MAGGIE PAGANO: Benefits Britain is a tragedy of wasted talent
Tragedy of wasted talent: Government should make it its top priority to get people off benefits and back to work, says MAGGIE PAGANO
If you had landed on Earth from planet Zog yesterday, you would think Britain was about to descend the Swanee.
First came the head of the British manufacturing association with a scathing attack on successive Conservative governments, accusing them of mismanaging the economy and reversing policies over the past decade.
A former civil servant, Stephen Phipson, chose Make UK’s annual conference to go on the offensive.
And he did not mince words at the delay in the introduction of small British-built nuclear reactors and the inability to attract gigafactories for the transition to net zero, leaving the country without an energy policy.
He criticized the inconsistency of quick-fix publicity stunts launched with much fanfare, leaving the business community with no long-term certainty.
Dormant labor force: there are a million vacancies and yet 5 million people are on unemployment benefits
And he took on the ping-pong game of switching higher education and skills policies between departments, resulting in a massive skills shortage and so on.
Phipson should know. His trade organisation, Make UK, represents 22,000 companies, from multinationals to start-ups employing around 3 million people.
Even more annoying is that these companies are desperate for more employees. There are 95,000 manufacturing vacancies costing the UK around £7.7bn a year in lost revenue.
Worse still, half of our manufacturers say they can’t find talent locally. That is a tragedy and totally unnecessary.
What this all means, Phipson claims, is that the UK is way behind in the race to lead the green revolution, a race that has recently been put on steroids now that the US has invested $370 billion in its Inflation Reduction Act (IRA) . ).
If the UK matched the US subsidies going to the IRA, our manufacturing sector could easily grow back to 15 percent of the economy from the current 10 percent.
Next to berate the government was Liam Condon, CEO of Johnson Matthey, one of the largest British companies that makes the most catalysts in the world.
It claims to have the intellectual property to make the UK a world leader in the production of green hydrogen for batteries.
But Condon told Sky News that we risk losing the race to become world champions because of the lack of government support and the large subsidies the US plows into its companies, creating an uneven playing field.
It’s hard to disagree with a word of what Phipson or Condon said. In an effort to improve policy, Make has come up with a plan of its own: to set up a Royal Commission on Industrial Strategy in which certain goals and ambitions are agreed upon.
This would be based on consensus among all parties on economic policy making, and one option is to re-establish the Industrial Strategy Council.
To avoid gang wars, this new body would work within the Cabinet Office. Every other major economy – from Germany to China to the US – has an industrial strategy.
Should we? The answer, of course, is that we should. What we call it is another matter. Joint thinking would suffice for the time being.
There are examples where merging the dots worked well and that usually works best in specific industries. The Automotive Council chaired by Lord Mandelson in 2009 is an example.
Yet much of what industrialists ask for can be done within the existing framework.
More quangos can be a way to kick tricky subjects into the long grass. Instead of just looking at ways to generate revenue and remove incentives, the Treasury should start by asking what the country needs most and work backwards to meet the ambition.
If No. 11 approached the policy this way, it would not have raised the NI or corporate tax to 25 percent, sending companies like AstraZeneca to Ireland or missing out on billions in tourism by waiving VAT on tourists . This was backward, profoundly counterproductive thinking.
But the biggest elephant in the room that needs radical reform is the size of the welfare state. The figures are astonishing: there are a million vacancies and yet 5 million people are on unemployment benefits.
This costs £100bn a year, a figure that has risen by £33bn over the past three years.
For most people, being unemployed is neither good for their health nor their status. Therefore, improving the education and training opportunities of the unemployed and helping them stay healthy should be the government’s top priority rather than relying on costly immigration.
That would be the best industrial strategy we could come up with.