How to find workers in the pool of economically inactive

 

Where to find new recruits

MANY COMPANIES ARE RUNNING TRAINING PROGRAMMES TO TEACH SKILLS SUCH AS COMMUNICATION AND TEAMWORK

It’s time for firms to tap into a wider talent pool to alleviate staff shortages

Imaginative small and medium-sized businesses are overcoming labour shortages by tapping into a far broader pool of talent than their peers – recruiting from groups ranging from ex-offenders to the long-term unemployed.

It’s an approach that reconciles recruitment problems with the record numbers of “economically inactive”  people in the UK. There are now 2.5 million people aged between 16 and 64 not working, a fifth more than three years ago. That includes people who are ill, but even so a rich vein of talent is going untapped.

“It is always a challenge to recruit good people and that is not getting any easier,” says Rosie Brown, co-CEO of Cook, the food retailer. Her company runs a scheme known as RAW – Ready and Working – that targets people who want to work, but have had trouble finding a job. “It’s not a lack  of desire or ability to work  for people,” Brown explains. “It’s confidence and lack  of opportunity.” 

Cook works with local partners to identify candidates for RAW, who then take part in a two-week intensive training programme. This is focused on teaching soft skills such as communication and teamwork, and just getting people comfortable with what work will involve. 

At the end of the two weeks, trainees get an interview for a position at the company; those who are successful are then mentored during their first few months at Cook, often by someone who has taken part in RAW in the past.

Cook’s recruits include former prisoners, people who have suffered serious mental-health difficulties and those who come from households where no-one has worked in several generations. “Our experience is that we get great colleagues who are fantastically loyal,” says Brown. “There is a perception that our approach comes with risk, but we have had very few problems.”

A POPULAR MODEL

It’s a model that other companies are also having lots of success with. Employers such as Greggs, Compass Group and Timpsons all recruit in a similar fashion and report healthy levels of hiring and retention. While there may be additional upfront costs to supporting new staff in this way, many employers report significantly reduced turnover rates with such schemes. Staff appreciate the opportunity and tend to stay for longer.

A wide range of charities and organisations offer practical advice and support to employers thinking about exploring this recruitment approach, at both a national and local level. Employers may need to be more imaginative about working practices: recruits may be more likely to need flexible working models, for example, and will almost certainly need more training and support than those joining the company  from another employer. However, the payback for making that investment is a far broader and deeper talent pool than other employers have access to, a great opportunity at a time when so many employers are finding it almost impossible to hire the staff they need. “RAW has opened up a whole new group of potential employees for us,” says Cook’s Rosie Brown.

This is also a way for firms to embrace social purpose (the notion that it is possible for businesses to have a positive impact on society). Research suggests Britons increasingly want to work for employers whose values they share. Setting out your stall as an employer focused on social benefit and creating opportunity for all could expand your potential workforce in this way too.

A lovely, simple supply-side idea:

 

Britain should free up its data

WE NEED TO PRY PAT’S GRASP FROM THE PAF

takes.jamesomalley.co.uk

Liz Truss was right: Britain is suffering from a growth and productivity problem, says James O’Malley. The trouble is, the most obvious things to do about it would be toxic for the Tory Party’s electoral chances – building more houses, cosying up to Europe, allowing more migrants, covering the countryside with wind farms. There is, however, one small intervention that would make the country a bit better and “nudge our sluggish economy in the right direction”: open up the Postcode Address File (PAF).  

AN INSANE SITUATION

This is a database of every postal address in the UK, and is owned and controlled by Royal Mail. Access to it is what allows the websites and apps you use to figure out your full address when you start typing or put in the postcode. The trouble is that this information is maddeningly difficult to get hold of. 

Imagine you’ve set up a small business that needs access to address data. To access the PAF you’ll have to pay the Royal Mail a “hefty” fee. A one-off copy of the database costs £360, but this isn’t useful as the dataset is always changing. Monthly updates cost £1,080. That’s just for the data. On top of that you pay £85 for every person who is going to use it. If you want to use the data on a website, you need at least £6,150 more. If you want to use it across an organisation, you can “look forward to paying” £18,400 every year. “The costs spiral from here.”

