News Article | April 23, 2017
Whether it’s the gender pay gap, a lack of promotion opportunities or the demand from retailers to work longer shifts – often standing at checkouts for 10 hours straight – life can be tough for women in the shop trade. For mothers it can be even worse, whatever industry they choose and in whichever part of the country they look for work. A TUC report last year found there was an overall gender pay gap of 34% for full-time working mothers who were born in 1970 and had their children before the age of 33. The time out from work on maternity leave before they had established themselves in skilled or senior roles effectively killed their chances of advancement, or at best restricted them, the report said. A report by the Institute for Public Policy Research this month found that the cost of childcare had risen to the point where some parents in low-income families effectively “pay to work”. The thinktank blamed a lack of support under the current system of tax credits as much as it did spiralling nursery charges. The report said a woman with a partner and two children who works fewer than 16 hours a week and earns the government’s “national living wage” of £7.50 an hour would see her childcare costs overwhelm her earnings, leading to a net loss. This situation is also common for women on higher hourly rates when they live in high-cost areas like London. The IPPR said the capital had the lowest maternal employment rate in the country and urged mayor Sadiq Khan to lobby the government for extra subsidies to plough back into childcare facilities. Metro mayors due to be elected next month in Manchester and the West Midlands will find parents in their areas facing similar difficulties. The Joseph Rowntree Foundation asked last year whether self-employment was a possible route out of low-paid work, particularly for women. It found the government needed to put in place much more support before people with lower skills – such as former BHS workers – could make the leap. It also highlighted research by the Social Market Foundation that revealed four out of five low-paid workers remained stuck in low pay even after 10 years in self-employment. But a study by NatWest suggested that while overall interest in starting a business has risen this year, having fallen to a historical low in the run-up to and aftermath of the Brexit vote, the gender gap remains firmly in place. Its research revealed that men are still significantly more likely than women to want to set up their own business. Sixteen per cent of men say that they want to start their own business compared to 12% of women, the majority of women saying they were discouraged from doing so because of a lack of inspiring role models.
News Article | May 2, 2017
"The current corporate income tax raises very little revenue," said Kotlikoff. "But it creates burdens for business, distorts investment decisions, and encourages American companies to invest overseas, leaving U.S. workers behind." The House Republican plan would replace the 35% tax on corporate profit with a 20% tax on sales, after deducting investments, wages and the cost of inputs. The proposal, developed by House Speaker Paul Ryan and Ways and Means Committee Chairman Kevin Brady, has been criticized for creating large deficits to give tax cuts to the rich. But the study finds that the total tax package (corporate plus personal income tax reform), if it succeeds in attracting dramatically more investment, pays for itself – by eliminating deductions and loopholes and creating enough new taxable income to offset the effects of lower tax rates. "The proposal is definitely not a giveaway to the rich," said Kotlikoff. "Under the new tax regime, the distribution of resources would be almost as progressive as it is today, even as everyone enjoys higher income." Kotlikoff believes the current corporate income tax mainly falls on workers, whereas the reform would shift that burden to owners of capital. For that reason, corporate tax reform is the most progressive part of the proposal. "The House Republican tax plan would replace a tax on labor with a tax on wealth," he said. "This is something every Democrat should support." In contrast to the House proposal, the economists criticized the outline of a tax reform by President Trump, which appears to create a loophole for the self-employed and appears to favor imported goods over domestic production. In doing their analysis, Kotlikoff and Auerbach are using: Led by Dr. John C. Goodman, the Goodman Institute for Public Policy Research (GIPPR) is a nonprofit, nonpartisan public policy research organization that promotes private alternatives to government regulation and control, solving problems by relying on the strength of the competitive, entrepreneurial private sector. Topics include reforms in health care, taxes, and entitlements. Visit www.goodmaninstitute.org. To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/economists-like-the-house-republican-tax-plan-but-criticize-trumps-version-300449733.html
News Article | April 15, 2017
