Jennifer Platt, Assoc CIPD
JRP HR Consultancy Services Limited
Both the Conservatives and Labour have a number of manifesto commitments which would impact significantly on employment rights. Some of the Conservatives' commitments include the following:
to protect workers rights that are derived from EU law after Brexit;
to ensure that the National Living Wage increases in line with current targets;
conduct a review of the so-called "gig" economy;
increase worker representation on company boards;
curbing executive pay; and extending the scope of protection against discrimination for those with mental health conditions that are "episodic and fluctuating".
Labour's manifesto contains some commitments which would significantly increase the protections afforded to workers and employees including: guaranteeing all rights after Brexit;
banning zero hours contracts;
ensuring that all workers aged 18 or over are paid the National Living Wage (which would be £10 by 2020);
increasing free childcare provision to all two-year old children;
abolishing Employment Tribunal fees;
extending employment rights to all workers from day one and making them equal to employees;
and strengthening equalities legislation and pay transparency.
Clearly if Labour were successful, there would be a significant impact on employment law and human resources. If the Conservatives win the election the scale of change will be less significant but there is still scope for some interesting developments. Things will obviously become clearer after the election on Thursday 8 June!
GE 2017: Strange Manifestos for Strange Times
By Alex Davies - Research Analyst
When Theresa May called a surprise General Election, the decision seemed to be a sound one, at least from her own parties’ point of view. What has followed however, has been one of the most simultaneously fascinating and despair-inducing campaign periods in recent history, and certainly in my lifetime. The political spectrum, often described as a line or a circle – where far left and far right crossover, now feels more like an ever-shifting 4 dimensional chess board. The manifestos themselves represent three parties wrestling not only with their own ideological justifications for being, but also the massive disruptive effect of Brexit. When the election was called, the consensus was that the Tories would swipe a massive majority, that Labour would suffer enough to see them almost reborn, and the Lib Dems and UKIP would basically fade away. Since the manifestos have been launched however, things seem to have changed.
The Conservatives’ manifesto reads like an unfinished draft of a party having an existential crisis. It has been said for a while that Labour’s return to the left would allow for the Tories to surge leftwards and take control of the centre ground. I have said for a while that the risk of a party spreading itself thinly across the centre is that they end up proposing policies that don’t really appeal to their own ideological base, but don’t really appeal to anyone else either. Early on there is an attempt to redefine what Conservatism is all about – what some are referring to as “Mayism”. It is as much a rejection of free-market capitalism a la Thatcher as it is the pseudo-socialism of Corbyn: a manifestation of the centre-grab and likely alarming to supporters of either.
Whilst the intention here is to sound pragmatic, the results are a bunch of policies that line up in no discernible place politically. We have the social care reform, acting essentially as an inheritance tax that “strong and stable” May flip-flopped on so easily. There is the Miliband-esque commitment to interfere in energy markets, which is a bad idea whoever proposes it, but is an especially un-conservative one. There is tinkering into corporate governance, calls for companies to publish gender-pay gap differentials, a commitment to regulate the internet and the return of fox-hunting which is opposed by 84% of the public– all concerning to liberal-minded Conservatives. Some of the fiscal side of things is more traditional –reductions in taxes, increases in the personal allowance, ending of the pensions triple-lock, but then we have the utterly bonkers re-affirmation of the totally impossible sub-10,000 net immigration target. The Tories’ Brexit plan is well known and includes the “no deal is better than a bad deal” line that is so evidently untrue, but seen by some as a necessary bluff. Finally, there is the total lack of costings – a gamble from the party that they are trusted on numbers where others are not, but an enormous set of goalposts for their opponents. The manifesto harks back to Churchill’s line that “manifestos should be a shop window, not a shopping list”, offering little detail and only broad objectives, but the current feeling is that this approach may have hurt their campaign.