This is all “insane”. Dealing with our growth and productivity problems will depend on innovation, and opening up data to the public is an important part of this. “Open data makes it possible for anyone to build tools, services and businesses that can improve the way we work and live, without us having to wait for the government to do it for us.” Transit data is a “particularly striking example”. Transport for London and National Rail share their schedules and real-time data openly, and there has been an “explosion” of tools and apps built on it. That’s why Google Maps can tell you when your next train is due, for example, and why you can bypass the terrible National Rail website by using the much better RealTimeTrains app. 

We don’t know what will be possible once the PAF is “liberated”. But the Open Data Institute has called it the “critical missing dataset” in the UK. When Denmark opened up its equivalent data file in 2005 the financial benefit to cost ratio was 30 to one. And it’s probably the only thing standing in the way of an app that will alert  us to what colour bins we need to put out this week.

Policy Exchange on how to sort out the railways

 12 December 2022 • 5:17pm

The railways’ real problem is not their ownership, but their complexity CREDIT: Getty

The bad news is that the railways are in a terrible, unsustainable mess. Public subsidy has never been greater, but service reliability has seldom been worse. Commuting, the network’s former cash cow, will never return to pre-pandemic levels, but the unions are in denial, striking for every wasteful practice to continue as before, and driving away even more passengers. This line leads only to a hard collision with the buffers.   

The good news is that there is a plan to fix things – or at least improve them – Great British Railways, or GBR. A public body, this would own and run the infrastructure (taking over from the already state-owned Network Rail).   

Unlike the current system of franchising, GBR would also plan the network. On most lines, it would contract private companies to operate to the timetables and fares it specified. Different companies would compete at the tender stage to make the best-value bid.   

This is a model that works all over the world – including in parts of Britain, such as London’s Overground, DLR and buses. All these are run by private companies with fares and timetables set by Transport for London. Each is among the few decent public transport services in the country.   

Launched in a government white paper last year, GBR was the product of three years’ work. The bill to create it should have been in Parliament right now. But, like the trains, it has got stuck.   

The problem is that GBR, as a mix of private and state, fails the purity tests of ideologues on both sides. Liz Truss, known for her sure policy touch, dropped the bill, believing that private competition on the rail (rather than at the tender stage) was the answer.   

But only a handful of lines are profitable enough for different private companies to compete on – and GBR would still allow that. What about the unprofitable ones? The Truss plan didn’t say.   

Labour and its union allies want renationalisation – the unions because a single employer makes it easier to bring everyone out on strike. That alone should rule it out (under GBR, most staff would work for the different private companies who’d run the trains).   

Labour forgets that the Government has already micromanaged the whole system for years, to little benefit. GBR would take the power away from civil servants and give it to railway people. Buying up the private bits of the railway would waste billions; far better to spend that money improving services.   

The railways’ real problem is not their ownership, but their complexity. They are too fragmented, too confusing to passengers, and too expensive to run. GBR would give the railway what it cannot have under the current structure: simplicity and single national leadership. 

It would reduce the current mess of tickets. It would make sure trains connected with each other. It would cut duplication, increase economies of scale, and make it easier and cheaper to plan track works. It would drive workforce change in a way the fragmented structure cannot.   

But it would also keep the drive and entrepreneurialism of the private sector, which helped almost double passengers from the old BR days. In all these ways, GBR would probably save enough money to prevent serious service cuts, even if passengers don’t return. Without it, the future looks horribly bleak.   

I think people want the railways to be fixed, and I don’t think they particularly care how. The Government has a thought-through solution on the table, a solution with the best chance of working, and it should take it.

Our "shockingly high" tax regime

 Matthew Lynn

City columnist

Britain’s shockingly high tax burden

The higher rate was once for fat cats. Now, more and more of us end up paying it. That will stifle growth

You need to have been following Budget speeches for a long time to remember when the 40% top rate of tax was introduced.  It made its debut on 15 March 1988, when Margaret Thatcher’s chancellor Nigel Lawson embarked on a far-reaching reform of the tax system. The basic rate of tax was reduced from 27% to 25%, corporation and inheritance taxes were reformed and, most radically, not to say controversially, the top rate was sliced from 60% to just 40%. It was designed to be a top rate of tax that would only be paid by a small fraction of the workforce and even then would not take such a high share of their income as to deter them from working. By 1990, only  1.7 million people were paying the 40% rate. By the time Tony Blair became prime minister that total had risen to 2.1 million and by 2010 it was 3.3 million. 

