Charlotte Salomon: Introducing the childcare loan

Parents could choose to stretch childcare payments over time whilst they continue earning the salary they deserve.

Charlotte Salomon is Deputy Chairman Membership for Saffron Walden Conservatives.

They don’t do espresso martinis in Pizza Express: the workaround is to order wine and a coffee separately, together – and alternate. It was my first time out after having children; first time wearing proper outdoor clothes and Weetabix-free hair – and first time realising that the country had an unsolved problem.

Ok, I’ll concede the Government has pushed out well-meaning schemes; they’ve even introduced cosmetic grants to patch up the well-meaning schemes. However, nothing has really stuck to the wall. Try as they may, when it comes to childcare the Government has only tabled pacifier policies rather than practical ones.

My friends and I ate from a fixed menu, pretending we weren’t secretly resenting leaving the house whilst sleep remained a rare commodity – and, although it was difficult, we tried not to talk about our children. Scanning my brain for polite dinner conversation, I reached for normality. “When are you going back to work?”

I’d assumed it was an acceptable question to ask women who spoke openly about their careers pre-maternity leave. However, it struck an uncomfortable tone.

“What’s the point?” One mother replied. “My salary would barely cover nursery fees, along with extra travel expenses and possible late fees because y’know— trains. It doesn’t make sense.”

She was right. It doesn’t.

Many new parents are finding themselves in something called “pay-neutral” work. This means that their childcare and travel costs wipe out their entire net earnings. So when did returning to work after having children become a luxury only afforded to Britain’s wealthier parents?

The Government decided to switch out of childcare vouchers in 2017 for something called tax-free childcare. It gives parents up to £2000 per year per child, if eligible. This operates through an online Childcare account provided by National Savings & Investments (NS&I) in partnership with HM Revenue and Customs (HMRC). Households on low incomes who qualify for Working Tax-Credits are entitled to claim ‘the childcare element’, giving them up to 70 per cent of approved childcare provider costs.

Not all are eligible for tax credits, and considering that a full-time childminder will charge an average weekly rate of £217.30, and that a nursery could charge £232.84, parents in full time employment need to budget £10,000 – £12,000 per child (- £2000 if eligible for Tax-Free Childcare) on top of their basic living expenses.

The median annual income in the UK, according to the Annual Survey of Hours and Earnings, is £28,677 for full-time employees. If childcare isn’t affordable, is the Government really cutting the cost of living?

We encourage our young people to take out student loans, get an education, learn skills, build and climb the career ladder. We’ve built affordable homes and propped them up with help-to-buy schemes. This Government wants to see Generation Rent finally turn things around: this is the Government determined to see savings settling in millennial bank accounts. So why abandon them in parenthood?

According to research from the National Childbirth Trust (NCT), 29 per cent of women and 14 per cent of men have found that returning to work after having a child isn’t financially worthwhile. And it’s not as if the gods of good fortune are acting in new parents favour; one in four employers believe it’s fair to ask interviewees if they plan to have children, and the Equality and Human Rights Commission (EHRC) approximate that 54,000 women are losing their jobs each year after having children.

Three in five professional women returning to work after a break are likely to move into lower-skilled or lower-paid roles, experiencing earning reductions of up to a third (PWC reports); and according to the Fawcett Society, for each year a mother is absent from the workplace, her future earning potential will fall by four per cent.

Losing employees to parenthood isn’t free. If you underline the costs of hiring and training new staff, redundancy payouts and lost productivity, parents being pushed out the workplace are inflicting costs up to £280 million a year. And the echoing effect from the higher earnings and spending power lost could mean the economy is losing out on an extra £1.7 billion, according to PWC.

But there is a solution.

The Childcare Loan would possess the same skeletal model of the student loan, allowing parents affordable childcare up until the age of five when fulltime education kicks in (and beyond, if after-school childcare is required). Four years of fulltime childcare demanding £900+ in ongoing monthly payments – made bite size.

Giving parents the freedom to return to work quashes anxiety about potential lost earnings, missed pay rises and forfeiting promotions. Utilising the Childcare Loan, parents could choose to stretch childcare payments over time whilst they continue earning the salary they deserve.

Paid back over ten years (for example), fulltime childcare with the added 6.3 per cent interest could cost a family £4252 a year. Under the Tax Free Childcare Scheme, this would be almost double. Like the student loan, variants could be introduced to ensure that people on lower incomes pay a lower interest rate, and parents who become unemployed can ‘pause’ the loan until they return to work.

It would initially cost the Government over £2 billion to get those 54,000 women back into work by employing the Childcare Loan method, but when faced with the economic impact of losing workers to parenthood the Chancellors’ purse strings might loosen.  And there is that infamous rumour that we may have £39 billion up for reassignment.

Virginia Crosbie: Mentoring is a very Conservative way to change someone’s life

Make your skills, experience, and contacts available to a disadvantaged young adult.

Virginia Crosbie is Director of Women2Win, Deputy Chair of Kensington, Chelsea and Fulham Conservatives and the CPF Champion for Social Mobility.

Did you make a New Year resolution? To eat less red meat? Exercise more or drink less? I have a request. Can you make a positive difference to someone else and add mentoring to your list?

January is National Mentoring month in the US, and I hope to introduce it here. Why? Because I would not be where I am now without the help of others, and in particular one special person who made time for me  when I needed it most: as a child.

I know mentoring makes a difference; I experienced it first hand. My grandfather was a miner in Merthyr Tydfil for 47 years, my grandparents lived in a council house, and my Mum worked in a jam factory. In my family it was normal to leave school at 16.