Labour have been smart given the circumstances. Their Brexit policy has long been a mess, but has been firmed up for the manifesto. It is essentially to do exactly what the Tories will do, but for more moral reasons that don’t exactly hold up to scrutiny (We won’t be able to duck state aid rules, for example). Labour do however reject “no deal is better than a bad deal”, which is a clever move, but for some will call into question their ability to negotiate effectively. They have also moved away from any intention to retain single market membership, which would more adequately suit their main objectives, but by committing to take stricter control of immigration (whilst rejecting “bogus targets”) they have finally concluded that membership is unfeasible. By broadly aligning themselves with the consensus on immigration and where Brexit is headed, they have pulled focus away from their haphazard Brexit stance towards everything else in their manifesto, and everything else in their manifesto looks to absolutely appeal to the typical Labour voter, and potentially many others given their opposition.
There are tax rises for the rich, a VAT freeze, an “excessive pay levy”, corporation tax rises and a tax on derivatives dealings, a new package to increase provision of free childcare, an end to the freeze on welfare benefits, the abolition of tuition fees and reintroduction of maintenance grants, social care reform at a cost of £7.7bn, repealing of the bedroom tax and a roll out free school lunches for pupils at a cost of £6.3bn. Then there are the promises of nationalisation that caused a bit of controversy by not being included in the costings, which Labour defended by stating that the money would come through capital borrowing and would not affect balance sheets.
There are issues. The practicalities of actually carrying out their renationalisation policy are likely to be more difficult than people expect, and the policy bets on the idea that nationalised industries automatically become more effective than privatised ones, which is evidently not always the case. Labour are thin on exactly what changes to current systems would take place following the buy-outs to make the whole thing worthwhile. The Tories have been criticised for not including costings whilst Labour have, but Labour’s costings are ambitious to say the least, including absolutely no sign of the behavioural effects that the policies will have. All evidence we have suggests that tax changes of this kind struggle to raise any of the extra cash that they propose to, and Labour is particularly ambitious with the outcome of their anti-avoidance measures, which again usually fail to do anything like what is expected. When Labour’s total extra revenue raised and total extra spending both handily add up to exactly £48.6bn, their ability to deliver on their promises may be called into question. Labour’s stance on boosting employee rights is also problematic. It presents all workers as victims of evil corporations when many businesses treat their staff well, and may be seen as tarring all companies with the same brush.
Finally, we have the Liberal Democrats, who much like the Conservatives are gambling on their bold Brexit stance. The Lib Dems are now the only major party to fully support continued membership of the single market following Brexit. They also position themselves as the only party to give the people a say over Britain’s future and the chance to oppose a hard Brexit by promising a referendum on the final Brexit deal with an option to remain. Whilst their position on the single market is laudable in a way, the LDs offer little in the way of confidence that what they propose is possible, particularly the idea that they can promise an option to remain in a second referendum. The LDs are going hard for the 48%, but evidence suggests that their plan may not be working, with support for Brexit to go ahead now supposedly at around 68%.
For the most part, the LDs do a good job of straddling the policies of their opponents, proposing £14bn of new spending pledges compared to Labour’s £48bn. Their policies include a 1p rise to all income tax band rates, raising £6bn to be ring-fenced for the NHS and social care services, a £100bn infrastructure package, a £5.7bn package for schools, a lifting of the 1% public sector pay cap and a reversal of some welfare cuts including the bedroom tax and universal credit. The LDs have also gone hard for the young vote, promising a new “rent to own” scheme and deposit loans for first time buyers, as well as a discounted young person’s bus pass.
The LD’s boldest policy is their plan to legalise and regulate cannabis, something which has been on their agenda for a long time, but may prove divisive amongst supporters. The policy is of course in the footsteps of other similar and successful policies in eight US states, and the LDs predict the policy will be able to rid the streets of high-potency “skunk” and raise £1bn in revenues. They also plan to repeal the Psychoactive Substances Bill, which has been widely criticised for driving previously regulated and legal substances such as “Spice” into the black-market.