Ever since then, however, the numbers have started to explode. By 2019 the total was up to 4.3 million, and in the current tax year it will be up to six million. Simply freezing the thresholds, as Rishi Sunak did as chancellor, combined with inflation running at more than 10% a year, has pushed more and more people into the top bracket. Now, Sunak’s chancellor, Jeremy Hunt, has frozen the thresholds all over again, a move that will take at least another two million people into the bracket by 2028, making a total of eight million, or more then five times the number when it was introduced. 

ADD IN THE “GRADUATE TAX”

The reality is even worse than it sounds. The workforce is shrinking rapidly – more than a million people have left it since the pandemic. It is likely that the bulk of those are concentrated at the lower end of the wage scale, for the simple reason that anyone earning a big salary is a lot more likely to be doing a job they enjoy and that they find rewarding. As more and more low earners leave the workforce, discouraged by poor earnings and higher taxes, the percentage of top-rate payers in the overall workforce will inevitably rise. 

And, as columnists at Bloomberg argued last week, we should also take into account student-loan repayments, which are effectively a graduate tax. Ever since fees went up to £9,000 a year at the start of the last decade, most students are now emerging with £50,000 of debt, or often more. With the “graduate tax” kicking in at 9% even on a fairly modest income of £30,000 a year, that has to be added in to get a sense of what the marginal tax rate actually is. Add in national insurance and the loan repayment, and anyone on that income with a degree will actually be paying 40% tax long before they reach the actual threshold for the higher rate (and they will be paying a shocking 70% at higher incomes, but that is a different story). In other words, far more people are paying the higher rate than the official figures suggest, and the numbers will be rising all the time as more and more graduates with higher debts enter the labour market. 

THE NEW STANDARD RATE

Add it all up and up to half of the workforce of 31 million and perhaps more could end up paying the top rate. In reality, 40% will not be a top rate anymore. It won’t even be a higher rate. It will be the new standard rate. On current trends, within a few years there will be a 20% rate for low earners, a standard 40% rate for most of us, and a  top 45% rate (although in reality probably  a 50% rate by then) for the wealthy. Without any real discussion, and without anyone pausing to ask whether that is healthy for the economy, that is where we are inevitably heading. 

This is scandalous. A 40% standard rate of income tax is ridiculously high, especially when people are paying 20% VAT on anything they buy, on top of fuel duty, stamp duty, inheritance tax, and all the other levies the state imposes. As Nigel Lawson realised, the key to unlocking greater enterprise and improving incentives is to leave more money in people’s pockets. A rate that takes almost half a person’s income will for most be a crushing burden that will squeeze the life out of the economy.

The problem with statistics

 Call me geeky but I found this quite fascinating - errors in census data can have a big impact on funding for schools and more. It is one of those things it is useful to have in your toolkit in case you are making a point about policy directed at very specific issues and want to question whether the data the decision is based on is reliable:

Can we trust what the census says?

Crucial policy decisions are based on its data, but it’s only as accurate as the people filling it in: us

Tom Calver

, Data Editor

Sunday December 04 2022, 12.01am, The Sunday Times

When the 2011 census said just 9,000 people lived in Whitechapel, east London, Dr Shlomit Flint Ashery refused to believe it.

Armed with a clipboard and a grasp of Arabic and Bengali, the researcher at Bar Ilan University, Israel, conducted her own door-to-door survey of the ethnically diverse area. She befriended religious leaders in mosques and mothers in local parks. After weeks of work she had recorded the names of 13,000 individuals – 4,000 more than the census thought.

“The census is generally intended for the mainstream population,” says Flint Ashery, “and it tends to be blind to people from other cultures.” Specifically, in Whitechapel, it was not very good at counting households that contained multiple generations, or multiple families – especially among tight-knit migrant communities where distrust of the authorities is high.

Unlike the biblical iteration that required Joseph of Nazareth to return to his hometown, the modern census is a “snapshot” of the day it is filled in

ALAMY

The census is hailed as the gold standard: the Office for National Statistics (ONS) invests millions in ensuring it is done correctly. Filling it in is mandatory — those who didn’t in 2021 faced a £1,000 fine — and last time 89 per cent did so online. In Scotland, a dismal response rate of 79 per cent has forced an inquiry. Everything from homes, healthcare, schools and even sewer capacity is planned from the information it collects. Can we trust it?

