What does it mean to make work pay?

Increasing the amount of better quality jobs in the UK is key to addressing low pay.

A key argument in the welfare debates this week has centred on ‘making work pay’. The Government argues that changes to tax and welfare will improve the lot of low and middle income working households. Though curiously, this came as suggestions surface the minimum wage could be frozen or cut.

Alongside others, we have shown that the increase in the personal tax allowance is roughly cancelled out by reductions in tax credits and other benefits. But there is a more fundamental flaw in the way this argument has been conducted.  It has focused purely on the role of the tax and benefit system with no discussion of how to make work itself pay.

This flaw was also evident in two other inputs into the debate in the last couple of weeks, both of which were otherwise useful and interesting.

First, a report on Improving Progression in the UK labour market by Policy Exchange. It’s encouraging to see work addressing the core issue of how we support people to not only get work but keep it and progress in it. This will let them end up earning enough to live decently, ideally without needing tax credits. The introduction of Universal Credit gives the opportunity for the Welfare to Work system to address this issue for the first time.  The report estimates that, under the new system, around 1.3 million people will become subject to some kind of in work requirements and support. 

This is a diverse group, with a mixture of ages and family types. Most work between 15 and 24 hours a week and over half are in fairly stable employment. Some have characteristics which will restrict the amount of work they can do: around a third have dependent children, over half are over 45, some are likely to have some health or caring related issues. Nearly 45% also have relatively low or no formal qualifications.  Most are apparently not actively looking for more or better work, although the reasons for this are not clear. The report makes some very sensible recommendations for improving the incentives for Jobcentre Plus and Work Programme providers to give real attention to progression in work. It also suggests piloting various other measures, including greater sanctions, to persuade more people to actively try to increase their hours and pay. 

However, the report seems to assume that there are abundant opportunities for more hours and progression, if people could only be motivated to look for them. This contrasts with our research showing that there are already 1.4 million people who want to work full time but are working part time because no full time job is available, the highest figure in 20 years.

At a Resolution Foundation seminar, Conservative MP and Skills Minister Matthew Hancock set out his agenda for tackling low pay. He argued that actively tackling low pay was vital and set out three ways of doing so: defending and strengthening the minimum wage; creating a tax system which supports low paid workers; and increasing productivity - by freeing businesses to compete, having good matching of jobs to applicants and increasing skills and human capital.

Both Mr Hancock and the seminar respondents (Allister Heath, City AM editor, Nicola Smith of the TUC and Ryan Shorthouse of Bright Blue) agreed that increasing the amount of better quality jobs in the UK was key to addressing low pay. But there was almost no discussion about how to do this. The debate was all about supply-side measures – tax, benefits, skills. All this is vitally important, but is highly unlikely to work without getting to grips with the demand side.

Only then can work truly pay – giving the ‘hard working families’ politicians talk so much about a real chance for independence and security.

Photograph: Getty Images

Helen Barnard is a Policy and Research Manager for the Joseph Rowntree Foundation.

Photo: Getty
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The rise of the green mayor – Sadiq Khan and the politics of clean energy

At an event at Tate Modern, Sadiq Khan pledged to clean up London's act.

On Thursday night, deep in the bowls of Tate Modern’s turbine hall, London Mayor Sadiq Khan renewed his promise to make the capital a world leader in clean energy and air. Yet his focus was as much on people as power plants – in particular, the need for local authorities to lead where central governments will not.

Khan was there to introduce the screening of a new documentary, From the Ashes, about the demise of the American coal industry. As he noted, Britain continues to battle against the legacy of fossil fuels: “In London today we burn very little coal but we are facing new air pollution challenges brought about for different reasons." 

At a time when the world's leaders are struggling to keep international agreements on climate change afloat, what can mayors do? Khan has pledged to buy only hybrid and zero-emissions buses from next year, and is working towards London becoming a zero carbon city.

Khan has, of course, also gained heroic status for being a bête noire of climate-change-denier-in-chief Donald Trump. On the US president's withdrawal from the Paris Agreement, Khan quipped: “If only he had withdrawn from Twitter.” He had more favourable things to say about the former mayor of New York and climate change activist Michael Bloomberg, who Khan said hailed from “the second greatest city in the world.”

Yet behind his humour was a serious point. Local authorities are having to pick up where both countries' central governments are leaving a void – in improving our air and supporting renewable technology and jobs. Most concerning of all, perhaps, is the way that interest groups representing business are slashing away at the regulations which protect public health, and claiming it as a virtue.

In the UK, documents leaked to Greenpeace’s energy desk show that a government-backed initiative considered proposals for reducing EU rules on fire-safety on the very day of the Grenfell Tower fire. The director of this Red Tape Initiative, Nick Tyrone, told the Guardian that these proposals were rejected. Yet government attempts to water down other EU regulations, such as the energy efficiency directive, still stand.

In America, this blame-game is even more highly charged. Republicans have sworn to replace what they describe as Obama’s “war on coal” with a war on regulation. “I am taking historic steps to lift the restrictions on American energy, to reverse government intrusion, and to cancel job-killing regulations,” Trump announced in March. While he has vowed “to promote clean air and clear water,” he has almost simultaneously signed an order to unravel the Clean Water Rule.

This rhetoric is hurting the very people it claims to protect: miners. From the Ashes shows the many ways that the industry harms wider public health, from water contamination, to air pollution. It also makes a strong case that the American coal industry is in terminal decline, regardless of possibile interventions from government or carbon capture.

Charities like Bloomberg can only do so much to pick up the pieces. The foundation, which helped fund the film, now not only helps support job training programs in coal communities after the Trump administration pulled their funding, but in recent weeks it also promised $15m to UN efforts to tackle climate change – again to help cover Trump's withdrawal from Paris Agreement. “I'm a bit worried about how many cards we're going to have to keep adding to the end of the film”, joked Antha Williams, a Bloomberg representative at the screening, with gallows humour.

Hope also lies with local governments and mayors. The publication of the mayor’s own environment strategy is coming “soon”. Speaking in panel discussion after the film, his deputy mayor for environment and energy, Shirley Rodrigues, described the move to a cleaner future as "an inevitable transition".

Confronting the troubled legacies of our fossil fuel past will not be easy. "We have our own experiences here of our coal mining communities being devastated by the closure of their mines," said Khan. But clean air begins with clean politics; maintaining old ways at the price of health is not one any government must pay. 

'From The Ashes' will premiere on National Geograhpic in the United Kingdom at 9pm on Tuesday, June 27th.

India Bourke is an environment writer and editorial assistant at the New Statesman.

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