With rising unemployment on the horizon, the chancellor announced a raft of measures to shore up employment and training - worth £1.3bn - in yesterday's pre-budget report.
The chancellor said he was determined to minimise the impact of the recession on employment and to help those who are made redundant move quickly into a new job. He said the evidence shows that the longer people are out of work, the more difficult it becomes to re-enter the labour market.
The government's Rapid Response Service will be extended to companies involved in both small and large scale redundancies. It provides help with access to vacancies, CV writing, skills analysis, and support in setting up in business. Train to Gain will be expanded to provide more pre-redundancy retraining and assist those newly made redundant, and local employment partnerships will be targeted not only on harder to reach groups, but also on the short-term unemployed.
The chancellor also announced a new initiative to help fill the country's half a million unfilled vacancies. The National Employment Partnership will be chaired by the Prime Minister.
Twenty of the largest employers, including Tesco, Centrica and Royal Mail, have agreed to take part to speed up recruitment, increase vacancies through Jobcentre Plus, and to step up access to work-related training.
Additional funding has also been set aside to ensure Jobcentre Plus and the New Deal have sufficient capacity.
Training and employment organisations welcomed the package but feared there may be a price to pay further down the line. Dr John Philpott, chief economist at the Chartered Institute of Personnel and Development said the pre-budget report was a welcome attempt to kick start the economy but warned that there was a danger that it would not be enough to counter job cuts already being planned.
"There is certainly a good spread of jam today in this budget," he said. "But with the bill so clearly in the post, including a hike in national insurance contributions for employers and employees, just as the economy is expected to be recovering, there is a real danger that this budget may do as much to slow medium-term jobs growth as it does to slow short-term job cuts.
"In the face of the avalanche of job cuts we're predicting over the winter, the package of support for people facing redundancy is welcome. These initiatives demonstrate the government recognises the severity of the looming jobs crisis. The extension of pre-redundancy support from the employees of large firms to those working in SMEs and the provision of more pre-redundancy training to help prepare people for the jobs market is particularly welcome.
However, it is a shame that the National Employment Partnership appears to be focusing only on larger employers. With such a high proportion of people employed by smaller employers, it is essential for government to find ways of engaging these employers in efforts to find jobs for the unemployed."
As widely predicted, the chancellor also confirmed that the standard rate of VAT is to be cut by 2.5% to 15% - the lowest level allowed under EU law - with effect from 1 December 2008 in a bid to get consumers spending again. The reduction will apply for 13 months, returning to 17.5% from 1 January 2010.
Small businesses using the VAT Flat Rate Scheme are being urged to seek professional advice to work out if it is still worthwhile using the scheme. Most (but not all) of the Flat Rate percentage rates have been reduced from 1 December 2008, but generally not by the full 2.5%.