Politics

British Steel’s Scunthorpe plant is losing one million pounds a day. Steep energy prices continue to put this plant, like many others, further into the financial red. This not only puts 1,700 of the worker’s jobs at risk, but also puts UK manufacturing companies which rely on its steel in an uncertain position. 

Therefore, the Energy Security and Net Zero Secretary, Grant Shapps, and the Levelling Up Secretary, Michael Gove, have called for a £300 million subsidy for British Steel, arguing that the company “does not have a viable business without government support.” This may keep the plant open temporarily, but it is costly and fails to solve the long-term problem – high energy prices.

High energy prices do not just harm existing industries; they stop industries of the future from opening in Britain too. If Britain wants to become an AI superpower, it will need a cheap supply of power. Otherwise, it will not be economically viable to run the large processing centres needed to train the complex AI models. Data centres, which are necessary to do anything online, could use more than a quarter of Britain’s energy by 2029. When multinational companies decide where to build new plants, energy costs are a key consideration. In short, the high energy prices plaguing the UK will deter foreign investment and act as a barrier to future growth.

While Russia’s invasion of Ukraine led to a 500% spike in wholesale electricity prices, high energy prices were already holding back the British industry long before the conflict. Out of 230 countries and territories, the UK was placed 190th in a ranking of energy prices in 2021. These high prices push up costs for consumers and erode profitability for industry.

To give British industry the support it needs, it is essential to boost domestic power production. New renewable projects already have lower lifetime energy costs of £44 to 57 per megawatt hour compared to gas’ £85, and are insulated from commodity price spikes Private investment into new renewable and nuclear small modular reactors (SMRs) is ready to go, but the planning system is holding Britain back.

Building new onshore wind, one of the cheapest forms of energy, is effectively banned in England due to planning restrictions. Just one objection to an onshore wind farm can stop an entire project being built. Consequently, England has built just two onshore wind turbines in the last three years. The easiest way to rectify this is to change how onshore wind is approved and allow schemes to go through the standard local planning system with the opportunity to hold a referendum if enough local residents object to the scheme.

The planning system also slows down offshore wind and solar power, which offer cheaper power for Britain’s industries. The UK is already the second-largest offshore wind market in the world. However, meeting the Government’s ambition to increase offshore wind capacity from 13.9 to 50 gigawatts by 2030 will be challenging. An offshore wind project currently takes up to 12 years to complete, with significant time spent on environmental impact assessments, consultations and development consent orders.  Construction takes just two years typically. A recent wind farm development, Hornsea 3, was slowed down by the need to complete a more than 10,000 page environmental assessment. 

To get more offshore wind farms up and running quickly, the Government should radically simplify the planning process for key national infrastructure and follow Spain’s lead in waiving environmental assessments in areas with low or moderate environmental significance unless it is specifically requested by a public body. 

The Government should also give industry the right to install rooftop solar panels on factories that are outside conservation areas, which would avoid the onerous requirement to get planning permission for installations greater than one megawatt.

Besides renewables, the Government should also focus on constructing new SMRs, which would reduce the time and cost of building nuclear power sources. Britain was the first country to build a full-scale commercial nuclear power station, but it has not completed a new station in 27 years. SMRs provide a solution by offering the opportunity to simultaneously build several prefabricated reactors in a factory rather than expensive, customised one-off projects. This could grow a new British industry; 80% of the components by value used by Rolls-Royce SMR will come from Britain. These are then shipped to sites that can be smaller than traditional nuclear stations. But this economy of scale will be lost if SMRs are forced to navigate the same complex planning process as full-scale nuclear projects. Enabling SMRs to be easily built on existing nuclear sites or former coal power stations sites would be a good start.

If we want to save British industry, we must start with the basics. Reforming our planning system to facilitate more renewable and nuclear power would lower energy prices.. Cheaper, domestic power could provide energy security that would underpin future investment and avert the risk of geopolitical instability interrupting Britain’s energy supply. As public finances come under further pressure, fixing the planning system would unlock billions of pounds in private investment, which would lower energy bills for British manufacturing and help make UK industry more competitive.

Ben Hopkinson is a Policy Researcher at Britain Remade.

This article was published in the latest edition of Centre Write. Views expressed in this article are those of the author, and not necessarily those of Bright Blue. 

Read more from our August 2023 Centre Write magazine, ‘Back to business?’ here.

It is a point trailed many times before that a highly skilled population is a prerequisite for economic growth. Whilst not a unique point, it is an important one – particularly at a time when the UK is craving a good news growth story amidst a continuing challenging economic picture.