Ask an economist or a technology expert and they will happily tell you that decades of data reliably show automation has created more jobs than it has destroyed. Far fewer of us now work on farms, for example, thanks to super-efficient machines that do the bulk of the work. Such technology has boosted productivity and, with it, living standards. As a result, more people work in leisure industries such as hospitality or hairdressing, serving all those people with higher disposable incomes and more free time. So far so good. And were the pattern to continue, one could envisage the realisation at last of the prediction made by John Maynard Keynes in 1930 that the working week would eventually be cut, perhaps to just 15 hours. The problem with this rose-tinted view of automation, however, is its focus on big averages that take little account of individuals’ experiences. Sure, the number of job gains for the whole of the UK may well be higher than the number lost to technology. But that is little consolation to someone who loses their job in a Midlands car plant to a robot and discovers most of the new openings are far afield in the coffee bars and hotels of London. Nor do studies of what has gone before allow for the fact that the pace of technological change will probably be quicker in the future. In other words, evolutions that took place over previous decades may well have been gradual enough for most people to find new ways of making a living, with varying degrees of difficulty. But faster and more widespread technological changes in the future are unlikely to be so easy to adapt to. For governments, this imposes a pressing need to step in and ensure the rise of the robots is not accompanied by a further rise in inequality. As tempting as it may be to pour money into boosting automation in return for the long-awaited boost to productivity and headline economic growth, doing so without having a clear plan for retraining displaced workers would cause untold harm to millions of individuals. As the Institute for Public Policy Research points out , some workers are far more vulnerable than others to automation. It highlights particular risks for low-skill sectors and warns that the robot revolution could widen Britain’s already entrenched north-south divide. The thinktank rightly calls for an urgent increase in investment in education and retraining and for funds to be prioritised to help regions far away from the capital that most need help equipping people to adapt as automation shakes up their workplaces. If the government fails to act, the result could all too easily be a spike in unemployment and poverty in places with the lowest skilled workers – a very high price to pay for a bit of average productivity growth.
News Article | April 21, 2017
Wanted: an undergraduate to take a full-time position with a major international fashion retailer. The job will last for a year. The pay? Zero. This fantastic opportunity, available only to those with independent means, wealthy parents and access to free accommodation, was advertised this week by US-based fashion chain Urban Outfitters. The company, which has 25,000 employees worldwide and last year reported earnings of more than $200m (£155m), wanted students to work for free as interns in photographic studio production and styling at its London office. The ad said the year-long, full-time placement was open to undergraduate students and would be entirely unpaid, although the company would cover travel costs – but only those incurred in central London. Anyone journeying in from suburbia would have to foot their transport bill themselves. The chain reported earnings of $218.1m last year, meaning it made about £19,000 in profit every hour of the year. Campaign group the Sutton Trust warned that these advertised roles are likely to be the tip of the iceberg because many positions are offered on an informal basis, often through well-connected family members. “Unless you have private means, or have access to family accommodation, you simply have no chance of taking up an unpaid internship,” said director of research Conor Ryan. Urban Outfitters is certainly not alone in looking for free labour. Unpaid internships are part of a growing trend that, according to critics, gives people from wealthy families an unfair leg-up in their careers. Fashion house Paul Smith and global advertising group Publicis are among other firms offering unpaid internships. Last month, the sandwich chain Pret a Manger offered 500 16- to 18-year-olds a week of unpaid work experience – giving the company the equivalent of nine people working free for a year. Their only reward was to be free food. However, the company backed down within hours of the Guardian reporting its plan. Fashion house Paul Smith, whose founder was knighted by the Queen in 2000, offers at least three unpaid positions, including a six-month placement in its press office, for which only travel and lunch expenses are paid. The company, which said last month that pre-tax profits more than doubled to £6m, did not respond to requests for comment. Fellow fashion designer Vivienne Westwood has previously come under fire for offering five unpaid internships, which are still being advertised. Publicis Media, part of the multibillion-pound French advertising and public relations group Publicis, is currently looking for a German-speaking intern who will receive only lunch and travel expenses. The firm’s parent company, Publicis Groupe, recorded an operating profit of £1.1bn last year. The company said it pays interns the London living wage of £9.75 an hour if they are with the company for three months or longer. But a spokesman said the whole advertising industry needed to introduce more paid internships: “We believe as an industry we can strive to do more.” The concept of the free shift is not confined to the fashion and media industries. The UK arm of French industrial group Dassault is offering a six-month placement for “a high-performing undergraduate” or MBA student. The company did not return a request for comment. The Sutton Trust’s Ryan suggested that an unpaid role could cost someone who does not live in London about £1,000 per month. “If you’re closing off internships by pricing young people out of them, you’re seriously harming social mobility and reinforcing the nature of those who get into top jobs across the professions,” he said. He said interns should ideally be paid the living wage as defined by the Living Wage Foundation – £8.45 per hour or £9.75 in London. At the very least, he said, they should receive the national minimum wage of £7.05 for under-25s and £7.50 for older