In summary, we have our two main political parties offering what could be described as false choices. The Conservatives are counting on Brexit winning them the election, but by trying to claim the centre from Labour have managed to offer up a set of policies that have no ideological coherence and may struggle to find a strong bed of support. Labour on the other hand, return to their comfort zone and offer the policies that their supporters will want, but contrast it with a muddled Brexit policy that may ultimately undermine their own objectives. The Liberal Democrats offer a medium ground and gun hard for those who would prefer us not to Brexit or those that believe a hard Brexit is a means not worth the ends. Ultimately though, the manifestos are thin on economic reasoning, and will do little to reassure people that the parties have a plan for tackling some of our long-term challenges like productivity, skills, infrastructure and re-balancing the economy. This is an odd and unexpected election with new dimensions to those we have seen before, and the manifestos certainly reflect this.
Fixing the skills system: One step forward, two steps back
By Alex Davies - Research Analyst
The failures of the skills system in this country is an issue that we’ve been talking about for what seems like an eternity, and one which doesn’t look to be going away anytime soon. There are all sorts of ways in which the market is mismatching what is demanded with what is supplied, and over the years many things have been attempted to improve how it functions. When the system fails, the stakeholders who lose out include not just businesses who struggle to find the people they need, but young and hardworking people who can so easily be left behind as the demands of the economy change. By not delivering the skilled workers that businesses need to grow, or by training people in skills that aren’t necessarily in demand, the failures of the system impact upon individual livelihoods, as well as growth and productivity within the economy.
A longstanding issue is that of perceptions. We have found for example, that qualifications other than NVQs are generally not considered to be competency based, when they very often they are. We also tend to see too much of a focus on the title of qualification itself, rather than the skills that are actually taught. People who train as hairdressers for example, are often perfectly suited for other customer-facing jobs. When an employer looks solely at qualifications rather than the skills of the individual, both can lose out. On the other end, young people very often do not know the options available to them, seeing construction as being 5 traditional skills rather than hundreds, or not understanding the vast array of routes good maths skills can open up. This again, leads to surplus supply of skills in some areas and massive undersupply in others.
There is also the impact of infrastructure. Young people in particular will often struggle to get to where they need to be to learn the skills they want, particularly when coming from areas outside of city centres. Take Greater Manchester as an example, it is easy to get from say, Bolton to the city centre for a job, but getting from Bolton to Rochdale to train as a plumber is often too difficult to be an option for many. Mayor Andy Burnham’s plan to introduce free bus travel for 16-18’s may ease this in this region, but the problem persists elsewhere and better transport links are always needed.
The future presents its own challenges. The introduction of the apprenticeship levy is well intentioned, but significant questions have been raised about its ability to deliver not just in terms of numbers, but in terms of improving lives and helping businesses function. Will businesses actually use the pot of money they are forced to contribute to? If they do, will it be on delivering new, quality training, or will it just be on accreditation of existing skills? The volume of training has increased over the past decade but with a large focus on particular routes, not delivering the diverse range and quality that is required. It isn’t clear whether the levy provides the right incentives for this to change, or instead if it will simply help the current government reach its apprenticeship targets.
Then of course, we have Brexit to deal with. Many of our industries are heavily reliant on talent abroad, and any changes to immigration policy that makes it more difficult for businesses to access talent will only exacerbate the mismatches we see currently. The problems within the system are obviously multi-faceted, but Brexit has the potential to add a whole new dimension. Whilst the next government will be unable to solve all the problems the skills system faces, it can certainly make small steps in the right direction. With Brexit happening at the same time however, they will need to make sure that it isn’t one step forward, two steps back.
Infrastructure - Connecting for Growth
By Chris Fletcher, Marketing & Policy Director
Say the word infrastructure to a group of business owners and it is highly likely that the vast majority of immediate thoughts would focus on either road or rail structures and systems, maybe for those who export, air travel too.
Mention broadband and you get a look of “of course” across many people’s faces – almost a guilty admission that they had forgotten about this fundamental part of the infrastructure spectrum.
Talk about canals and again you can see the dawning realisation from many that yes these too, the very transport system that built the original northern powerhouse, are also important and should form part of the infrastructure network. It also involves stuff you can’t see such as energy , but without which things pretty much would grind to a halt quickly.
Indeed this article is a result of infrastructure – access to Office on the cloud to write it and then the means to publish this onto whatever device you’re reading it on.
And this is the big problem with a subject as broad as this. It’s all critical at one level or another - you can’t run a modern economy without it but what should you focus on?