Critical to local economic growth is the capability of an area’s working population. With skilled workers high in demand, competition is fierce. In the period from March to May 2023, vacancy numbers in the UK sat at just over one  million, and it was the 11^th consecutive period of fall after several years of post-pandemic impact.

Skills and labour shortages have exacerbated this problem. The Federation of Small Businesses found last year that 80% of small firms faced difficulty recruiting applicants with suitable skills in the previous 12 months, and COVID-19 also caused high levels of economic inactivity – something HM  Treasury continues to grapple with today.

It can be tempting to keep the debate on skills in a more cynical place, focusing on the negatives as to why this is such a problem for us here in the UK. Of course, we need to understand and diagnose the problems, which include an historic focus on academic rather than technical and vocational routes, the impacts of Brexit and the COVID-19 pandemic and a rapidly changing world that is fast creating the need for new skill sets.

However, with challenge also comes opportunity. Our net zero ambitions are already creating a whole host of new future skills needs, and the pandemic has introduced new ways of working and operating for many businesses which did not seem possible three years ago.

As places look to build their plans to drive economic growth, skills should be at the heart of any strategy. A good way for local areas to do this is by identifying the key growth sectors from which a compelling skills offer can be constructed, not to mention the obvious opportunity to create exciting propositions for potential inward investors too. From agritech in North Yorkshire to the creative industries in Coventry, every local place has its own story to tell.

Local areas know their skills needs better than anyone. Whilst national initiatives to boost skills have their place, closer collaboration between local partners could yield transformative results. With local authorities acting as a natural convener, businesses can report their skills-related needs, shortages and surpluses, with nearby further and higher education institutions then responding accordingly. This happens well in some parts of the country and less well in others.

A greater use of local skills not only benefits businesses, but it also allows local places to move away from ‘brain drain,’ where people skill up locally and then leave, even though many would love the opportunity to live and work in their hometowns.

Local places do not need to embark on this journey alone. There is considerable enthusiasm within the private sector to join forces with partners to regenerate and grow local areas, and getting the skills piece right will be a fundamental part of that.

Henham Strategy was recently commissioned by the North Essex Economic Board, consisting of six North Essex district authorities and the Essex County Council, to write a refreshed Economic Strategy and Delivery Plan. As part of that project, we worked with CB Heating, an air source heat pump installer based in Clacton-on-Sea, who have a successful partnership with EDF to roll out more products across the country and establish a Heat Pump Installers Network Academy, which has the capacity to train up to 4,000 new installers. For both parties, the collaboration is a win-win, and North Essex now benefits from a strong skills pipeline for its renewable energy regeneration growth sector.

The policy debate around skills does not need to be a bleak one. Closer and more open collaboration between key partners at a local level has the potential to paint a very different, and more optimistic, picture and one that sets out an exciting vision of the future for us all.

Kate Fairhurst is a Director at Henham Strategy and previously Head of Office at the London Assembly  

This article was published in the latest edition of Centre Write. Views expressed in this article are those of the author, and not necessarily those of Bright Blue. 

Read more from our August 2023 Centre Write magazine, ‘Back to business?’ here.

The cost-of-living tracker published by the Joseph Rowntree Foundation (JRF) recently showed that 7.3 million UK households on a low income were going without essentials such as showers, transport and warm homes. A total of 5.5 million of those have had to cut down or skip meals because they cannot afford food.

The stress of going without essentials contributes to poor mental health and a loss of sleep. For those going without essentials, the JRF tracker found that nearly half of respondents (47%) reported poor mental health and 45% reported a loss of sleep compared to 14% of households not going without essentials. This backs up findings from the Mental Health Foundation on the impact of the cost-of-living crisis, which found that 10% of adults surveyed in the UK reported feeling hopeless, 34% feeling anxious and 29% feeling stressed.

It is inevitable that all of this will take its toll on performance at work. Research shows a strong correlation between employee wellbeing and productivity and performance.

However, there are a number of positive steps that employers can take to mitigate the impact of the cost-of-living crisis on their employees. The pandemic saw many employers stepping in to support their employees in new ways when circumstances changed. The cost-of-living crisis is no different.

First, employers can make sure that they are paying the real living wage for all employees and are in a strong position to engage with external contractors on this issue too. A survey by PricewaterhouseCoopers (PwC) last summer found that eight out of ten large companies were looking at ways to help employees and over half (53%) were implementing or considering focused pay rises for essential workers. The PwC survey also indicated that employers are looking at one-off bonuses, assistance with other costs such as travel or home insulation, as well as setting up hardship funds.

