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    • Dear Rachel Reeves, this is what the CIPD wants to hear in this week’s Budget
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    Dear Rachel Reeves, this is what the CIPD wants to hear in this week’s Budget

    Umito Posted on

    The Chancellor’s Budget will be a key moment for this new government to outline how it intends to deliver on its ambition to generate economic growth and improve living standards.

    Against a backdrop of slow growth and grumbles about the government’s negative economic tone over the summer, this budget could represent an important reset moment for the prime minister and his chancellor. And most importantly, it will set the context for next year’s spending review.

    The government will have to exercise prudence in order to support public services, stimulate economic growth and balance public finances.

    To achieve these objectives, the Budget will need to set out the direction of a new economic strategy that can help increase growth and productivity across all sectors and regions of the UK, while supporting green transition efforts.

    Chancellor Rachel Reeves recognizes this and has highlighted the importance of increasing the diffusion of technology and best management practices into less productive businesses. However, surprisingly little emphasis was placed on this topic in the recent government report. industrial strategy green paper.

    If the reports are accurate, growth may need to be revived in the face of headwinds from higher employer National Insurance contributions and as businesses adapt to significant changes to employment law, as planned the new labor rights bill.

    This means it is even more urgent for the government to make the policy changes needed to help employers invest more in the skills and wellbeing of their workforce and to drive technology adoption.

    Combat the skills shortage and increase apprenticeships for young people

    Major changes to skills and apprenticeship policy are planned, to help support improvements in vocational training and address critical technical skills shortages. Skills England must meaningfully consult employers on the design of the new Growth and Skills Levy to ensure it strikes the right balance between increasing apprenticeships for young people, upskilling the workforce and tackling critical skills shortages.

    We have also called on the Government to build on its Youth Guarantee and introduce an Apprenticeship Guarantee to provide a level two or three apprenticeship opportunity for all young people aged 16 to 24 with the necessary qualifications. According to our researchalmost 90 percent of employers would support this proposal. Other changes we would like to see in this area of ​​the budget include better pre-apprenticeship training and new incentives for small businesses to encourage them to undertake apprenticeships.

    A more flexible levy and an improved vocational education and training system can provide a basis for supporting more business investment in the skills the economy needs.

    Solving the UK’s ‘innovation adoption’ problem

    Closely linked to skills, innovation is another area that needs to be fundamentally rethought. The UK is performing well and investing heavily in innovation under a range of measures, with R&D tax credits costing taxpayers more than any other OECD country.

    However, new ICPD Research points out that our underperformance lies in the “diffusion of innovation,” where new technologies and best management practices are poorly adopted across the economy.

    Addressing the UK’s innovation adoption gap requires as much attention to improving innovation adoption in mainstream workplaces across the country as it does to R&D and high-tech industries. We have called for a new £50 million social partnership fund, which sector bodies could use to improve their capacity to support collective action to improve management capabilities, skills development and technology adoption .

    We have also called for a review of public business support as a first step towards developing a cost-effective and accessible business support service capable of providing high quality advice to SMEs on the capabilities needed to drive innovation and growth.

    Additionally, we want the government to establish and fund a limited number of “labor productivity pilot projects” to develop innovative approaches to human resource management and technology adoption in the public sector that improve efficiency and effectiveness.

    These types of policies, aimed at rebalancing the innovation strategy in favor of a wider diffusion of innovation, could be financed by relatively minor changes to the UK tax credit system, which, as the facts show, is plagued by significant levels of fraud and what economists call a “windfall effect.” For example, abolishing a tax credit scheme called Patent Box, which offers a lower rate of corporation tax on profits attributable to intellectual property, would save £1.5 billion per year and would eliminate a system that has been widely assessed as showing little evidence of increase. any public value.

    Efficiency gains from the R&D tax credit system could also be used to finance much-needed improvements to another key foundation of the economy, namely the labor market enforcement system.

    Improving the UK labor market enforcement system

    The government has recognized the need to improve labor market enforcement through its proposal to create a Fair Work Agency. However, improving enforcement will require a comprehensive strategy that also includes the work of the Health and Safety Executive and the Equality and Human Rights Commission. There is also a need for additional funds to increase the number of labor market inspectors and measures to improve the labor court system.

    In addition to these changes, it is necessary to increase the resources available to Acas, to strengthen its capacity to support employers, particularly SMEs, to help them understand and comply with the new regulations.

    The CIPD has called for the Acas budget to be doubled to £120 million per year to support the development of a more effective labor market enforcement system that can contribute significantly to improving standards overall employment figures.

    The Budget marks a pivotal moment for the Chancellor as she sets out her ambition to achieve inclusive and sustainable economic growth that extends beyond a limited number of sectors, industries and locations. As she observed in her More conference earlier this year, “a strong economy cannot rely solely on the contribution of a few companies at the forefront”‘.

    The CIPD will continue to work with government and consult with its members to be the voice of the humanities profession and help chart the path to sustainable economic growth.

    Ben Willmott is Head of Public Policy at the CIPD

    Get the latest on the plan to make work pay from the CIPD’s public policy team.

    Umito
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