Paul, a local Conservative councillor, sat with me on Monday nights to go through 11+ papers. Thanks to Paul’s encouragement I gained a place at Colchester High School – a leading Grammar school – and became the first person in my family to take A levels and go to University, where I read Microbiology.

Paul taught me the value of hard work and ability, and he inspired me to succeed on my own merit. Those Conservative values have guided my life through a successful career at GlaxoWellcome, where I worked in the production of interferon; UBS, where I was one of its youngest directors; and HSBC, where I won awards as a leading pharmaceutical analyst.

He also taught me to give something back. I now teach maths to disadvantaged adults at the Masbro Centre in Brook Green, giving them the skills to succeed. For me being a Conservative is a way of life. It is about working hard, identifying your skills,  using them to ensure you are successful rather than a burden on society, and then helping those that are less fortunate than yourself.

Most people don’t ever get to thank the people that truly inspired them, but I had that privilege recently when I had the honour of speaking with Bernard Jenkin MP at the Harwich and North Essex Conservative Women’s Group.

It’s the area where I grew up. I spoke about my early life and all the people that have helped and supported me. I spoke about my job training dolphins, what it was like standing as the Parliamentary Candidate in Rhondda, and how I now arrange ‘Make It Your Business’ entrepreneur events for my Grenfell community. Sitting in the front row with tears streaming down his face sat Paul, the Conservative councillor who changed my life. In the spirit of full disclosure – I cried too.

I am privileged to live in Kensington. It’s a great community, a place of exciting contrasts that draw people to live and work here. The average annual salary is £123,000 – the highest in the UK – and yet there is an 11-year life expectancy gap between the north and the south of the borough. I live next to Notting Dale ward, which is ranked as one of the most deprived wards in the country. Grenfell Tower stands in this ward.

The Grenfell tragedy will always cast a shadow over our community. I realised early on that we had to work together to give the residents of the Tower hope, and was intent on providing mentoring and support. People would ask me ‘How can I help?’ and I would reply: “Open up your address book – speak to your work about having a Grenfell summer student”. Over the summer of 2017 I arranged work placements for students from the Grenfell community with City banks, PR companies, local businesses… and even Number Ten!

Supporting young adults has enhanced my life in so many ways. I have made life-long friends and learned about many different businesses, from gardening to yoga to teaching Spanish and Ghanaian textiles. I play a real part in my community and I am excited about helping shape its future. Talibah, one of my former mentees, said: “Virginia believed in me. She encouraged me and supported me and dragged me. Now I have my own textile business and it is me who is encouraging other women to develop their talents.”

Mentoring has taught me to listen, to work with people where they are, to work out their needs, and to work to add value to their lives. It has also helped me to develop as a teacher. It takes passion and strength to run a classroom, imagination and humour to keep students motivated, and empathy and patience to provide useful feedback.

A mentor changed my life and gave me access to opportunities that have enriched and shaped my journey. I want others to have the support I had at a critical time. If you are reconsidering your New Year resolution – or the decision not to make one – please think about mentoring a disadvantaged, talented young adult.

Reach out and find someone that can’t find you: local schools, youth groups, or charities are a great place to start. Together let’s make January mentoring month in the UK – and make some people cry.

Jobs miracle, jobs mystery

Is it reasonable to expect more political benefit from record numbers in employment, record numbers of vacancies, and wages rising faster than inflation?

This week’s labour market statistics delivered a triple whammy of good news.

As David Freeman of the ONS summarised the figures:

“The number of people working grew again, with the share of the population in work now the highest on record.

“Meanwhile, the share of the workforce looking for work and unable to find it remains at its lowest for over 40 years, helped by a record number of job vacancies.

“Wage growth continues to outpace inflation, which fell back slightly in the latest month.”

In other words, the workforce are employed at record levels, their opportunities to find jobs are at record levels, and that combination of employers chasing employees is driving wages up in real terms. The jobs miracle is continuing to change people’s lives for the better.

And yet, it doesn’t seem to be having the same effect on the Government’s electoral prospects. I wondered a year and a half ago if the good news from the labour market was simply losing its electoral appeal. Since then, some of the possible factors I mulled – most crucially the lack of wage growth – have improved, but there is still no sign of rising economic indicators lifting the Government on their tide.

So what is going on?

It’s certainly the case that this Government talks far less about its economic record than its predecessor did – partially due to its different character, partially due to the all-consuming battle over Brexit. The economic ministers – Philip Hammond and Greg Clark – whom you might expect to take up the loudhailer on economic good news are often busy talking up economic risks as part of their campaign against No Deal, which is unlikely to help.

Meanwhile, the dark days of the recession, which loomed so large in the Coalition’s time, disappear ever further into the distance. In the years since, people have come to feel that this type of job market is the basic standard to expect, not a combination of records all at once. At the same time, myths – like the persistent belief that the majority of new jobs are zero-hours – have caught hold very deeply. It’s not unreasonable to look beyond the quantity of jobs and demand that quality should improve, too, but we are in a peculiar cultural position where people routinely talk as if the former doesn’t matter.

Finally, there’s a third possible answer, which is rather more grim from the Government’s point of view. What if there is a political bounce from the boom in employment, the strong supply of job vacancies. and a real terms rise in wages? What if that positive effect on millions of people’s lives has already given a boost to Conservative ratings and poll numbers?