Over the last few years rail investment has captured the headlines and most of the funding. It will probably continue to do so as the HS2 build work starts and we continue to push for Crossrail North. Roads, so often at the back of the queue, must start to receive similar levels of investment both at a strategic and local level.
Genuine high speed broadband should be treated in the same way as other utilities and we should not be afraid to explore other modes of connectivity too – so lets have a serious look again at the canal system. It doesn’t need building it’s already there so how can we modernise it?
But why do this? Simply it’s about connectivity – the core aim of the Northern Powerhouse put forward by the then Chancellor George Osborne. If you connect the major economic areas – not just cities – you open up all sorts of possibilities. But you have to be serious about this and you have to recognise that you can’t deliver things overnight without disrupting existing networks.
Work is taking place – think of the Ordsall Chord, the M60 works. But we are in a bit of a trap at present just making the current networks adequate following years of inadequate funding from several governments. But what of future growth?
The investment is there – all parties have recognised this and have committed to major infrastructure investment but money on its own isn’t enough it has to pay for schemes that are truly transformational and have the shelf life to make a difference. How for example can you make sure that journey times from across a huge catchment area are reduced sufficiently to allow easier access to the regions airports? How can you make sure that city centre roads stop resembling car parks? How do you start to integrate the inevitable onset of driverless vehicles?
Tough questions. But throwing money at things doesn’t work without a longer term vision. That vision has to be about connectivity digitally and in the everyday world too. It is an issue that needs looking at completely in the round if we as a country really do wish to move forward.
By Alex Davies - Research Analyst
One consequence of Brexit is that people have started talking seriously about trade again, something this country has arguably not done for 40 years. “Global Britain” is a term that has started cropping up everywhere since the Brexit vote, and now forms major sections of both the Labour and Conservative manifestos. Unfortunately, both are woolly on the issue, basically stating over and over again that we should do more trade with everyone and encourage them to do more with us. We also heard vagaries about the benefits of free trade and reminisces about the corn laws from Liam Fox before he disappeared from existence a few months back (seriously, where is that guy and what is he doing?). There is a lack of detail across the board, and as we can extract from the CETA agreement taking more than seven years, matters of international trade are all about the details. So we might be talking about trade again, but largely it feels like we are missing the point.
Some progress has been made, with the conversation slowly picking up on the fact that what really makes trade happen isn’t reducing or removing tariffs, it’s removing all of the other stuff that gets in the way – the non-tariff barriers (NTBs). It is these barriers that drag trade to a crawl, with companies having to provide all sorts of documentation with their goods, those goods getting stopped and checked at borders, complex compliance requirements and a whole host of other things. Businesses can deal with tariffs, which manifest as an extra line on a bill, but the other hoops they have to jump through are what really discourages international trade, and slows it down when companies are bold and take the plunge. If you’re just talking about tariffs, you’re not talking about trade.
Another issue is communication. “Bonfire of regulations” is a popular term, but when regulations are stripped away the businesses that wrestle with said regulation can only adapt to the changes if they know about them. We’ve heard anecdotes of companies continuing to adhere to paperwork or compliance obligations unnecessarily simply because nobody had told them that they don’t need to do it anymore.
Wouldn’t it be great if there were loads of people who deal with this stuff every day? Who could perhaps help our government figure out how we make “global Britain” a reality? There is – businesses. Obviously, the macroeconomics and minutia of international trade deals will be juggled by people are experts in legislation, but businesses deal with NTBs every day, and are put off exporting to that new market for some reason or another, every day. There is so much knowledge out there in the minds of everyday workers who deal with international legislation, even if they don’t know it themselves. The Chamber network across the UK will attest to this.
This is why in the context of Brexit and potentially a re-imagining of our trade policy, it is vital that the communication between those drawing up new trade legislation and the businesses that will use it is strong. This means ongoing business-led trade support and a recognition of the vast expertise that exists in Britain’s businesses. This means face-to-face time with people who deal with export documentation. It means allowing the Chamber network and other similar organisations to act as a conduit for these types of engagement. Instead of reminiscing about Britain’s maritime past, go and talk to an exporter of widgets from Oldham about their issues, or go talk to a manufacturer who wants to export but doesn’t know how in Tameside. Global Britain starts at home.
