by Jamie Cater 3rd October, 2016
3 min read

The Tories’ Flex Appeal

Over the weekend, in the build-up to the Conservative Party Conference, Theresa May made one of her most important announcements since becoming Prime Minister. It was not related to Brexit, as significant as yesterday’s confirmation that Article 50 will be triggered next year was; on Saturday morning, it was revealed that May has commissioned Matthew Taylor, chief executive of the RSA and former policy adviser to Tony Blair, to undertake a review of modern employment.

The review has been partly prompted by growing concerns among policy-makers about the insecurity faced by employees in the workplace, particularly those on low pay, but much more important than this is the emphasis placed on self-employment and flexible working. The number of people who are self-employed or part of the flexible workforce has increased exponentially since the financial crisis in 2007/8, with such people now making up roughly 15% of the country’s labour force, although this is part of a longer term shift since the beginning of the 21st Century. Companies such as Uber and Deliveroo have received huge backing from private equity and venture capital over the last two or three years and are changing the face of working in the UK, but the policy sphere has not yet caught up with the challenges that the growth of businesses like these have created for modern-day work.

The challenges arise from the fact that, simply put, much of the existing infrastructure to aid workers is framed by the traditional employer-employee model of working. The welfare system – particularly reforms to the pensions system under the last Government – is designed around this model, and policy-makers will have to come up with a convincing response to the question of how self-employed workers can benefit from the same security offered by compulsory workplace pensions and the National Living Wage for employees. Self-employed and flexible workers also relinquish other benefits associated with salaried employment, such as offers of private health insurance – thinking will have to be done about the ramifications for the NHS and other public services.

Then there is the overarching question of productivity in the UK economy. It is a question that has been on the lips of many analysts for some time, but the growth in self-employment adds urgency to the need to address this country’s decline in productivity. The self-employed tend to be less economically productive than traditional employees, so increasing self-employment may go some way to explaining how this decline has emerged. Should current trends continue, how can policy-makers ensure that productivity does not slip further, especially with the risk of an economic slowdown as the Brexit process begins?

While these issues are increasingly debated among the likes of academics and think tanks, policy-makers have been slow to react to the trend. Indeed, while David Cameron’s government sought to encourage flexible working, in some areas it arguably did more to restrict them than liberate or protect them. Measures such as limiting tax relief for contractors or freelancers working through an umbrella company seemed to contrast with the positive rhetoric deployed by Cameron and George Osborne on self-employment. The last Budget included some small measures intended to help the self-employed, but there has been little sign of this becoming an urgent priority.

If the Conservatives have not been quick on the uptake when it comes to this issue, Labour – as on many issues – is nowhere to be seen. For much of the last six years it has concentrated almost exclusively on small uplifts in the minimum wage or the slowing proliferation of zero-hours contracts, with seemingly no real thought for how the nature of work is changing. Under the leadership of Jeremy Corbyn and John McDonnell, there has at least been some sign of progress in this area; the party has reportedly been considering making a universal basic income its policy, in addition to a substantial increase in the minimum wage. While there are undoubtedly barriers to such a policy becoming a reality – not least an enormous cost to the exchequer – it is the first sign that the opposition is starting to take seriously the fact that the self-employed and flexible labour force cannot be dismissed. It is also interesting to note that Matthew Taylor’s RSA has publicly advocated the introduction of a universal basic income.

Labour’s struggle to fully understand these issues is not only a fairly damning indictment of its ability to endure as the workers’ party, but a reflection of the wider difficulty that all political parties have in grappling with how fundamentally the labour market is changing. Although the details and the remit of the review are not yet fully clear, in announcing it Theresa May has made not only a clever political move in placing her party on Labour ground, but has demonstrated a willingness to confront a daunting public policy issue from which all others have cowered until now.

It may have been overshadowed by the fuss over Article 50, but the long overdue review of modern employment could – and should – be the initiative that allows May to really make her mark as Prime Minister.

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