After all, if it is peculiar that it has not materialised, perhaps the answer is simply that it is hidden from view. That would mean that the current opinion polls are the product of the jobs miracle – and rather than push the Prime Minister into a commanding lead, so dented is her reputation that even this important good news has only been sufficient to keep her neck and neck with Corbyn. Now that is a cautionary thought for anyone pondering a General Election.

Steve Double: May has misread the mood of the country over free movement. Now is the time to drop hostile rhetoric.

There is a now a window of opportunity for a better, more sensible and cross-party debate than the one we had in the referendum campaign.

Steve Double is MP for St Austell and Newquay.

Since the nation voted for Brexit in June 2016, our resolve to respect the results of the referendum by leaving the EU and the European Single Market has been unwavering. Talk of a second referendum has dominated the airwaves lately, but there is scarcely any evidence this would deliver a decisive result – the kind that some politicians are seeking in order to rethink Brexit – were we to have another vote tomorrow. If anything has changed, it is the way the British public views migration – its importance and its impact on our economy and communities.

Bringing an end to freedom of movement, one of the four indivisible and fundamental freedoms of the EU, has been a priority for the Prime Minister in her negotiations. Migration ranked highly among the reasons for the people’s vote to leave the EU. “We have no control over migrants coming in”, “open borders has not worked”, “they are putting a strain on local infrastructure and services” – these were the concerns many of my colleagues and I heard time and again on the doorstep and at town hall meetings, and the more-than-unexpected results of the referendum spoke volume about the extent that these concerns were felt across the country.

While it is certainly true that leaving the EU presents us with a once in a lifetime opportunity to build a fairer and more effective migration system that meets our needs and returns control of migration policy from Brussels to London, Number Ten would be misguided if they thought nothing has changed. Public attitudes have changed in profound ways and these changes have taken place on three levels.,

First, the Brexit vote has given rise to a more positive view of migration. Fewer people think that there are too many migrants in the UK, as Britons increasingly recognise the benefits that migrants bring to the country and are assured by the government’s commitment that there will be a reduction in migration levels.

Recent evidence from the National Conversation on Immigration has shown that our citizens are ‘balancers’, on the whole, who see the gains and pressures of migration when weighing up its impact. They appreciate the skills they bring in, the jobs shortages they fill and their contribution towards public finances. They understand that there are realistic trade-offs when it comes to controlling migration and know what is at stake for British businesses. There is also a broad consensus for a fair and humane migration system that places the welfare of families and individuals at its heart: The vast majority of us are ashamed of the treatment of the Windrush generation and none of us want to see administrative failures and incompetence lead to a repeat of the scandal.

While it is true that controlling migration remains to be an issue of concern for Leave voters, it is no longer the case that migration is seen by the public as the most salient issue. Two weeks before the nation went to the polling booths to decide our future with the EU, a YouGov Most Important Issues poll found that 56 per of those surveyed saw “Immigration & Asylum” as the most frequently-cited issue facing the nation – more than 10 points ahead of any other issues including the Economy, NHS and Public Health, Defence and Terrorism. This figure was most recently recorded at 29 per cent.

Third, with employment rates hitting record levels and virtual full employment across many sectors, businesses have raised legitimate concerns that they do not want an oversimplified approach to migration which will leave them worse off with fewer workers. Removing the numerical cap on Tier 2 skilled workers visas would be a good start, but any salary-based threshold must be driven by evidence and not imposed arbitrarily.

Furthermore, the importance of certain lower-wage roles for our economy and society needs to be adequately considered. In my constituency of St Austell and Newquay in mid-Cornwall, for instance, the seasonal nature of our visitor economy as well as fish stocks, fruits and vegetables mean that a flexible and dynamic migration system for temporary low-skilled labourers will be absolutely crucial to ensuring the continued success of the Cornish economy.

It appears quite clear that the approach from Number Ten has been that as long as we stop free movement people will view that as delivering on the referendum. However, regaining sovereignty over our own laws and trade has instead become a more important issue. The notion of ‘control over our own borders’ has moved away from a debate around migration to one focused on the so-called backstop and the integrity of the union.

The Prime Minister has misread the mood of the country by overemphasising and prioritising the stopping of free movement of people. The draft Withdrawal Agreement has not captured the shift in public mood with regards to migration, and fails to keep our commitment to regain sovereignty to the UK – a precondition to any true Brexit that delivers on the result of the referendum.

In a rare admission of fault, the Prime Minister told MPs recently that she was wrong to have referred to EU citizens as “queue jumpers”. Though she might have been able to get away with that kind of language in 2016, the British people have since moved on and have come to better appreciate what is at stake in the migration debate and migration’s impact on our country.

Despite the many irreconcilable differences that exist between Remainers and Leavers over Brexit, there is a now a window of opportunity for a better, more sensible and cross-party debate around migration than the one we had in the referendum campaign. The public wants us as politicians to lead the way in improving the quality and quantity of discussions on migration.

It is absolutely right that as we leave the EU we do take back control of our borders. But having control over our own migration policy is not the same as stopping all migration. We should be able to manage migration in a way that suits our own economic and social needs and concerns whilst having a compassionate approach to those fleeing war, persecution and oppression. We should also be able to better ensure we have the infrastructure and services to meet any increase in population and protect those communities who have in the past felt overwhelmed by migration.

With the Immigration White Paper now published, the time is now to drop this hostile rhetoric against those who come legally to our country to contribute in our workplaces and communities, and begin a more mature and measured conversation around how we can put together a post-Brexit migration system that works for everyone.

