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4 challenges for BEIS now the reshuffle is over

4 challenges for BEIS now the reshuffle is over

Now that the reshuffle is over, focus can return to the challenges facing the country in 2018. This is an uncertain time for jobs, investment and business. A lot rests on Brexit and ensuring confidence in both the government’s handling of negotiations and any future trading relationships.  Stagnant wages, which still have not recovered from the bank crash in 2008, and a fragile economy highlight the difficulties facing the refreshed team at the Department for Business, Energy, and Industrial Strategy (BEIS).

This is my take on what should be top of the inbox for Ministers returning to their desks.

  1. Fixing the productivity/wages challenge

Even without the uncertainty of Brexit, the UK economy would face challenges from global competition and rising inequality. Britain has stubbornly low levels of productivity when compared our major competitors in the OECD. It doesn’t matter what trade deals can be struck post-Brexit, if British business is not closing the productivity gap. Technological change, the gig economy, inadequate infrastructure, the gender pay gap and an inadequate focus on skills are creating an insecure world of work with rising inequality.

If Ministers are serious about making the economy work for everyone, as the Conservative Party manifesto promised, then they need to listen to the voices of the workforce. We need to improve the quality of jobs on offer, ensuring business and individuals have the skills to meet the changing needs of the economy. Whereas rising living standards will foster the sense of trust needed to tackle the challenges of automation and technological change, continued inequality will breed further discontent. Just as unions have been key partners in reviving the fortunes of the automotive sector, modernising our shipbuilding capacity and driving skills and apprenticeships in the energy sector (to name three successful industries), then unions can provide solutions for the government in other sectors.

We need a new approach to partnership with collective voice and bargaining as key components in raising productivity levels, sharing the proceeds of growth (e.g. wages) and creating prosperity.

  1. Address the Skills Crisis

The UK is in the midst of a serious and protracted skills crisis. Many key sectors are facing chronic shortages of skilled workers, and a recent CBI survey suggests almost 80% of employers think skills gaps are a serious threat to the UK economy. At the same time, the UK has an abysmal recent record on training and developing existing workers, with training rates at historic lows.

Prompt and meaningful action on skills and workforce development will be critical if the UK is to close the productivity gap with its competitors. The evidence suggests unions have a major role to play - training rates are up to 70% higher for union versus non-union workers. So, the new BEIS secretary would do well to partner with unions and give workers a strong voice in planning a new, comprehensive skills strategy.

  1. Action on Energy – including signing of the Nuclear Sector Deal

The fate of the long- delayed nuclear sector deal encapsulates much that has gone wrong with UK energy policy – as Prospect has argued, we desperately need some fresh joined-up, long-term thinking backed up by adequate public resources to secure a sustainable energy future.

With coal power stations facing the axe, we need more low-carbon power sources if we are to meet our energy needs without missing our climate targets. If it’s done right, nuclear power, which currently provides around a fifth of UK electricity, can be both sustainable and affordable.

For the last decade it has been UK policy to build a new generation of nuclear power stations but the new build programme has struggled to get off the ground. A comprehensive nuclear sector deal, with action to address skills shortages and a commitment of public funding, is overdue and should be a top priority for the new secretary.

  1. Meaningful Reform of Corporate Governance

When Theresa May became Prime Minister in 2016, she promised big changes to corporate governance. So far, her government has failed to deliver. Despite pledging to give workers a real voice in the management of the companies they work for, the watered down proposals that were announced last summer offered little of substance. Yet the UK currently ranks 23 out of 28 EU countries in terms of the rights workers have to participate in company decision-making, while soaring rates of executive pay are contributing to growing income inequality.

Giving workers a meaningful voice in executive boardrooms can yield major benefits for forward-thinking companies. Research by Gallup found that companies that give workers a greater voice have 20% higher rates of productivity, 24% lower rates of staff turnover, and up to 70% fewer health and safety incidents. And, a meaningful voice for workers would also improve the transparency and fairness of pay decisions, and help to curb excessive executive remuneration.

Negotiations with the EU are set to reach a crucial stage this year, but the new business team mustn’t let Brexit crowd out the other critical issues demanding urgent attention. Taking action on productivity, skills, energy infrastructure, and reforms of corporate governance would all help prepare the UK for life after Brexit. A meaningful voice for workers is a common thread in each case and the new business secretary would be well-advised to start their job by opening a dialogue with Britain’s trade unions. A sustainable and equitable economic future for the UK may depend on it.

Mike Clancy

Mike Clancy


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