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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

    Online Niel Posted on

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

    Against a backdrop of sluggish growth and grumblings about the government’s downbeat economic tone over the summer, this Budget could provide an important reset moment for the prime minister and his chancellor. And importantly, it will set the stage for next year’s spending review.

    The government will have to walk a careful path to support public services, stimulate economic growth and balance the fiscal book.

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

    Chancellor Rachel Reeves recognizes this and has emphasized the importance of increasing the spread of technology and best management practices in less productive firms. However, surprisingly little emphasis has been placed on this in the recent government industrial strategy green card

    If the reports are correct, the increase may need to start against the headwinds of increases in employers’ national insurance contributions and as businesses adjust to significant changes to employment law as set out in the new Work Rights Act.

    This means there is an even more urgent need for the government to make the necessary policy changes to support employers to invest more in the skills and wellbeing of their workforce and to drive technology adoption.

    Tackling the skills gap and increasing apprenticeships for young people

    Major changes to skills and apprenticeships policy are planned to support the improvement of vocational training and address the critical technical skills shortage. Skills England must consult meaningfully with employers on the design of the new growth and skills levy to ensure it strikes the right balance in increasing youth apprenticeships, improving the workforce and tackling critical skills shortages.

    We have also called on the government to build on the Youth Guarantee and introduce an Apprenticeship Guarantee to provide a level two or three apprenticeship opportunity for all 16-24 year olds with the necessary qualifications. Conformable our researchnearly 90% of employers would support this. Other changes we would like to see in this budget space include improved pre-apprenticeship training and new incentives for small firms to encourage them to take up apprenticeships.

    A more flexible tax and an improved education and training system can provide a basis to support more business investment in the skills the economy needs.

    Tackling the ‘innovation adoption’ problem in the UK

    Closely related to skills, innovation is another area that requires significant rethinking. The UK performs well and invests heavily in innovation across a range of measures, with R&D tax credits costing the taxpayer more than any other OECD country.

    Still, new CIPD research points out that where we underperform is ‘diffusion of innovation’, where new technologies and best management practices are poorly adopted across the economy.

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

    We have also called for a review of publicly funded business support as a first step towards developing an accessible and cost-effective business support service that can provide SMEs with high-quality advice on the capabilities they need to drive innovation and growth.

    In addition, we want to see the government establish and fund a limited number of ‘workforce productivity pilots’ to develop innovative approaches to public sector people management and the adoption of technology that improve efficiency and effectiveness.

    These types of policies, to help rebalance the innovation strategy towards more widespread innovation, could be funded by relatively small changes to the UK’s tax credit system, which evidence shows has been affected by significant levels of fraud and what economists call “deadweight”. For example, scrapping a tax credit scheme called the patent box, which offers a lower rate of corporation tax on profits attributable to intellectual property, would save £1.5 billion a year and eliminate a scheme that has been rated on large scale as showing little evidence of addition. any public value.

    The efficiency of the research and development tax credit system could also be used to fund much needed improvement of another key foundation of the economy, which is the labor market law enforcement system.

    Improving the UK labor market enforcement system

    The Government has recognized the need to improve labor market enforcement through its proposal to establish 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. Additional funding is also needed for more labor market inspectors and measures to improve the labor court system.

    Alongside these changes, there is a need to increase the resources available to Acas to increase its ability to provide support to 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 £120m a year to support the development of a more effective labor market enforcement system which can make a significant contribution to improving overall employment standards.

    The Budget is a key time for the Chancellor to set out his ambition to achieve inclusive and sustainable economic growth that cuts across a limited number of sectors, industries and places. As he observed in her More lecture earlier this year, “a strong economy cannot rely solely on the contribution of a few firms at the top‘.

    The CIPD will continue to engage with government and consult its members to be a voice for people’s profession and help chart a path to sustainable economic growth.

    Ben Willmott is Head of Public Policy at the CIPD

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