From big vision to the budget – the route to better work - RSA

From big vision to the budget – the route to better work

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  • Employment
  • Leadership

I hope RSA Fellows will forgive me again using this blog* to provide an update on my role as Chair of the Modern Employment Review set up by the Government. I have an excuse in the work the RSA is doing in this area, with an excellent recent report on self-employment and one forthcoming on the gig economy. 

There is another tie-up between the Society and the Review: In our research and social engagement the RSA seeks to develop credible models of change. Increasingly this means applying our nostrum ‘think like a system, act like an entrepreneur’. Working with the Review members and our team of officials, I am trying to apply this approach to the Review.

The systemic focus on what is driving patterns of work in the UK economy has led us to go beyond immediate reform proposals (although there will be those too) to explore a set of strategic shifts. These are medium-term changes which will be complex and emergent. The Review can describe the destinations needed to bring about better work but not the precise route to be taken. At present we are exploring five of these shifts:

The move from taxing forms of employment differently to taxing labour more consistently. The goal here is to reduce the incentives for business models and forms of employment driven not by productivity or the desire for individual flexibility but by the attempt to avoid paying tax or meeting employment entitlements. There is also a wider case for reform to be made in terms of fairness and fiscal sustainability.

Developing the capacity of Government to provide services and support to the self- employed. Through Government-accredited platforms – delivered by private, voluntary or cooperative providers – self-employed people could access PAYE services, access entitlements and services, find work and share information. As part of this development, and in the face of disastrously low pension savings rates among the self-employed, Government should in particular explore incentives to encourage self-employed people to opt into NEST. As we move towards a cashless economy, these platforms could also shift the default on paying for casual self-employment thereby helping to tackle that most intractable of policy challenges – the informal economy. 

Encouraging a coordinated sectoral approach to better work. Given the way employment issues and challenges vary across industrial sectors (something we are learning on our national road show), and in line with the direction of its industrial strategy, the Government should encourage and incentivise key partners in sectors – employers, employees, consumer groups – to work together to improve the quality of work and tackle bad practice.

In pursuit of the ideal that all work offers scope for development, the Government should bring together the many useful suggestions for a generic skills framework to develop a unified national approach. Starting perhaps with the generic components of apprenticeships and the frameworks being developed for graduate employability, a set of, say, twelve skill sets such as ‘communication’, ‘enterprise’, ‘creativity’, ‘team working’ and ‘problem solving’ should be agreed. These categories could then be the criteria for identifying and pursuing the individual development potential of all work roles, as well as providing a framework for both formal training and informal learning opportunities (something which could be facilitated by the digital badge approach being explored in the RSA’s City of Learning initiative).  

To ensure the momentum of the Review is maintained and these strategic shifts pursued, the Government should develop mechanisms to ensure a more holistic and dynamic approach to the quality or work in the UK economy, recognising its importance to social inclusion, citizenship and economic dynamism: Much as I am enjoying myself I don’t want to lead another Taylor Review in 2027.

In addition to these strategic shifts the Review will make detailed recommendations for more immediate action in areas like employment status, worker empowerment and the enforcement of rights.

But if these strategic directions reflect the systemic approach of the Review, what about the idea of ‘acting entrepreneurially’ in the pursuit of change? I am considering an initiative – led by the RSA – ahead of the publication of the Review to win support for the very idea of good work. The aim here is to get millions of people, directly as individuals or indirectly through the organisations to which they are affiliated, to sign up to a statement along the lines of ‘all work should be fair and decent with scope for fulfilment and development’. Were such an initiative to gain traction it would provide a vital platform of legitimacy for the Review’s recommendations. There is a risk this will be a damp squib, but I want the RSA to lead the initiative because it aligns with our charitable mission and we can be more dynamic and focussed advocates than Government.

Another example of acting responsively is that the Review should aim to influence decisions being taken now which could make our job easier or harder. That’s why, I wrote to the Chancellor over the weekend to encourage him to connect the planned abolition of Class 2 Self Employed National Insurance contributions to the wider need to address the scale of the disparity between the taxation of employed and self-employed labour.