At Fair By Design, we are particularly interested in how greater flexibility in how people are paid, as well as how they pay for things, can help people on low incomes. Therefore, a second way that employers could support employees is by setting up an Employer Salary Advance Scheme (ESAS), which enables employees to access their wages as soon as they have earnt them – that is, before payday.

Employers can also provide low- or no-interest loans to cover season tickets or electronic equipment. A free or low interest loan not only enables employees to avoid paying more for a more expensive form of credit, but it also enables employees to avoid the poverty premium incurred for paying monthly rather than annually for something like a season ticket. Employers should seek professional advice to ensure loans fall within the exemption from having a credit licence.

These solutions can prevent the need to access high-cost credit at a time when credit is scarcer and more expensive. In the first quarter of 2023, lenders surveyed by the Bank of England reported a reduction in the availability of unsecured credit provided to households and a fall in the approval rate for lending. Consistent with Bank of England data, Fair 4 All Finance have found that 44% of community finance lenders had tightened their lending criteria in response to the economic environment in late 2022. Even though application rates were higher, they expect loan approvals to be lower than usual due to tighter affordability criteria and credit risks.

Finally, sensitively offering employees the opportunity to access financial advice and digital literacy training opportunities can also empower employees to get the best out of their finances.

Navigating the cost-of-living crisis is not easy, but employers have a key role to play in maximising the wellbeing and potential of their staff.

Maria Booker is the Head of Policy at Fair By Design.

This article was published in the latest edition of Centre Write. Views expressed in this article are those of the author, and not necessarily those of Bright Blue. 

Read more from our August 2023 Centre Write magazine, ‘Back to business?’ here.

‘Younger people are entitled and lazy; they do not want to put in the graft that got their parents’ generation to where they are today.’ This accusation is one most younger people have read in newspaper columns and heard at dinner tables for years.

The flippancy of the charge is hardly worth engaging, but there is a kernel of truth to it – younger generations do have a different attitude to work than their parents or grandparents. Rather than shirk work from home, it is clear that there has been a shift in priorities between generations. As we emerge into a new post-pandemic economy, the key to a thriving business environment is for employers to understand what people want from work and engage with these priorities in good faith.

Unlike previous generations who prioritise job security and climbing the corporate ladder, the main factor distinguishing younger generations from Gen X and Baby Boomers is a stronger emphasis on finding a healthy work-life balance. Indeed, PwC research into millennial attitudes at work found that 95% of respondents said work-life balance is important to them.

Finding ways of adapting to this is in employers’ interests, as happier workers tend to be more productive. Moving away from flexible working would fritter away the significant upsides for young workers. At a time when salaries are low in real terms, many appreciate the reduced costs of working from home for some of the week. One of the few positive after-effects of the pandemic has been the survival of the hybrid-working model. Workplaces are rightly trying to find the optimal balance between office- and home-working.

But there are also more profound impacts on our lives and economy. As younger people age, many feel a need to rebalance their working lives if they are to consider starting a family. With rising childcare costs and fewer families able to afford for one parent to stay at home, working conditions need to become more accommodating. Flexible working significantly takes the pressure off young families, as each parent can balance their time at home to minimise how often they need to seek alternative childcare arrangements.

The caveat is that these changing attitudes to work-life balance do not remove the fact that cash is king. Deloitte’s Global Millennial Survey has consistently shown that low pay is the greatest source of millennial dissatisfaction. Both in 2019 and 2020, nearly half of respondents cited dissatisfaction with pay as the main reason why they would consider leaving their job within the next two years. In the UK, it is unsurprising that this frustration is felt acutely; real wages have not seen sustained growth for over 15 years. The Resolution Foundation calculated that if wages had continued to grow as they had before the financial crash of 2008, the average worker would make £11,000 more per year than they do now, taking rising prices into account.

Tackling the low-wage, low-growth spiral will require a greater focus on increasing productivity, which grew at 2.2% a year in the three decades leading up to the 2008 global financial crisis and at under 0.5% a year since. The first part of this puzzle is to upskill our workforce and young people. A glut of low-quality qualifications and university courses has seen a generation saddled with debt, but with many not receiving the skills they paid for. The introduction of T-levels, practical qualifications which train students for highly paid technical jobs in fields such as science and engineering, has been a step in addressing this problem. We need to go further to instil workplace training into company culture, like how the German system of lifelong training became a standard practice.