workers. Labour MP Justin Madders, a member of a cross-party group on social mobility, said companies who did not pay interns for long periods of work were guilty of exploitation. He said: “It sounds like these companies’ business model is predicated on getting people to work for nothing. Let’s call it out for what it is, it’s exploitation.” Madders said universities should “look carefully” at whether unpaid placements were worthwhile and distance themselves from companies that ask people to do a “proper job” without paying for it. In an emailed statement, Urban Outfitters defended its approach: “Unpaid internships are legal under UK law, as long as the intern is a student at an accredited college or university and will be receiving academic credit for the internship.” Ben Lyons, co-director of Intern Aware, which campaigns for interns to be paid the minimum wage, said: “Unpaid internships exclude the vast majority of young people who can’t afford to work free, and the government needs to take long-overdue action to crack down on then.” A report by the Institute for Public Policy Research (IPPR) thinktank earlier this month warned that poorer young people are missing out on jobs because firms increasingly require candidates to work for nothing. Unpaid internships are legal if they are part of a placement attached to a university course, in which case they are limited to a year. However,, if an intern is classed as a worker, they will normally be due the national minimum wage. However, the Institute of Directors, which represents company bosses, warned against forcing employers to pay interns. Seamus Nevin, head of employment and skills at the lobby group, said the IoD encourages firms to pay interns “appropriately”. But he added: “We would fear that obliging all employers to pay interns might prove counterproductive.” The social mobility commission, chaired by former Labour cabinet minister Alan Milburn, has also called for a ban on unpaid internships on the grounds that they penalise young working-class people. But so far there is little sign of that happening.
News Article | April 15, 2017
A leading thinktank has urged the government to spend billions of pounds helping poorly skilled workers in the less prosperous parts of the UK cope with the threat of the looming robot revolution. The left-leaning Institute for Public Policy Research (IPPR) said in a new report that those most at risk from automation were concentrated in low-skill sectors of the economy and were least able to adapt to change. More than 10m jobs in the UK – a third of the total – are thought to be at risk from automation within the next two decades and the IPPR said the scale of the challenge required urgent action. There was also evidence to suggest that the impact of automation would be geographically concentrated and so widen the north-south divide. The IPPR research said that in four sectors alone – retail, hospitality, transport and manufacturing – 5m jobs were at risk, adding that a particular concern to ministers should be industries ripe for automation with a high proportion of workers least able to adapt. “In wholesale and retail for example, there are over two and a half million jobs with a high potential to be automated, and three in four workers do not have a degree-level qualification and may lack adaptability,” the report said. The IPPR called on the government to introduce a retraining allowance of up to £2,000 for those replaced by machines, and for the newly created apprenticeship levy to be turned into a £5bn-a-year skills levy offering special help to the regions furthest away from London. “Britain can’t afford to ignore the huge changes that will transform our labour market in the coming years,” said Joe Dromey, senior research fellow at the IPPR. “If we don’t retrain Britain’s workforce with the skills they need for the future we are likely to end up with a society where a small number prosper while many are left behind. “This doesn’t mean everyone going to university, far from it, but it does mean a much greater focus on supporting adults to retrain and up-skill, rather than focusing only on young people.” The thinktank noted that adults who had left full-time education without GCSE-level qualifications were almost twice as likely as graduates to be unemployed a year after being made redundant – making them especially in need of help to retrain. The IPPR said its analysis showed that jobs in London and the south-east were more resilient to automation than those in the rest of the country. “Whereas 39% of jobs have a high potential for automation in London, 47% are at high risk in Yorkshire and the Humber and the West Midlands, and 48% are at high risk in the north-east and Northern Ireland.” The thinktank said the £2,000 retraining allowance should be paid to workers who lacked A-levels or their equivalent, with better qualified workers eligible for up to £1,000 for retraining provided they matched the amount with their own contribution. The cost of £164m a year could be recouped by reducing the tax free allowance for redundancy payments, the report added. It said that the skills levy should be set at 0.5% of the payroll for employers with more than 50 members of staff and 1% for those employing more than 250. A quarter of the £5bn a year raised would be allocated to a regional skills fund. Clare McNeil, associate director of work and families, said two-thirds of the workforce of 2030 – when the impact of automation is expected to be fully felt – had already left full-time education, and this made it vital for the government to ensure the workforce could keep pace with technological change. “The starting point for government should be those industries with both a high proportion of jobs with the potential to be automated, and a high proportion of workers who are low-skilled,” she said.