Dan Watkins: Six reasons why the Conservatives deserved to win that no confidence vote yesterday

It’s not hard to find reasons to be frustrated with the Government, but we are still delivering for the British people.

Dan Watkins was a three-time Conservative Parliamentary Candidate in Tooting and now campaigns with Kent Conservatives.

Everything is dominated by Brexit at present, but behind the scenes the Government is still continuing to deliver the Conservative’s domestic policies, much to the benefit of the British people. So here are six reasons why the country should be positive that the Government survived the vote of no confidence.

Tackling the Deficit

We should never forget that when we came to power in 2010, the Government couldn’t afford to pay for its public services and was building up a colossal amount of debt which future generations would have to pay. Years of spending restraint, combined with healthy growth of the economy, mean that Britain’s deficit is less that a fifth of what it was and debt as a share of the economy is coming down every year.
While we remain in power, the public finances stay in balance, reducing debt and allowing us to spend less on interest and more on public services.

Improving School Standards

Through the past eight years we have been reforming teaching, boosting Academies and opening Free Schools. We know these reforms are working because school standards are getting better and better, as measured by Ofsted, as well as international league tables, which we are steadily climbing. This year will see more Free Schools open and more Academies created, ensuring more children go to outstanding schools and receive a world-class education.

Boosting NHS Funding

The NHS is a huge organisation with a huge budget. As the population gets older, the demands upon it increase and the only way we can continue to fund its expansion is by growing the economy and investing those extra tax receipts into it. We have just detailed our Long Term NHS Plan, but it requires an extra £20 billion pa and this is only possible to find if we keep growing the economy. Another Labour-led recession would stop this extra funding dead in its tracks.

Creating an Enterprise Economy

From the moment we took office in 2010, the Conservatives have been making Britain the most business-friendly economy in the world. We have made it easier to start a company and to employ staff, cut business taxes and invested in research and development to support our high growth sectors such as creative, life sciences, automotive and more. Britain has been assessed by Forbes as the best country in the world to start a business. Every year we remain in Government is another year when Jeremy Corbyn’s Labour can’t undo our good work.

Protecting the Environment

Less heralded than other areas perhaps, but the results of our policies in energy and the environment have yielded excellent results. Renewal energy has expanded dramatically, carbon emissions have been slashed, plastic pollution is being tackled with radical action, and animals at home and abroad have won new protections. Michael Gove and DEFRA have more initiatives underway this year which will ensure that we continue to lead the international community on animal welfare and cleaning the environment.

Helping People into Work

Work is the bedrock of living a fulfilling life and this Government has done more than any other to give more people the opportunity to work. While welfare reforms have ensured that work always pays, the National Living Wage ensures that work pays even more.
Record numbers of people have been lifted out of the lowest paid work and the evidence shows that policies like Universal Credit help many more long-term unemployed into jobs. We need to have fully rolled out and bedded-in these initiatives before Labour get to power, so that it is much harder for them to reverse them.

At the present time, it’s not hard to find reasons to be frustrated with the Government, and indeed Parliament more generally, but when we’re out on the doorsteps campaigning, let’s be clear that the Conservatives are still delivering for the British people.

Universal Credit. Noble aim, thorny problems – and Rudd’s decision. If the scheme is to work properly, it must be paid for.

If you appoint Duncan Smith to the post she now holds, as Cameron did in 2010, it follows that you must fund his plan fully.

ConservativeHome spoke yesterday to Conservative MPs in marginal seats about Universal Credit.  One switched-on Parliamentarian told us that food banks in his seat hate the new scheme and that job coaches love it.  He said that the former claim it pushes people into debt, homelessness and destitution.  And the latter counter that makes it easier for them to help benefit claimants move into work and get better-paid jobs.

Both perceptions can reflect reality.  It was never going to be easy to make a major change to the system which is reliant on people reporting changes to their income in real time, complete with new computer systems to enable this to happen.  This helps to explain why Universal Credit, originally intended to be fully operational by 2017, will now not be so until 2023.  The payment poses particular challenges for claimaints migrating to it from what Ministers call the legacy system.  Last autumn, the Resolution Foundation calculated that 2.2 million families were expected to gain under the system and 3.2 million to lose, with single parents especially adversely affected.

The Government has chucked transitional relief at Universal Credit.  Ministers argue that claimants can take on more work to increase their income.  Philip Hammond announced more support and an increase in work allowances in last autums’s Budget.  But the bottom line is that too many people are being paid late: last summer, the National Audit Office said that it a fifth of those expecting their first full payment were in this position.

A Commons vote is due on transferring three million claimants from the old to the new system.  David Cameron had a small majority, but his Government was vulnerable to defeat on welfare-related and many other issues: remember George Osborne’s U-turn on planned changes to tax credits.  Theresa May has no majority at all.  A handful of backbench protesters could sink the change.  Amber Rudd thus had little alternative but to postpone the vote, and has duly done so.  She will now seek Parliamentary approval for a pilot plan that transfers just 10,000 people from the old to the new system.

The operation of Universal Credit is complex, but the politics are simple – or straightforward, at any rate.  The Universal Credit system is the brainchild of Iain Duncan Smith’s work in opposition at the Centre for Social Justice.  It has a visionary aim: to roll six benefits into one, make the system more simple and flexible, and improve incentives to work.  Writing on this site last autumn, Alok Sharma, the Employment Minister, complained of three cliff-edges in the legacy system that deter claimants from seeking work, and reported that 86 per cent of people on Universal Credit are actively looking to increase their hours, compared to just 35 per cent of people on Jobseekers Allowance.