Price caps are hard to do
By Alex Davies - Research Analyst
Both the Conservatives and Labour have included energy price caps in their manifestos. It is easy to see why the idea is in vogue. Energy companies have been accused of taking advantage of customers for many years, tempting in new customers with low fixed-term tariffs before switching them to much higher priced standard variable tariffs (SVTs), meaning only those willing to constantly shop around and change providers can stay on the lowest available rates. Unfortunately, price controls have been shown time and time again to hurt those they are meant to protect.
Economics 101 tells us that market-interventionist policies such as price controls are theoretically a very bad idea. In essence, when the price of something is limited to below the market-clearing rate, that product will tend to disappear from the market. By keeping prices artificially low, demand outstrips supply and scarcity increases. We can look to history to confirm this theory. The famous rent controls imposed in New York city following World War 2 Two increased demand dramatically but gave no incentive to suppliers to provide more housing or invest in what they already had, leading to enormous shortages in supply and declining conditions. Price caps on food and construction materials have had disastrous effects in places like Venezuela. The price of fuel in the USA was capped below the market rate in 1973 and the inventory quickly disappeared due to shortages. As Milton Friedman put it: "We economists don't know much, but we do know how to create a shortage. If you want to create a shortage of tomatoes, for example, just pass a law that retailers can't sell tomatoes for more than two cents per pound. Instantly you'll have a tomato shortage. It's the same with oil or gas."
There are likely to be all sorts of third-round effects to an energy cap that would ultimately hurt customers. The biggest of these would be reduction in competition, where small suppliers who truly benefit consumers by taking on the big boys simply become unsustainable, and new entrants into the market would be deterred. Suppliers may also raise prices in anticipation of the cap, or just raise the prices of their cheapest tariffs in order to make up the shortfall. Not only would these effects disproportionately hurt the poorest in society who are currently on the cheapest rates and pre-payment meters, it would reduce the incentive for people to shop around for the lowest prices and in turn reduce the incentive for suppliers to offer cheaper deals. Furthermore, a cap on prices would act as a cap on the upside potential of any investment by suppliers without altering the downside potential. This could lead to a reduction in much-needed investment into innovation, new technologies and energy infrastructure to make savings. Overall, the power of the big suppliers over the consumer would be increased.
Whilst we know that price controls are bad, there are different ways of doing them, such as with a relative price cap– a more interesting and marginally less scary proposal that has been advocated by Policy Exchange and promoted by John Penrose MP. The idea is that the cap is a limit on the differential between the highest tariff charged by a supplier and the lowest, ending the enormous price jumps that hit customers when they jump from fixed-term deals to SVTs. The policy may seem a smarter way of doing a cap, but it is a price control nonetheless and the third-round effects are simply more obfuscated. Again, we can look to history. Something similar was actually tried in 2008 when Ofgen banned the use of ‘unfair price differentials’ between tariffs, after determining that they existed within the market to the tune of £500m, and all sorts of bad things happened as a result. The price differentials were reduced primarily by suppliers increasing the prices of their cheapest tariffs whilst leaving the most expensive ones untouched. Ofgem at the same time introduced constraints on direct marketing and door-to-door sales, which saw a reduction in consumer engagement with the market – particularly amongst the poorest who relied on such tactics to find lower tariffs. Suppliers further mitigated the costs of the policy by introducing a whole host of new tariffs that baffled customers, reducing engagement even further. Overall, the rate of switching fell by 50%. The policy was scrapped in 2012, but many of its effects on the behaviour of both customers and suppliers linger on.
Unfortunately, neither party gives any real detail on how their caps would work and so it is difficult to properly assess the trade-offs involved. What we do know though, is that price controls have failed over and over again, and the parties are going to have to do something really clever if they want it to be different this time.