News Article | April 16, 2017
For many years, the idea that a government of the right should have an industrial policy was heresy. The state’s role was to keep inflation and taxes low, then stay out of the way so that market forces could operate. Ronald Reagan summed up the philosophy when he said the nine most dangerous words in politics were: “I’m from the government and I’m here to help.” The idea that Reagan pursued a form of pure laissez-faire is, of course, nonsense. Plenty of US firms reaped the benefits of vastly increased defence spending in the 1980s, a form of military Keynesianism, that had plenty of technological spin-offs. Similarly, all Conservative governments in Britain have an industrial strategy, even if they are not always prepared to confess as much. Margaret Thatcher based hers on inward investment and the City of London. Ted Heath was as likely as Harold Wilson to bail out a lame duck. Michael Heseltine was a powerful business secretary in John Major’s government, eager for the UK to be at the cutting edge of the new industries then emerging. So when Theresa May calls for an industrial strategy to help deliver a “stronger economy and a fairer society”, she is saying nothing new or radical. She is part of a tradition that stretches back to Neville Chamberlain’s industrial interventionism as chancellor in the 1930s and beyond. The prime minister sketched out her vision for a more active role for the state in the foreword to the government’s green paper – Building our Industrial Strategy – published three months ago. The consultation period ends on Monday and will influence a white paper from the business secretary, Greg Clark. May’s idea of trying to build a cross-party consensus around an industrial strategy is sensible. Britain’s problem has never been the lack of a plan. There have been plenty of those down the decades. Nor were all the plans useless, although some of them were. Rather, there has been too much chopping and changing, a failure to stick at anything for long. Ministers regularly deliver lectures about the need to eschew short-termism but hardly lead by example. As the Institute for Government pointed out in a recent report, Clark’s three predecessors in the decade before he got the job all had a different industrial strategy. “From 2008, [Peter] Mandelson looked to use his department to rebalance the economy away from one focused heavily on financial services. He called for a ‘new activism’ and ‘targeted intervention’ for government to invest to support particular enterprises. “After 2010, [Vince] Cable sought to use government to support themes such as skills, technological development and creating conditions for investment and growth. After 2015, [Sajid] Javid also sought to distance himself from his predecessor, setting out a far more deregulatory and small-state role for government.” That Germany would have three different industrial strategies in so short a time is unimaginable. So what could be done to prevent May’s “modern” industrial strategy failing in its promise and before too long being supplanted by the latest fad? One approach would be to learn from the process that led to the adoption of the UN’s Sustainable Development Goals in 2015. The SDGs are not perfect, but they provide a template for how the government could turn its lofty aspirations into something more concrete. It sounds obvious, but the first thing to do is to identify the problem. In the case of the UN, it was that too many people were living in poverty despite a growing global economy. May’s motivation is not that different. The economy should work for the many not the few. Second, break the problem down into its component parts. There are 17 individual SDGs – such as tackling hunger and ensuring universal access to clean water – which are further broken down into more than 160 targets. The government’s industrial strategy green paper is candid about some of the UK economy’s failings: its weak investment record; the poor level of skills and regional disparities that mean 61% of people live in areas with incomes 10% below the national average. Only two cities outside London – Bristol and Aberdeen – have productivity above the national average. That’s the easy bit. It’s proved much harder to raise investment levels - Britain has ranked in the lowest 25% of all rich countries in the OECD for investment in 48 out of the last 55 years - to improve skills, and to close the north-south divide. If the government has a role in trying to tackle these issues, and May is clear that she thinks it does, then Britain needs Industrial Strategy Goals. These should be limited in number, 17 is too many. Dame Kate Barker is chairing the -industrial strategy commission, set up to keep tabs on the Government’s plan as it evolves. She says May and her team need to identify the big things they want to achieve. Third, set a date for the targets to be reached. In the case of the SDGs, the UN has given itself 15 years, which is a testing but realistic deadline provided action is not delayed. By 2030, Britain will be in the middle of a robot revolution and the industrial strategy should reflect that. Around a third of jobs in Britain could be put in jeopardy by automation and, as the Institute for Public Policy Research has noted, those with the least qualifications are most at risk. “The government is developing an industrial strategy which calls for employer-led sector deals to boost productivity and skills. But so far, efforts have focused on high-skill, high productivity, hi-tech export sectors such as automotive and aerospace,” it said. Fourth, build as big a consensus around the plan as possible. In the case of the SDGs, governments, civil society, the private sector and the multilateral organisations all signed up. Getting everybody inside the tent took effort, but it is vital. One of the reasons Germany’s industrial strategy has been successful is that the government, business and unions all agree with its broad principles. There would be no change of direction were Angela Merkel to be ousted as chancellor this autumn. A report by Barker’s commission notes: “To be effective, we believe that any industrial strategy needs consistent application over a long period, probably to be measured in decades rather than years.” In Germany that would not need to be spelled out. Finally, the industrial strategy goals should have independent monitoring of the progress made, or the lack of it. The government should take its industrial targets as seriously as its fiscal targets, with an independent watchdog created along the lines of the Office for Budget Responsibility. If the industrial strategy is as important as May says it is, ministers should not be allowed to mark their own homework.