If you are going to appoint Duncan Smith as Work and Pensions Secretary, as Cameron did in 2010, you cannot do so without allowing him the room to implement his scheme.  And if you are going to do so, it follows that the Treasury must take the funding consequences on the chin.  It didn’t.  Think back to that Osborne tax credits U-turn.  The reason for Duncan Smith’s resignation in 2016 was precisely that the then Chancellor was not prepared also to reverse planned savings to disability benefits (which in turn impacted upon Universal Credit).

Amber Rudd is the fifth Secretary of State for Work of Pensions to hold the post since he left – a turnover rate of about one every six months.  She has started by doing what every new Cabinet Minister should do if confronted by a policy problem: namely, to promise that she will listen and learn.  There is more to this than the usual bromides.  Rudd is particularly sensitive to the position of women in the system.  She will campaign for more money: Downing Street’s Brexit-driven weakness may thus well be Universal Credit’s gain.  That she is on broadly the same wavelength as the Chancellor over EU policy can’t do her cause any harm.

Writing on ConservativeHome last autumn, Tom Clogherty of the Centre for Policy Studies identified what new money could do to help realise Duncan Smith’s goal: a report from the think-tank, he said, “advocates bold action on Universal Credit, suggesting that the taper – the rate at which benefits are withdrawn against each pound of post-tax earnings over any work allowance – should be cut from 63p to 50p. This would give a huge boost to the lowest earners, while also giving them a strong incentive to increase their hours and make progress in the workplace”.

Separately, senior backbenchers and former ministers are piling on pressure for an end to the benefits freeze.  A coalition of five former Secretaries of State, ranging from Nicky Morgan to David Davis, made the case last year.  Davis said that the freeze contradicts “the basic Tory notion of having a robust safety net and an effective ladder out of poverty.”  Rudd can be expected to make the same case in private.  Whatever your take, one thing is certain.  If Universal Credit is to be introduced in the first place, it must be paid for.

Laura Farris and Guy Opperman: How to tackle the UK’s productivity challenge

Employee ownership, flexible working, and offering ‘mid-life MOTs’ are all simple, scalable, cost-effective policies ministers can support.

Laura Farris is an employment law barrister and was a Conservative PPC in the 2017 General Election. Guy Opperman is Parliamentary Under-Secretary of State for Pensions and Financial Inclusion, and the Conservative MP for Hexham.

In his Budget announcement on 29 October 2018, Philip Hammond informed Parliament that 3.3 million jobs had been created since 2010 – a rate which comfortably exceeds a thousand jobs per day. This is an extraordinary achievement.

Contrary to the attacks of his opponents, data published by the Office of National Statistics (ONS) on 25 October 2018 reveals that the proportion of those in insecure or low-paid jobs (defined as less than two-thirds of median pay) is now at its lowest since records began in 1997.

Yet despite the spike in employment figures, productivity growth trails that of our major competitors. Measured by output per hour, the UK is approximately 13 per cent below the G7 average.

The reasons for this are varied:regional variations in performance; uneven economic demand; and the under-utilisation of digital technology are among the contributing factors. But it was not for nothing that Hammond told the BBC this month that productivity growth was the “single most urgent challenge” facing the economy in the years ahead.

We don’t pretend there is a silver bullet. However, we have argued that businesses are missing opportunities to maximise the efforts of those they employ and could reap benefits by re-thinking the way they remunerate and engage their workforce.

Employee ownership

First, there is untapped potential in employee ownership schemes. These may be well-established payment structures in some organisations, but for the most part remain the preserve of senior staff.

We state at the outset that, unlike Labour, we are not advocating the seizure of capital from shareholders or the imposition of rationed returns to employees. Indeed, McDonnell’s model of employee ownership is a double rip-off: punishing those who have set up their own companies by confiscating large chunks of them, and punishing workers by minimising their ownership stake so that government can pocket the rest.

But we do think that the basic principle of giving workers a meaningful stake in the enterprises in which they work is a good thing and should be expanded. Properly harnessed, employee ownership schemes can have a transformative effect on financial security and business productivity.

Until relatively recently, there was little empirical data as to their impact. That changed last year when the US National Center for Employee Ownership published a report on the impact of Employee Stock Option Plans (ESOPs). The study involved a cohort of 9000 workers from similar socio-economic backgrounds who been followed from 1997 to 2013; a period spanning most of their professional lives.

The results showed that by 2013 those who worked for companies with ESOPs had a 92 per cent higher median household wealth, 33 per cent higher income from wages, and 53 per cent longer median job tenure that those who did not. Significantly these differences applied regardless of gender, ethnicity, family or marital status – cutting across some of society’s major fault lines.

But more striking still was that the ESOP companies that employed them typically demonstrated much higher levels of financial growth over the same period, suggesting that employee ownership enhanced the productivity of the workforce and created value for both businesses and staff.

To increase take-up the Government could extend efficiencies in existing tax arrangements, with employers building them into incentive structures to reward length of service or performance.

Mid-life MOT

Second, and aligned to our first point, we think that employers stand to gain from playing a more proactive role in their employees’ long-term financial well-being. With people both working and living longer, there are plenty of reasons for employers to help staff recalibrate their financial planning and draw up long-term professional objectives.

