The recent budget announcement by the UK government introduced a host of changes likely to affect businesses. With adjustments to tax policies, employer obligations, and support measures, we’ve no doubt that, as a People leader, you’ll be doing what you can to stay informed and agile. 

Whenever there’s financial pressure on the organisation, there’s a temptation to look to L&D to save costs: whether that’s downsizing your Talent Development team or relooking at budgets. Whilst these might look like keen pickings for saving costs, this knee-jerk reaction can actually cost you more in the long run. And it’s your job to influence your stakeholders on how much of that budget you get to keep your mitts on.

Here’s a breakdown of two key business-related changes that are likely to impact your organisation and why leadership development must remain a critical investment for navigating these changes. 

1. Employer Contributions: Increased NICs and Secondary Threshold Reduction

The most immediate impact on businesses will likely come from an increase in Employers’ National Insurance Contributions (NICs) to 15% from April 2025 and lowering the Secondary Threshold to £5,000. These changes will likely lead to questions over the coming weeks about how to make careful People-budgeting decisions.

Things to watch for: People worrying about job security, the continuing rise in cost of living and whether these costs will be absorbed by limiting bonuses and pay rises in the coming months. People want to know what this means for them.

2. Tax Changes: Corporation Tax and Capital Gains Adjustments

Corporation tax will remain capped at 25%, with provisions for full expensing and Annual Investment Allowance (AIA) to continue supporting capital investments. Capital Gains Tax (CGT) will rise to 18% at the basic rate and to 24% at the higher rate. This increase may impact your organisation if you’re looking to invest or divest assets.

Let’s face it - unless the majority of your team work in M&A then they might be blissfully unaware of how these changes might affect your organisation financially. Nonetheless, your CFO will have this pretty high on their list of priorities if this impacts you. And therefore knowing about it can be helpful when you’re negotiating any impact these costs have on the rest of your People strategy.

There’s also been announcements about the National Minimum Wage, Business Rates, Stamp Duty, as well as sector-specific commitments and investments. You can read more about how the budget impacts you here.  

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Why it’s NOT time to cut your Leadership Development budget

Simply put: your organisation’s success or failure hinges on your leadership.

A strong, adaptable leadership team inspire action, develop talent, think strategically and help their team navigate change and periods of uncertainty (and let’s face it, the last 5 years have given us heaps of that!).

A well-intended leadership team that lacks maturity, experience and investment sees conflict avoidance, siloed decision making, a lack of trust and short-term thinking.

You choose which game you want to play. 

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The cost of not investing in leadership development:

We did some digging to better understand the current landscape when it comes to leadership performance:

• Only 40% of leaders rate their organisation’s leadership quality as “very good” or “excellent” — down eight percentage points since the pandemic. (DDI)
• When asked about which traits are most important to being a successful leader, being “trustworthy” was ranked as the most important trait. Yet, only 46% of employees trust their manager to do what’s right, and that number drops to 32% for senior leaders. (DDI)

And we’ll let you do the maths on this one 👇

• Companies earn an average of 147% higher earnings per share when their number of talented managers increases and the rate of engaged employees doubles. (Gallup)

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The other option? Introducing the Coachable leader:

We’re totally biassed here, but being able to coach as a leader is something all leaders need to be able to do. Despite our obvious bias, the numbers stack up too:

• Leaders are 2.7 times more likely to feel accountable for being an effective leader when they receive quality coaching from their managers. (DDI)
• Over 70% of individuals who receive coaching benefited from improved work performance, relationships and more effective communication skills. (Institute of Coaching)
• 86% of organisations saw an ROI on their Coaching engagements. Source: International Coaching Federation (ICF)

Leaders that understand how to coach, also site being able to:

• Make better decisions
• Influence upwards and get buy in from their team
• Inspire and motivate change
• Raise self awareness of self and others
• Build resilience 
• Earn trust
• Develop others

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☝️ and we’re yet to meet anyone who doesn’t want their leadership team able to do all of this. When people say “high performance cultures”, what they actually mean is leaders with these capabilities and the self-awareness and humility to act on feedback from others. 

So whilst parking your 2025 leadership development initiatives might seem like a “quick win” for saving money short term, the long-term trade off makes this decision far from business-savvy. 

Remember, the value of L&D can sometimes feel harder to demonstrate than tangible, revenue-generating investments so speak the language of your stakeholders and plan for long-term success.

And if you want some help on how to foster a coaching culture or develop your leaders, drop us a message. No obligation, we’re just here to help you rid the world of shitty bosses and replace them with Coachable leaders!

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