By Alex Davies - Research Analyst
Politics, like Economics, is all about trade-offs. In all areas of policy, there is general agreement as to the broad objectives, but enormous differences of opinion in how we can move from our current position towards these ends; more specifically, there is disagreement about how the trade-offs should be managed. It is because there are different routes to any desired outcome and any number of trade-offs included in the process of getting there that organisations like ourselves overwhelmingly call for pragmatism rather than any particular policy. Politics often gets in the way of this approach, as we see time and time again with those from the left or from the right choosing to support or oppose a particular policy based on who proposes it rather than the trade-offs it addresses.
This is how things usually work, anyway, but Brexit is making things a little more complicated this election. We have broad agreement on some things – trade for example. Nobody wants us to export less, and as far as I know everybody would like us to trade with everyone else on the best possible terms. Even so, we have disagreements on the route we should take and how the trade-offs should be played – do we try for a new arrangement, sever ties and rebuild, or stay in the single market at least for the time being? Then we have an issue like immigration, where neither the public nor political spectrum has agreement on the desired outcomes or the means to achieve them.
The businesses we represent understand trade-offs and have to deal with them every day. Businesses are pragmatic by nature, having to regularly deal with constantly shifting conditions in order to survive. What businesses really don’t like is surprises. Any obstacle is surmountable if there has been adequate time to assess and plan effectively. This is why when it comes to Brexit, businesses prioritise stability over all else; a new world is acceptable if it can be seen from a distance and if the old one isn’t blown up in the meantime.
Alas, with a beast as complex as Brexit, and going into prolonged negotiations with another 27 countries, the communications between political parties and the business world is perhaps not conducive to the stable environment that business craves. Parties differ on everything from the final destination, to how long we should take to get there, to whether we should be prepared to walk into the unknown. To be frank, they are signalling in an effort to keep their options open. All we ask is that when down to the details, pragmatism in the name of stability reigns supreme.
If we are going to leave the single market, let’s make sure we can hold on to as many of the benefits it has delivered as possible before doing so. If we can’t do that, let’s make sure that businesses understand the changes and have time to adapt. Let’s make sure that those businesses currently taking advantage of trade deals can continue to do so before we try to make any new ones. If we can’t do that, let’s take time to reassess the trade-offs and see what the options are. Let’s not be tied down to any particular strategy or destination, and give businesses the signals they need to accommodate whatever change may come.
The final destination is still up for debate, but the new government should do its utmost to make sure that the path there is as smooth as it needs to be to maintain a stable environment for business. A sudden shift of environment in exchange for the promise of a long-term gain does not work for the day-today operations of a company, and many simply cannot survive it. For businesses the downside risk of Brexit really lies in the means, not the ends.
By Christian Spence – Head of Research & Policy
Policy is hard enough without politics, but politics trumps reality. It’s not ideal, but it’s the way the world works, and those of us who work in this world are long-used to dealing, ultimately, in the same way that business does, with the world as it appears today, and not as we’d like it be. However, that doesn’t mean that we’re not working to try and shape that world, to influence it, and to guide the government and its advisors on how they should go about achieving both their and our ideal objectives.
I’ve long maintained that political parties of all persuasions, government (both national and local), the third sector and the business world have far more in common than any one of those sectors would ever admit. Even when political parties from diverse backgrounds debate issues, if you can get past the often tedious adversarial nature of their debates, they all want broadly the same things, and those are often broadly the things that we want: a successful economy, good housing, vibrant culture, efficient infrastructure, rising prosperity for all, and efficient government. Where the disagreements, often heated, come about, is in the different ways we think that these things are best achieved.
This is, for people like me who earn our living from policy design, the hard part. The nature of politics mean that our political leaders often resort to easy phrases, talking publicly about the parts of policy and legislation that are tangible to the general public, essentially reducing complex issues to short soundbites. When talking about business taxation, all energy is focused on corporation tax (single number, nationally applied) but never about business rates, employer national insurance contributions, energy levies, pension costs or the other myriad ways in which the tax system affects business. Politicians focus on “fair contributions” whilst missing the important ways in which the system incentivises businesses to behave in certain ways.