Aviva, for example, recently undertook a “mid-life MOT” pilot scheme involving a cohort of employees over the age of 45. It offered staff 12 hour-long classroom sessions covering wealth, work, and well-being, and plans to roll-out the scheme to all qualifying staff from 2019.

This is not just window-dressing. Research by Mercer revealed that just 32 per cent of employees in the UK feel that they have the mechanisms in place for financial security in retirement; a figure that falls to 26 per cent for women alone. Anxiety about financial security is the leading cause of work-related stress, itself a major contributor to absenteeism and poor-productivity.

Schemes of this kind can be tailored to meet individual requirements, for example for female workers who might have taken career breaks for family or for older employees who want to re-shape their working patterns. Long-term such schemes can reduce the attrition of experienced and productive talent and enhance the contribution of older members of the workforce.

Flexible working

Finally, survey after survey now shows that the benefit most valued by employees (after pay) is flexible working. A 2018 report by the recruitment consultants Badenoch and Clark found that this preference was now shared nearly equally between women and men but was still the benefit that employees felt most reticent about requesting.

There is scope for radical thinking in this area. Some firms in Silicon Valley are setting new standards in flexible practices. Asana, the software business, sets goals and objectives four months in advance. Employees have no fixed working hours or limits to the time they can take off. Daily attendance is encouraged but beyond that employees set their own schedules and performance is assessed by the attainment of KPIs.

Dropbox has gone one further – abandoning its old system of paid annual leave altogether. Its employees must meet targets but are entitled to unlimited paid time off and “no meeting Wednesdays” which are ring-fenced for uninterrupted work. Both have seen impressive results on productivity. “We have found that when employees are given flexibility, they are far more highly engaged” says Melanie Collins, Dropbox’ global head of people.

Such innovative working methods are unusual in the UK but those who would write this off as a Silicon Valley quirk miss the point. Armed with a smartphone and a laptop, employees across a range of sectors are able to discharge their duties remotely and value the opportunity to do so. We think employers seeking competitive advantage in talent and productivity should actively promote their approach to flexible working as part of the recruitment process.

Conclusion

The recommendations we have made are simple, scalable and cost-effective. If British businesses want to get the best from those they employee, we think these are potential solutions.

Rachel Maclean: We must address the role of life-long learning in the future of work

The oft-maligned ‘gig economy’ is delivering flexibility, innovation, choice, and value to millions. But for it to keep doing so, we must adapt.

Rachel Maclean is the Conservative MP for Redditch.

Fancy a pizza? Need to get home late after the work Christmas party? Most of us think nothing about turning to our phone, and opening one of those sharing economy apps that Liz Truss has referred to on Twitter as the ‘staples of my life’.

This week’s Deliveroo High Court decision, however – in which a previous ruling was upheld that its riders are self employed rather than workers or employees – reminds us of some of the big questions around the future of work.

Within self-employment, the ‘gig economy’ is a small but growing part of daily life. Peer-to-peer companies like Uber, Deliveroo, and TaskRabbit have become everyday solutions, offering cheap and reliable goods and services, quickly.

The Department of Business, Energy and Industrial Strategy estimated earlier this year that 4.4 per cent of the population of Great Britain, or 2.8 million people, participated in this form of work over the past twelve months. Working this way offers many people more freedom, a better work-life balance, and greater flexibility. Businesses – and small businesses, in particular – can benefit from a more mobile and flexible pool of readily accessible labour. These benefits are also passed on to consumers, who enjoy increased choice, better experiences, and decreased expense.

New entrants to the market drive up standards and drive down costs, as innovation meets demand and drives growth. Meanwhile, more traditional business models are forced to update, becoming disrupted and newly open to competition, as they lose monopolistic control. There is much to be celebrated, here.

However, the gig economy is often painted by its critics as a framework that systematically exploits vulnerable low-skilled workers, and it is important to acknowledge that this can sometimes happen. But reforms and protections, including the banning of exclusive zero-hour contracts, have, thankfully, decreased instances of genuinely exploitative practices. These practices would be supported by few people with a true interest in the maximisation of freedom: I certainly don’t support them, and neither does the party I represent.

Moreover, common fears about economic insecurity and financial hardship related to participating in the gig economy often lack evidence. In a recent paper by Public First, for instance, it was reported that Deliveroo riders ‘can typically earn more than they would in the alternative work available to them’. And, while the CIPD’s 2017 report To gig or not to gig?’ emphasises that ‘49 per cent of gig economy participants report they are living comfortably or doing alright, in contrast to 56 per cent of other workers’, the percentage of gig economy participants who self-report as fitting in the most comfortable bracket (‘living comfortably’) is very slightly higher (17 per cent) than the percentage of other workers who do so (16 per cent).

Rather, the key sticking points in this debate focus on questions around employment status – as pointed up by the High Court case this week – and the place for further regulation.

My new FREER paper, out today, examines these questions in detail, and proposes sensible freedom-enhancing ways to address them. Moreover, it also emphasises the way in which it is not only the self employed who value and can greatly benefit from increased flexibility in their work. According to a recent YouGov survey, only six per cent of people now work a ‘normal 9-5 week’, and Timewise reported earlier this year that 87 per cent of employees want to work flexibly.

In this dynamic age, however, individuals must keep up to date with the new skills necessary to contribute and achieve fulfilment across a longer working life span. The future of work is unbreakably tied to learning and skills. Yet the frameworks of our education system have remained largely unchanged since the industrial revolution. It is time for a fundamental debate on the prevailing notion that, for most people, education finishes in their late teens or early adulthood.