News Article | April 17, 2017
There is plenty to admire in the government’s plans to beef up apprenticeships, funded from a levy that came into force this month on all companies with a payroll of more than £3m a year. The scheme will provide an extra 3m apprenticeships, which the government believes will help fill the skills and productivity gap that dogs the British economy. Everyone, from the CBI to the TUC and the main parties, has signed up and wants it to succeed. But it is coming in helter-skelter, with important details unresolved, and it is going to be bolted on to a system that needs much deeper change if it is to deliver genuinely higher skills and social mobility in Sheffield and Newcastle as well as in London. The biggest flaw is that, like so many other government initiatives, this latest attempt to boost the number of apprenticeships could have been designed to be gamed. Experience has surely shown by now that setting a target, generating the cash, and launching the scheme before systems of monitoring and assessment are up and running is an open invitation for employers to cheat. So there is nothing to stop them, say, rebadging existing training or other professional development programmes, or offering low-skill apprenticeships in business administration or customer service. Employers complain that the levy is a tax by another name even though their contribution can be reclaimed, with a Whitehall top-up of an extra 10%, as long as it goes on apprenticeships. More problematic is that since most of the levy will be raised in London, it will be spent in London – not so good for Manchester, say, or Liverpool. It is also being levied on the public sector, which can ill afford it. Most apprenticeships on offer now add little by way of an employment premium for the apprentice, while employers are reluctant to teach transferable skills for fear of losing their investment. That might account for the wide range of apprenticeships on offer, from animal care and health and beauty to earth sciences and biotechnology. Colleges with years of experience, and sometimes big investment in facilities for off-the-job training, have been rejected from the scheme for what they feel are spurious reasons. Meanwhile, one core difficulty is outstanding: a lack of esteem, characterised by the idea that apprenticeships are for other people’s children. Teachers are much more familiar with the path students need to follow to academic qualifications. That means many students who might have benefited from access to technical and vocational courses at 14 have to wait until 16, when they may have entirely lost their enthusiasm for learning. Ministers will be familiar with the critical analysis that has come from bodies such as the Institute for Fiscal Studies and the Institute for Public Policy Research. They should remember that quality almost always trumps quantity: consistency of purpose and targets that prioritise added value and user satisfaction matter most. At the very least, the government must recognise that numbers are the least useful outcome to measure. Scale back the ambition. Great strides in understanding weaknesses in Britain’s vocational and technical education have been made through Lord Sainsbury’s report on 16-plus educational choices and the Holman investigation into career guidance. There is a lot of goodwill behind apprenticeships. Don’t risk it all on a single easy-to-cheat target.