And even more challenging is the way in which different systems interact, and this is routinely missed by our politicians and even by the civil service. The previous government’s draft industrial strategy is a good example. It mostly correctly identifies some of the structural issues that our economy faces (though, as they’ve been the same ones for forty years, it shouldn’t have been difficult) and presents them as a number of discrete pillars. But it misses the way in which those vertical pillars are inextricably bound together with horizontal ties, and this is both what’s important and what we generally refer to as the overall business environment.
Policy on tax, employment, skills, the environment, planning, transport and the wider legal and compliance framework all interact with each other, weaving a complex web. Too often, individual policies are considered in isolation, without looking to see how other policies will affect their implementation. And far too often, solutions to issues are sought by passing new legislation in the same area, when easier solutions can be found by repealing legislation from a different one, the issue being not any on piece of policy, but the horizontal ties where they interact.
For me, this is where the policy world is its most interesting. The realisation that a piece of legislation that deals with commercial tenancy agreements may be causing some of the problems that appear in a different area, such as the revaluation of premises for business rates, is a huge eye-opener. It doesn’t mean that solving the problem is any easier, but it does mean the solution may well not be where government is looking for it.
That’s why we’ve called for government to reassess the way it looks at legislation and regulation. Everything must be considered in the round, so policies, laws, and individual government departments stop working in isolation, and instead try to see the world from someone else’s point of view. As so often, the solution lies in recognising what the best of businesses do already. It’s about developing a mature pragmatism, understanding that one person doesn’t know everything, and devolving decision making to those are best placed to respond. As someone once said, collaboration is the new competition; the best businesses have already learnt this. Our challenge is to get government onto the same page.
Putting devolution and place at the heart of decision-making
By Christian Spence – Head of Research & Policy
Devolution is a word which inherently makes people feel comfortable. It is natural to feel that decisions made more closely to where you live or work will inherently be better than those made from somewhere more remote. If it means anything, it speaks to being personally better connected to, or better able to influence, the people or institutions that take decisions that affect your life. But, for decades, this has not been how local government works in the UK. The UK is one of the most centralised developed economies, with local authorities having little control over their own budgets or even decision making, with Whitehall mostly dictating to town halls the services that they must provide and how money should be spent.
But, when the past few years have seen lots more powers being devolved from Westminster to our local town halls, does any of this matter? In short, we believe it does. We have been supportive of the measures introduced since 2009 to allow greater decision-making locally, where we know that greater knowledge of our needs and opportunities exists. Since George Osborne gave birth to the idea of the Northern Powerhouse, Greater Manchester has seen a number of deals with central government that have given it greater control over transport, housing, skills, spatial planning and others, in exchange for having a directly-elected mayor. Two weeks ago, Andy Burnham was elected to that position, bringing a powerful figurehead to the city region in a mould similar to that of the mayor of London.
This is an enormous step forward in a relatively short amount of time, and we welcome the achievements in getting this far, but this must be seen as only the first step. The powers that areas like Greater Manchester have gained through their combined authorities and mayors must continue to increase and, crucially, these must come with adequate resources to allow for their successful deployment. The policies of the coalition government from 2010 saw local government income from Whitehall halved, and the ability for local areas to raise additional revenue to support projects and schemes remains close to zero. If devolution is to be something real, and not just decentralisation, then local areas must be given greater fiscal control.
This is easily said, and hard to deliver, but business can play a crucial role in supporting its development. We have long campaigned for a stronger, more direct democratic role for the business community in local governance; our conversations with business show that together the sector is more pragmatic than many politicians believe. The success and variety of business improvement districts across the UK (and we have a growing number here in GM) show that business is prepared to contribute to its local economies and communities, providing that their voice is heard and that they can shape the programmes that they are supporting.
The time has come to further stretch the apron strings that connect local areas to Whitehall. Our town halls across the country must be freed to make more decisions locally, their business communities must be engaged at the heart of the debate and, as taxpayers, we must ensure that their voice is heard as loudly as that of citizens, but we must also ensure that the resources needed to make this a success are also available. If Whitehall is not prepared to transfer those to us, then we must be empowered to create our own.
For more information on GM Chamber’s Campaign for Business 2017 and the asks for further devolution, see our Resources page.
We're collecting a range of viewpoints and opinion pieces as we lead up to the general election.