My paper, therefore, also engages with the ‘lifelong learning’ discussion. The recent serious fall in the number of part-time and mature students should be of concern to us all. We must accept that the learner of the future will not be an 18-21-year-old on a full-time three-year university course, and recognise the benefits and challenges that this change will bring. This will be key, not least, for the country to meet the skills challenges ahead. Of equal importance, our current approach underplays the vast intrinsic value of good education to everyone, of any age.

We urgently need to reassess the critical yet complex roles that both work and education play in our society. My paper, which is the first of a FREER stream focused on the future of work, aims to kickstart an essential conversation.

Johnny Mercer: Ministers are asking for my vote next week. But I’m asking them for a vision – now.

I, like many colleagues, react badly to the Party’s decision to try and strong-arm me into voting for this deal.

Johnny Mercer is a member of the Defence Select Committee and MP for Plymouth Moor View.

I’ve no idea what to do. I’m looking for hope – for inspiration from the generation of Cabinet ministers and seniors members of our Party who led us to this point.

I came into politics for fairly niche reasons. I fought for years in an unpopular war and, fed up of the politicians feigning interest, I decided to run for office. My city of Plymouth – I’m passionate about it. Whilst my wafer-thin experience in politics helps me to retain a degree of perspective in these tumultuous times, it has also caught me out. I regret not being clear enough in some areas: for example, I never said that I wouldn’t vote Conservative in that notorious interview in October; I simply stated that a young, busy family attempting to assert itself in a competitive and chaotic world would probably take one look at the current political offerings and simply not take the time out to go and vote, because those offerings are so poor. But of course that view can be twisted. And I should have known that.

None the less, this perspective has also led me to some pretty dark conclusions of late. I have been firm in my criticism of this administration – one of which almost everyone knows my description, and one by which I resolutely stand by (though will not repeat). There are many people in this country who want – indeed need – a competent compassionate modern Conservative Government: I must speak out for them. The fear that they may turn to a Labour Party led by Jeremy Corbyn – particularly in Plymouth – is the single motivation for all of my interventions. Nothing more and nothing less.

But amidst all this, I have been looking for a vision – at no moment more so than now. There are plenty of colleagues who have come into Parliament to extract Britain from the European Union. They respect my endless diatribes about how this country treats its military, and in return I entirely respect them and their views on Europe. I remain ambivalent: the EU is an issue of course, but it is not the issue of our modern times. Many more people join the Conservative Party, as I did, for reasons other than Europe. I want to leave the EU – we must leave. But for what?

And I ask that not mockingly, but with a genuine desire to hear the answer. I, like many colleagues, react badly to the Party’s decision to try and strong-arm me into voting for this deal. The idea that a group of senior people in our Party who lost a 21 point lead in a self-indulgent general election – to Jeremy Corbyn – are advising me to now listen to my constituents, having singularly failed to do that themselves ever since David Cameron left office, is genuinely amusing. The arrogance of failing to answer the question – what is “Plan B”? – as part of a suite of unthinkable threats including a general election, no Brexit, or a no deal catastrophe, actually push me away from supporting this particular deal. The clear deception of red lines crossed without acknowledgement, and the idea of the UK being a junior partner in a relationship that we cannot unilaterally leave, leaves agnostics like me are looking for an alternative.

But I can’t hear it. How are my constituents – who voted almost 70 perc ent to leave the EU – how are their lives going to be better off in April compared to March, immediately after this momentous decision? How will being outside of the European Union help our core mission as modern Conservatives – to meet the challenges of a modern Britain that is changing so fast. Why or how is food going to be cheaper for some of my poorest families? How will being outside the ECJ help my small entrepreneurial businesses in Plymouth? How will our economy thrive to provide the jobs – the single biggest accelerant of life chances in our most deprived communities like mine. How will Brexit provide the engine that drives a health service so desperately in need of reform in places like Plymouth?

I could go on, but I won’t. At some point, someone, somewhere in a position of influence in this Party will wake up and realise that the politics of fear will only take us so far. It is easy to scare people into voting for you. It is harder to sell a vision, to advocate, to persuade – to lead people to a brighter future. But that is the key question this week. Can a case be made for a bright alternative, or are we going to accept this deal as ‘the best we can do’, ‘could always be worse’, answer that won’t encourage a single swing voter to vote for us at the next election? I wait with interest. More importantly, the country does.

A riposte to the Project Fear narrative promoted by The Economist

Theresa May has achieved the remarkable feat of uniting the nation. Leavers and Remainers of all stripes have come together to condemn the Withdrawal Agreement she has negotiated with the EU. This should not really be a surprise: she has committed the country to a semi-permanent colonial state in which we stay in the Customs […]

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Theresa May has achieved the remarkable feat of uniting the nation. Leavers and Remainers of all stripes have come together to condemn the Withdrawal Agreement she has negotiated with the EU. This should not really be a surprise: she has committed the country to a semi-permanent colonial state in which we stay in the Customs Union and Single Market but without having a say in the rules. There is a way out but only if the EU agrees, something they are unlikely to do unless any future trading relationship works to their advantage.

Far from taking back control, the Prime Minister has agreed to the UK being a rule-taker from the EU for the foreseeable future, under the supervision of the European Court of Justice. And the icing on the cake is that, in return for these ‘privileges’, she has also agreed to hand over £39bn of taxpayers’ money to the EU with absolutely no guarantee of any long term agreement on trade. Even the right to take decisions over fishing in our water has been left up for grabs.