If we are to see real wage growth, the Government must also take steps to reform the planning system, which is easier and quicker to do than skills reform. A boom in building new homes, lab space and renewable infrastructure would naturally create a host of new practical, high-paid jobs.

Finally, Conservatives should reembrace their instincts to incentivise work. Income taxes in the UK have risen sharply, with the average graduate now paying a marginal rate of 51% between the age of 33 and 47. As the fiscal headroom becomes available, the Government should prioritise cutting income taxes first, avoiding instead the temptation of cutting asset taxes to appeal to older voters.

Taken together, it is clear that there is a balance to be struck. Policymakers should not be afraid of embracing some of the work-life balance solutions that have sprung forward in recent years, and it would be a mistake to attempt to ideologically push businesses into reverting to old practices. However, incentivising work and cultivating growth should remain core Conservative principles. In the remaining 18 months of Conservative Government, we must make work pay.

James Cowling is the Founder and Managing Director of Next Gen Tories.

This article was published in the latest edition of Centre Write. Views expressed in this article are those of the author, and not necessarily those of Bright Blue. 

Read more from our August 2023 Centre Write magazine, ‘Back to business?’ here.

It is time to remake the case for promoting gender equality in the workplace. The overwhelming majority of Britons now reject traditional gender roles and support gender equality at work.

Yet a large minority of the British public (43%) also believe that we have gone so far in promoting women’s equality that we are now discriminating against men. A majority of men (53%) agree with this view, as well as a third of women (33%).

Analysis of gender pay gaps suggest that this is quite a stretch. In 2022, the gender pay gap among full-time employees was 8.3%, reflecting the fact that women are over-represented in lower paid roles in organisations and men in leadership positions. These figures exclude part-time workers, the majority of whom are also women, where they are much less likely to receive pay rises or promotions, leading to the so-called ‘mummy’ trap. Moreover, women are disproportionately employed in low-paid, insecure work. But there lingers a fear, among some, that men might be left behind.

What is driving the gap between our perceptions and reality? A key factor is our failure to take gender seriously. Those of us making the case for change too often talk the talk of gender equality – and this conversation is certainly not done – but to accelerate the pace of change we need to also act and dismantle the gender stereotypes that affect men as well as women. To do that we need to focus on how gender inclusive workplaces benefit everyone.

A gender inclusive workplace is one that recognises several key features of our human workforce:  First, we do our best work when we are mentally and physically well. Second, our teams are most creative when we benefit from diversity of thought.. Third, we are most effective and efficient when we can speak truth to power.

All three of these attributes of a healthy workplace are undermined in cultures of hyper-masculinity, where colleagues feel pressure to be invulnerable, are homogenous in background and experience and work within rigid hierarchical structures.

Indeed, in the aftermath of COVID-19, there is an opportunity for us to give greater respect to the role physical and mental wellbeing play in a productive workforce. However, more of us are also facing the flexibility paradox, a term coined by Professor Heejung Chung from the University of Kent. Many office workers have more choice about where we work, but this is often accompanied by a growing sense that work is bleeding into every aspect of our existence, damaging our physical and mental wellbeing. Promoting a positive work-life balance for all – including frontline workers – would benefit men and women, as well as the bottom line.

This trend is exacerbated by cultures that valorise overwork and are prevalent in many high-reward male-dominated sectors and roles, typifying a toxic masculinity that discourages men from spending time with their families and looking after their physical and mental health – and too often excludes those, especially women, with caring responsibilities. An ‘always, always on’ culture is toxic for both men and women.

This is evidenced by a 2022 study of the Australian construction industry. The authors illustrate how the hypermasculine culture predominant in the sector, featuring a ‘dog-eat-dog’ mentality alongside competitive presenteeism, is associated with depression, anxiety and burnout among both men and women employees, and a high exit rate from the industry amongst women.

Tackling cultures of competitive presentism by focusing on rewarding outputs instead of efforts would go a long way towards both improving productivity in the workplace and creating a genuinely gender-inclusive working environment. Employers who promote genuine flexibility, with give-and-take from both employers and employees, will benefit from more diverse teams and meritocratic processes, where the most talented – and not those most able to signal their commitment with excessive hours – reach the top.

Professor Rosie Cambpell is the Director of the Global Institute for Women’s Leadership and Professor of Politics at King’s College London. 

This article was published in the latest edition of Centre Write. Views expressed in this article are those of the author, and not necessarily those of Bright Blue. 

Read more from our August 2023 Centre Write magazine, ‘Back to business?’ here.