Cllr Nick Denys is Head of Policy for the Conservative Workers and Trade Unionists.
By the time Phillip Hammond sits down behind the despatch box on 22nd November, it should be clear that his budget speech was the moment when the structure of work started to shift. This shift will be about giving workers control – to ensure that all work is fair and decent, that the vulnerable cannot be exploited by unscrupulous bosses, and that flexibility, which is at the heart of the successful British labour market, allows everyone to choose what works best for them. It will also be about embracing artificial intelligence, robotics, and the potential of the gig-economy to improve the lot of people while they work, as well as when they consume.
This may sound like a big ambition, but the big changes happening means that government, business, and workers need to look upwards. The backdrop for this year’s budget is low productivity, created by low skills and low investment in technology, leading to low wage growth. The slow-burning pain from the 2008 credit crunch is starting to be felt by most workers. Incomes are now 15 per cent lower than they would have been if productivity had risen at post-war average rates. When taking inflation into account, average pay is £800 per annum lower than it was in 2008. This does not just impact what’s in your wallet. Each year, the Government’s biggest tax-take is collected from incomes. If we are paid less, the Government gets less, thus getting rid of the deficit becomes more difficult. Added to this is the nearing threat of new technologies taking jobs in vast swathes of the economy. The lawyer is as much under threat from artificial intelligence as the warehouse worker is from robots.
This all sounds bleak, but we can be optimistic. The Government can reset the sails of our employment framework so we can advance with confidence into the post-Brexit adventure. The key will be to trust workers to make decisions that are best for them and their colleagues, which will also be best for business and our economy as whole. Industrial relations should not be a zero-sum game, where it is either bosses or workers who win – or a battle needs to happen to ensure a messy draw. The Conservatives can set themselves apart from Labour by giving workers control of their destiny. Corbyn’s instincts are to nationalise – to hoard control in the state, from which bureaucrats will then dispense goodness onto the many. The Conservatives will give you the power, as we trust you to know what is best.
Hammond’s first set of announcements should encourage the voice of the worker to be louder. The workplace is one of the least democratic environments left in our society. Workers have a huge stake in the success of an organisation, plus they often know for real what is happening on the shop-floor. Staff should have the same voting rights as shareholders, in order to have their say on executive pay awards. While the pay for most workers has struggled to keep up with inflation, senior bosses have seen their pay packets shoot ahead of everyone else. We now have a situation where the wealth gap in the UK between the richest and the rest is one of the largest in the Western world. This is not good for community cohesion. It also disconnects a lot of people from the UK’s overall economic performance, meaning there is little incentive to improve everyday productivity. Good bosses who make a positive difference to a business should be rewarded above and beyond the rest of the workforce, but too many executive pay awards seem divorced from the performance of their company.
A quick win would be to introduce Matthew Taylor’s proposal to drop the threshold for introducing works councils down from ten per cent to two per cent of the workforce making the request. This would encourage a more co-operative relationship among the different parts of an organisation. Conservatives should also stop being suspicious of trade unions. Research shows that workplaces where trade unions operate are more equitable and ethical. Also, to make effective change you need to take your workforce with you – and trade unions are often key to successfully reforming how work is done. Businesses should not be able to stop unions advertising their services in the workplace and the law should support collective bargaining within each workplace. At the same time, trade unions should be encouraged to show that they want to concentrate on workplace matters and represent all workers by ditching party political affiliation. New enabling laws would only be accessible to trade unions who commit to being politically independent. Hammond should also announce that politically independent trade unions would benefit from having a tax status equivalent to charities and have to follow a less stringent reporting regime.
Hammond’s second set of announcements should encourage life-long learning. The Government needs to ensure that every young person will be offered a quality apprenticeship from 16 onwards, from Level 2 right up to degree apprenticeships. The financial support that apprentices get should be reformed to allow people to travel to where they can get the skills they need. This is an investment in our people, which gives back a good return. Ninety per cent of apprentices get jobs afterwards, or go onto further training.
To keep up with the pace of change, workers will need to commit to life-long learning. To help encourage people to improve their skills each year, the Chancellor should announce that all workers can claim back one week’s income tax and National Insurance contribution as a training voucher that can be used towards funding work-related training. For a worker on the average salary that would be over £100.
Hammond’s third set of policies should ensure that work-pays for everyone. The “benefits freeze” approach to welfare reform is a false economy. Research shows that those on low pay find it difficult to escape the poverty trap. This leads to significant financial costs being placed on other parts of the state – such as health, housing and social care. The Government should ensure that tbenefits for this group rise each year in line with inflation.
Finally, the Chancellor needs to reboot business investment. Between 1997 and 2017, investment in the UK economy was the lowest in the entire OECD, at a time when technology is moving forward rapidly. The state should have a stake in the future by investing in artificial intelligence and robotics, and must think about how technological advances will work best in society. Like roads and utilities today, in 20 years’ time certain technologies will form the new base on which all people work.