So I am pleased to see that policy being enacted in the budget. I am also glad that the impact of the changes is progressive; self employed people earning less than £16,250 will be better off. And even more pleased that there is also to be consultation about how to provide access to parental leave payments to the self-employed (this fits with the second of my five themes above). It isn’t comfortable being cited by the Chancellor in the context of what is tax rise for many people I know, but from the perspective of fairer and better work this is the right thing to do.  

And in conclusion….

As I have gone round the country for the Review I have heard many different ideas about what reform are necessary, but there has also been a consensus that we should take the quality of work in our economy more seriously. This growing concern reflects the rise of in-work poverty, the sense that bad employment practices are out of keeping with 21st century expectations of individual dignity and autonomy and the urgency of thinking afresh about the purpose of work as the revolutionary impact of technological change becomes clearer.

It is a great privilege for me to be leading the Employment Review and tapping into what feels like a growing national mood. It will be even more exciting if we can use this as an opportunity to demonstrate the potential of ‘thinking like a system and acting like an entrepreneur’.

*This is a revised, post budget, version of a blog posted earlier today.

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  • When looking at the question of how different 'forms of employment' are taxed the Employment Review team must explore how sole traders,  limited company contractors and  limited liability partnership contractors (sometimes called personal service companies or PSCs) use recruitment agencies to source their work assignments.  If a contractor is truly self employed/genuinely in business on his/her own account for tax, you might wonder why they would need a recruitment agency to source their clients and pay their invoices?  The truth is that not many roles, where agencies are involved, are truly self employed roles.  Some may be highly paid and highly specialised but that doesn't mean those filling them are genuinely in business on their own account for tax when doing so.  Indeed in my experience a much smaller proportion of PSCs working through agencies are genuinely self employed than reap the tax benefits of being so.  Shouldn't all temporary and contract agency workers, regardless of the type and/or level of job they do, be paid by the agency supplying them subject to the normal PAYE and NICs rules?  In being so they would be eligible for all worker rights including paid holiday, statutory sick pay, statutory maternity and paternity pay and so on.  Those who are genuinely self employed can go on providing their services direct and if the new Off-Payroll rules are extended from the public into the private sector as well, making the user client liable for any false assessment of the tax status of a role, the wood will soon become distinct from the trees. No-one is stopping those who are genuinely self employed from being so and nobody wants to do anything to hinder flexibility in the labour market (that is one of the genuine gifts the recruitment industry has given to UK plc), but PAYE temporary workers supplied by agencies provide and enjoy the same degree of flexibility as PSCs, they are just paying employment taxes and enjoying worker rights. This is a huge and complex topic with many vested interests.  However the Employment Review will be incomplete if it does not address this issue.

  • "All work should be fair and decent with scope for fulfilment and development." A great statement, but the word 'decent' seems to me to belong to a rather outmoded, white-collar lexicon that immediately renders the statement less inclusive than it wants to be. There are millions who won't connect with 'decency' as a particularly desirable attribute of their jobs. It's not quite the right word. I wonder if something like the following might represent a more general aspiration: ‘All work should be fairly rewarding with scope for fulfilment and development.’

  • This is indeed very detailed and very much reflects the thinking that self-employment is gradually becoming a key contributor to the economy entrepreneurialism. However, I am sure this is not confused with those who have been driven to 'self-employment' simply for some employers to avoid proper employment due-diligence and employee care. There needs to be somehow that clear distinction between self-employment by way of  vs an uber style self-employment. 

  • A lot of very good thinking in this, which I hope will have some influence when the review is submitted to Government. However, I believe more attention should be paid to those areas of employment where 'entrepreneurialism' is not strictly valid. People who become doctors or nurses, teachers at whatever level, social workers, policemen and women, priests or firemen and women are mostly not motivated by entrepreneurial ambition, and yet their contribution is vital to the economy. One hopes a model might emerge which recognizes the importance of this sector to the economy at large.

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