In 1911 the suffragette Emily Davison, later killed by the King’s horse at Epsom, was found “hiding in the crypt of Westminster Hall” by census officials. This was recorded as her address.

Here lies a limitation of the modern census: unlike the biblical iteration that required Joseph of Nazareth to return to his hometown, it is a “snapshot” of the population of where they are on the day it is filled in.

The latest census was conducted in early 2021. Britain was in lockdown, so many of us were not where we usually live. Students who had gone home for Christmas did not immediately return to university; families may have gone to live with grandparents or in second homes.

Officials believe this made the population of some London boroughs seem much less than it usually is. Camden’s population — which the ONS previously thought was rising — nominally shrank by 10,000 over ten years to 210,000. Councillors, fearing the borough could suffer a reduction in government funding as a result, have joined a campaign to find the city’s “lost Londoners”.

The apparent drops are most significant among children, which could have implications for school funding. “Across London, billions of pounds for frontline services are at stake, and our residents will be the ones who suffer,” the Camden council leader Georgia Gould said in the summer.

Perhaps a greater problem is that the census is simply not very good at reaching certain communities. Some 97 per cent of households responded to the census, according to the ONS, up from 94 per cent a decade earlier: Professor Tony Champion, emeritus professor of population geography at Newcastle University, points out that the fact it happened “when most people were bored out of their minds and had plenty of time to complete the form” may have helped.

There are other reasons to treat census figures with a pinch of salt, as another population-wide programme conducted at the same time shows. Some 6.1 million people in their sixties had received a first vaccine dose by the end of 2021 — around 1 per cent more than the total number of sixty-somethings recorded in the census.

The latest census was conducted in early 2021 and recorded the population of England and Wales as 59,597,300

MATT ALEXANDER/PA

Comprehension has mercifully improved since the first census forms were handed out 200 years ago. When asked of his “relationship” to the head of the household, one Victorian agricultural labour, living in a shed at the bottom of a farmer’s garden, replied “friendly”. Yet even now that most of us can read, some of the categories remain ambiguous. If you are not one of Britain’s two million churchgoers but enjoy some fruits of the Christian tradition, do you mark your religion as Christian? Even ethnicity is, apparently, not that objective. “I changed my ethnicity between 2011 and 2021,” says Professor Edward Higgs, a leading census historian: “I put white Irish this time.”

Censuses are good at tracking change — but not if you change the questions. For last year’s census, the ONS moved “British” to the top of the census form, where “English” had been a decade before.

This was, it says, to make it easier to answer the question — yet in a striking example of “question-order bias”, the number of people identifying as “English” fell from 58 per cent, to 15 per cent. Some of that fall may be a genuine collapse in “English” identity, but we have no way of knowing.

Does any of this matter? It very much can do. For years, the ONS forecast that Coventry’s population would rise by 32 per cent between 2011 and 2031 – twice as fast as Birmingham’s. Yet on closer inspection, it emerged that these projections expected most of the city’s substantial student population to stay in Coventry after graduating (most do not). Thousands of homes for these graduate ghosts that were set to be built — some on greenbelt land — were not really needed.

There is a solution to these census imperfections. Countries like Norway have a joined-up “population register”, where data on taxation, benefits, schooling, health and education — currently separate in Britain — are all linked together in a single database. This approach may not sit well with some privacy campaigners, and the ONS is set to decide next year whether it can adopt a similar approach here.

This most recent census may well end up being the “best and highest quality” so far, according to Champion. Yet as long as it is filled in manually, it can only ever be as accurate as the people filling it in.

@TomHCalver

Sunday Times Leader on failings in our education system

 This article will help you recognise how to build a constructive argument quickly and concisely:

THE SUNDAY TIMES VIEW

What became of education, education, education?

The Sunday Times

Sunday December 04 2022, 12.01am, The Sunday Times

There is no denying that in modern Britain our education system is not meeting the needs of industry

MONTY RAKUSEN/GETTY IMAGES

Isambard Kingdom Brunel was arguably the greatest figure of the Industrial Revolution. The Victorian engineer changed Britain’s landscape and reimagined public transport with dockyards, railway lines, tunnels and suspension bridges, many still in operation today. He was a true British success story.