News Article | February 15, 2017
There is a question that was never put to the leaders of the campaign for Brexit and has not, as far as I’m aware, been put to the prime minister since her conversion to the cause. It is this: what will you do on the morning of formal separation from the EU that you could not have done the day before? What restored freedom, what action hitherto proscribed by the tyrannical bureaucrats of Brussels, will you indulge as the sparkling English wine is uncorked? Bend a banana, perhaps. Or catch the Eurostar to Paris and savour the sensation of no longer having the automatic right to work there. Oh! Pleasant exercise of hope and joy! … Bliss it will be in that dawn to be alive. Right? Brexit enthusiasts will complain that my question is unfair. Objections to EU membership were all about democracy, sovereignty and long-term economic opportunity: not pleasures that can be consumed overnight. And while that might be so, it is also true that people tend to vote for things in expectation of tangible benefits. A weekly dividend of £350m for the NHS, for example. So the unlikelihood of quick gratification for leave voters is a problem. Theresa May identifies a deeper imperative to Brexit than was written on the referendum ballot paper. She hears a collective cry of rage against the economic and political status quo, requiring radical change on multiple fronts. So, in parallel with the prime minister’s plan for a “clean break” from the rest of Europe, Downing Street is thinking of ways to address grievances that generated demand for Brexit in the first place: stagnant wages; anxiety that living standards have peaked and that the next generation is being shafted; the demoralising experience of working all hours without saving a penny. Government thinking on these issues has so far yielded a modest harvest. Last week’s housing white paper was meant to address a chronic shortage of homes by nudging councils towards quicker approval of new developments. Last month saw the launch of an industrial strategy, embracing state activism to nurture growth in under-resourced sectors and neglected regions. Last year May appointed Matthew Taylor, formerly head of Tony Blair’s policy unit, to lead a review into modern employment practices – the decline of the stable, rewarding full-time career and its replacement by poorly paid, insecure casual servitude. A notable feature of this non-Brexit agenda is how closely it tracks arguments made by Ed Miliband in the last parliament. The former Labour leader had a whole thesis about the structural failings of British capitalism and how it corroded people’s confidence in the future, leaving them anxious and angry. His focus on the “squeezed middle” anticipated May’s promise to help those who are “just-about-managing”. Miliband’s calls for state intervention in failing markets were derided by the Tories as socialist delusion at the time, but he opened rhetorical doors through which May is now tentatively stepping. Last week’s housing paper even used a forgotten policy that Labour had launched in 2013 – a “Use it or lose it” threat to developers who hoard land without building on it. Meanwhile, Downing Street has taken a close interest in the commission on economic justice set up by the Institute for Public Policy Research, a thinktank that provided regular policymaking services for Labour in the days before its capture by Corbynism. The commission was recently invited to give a presentation to May’s leading policy advisers inside No 10. Were it not for Brexit’s domination of political debate, May’s eschewal of conventional left-right dividing lines – her willingness to jettison Thatcherite orthodoxies – might have attracted more notice. But then, as the old Yiddish saying goes, if my granny had balls she’d be my grandpa. The idea that there is some parallel realm of politics that May can develop and for which she will be remembered alongside her EU negotiation is delusional. Timid little steps on housing, industrial strategy and job security are not going to get the prime minister to the promised land of fairness and opportunity in time for Brexit day. And she insists on a diversion to set up more grammar schools along the way, despite nearly every expert in the field warning that educational selection closes more avenues to social mobility than it opens. Even on immigration the government cannot meet expectations raised by the leave campaign. There will still be new people arriving because businesses will insist on a capacity to hire from abroad. Millions who arrived in Britain over recent decades, and their children born as British citizens, will stay because the country is their home. Even the most draconian border regime cannot restore the ethnic homogeneity for which some nostalgic Brexiteers pine. At some point someone is going to have to level with the country. Much of what leave voters were promised is unavailable because the EU was never responsible for a lot of things that made them angry. The dawn of Brexit promises no significant freedom or opportunity that wasn’t there the day before. It isn’t a message that ex-remainers can deliver, for all the reasons that scuppered their campaign last year. It sounded patronising before the referendum and the tone isn’t improved by bitterness in defeat. None of the original leave campaigners will dare admit their dishonesty in making Brussels the scapegoat for every conceivable social and economic ill. There is no point expecting Boris Johnson or Michael Gove to embark on a self-critical journey of public-expectation management. Far more likely they will be drawn deeper into the old lie: someone must be held responsible when Brexit does not unblock the sluices of wealth and opportunity; when the milk and honey refuse to flow. The obvious candidates are foreigners and fifth columnists – EU governments that negotiate in bad faith; alien interlopers who drain public services; unpatriotic “remoaners” talking the country down. The question then is whether the prime minister will go along with that game. She has managed so far to sustain the pretence that dealing with the failure of Britain’s economy to share its bounties fairly and quitting the EU are kind of the same thing. If it turns out that they aren’t, and one ambition obstructs the other, who will she blame?
