Budget 2017: Chancellor’s ‘forgotten workforce’ fuels Britain’s productivity problem

Mark Beatson, Chief Economist for the CIPD, the professional body for HR and people development, comments on today’s Budget announcement:

“The Chancellor said this was a Budget for the next generation and the result is that today’s workforce has been largely forgotten.”

On putting the next generation first:

“The Chancellor is right to want to build a solid future for the next generation but the solution to the UK’s productivity problem lies largely with this generation, some of which still have another 40 or more years of work ahead of them.

“We simply cannot afford to wait twenty years or more for new skills from future generations to arrive. We need to look at the very real skills challenges that the UK is facing now and how the Government and employers can work together to address them by upgrading the skills of the existing workforce.”

On productivity: 

“The Chancellor rightly said that “our nation’s productivity is no more and no less than the combined talents and efforts of the people of these islands” but went on to only talk of infrastructure and largely structural changes to education as the means to solve productivity.

“The solution to the UK’s current productivity challenges, and the future of work itself, is human. Simply getting people to work more quickly by reducing their commute time might reduce stress levels but we need people to work smarter, not harder or for longer. We must look more closely at how people are performing at work; whether their roles provide challenge and the opportunities to use their initiative and develop new skills.

“Measures such as the Apprenticeship Levy and the National Living Wage in isolation are unlikely to deliver sustained improvements in productivity. Financial measures can provide the incentive to increase productivity, but businesses usually need other types of support as well if they are to turn intentions into reality."

On falling unemployment:

“The Government cheered today’s fall in unemployment, and rightly so, but we have to look beyond simply getting people into work. We have to look at how we’re developing people at work as well, and this must involve a focus on skills and improved leadership and management capability. The increased cost of doing business – through the National Minimum Wage increase, the introduction of the National Living Wage and employer pension contributions – could make employers more cautious about hiring extra staff.”

On small businesses:

“There was plenty in the Budget for small businesses to welcome in the form of cuts to capital gains tax, relief on business rates and a further reduction in the rate of corporation tax.

“However, changes to taxation and balance sheets alone aren’t enough to make businesses thrive. Both government and employers really need to get under the skin of how people are performing at work, the barriers that prevent them from being productive and how we can improve the skills and potential of the British workforce. We know that incompetence or bad management causes about half of corporate failures and these Budget measures could even reduce productivity by extending the lives of badly run businesses.” 

On the new Lifetime ISA:

“As well as giving people the means to save for their retirement and their own home, we need to look at how people can be given the means to invest in themselves. The Government should consider a ‘Help to Learn’ fund that can give individuals at different stages of their working lives access to the careers guidance, training and development they need to move into skilled work and progress at work.”

“The new Lifetime ISA makes the assumption that people have enough money left at the end of the month to put aside for retirement or buying their own home, but we know this is a huge struggle for many people. It also assumes that people will make the right decision with their money which could have an impact on people’s efforts to save sufficiently for their retirement.” 

On education:

“While we welcome the Government’s plans to look at teaching maths to age 18 for everyone, our education system fails too many young people by not equipping them with the basic skills needed to be productive workers and engaged citizens.

"Keeping young people in education for longer won’t make them any better equipped to enter the world of work if it’s another year of the same. There needs to be a much stronger focus on the provision of high quality careers advice and guidance to help ensure young people are equipped with the information and skills that help prepare them for the world of work. There must also be enough high-quality alternative to university, including apprenticeships, for those young people who would benefit from a different learning environment." 


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