The Agreement is so demonstrably bad that barely any MPs outside of the Government payroll have come out in its support. Rather than accepting that the Agreement is unlikely to be passed by the House of Commons, Number 10 seem to be focusing their strategy on making the alternative, namely leaving without a trade deal, sound as terrifying as possible. The hope is that, if MPs and the public are sufficiently unnerved by the prospect of ‘no deal’, they will come round to reluctant support of the flawed Withdrawal Agreement.

The scary predictions made by the Treasury and others during their campaign of Project Fear during the referendum proved to be an embarrassing failure of almost legendary proportions. So the decision to embark on Project Fear Mark II is, should we say, brave. But this does not appear to holding anyone in the Establishment back.

Last week, that once-respected periodical The Economist published a leader going all out to support the Prime Minister’s line of attack. We are warned that no deal could lead to “food rationing”, “medicine shortages”, “the demise of farming” and the “collapse” of manufacturing. The planes will all be grounded of course but (Hallelujah) the leader writer thinks that the EU might graciously allow us to operate a few flights to “carry stranded citizens home”. The Economist seems to have gone ‘full Project Fear’ and as Robert Downey Jr might have said in Tropic Thunder, ‘you should never go full Project Fear’!

To some extent, such emotive nonsense deserves only ridicule. But despite The Economist’s recent reputation as being the lapdog of the Remain establishment, its influence cannot be underestimated and it is important to engage with its arguments about the risks of no deal, so let’s consider a few of its claims:

1. “Reneging on the £39bn in obligations to the EU would devastate Britain’s international credibility”

Even under no-deal, the UK will of course honour its obligations under international law. However, it is clear that our strict liabilities are very significantly lower than £39bn and, if there is no Withdrawal Agreement, we will be under no obligation to fork out such a sum as even the Remain-dominated House of Lords EU Financial Affairs Committee concluded. The exact amount due could end up being decided by independent arbitration, something that would take a number of years. In practice, the UK may well be willing to make a generous settlement once a reasonable trading relationship with the EU has been agreed. The EU desperately needs the UK cash to avoid a huge hole in its budget. So, far from ruining our relationship, leaving with no deal and no payment will help to focus EU minds. They will certainly have every incentive to avoid creating more difficulties for the UK than necessary. From the UK’s point of view, savings on the £39bn bill can be put to good use in the months leading up to and immediately after Brexit with the aim of minimising the short run disruption that may occur as we re-work our systems to cope with new arrangements.

2. “Britain has slipped to be one of the slowest growing members of G7”

Surely The Economist could at least have got basic statistics like this correct? It does not take much to look up the latest OECD data which reveal that the UK is the third fastest growing G7 economy this year, ahead of all the major EU economies. At the same time our employment rate continues to be at a record high, wages are growing again, and in a good sign for future growth, foreign direct investment into the UK in 2018 has been by far the highest of any European country. This is all a far cry from the doomsday scenarios predicted by the Treasury in the first round of Project Fear. There is a great deal of confidence in the long term prospects for the UK economy, irrespective of whether we strike a formal trade deal with the EU.

3. “No deal would swap membership of the EU’s single market for the most bare-bones trading relationship possible”

World Trade Organisation rules are certainly not “bare bones”. They are designed to facilitate trade and they already provide the basis for about half of UK exports and imports. Further, leaving without a deal would allow us to embark straight away on independent trade deals with some of the fastest-growing countries in the world. Remember that we operate a trade surplus with the EU of close to £100bn per year. Once we have left the EU on 29th March, the EU will face heavy pressure from member states such as Germany and the Republic of Ireland to ensure that they strike a trade deal with the newly-independent UK as soon as possible. There is no reason why, like other countries such as Switzerland, Norway and Canada, the UK should not end up trading freely and tariff-free both with the EU and with other countries around the world.

4. “WTO rules require the enforcement of a hard border between the Republic of Ireland and Northern Ireland”

The Economist is being particularly irresponsible in perpetuating this myth. WTO rules do not require border checks on goods – that is a matter for each country to decide. Currently, ‘intelligence led’ inspections by the UK affect only 4% of non-EU goods shipments, Ireland only 1%. The remainder are cleared immediately by computer-based procedures. There is no WTO requirement for these checks to involve physical infrastructure at a border and they can be carried out away from the border. Time and time again in Select Committee hearings, Jon Thompson, Chief Executive of HMRC, has told MPs that there is absolutely no need for the UK to erect a hard border under any scenario, including leaving without a deal. Either The Economist is ignorant of this or, even worse, they know the truth but refuse to report it.

Responding to Project Fear arguments is a bit like playing whack-a-mole: no sooner has one claim been demolished than another – equally implausible and twice as bizarre – surfaces. The Economist leader is no different in this respect and it is impossible to respond to every point in just one article.

The key point is that virtually all Brexiteers would prefer to leave the EU with a trade deal in place and most are willing to agree to a transition period to help achieve this. However, no-one can force the EU into a deal and if they are unwilling to countenance a sensible withdrawal arrangement then we must implement the result of the referendum without one. Doing so will certainly not be the economic disaster suggested by Philip Hammond and The Economist.

The trouble with the EU negotiations is that Theresa May never really believed her mantra that “no deal is better than a bad deal”. The deal she wants us to sign up to is a very bad deal indeed so leaving with no deal is looking increasingly like the best option available. The UK should embrace the economic opportunities it will bring, even if that means doing so without Theresa May at the helm.

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