So it was cause for celebration when Brunel University, which took his name, launched its first medical degree in September. The cohort of 109 students will become desperately needed doctors. Yet not a single one of those bright and ambitious youngsters is British.

Brunel is accepting only foreign students, whom it will charge £44,905 a year in fees — more than four times the sum it could impose on UK students. Chester University, which will open a medical school in September 2024, is also planning to accept foreign students only. A handful of places for British students in a third new medical school, at Worcester University, have been made available only thanks to the generosity of a local philanthropist. Yes, some of these foreign students are likely to stay in the UK after graduation and join the vast international workforce keeping the NHS afloat. But we cannot continue to rely on foreign labour to fill our needs. It is surely a missed opportunity that government funding has not been secured to help train more homegrown doctors and plug the gaping skills gap in our hospitals.

It is not just doctors we need. It seems almost every industry — from software development to construction to the restaurant trade — is crying out for well-trained, motivated employees. There are 1.2 million job vacancies in Britain today. Half of engineering companies say they are lacking skills in their own workforce. A third of radiologist positions in hospitals are unfilled.

Perhaps most alarming of all, we can’t even recruit people to teach these skills. Three quarters of colleges lack teaching staff in technical and digital subjects, according to the Association of Colleges.

Yet other graduates cannot get a job in the subject for which they have been trained. Lizzie Crowley, a skills adviser for the CIPD, the professional body for staff development, said: “The expansion of the higher education systems actually meant that far more graduates are now finding themselves in non-graduate roles.” That is not to say that there is anything wrong with education for education’s sake. To argue for the strictly utilitarian application of education risks leading us down a road with no place for the study of history or literature, arts or philosophy.

But there is no denying that in modern Britain there is a fundamental mismatch: our education system is not meeting the needs of industry. Universities are underfunded and teetering on the edge of collapse, riven by industrial disputes and bloated with too many students. Further education colleges — likely to be attended by poorer mature students, those starting apprenticeships and those resitting exams — are arguably our hidden gems and potential drivers of social mobility. But too often they are overlooked.

So what do our politicians offer? New apprenticeships? Upskilling? No. Instead parliament is bogged down in an unedifying row over VAT rebates for private schools — institutions attended by just 5.8 per cent of schoolchildren in the UK. Impose VAT charges on private schools or allow them to remain exempt, but do not expect either decision to transform education. That this is still being debated reveals a depressing fact: neither Labour nor the Conservatives have an education policy that comes close to addressing the aforementioned problems.

At the very least both parties must look again at the apprenticeship levy. This is a 0.5 per cent charge on employers’ pay bills over £3 million. Companies are free to spend this money on apprenticeships, but any left over at the end of the year must be handed to the exchequer. In theory it is a good system, but bosses say it is easier just to pay the bill than to try to recruit apprentices.

But the problems really start with our schools. Curriculums are narrow and unambitious, teachers exhausted and uninspired. The fact that maths is now the most popular subject at A-level suggests children — and their parents — have their eye on the future. In many respects they are ahead of politicians. T-levels, which offer training in vocational subjects, are a promising start but must be properly promoted to parents and pupils.

The skills gap is one of the most pressing issues facing post-Brexit, post-pandemic Britain. We need our political leaders to stop bickering and take control.

Where should a UK growth strategy focus?

 

The Tory leadership race and Britain’s growth challenge

The life-sciences industry shows what embracing growth requires

Jul 21st 2022

And then there were two. On July 20th Tory MPs chose Rishi Sunak, a former chancellor of the exchequer, and Liz Truss, the foreign secretary, to battle it out to become their new leader and Britain’s next prime minister. The candidates, who will campaign for the votes of Conservative Party members over the coming weeks, agree on at least one thing: Britain sorely needs growth. The 15-year period between 2004 and 2019 was the weakest for growth in gdp per person since the one between 1919 and 1934—and that was before the shocks of Brexit and covid-19.

Boosting Britain’s feeble growth will require an honest assessment of what the country does well, not just where it lags behind. That may seem head-smackingly obvious. But it needs saying. The Tories won the 2019 election on the promise of a hard break with Britain’s largest trading partner. The big idea of Boris Johnson’s government has been levelling up, a scheme to reduce regional inequality that has often seemed more like an excuse to bash successful places. The financial-services industry, one of the country’s biggest assets, was an afterthought in Brexit negotiations. Brexit is a fact, and it will yield some opportunities. More should be done to improve the productivity of northern cities. However if the Tories are to be a party of growth again, they must play relentlessly to Britain’s strengths.