News Article | November 27, 2016
All roads lead to Rome, and experience would suggest, all autumn statements lead to roads. Under Alistair Darling there was an M1 upgrade in what was then called a pre-budget report. His Conservative successor George “we are the builders” Osborne pledged the biggest road investment programme since the 1970s and a permanent pothole fund. Then last week, Osborne’s successor Philip Hammond stuck with tradition and promised to push ahead with road schemes in the “northern powerhouse” and to tackle congestion on key routes under plans to revive the UK’s pitiful productivity growth. Such nods to drivers and hauliers are easily explained in a nation where cars are by far the most popular mode of transport and where almost three times more goods are moved by roads than by water and rail combined. Promises to bust traffic jams and plug potholes are easy wins for politicians – as is endlessly freezing fuel duty. Similarly, when it comes to appearing to be doing something about the productivity puzzle it is far easier to talk about roads than the thorny issue of Britain’s addiction to low-paid, low-skilled work. But Hammond will not be able to escape this reality if he is serious about raising productivity – a measure of what is produced for every hour worked. Likewise, if he and Theresa May want to address the economic discontent that was partly responsible for the Brexit vote he will have to ensure any productivity gains he does eke out are shared by low-paid workers. As the chancellor said himself, Britain’s productivity gap with its neighbours has real repercussions on living standards. “In the real world, it takes a German worker four days to produce what we make in five; which means, in turn, that too many British workers work longer hours for lower pay than their counterparts,” Hammond said. It was a welcome appraisal of a problem that is too often discussed in abstract, jargon-laden terms. But Hammond still fell into the usual trap of turning to infrastructure and innovation for the solutions. Roads and inventions like next-generation electric vehicles are all well and good, but in an economy dominated by the services sector, it too needs attention if the country is ever going to make meaningful inroads on productivity. Of course, many of the technological advances that are made under the badge of innovation can help in the services sector. Internet banking and automatic checkouts are obvious examples. But there is also evidence that services employers can make productivity gains by changing the way they treat their employees. The Joseph Rowntree Foundation has been exploring this link between the prevalence of low-paid work and low productivity. In an analysis with the thinktank, the Institute for Public Policy Research [pdf], the charity found low-pay sectors constitute about 23% of our economy, but account for about a third of the UK’s productivity gap with leading western European economies. JRF is rightly telling ministers to broaden the industrial strategy to include low-paying parts of the economy such as retail, care and catering, and that by doing so they could make greater economic gains and lift hundreds of thousands of people out of working poverty. Finding ways to lift productivity in those sectors is not easy. But if solving our low productivity problem was simple, countless experts would not have dubbed it a “puzzle”. There are three key areas that employers and policymakers can explore, beyond the usual technology fixes. The first is the relationship between pay and productivity. In a classic chicken and egg situation, economists argue over what comes first: low pay or low productivity. There is an argument that employers can only afford to raise wages, when productivity goes up. But work by the Living Wage Foundation and others has found raising pay can in turn raise productivity. Better paid workers are more motivated and more likely to stick around and accumulate skills. Seen another way, when employers are forced to pay more, they are more likely to seek ways to make work more productive. Ideally, this will happen with the government’s mandatory national living wage. The second area is flexible working. Consider the case of a woman working for a retailer. She acquires years of experience, then has a child, takes maternity leave and returns to work part-time. Her employer wants to capitalise on the woman’s experience and offers her a senior role. Fearful of how that new role will fit in with her childcare arrangements, the woman turns down the promotion. When JRF commissioned research into productivity and pay in the retail sector by the economist and former MP Kitty Ussher, she found about half of retail workers who already worked part-time said they would only accept a promotion if they could remain part-time. Little surprise then, that the study also revealed half of retail workers felt overqualified for the work they did. Clearly, employers are missing a trick when they fail to help workers find ways to balance family commitments with career progression. Alongside these workers for whom the overriding priority was to have controlled hours, Ussher identified a second group who wanted to work more hours and gain promotion to increase their earnings. Among that second group there was evidence of frustration at the lack of opportunities to get on. This leads to the third area: engagement. If staff do not feel involved in deciding their hours or career path, it is unlikely they will feel ready to share suggestions on how their workplace could run more efficiently. Productivity suffers as a result. Words like engagement sound fluffy, but manufacturing – which consistently outperforms on productivity – has been doing this for decades. In a well-run factory, staff are actively encouraged to make suggestions on small changes that could raise their productivity, such as the positioning of a tool. It’s called “continuous improvement”. Ussher’s research found this kind of engagement was lacking in retail, where 72% of workers felt they could see possible improvements in how their business ran, but just 44% said those ideas were taken seriously. With management clearly failing these workers, it was welcome that Hammond’s autumn statement contained £13m for a scheme to boost UK management skills. But workers need more than just better managers to be more productive. They need better career paths, including quality apprenticeships, and they need more economic security, not zero-hours contracts. Employers are crucial in this and so too is government backing. If the chancellor really wants to “build an economy that works for everyone” he and his fellow ministers must resist the temptation to pick winners at the expense of those working in the vast, low-paying, low productivity parts of the economy.
