Peaking early. How radical can work reform be? - RSA

Peaking early. How radical could work reform be?

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  • Employment
  • Leadership

I am well into the work of the Modern Employment Review, which I am heading up for the Prime Minister. Indeed the challenge right now is keeping my feet on the ground.

Over my several decades in policy research and development I have come to recognise a pattern. When I first look at a policy area it can feel baffling and impenetrable, one’s main priority in speaking to experts in the field is to avoid looking like an idiot. As time passes and as my knowledge and confidence grows so does the sense of possibility. This culminates, like reaching the peak of a steep hill, with a sense of being able to see anything and plot any route forward.

It is then, when I am overflowing with great ideas, things often start to change. One idea falls away because it turns out to have been tried before and to have failed. Another one crumbles when the numbers don’t add up. A third smashes into a wall of political or professional resistance. Instead of the smooth path to an enchanted destination one finds oneself stumbling through a thicket of complexity hoping to emerge with at least one or two ideas dented, diminished but still intact.

I’m subjecting you to this extended metaphor because right now I feel close to that beguiling peak. The Employment Review has surfaced many exciting ideas, from a vision of all work as good work, to strategic shifts in tax, skills and technology which could tackle the gaps and perverse incentives in our current employment policy, to a set of specific measures ranging from enhancing worker voice, to a step change in the quality of information and ease of redress for those most at risk of exploitation.

Perhaps the idea that I am most excited by right now is one that could not only improve support for self-employed people and help those who hire them but also make a real inroad into one of the most intractable of all public policy problems; the grey economy. Building on work already underway in the technology sector and in Government the idea is to develop a set of tools which could become the foundation for a universal on-line self-employment service.

Imagine a suite of platforms with different providers aimed at different employment sectors but with a common set of Government endorsed resources and protocols. The platforms would offer a registered self-employed person resources which might include an on-line HMRC backed PAYE service or a set of entitlements that individuals could build, and which Government could incentivise, such as saving for a pension or for paid parental leave. As well as customer and peer review aspects we have come to expect from most platforms, they might also offer elements of worker-tech which would enable self-employed people to organise and advocate for better treatment from major hirers.

For the hirers of the self-employed (including you and me) the platforms would provide important information and reassurance. For example, currently anyone who hires self-employed labour should undertake a migration check on the person they are engaging, but how many people do? If registration on the platform required such a check to have been completed, the problem is solved.

The migration check issue is part of a bigger problem which is that for many people using casual self-employed labour – a window cleaner or a gardener for example - it is easier to pay cash in hand, no questions asked, than to check that the person is above board and paying their taxes. Ultimately, once the registered platforms are shown to work the Government could legally require both hirers and the self-employed to use only registered platforms for payment, something made easier by the inevitable shift to a largely cashless economy. At this point it is easier to obey the law and tax rules and more difficult to say one is breaking them accidentally, something which would be likely to make major inroads into the grey economy. After all the grey economy is not only unfair to the taxpayer it also disadvantages those who trade by the rules.   

All the elements of this idea exist or are in development, including for example the Making Tax Digital work being undertaken by HMRC, but the step change comes from combining support, entitlements, incentives and enforcement through the same tool.    

Better support for the self-employed, reassurance for hirers, a fairer market and more money flowing into the public purse – it sounds too good to be true. Which it may prove to be, either at the stage of policy development or implementation. But now standing on my optimistic peak this is one of many ideas which look like they could benefit both workers and wider society.  

I know sooner or later on this journey the slow walk downhill to realism will start but right now I am encouraged by the enthusiasm I hear for reform from many quarters. Maybe, just maybe radical ambition and realistic possibility can for once coincide. 

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  • This is fascinating area to review and the timing is particularly relevant as we see new businesses with new ways of working and delivering their services running up against the established methodologies and vested interests. From Uber to Deliveroo to driver-only trains, we are entering a period which is likely to define what works 'looks like' for a generation.

  • Good point Mike. Its about how the self employed work and who they are. Some who 'work from home' use it as a base (construction, agriculture) and these sectors will be affected by technology as all will be. Others will be involved in design, technology, culture etc where space for collaboration and innovation will be vital. Business rates (how they are applied and how they are collected) will be another element here.

  • Matthew- in case you are not already aware, the HMRC appear to be cracking down on the self- employed through 'IR35' and particularly for those that contract with the public sector. I think they prefer everyone to be an employee on a payroll as it makes tax collection easier for them. But this sector will surely grow not least because of the gig economy.

  • This work is timely as it can inform the Governments industrial strategy. The strategy is not always explicit, but there is strong suggestion that collaboration and innovation are the future for economic success. This will especially be true for rural areas, which at least get a mention, and where self employment is a reality of the economy and where co production can be facilitated for great success. Digitisation needs skills support and broadband to the "last 5pc"