There is no better example of those strengths—which include scientific excellence, fine universities and a healthy startup culture—than the life-sciences industry. Britain hosts four of the top ten universities in the world in life sciences, all of them within the “golden triangle” of Oxford, Cambridge and London. Enterprise is flourishing. British life-sciences firms raised £4.5bn ($5.4bn) in 2021, compared with £261m in 2012.

In the National Health Service (nhs), the industry has a major asset: a large cradle-to-grave source of data for clinical trials and drug discovery. This ecosystem rose to the challenge of the pandemic. The Oxford-AstraZeneca vaccine saved more lives—6.3m of them—in the first year of its roll-out than any other jab. The recovery trial, the world’s largest trial for people hospitalised with covid-19, went from first protocol to first patient in nine days. British institutions sequenced more than a quarter of all sars-cov-2 genomes during the pandemic.

Yet the industry faces plenty of obstacles. In theory the nhs ought to be able to act as a centralised buyer of new medicines and products, giving startups a large market to test innovations. But it is often sluggish and stingy, and seldom cohesive. America’s competitive health-care market is swifter to adopt new technologies. The time from approval of a medicine to it being available to patients is 120 days in Germany, but 335 days in England. Lack of space is another constraint, particularly in the golden triangle: Cambridge had no available lab space in 2021, although property developers are now responding. Labour shortages are a worry: the industry says it will need 133,000 new staff by 2030.

Most important, there is not enough domestic growth capital available to young life-sciences and other technology firms. Investors often pull firms towards other markets, notably America, which has more large companies that can buy promising startups. The public markets in America are more hospitable, too. The London Stock Exchange accounts for less than 1% of the capital raised in global initial public offerings so far this year. Its biggest listing for a decade—a toothpaste-peddling spin-off from GlaxoSmithKline, one of two big pharma firms with headquarters in Britain, which took place on July 18th—is instructive. It raised no new money and involved no new technology.

There are technocratic answers to such problems. The gap in growth capital would close if pension funds and insurers were able to put more of their money into venture-capital funds; less than 1% of these assets is currently invested in unlisted equities. The government this week endorsed proposals to smooth public listings. Last year it added the job of lab technician to its “shortage occupation list”, making it easier for foreigners with the right experience to get a British work visa.

Real change requires political will. Getting the life-sciences industry, and the economy as a whole, to grow faster will require the new government to face some hard truths. The first concerns Brexit. Leaving the European Union (eu) does yield some opportunities to liberalise: Mr Sunak wants to streamline the approval process for clinical trials, for example. Yet Brexit throws an awful lot of sand in the gears, too. Britain’s medicines regulator is approving fewer new drugs than its peers in the eu, in part because firms are heading to the larger market first. A bill to override the bit of the eu withdrawal agreement about Northern Ireland threatens British participation in the world’s largest multinational scientific-funding programme. Until the Tories stop treating Brexit as a test of ideological purity, its economic costs will only grow.

Geography is another area where Tory thinking and economic logic collide. In 2021 the government released a plan it called the “Oxford-Cambridge Arc” to turbocharge connections between the two cities. That scheme was fundamentally wise—the fastest way to get between them by rail now is via London. But it was quietly dropped, in part because it was thought to conflict with levelling up, in part because the government is nervous of building anything that spoils the views from voters’ windows. It is reasonable to worry about governments picking winners; only in Britain has it been policy to pretend winners don’t exist.

The Tory leadership debate about growth has so far focused on tax cuts. Ms Truss thinks an unfunded giveaway would pep up the economy; Mr Sunak argues, rightly, that it would fuel inflation. In making these arguments, both lay claim to the mantle of Margaret Thatcher. But Thatcher was defined above all by her character, not her policies. Hauling the British economy out of a deep rut took steel and stamina. These qualities are needed again today. It is easy enough to talk about the need for growth, much harder to embrace its consequences: difficult compromises with the eu, more money for already-wealthy areas and unpopular planning decisions taken in the teeth of local objections. The fortunate thing is that Britain boasts world-class strengths. It should play to them.