News Article | February 24, 2017
Ministers should establish a new energy commission to spur on construction of power stations because successive governments have failed to encourage enough fresh power capacity in the UK, according to a House of Lords report. Subsidy-backed growth in renewable energy projects, such as windfarms, has deterred the construction of new conventional power plants, the economic affairs committee claimed. The peers envisage the new energy commission would oversee auctions where all technologies, including fossil fuel power plants, competed for guaranteed electricity prices. The auctions would cap carbon emissions. At present the government only allows low-carbon power, such as windfarms and new nuclear power stations, to compete in auctions for such deals, known as contracts for difference. The influential cross-party group of peers concluded that successive governments have got their priorities wrong on energy policy by giving priority to carbon emissions cuts – a statutory duty under the Climate Change Act – over keeping costs down and keeping the lights on. The report has sparked an angry response. Robert Gross, director of the centre for energy policy and technology at Imperial College, London, said: “The term ‘post truth’ has become over-used. Yet it would be possible to take all the evidence the committee presents and tell a completely different story: there’s been huge success in growing renewables and reducing emissions from the power sector.” Lord Hollick, the committee’s chair, said: “We are critical of the drift that’s taken place over the last 15 years or so, which has delivered on the decarbonisation agenda but very much at the expense of consumers paying 58% more than they were in 2003. On the affordability front we haven’t looked after consumers.” However, as the report acknowledges, most of the price increases came from higher gas prices, not the 10% added by renewable energy subsidies. The peers, who include the former chancellor Norman Lamont, and a former head of the civil service, Andrew Turnbull, said security of supply should become the key aim of energy policy, above decarbonisation and cost. “Low-carbon but chronically unreliable electricity is not acceptable. Similarly very cheap prices at the expense of frequent shortages would be unacceptable,” the report says, which also claims fossil fuels have remained cheaper than renewable sources. But Paul Massara, the former chief executive of npower who now runs the renewable energy firm North Star Solar, said the committee was simply wrong to say fossil fuels were always cheaper than renewables, and condemned the report as “backward looking”. Darren Baxter, a researcher at the Institute for Public Policy Research thinktank, said: “A failure to keep the pace up with decarbonisation, as suggested in this report, would be a disaster for the north [of England] and its growing low-carbon economy.” Hollick told the Guardian that the government had micromanaged the energy market and did not need to interfere as much. He said the government “should now allow the energy commission to move forward, to run auctions, to fill the gap and to build a properly balanced [energy system]”. Hollick denied the report was anti-renewables. “Exactly the opposite. We see renewables very much as the way forward,” he said, arguing that more public money should go into R&D in renewables and energy storage. The committee also urged the government to publish its plan B if the Hinkley Point C nuclear power station, which is expected to provide 7% of the UK’s electricity from 2025, is delayed or even cancelled. Hollick said the biggest surprise during the committee’s inquiry was the “fragility” of the government’s nuclear ambitions, which envisage new nuclear reactors in Somerset, Suffolk, Anglesey and Cumbria. “It is imperative that the government publishes it contingency plans for how it will make up the capacity due to be provided by these plants in the event one or more does not succeed or is delayed,” the report says. Hollick said he expected the government’s energy back-up plan to be made up largely of new gas power stations and offshore windfarms. A spokeswoman for the Department for Business, Energy and Industrial Strategy said: “Keeping the lights on is non-negotiable. Our top priority is making sure UK families and businesses have secure, affordable energy supplies.”