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The Budget Statement – given for the very first time by a female Chancellor, itself a moment worth marking – was, to quote the BBC, ‘a big, consequential budget’. It aimed to take seriously the difficult economic situation that the country has found itself in, and look to bring long term stability through investment.
This is something that we have been calling for at IFOW through many past Budgets, and we support the Chancellor’s guiding principle that this will support growth.
As well trailed, the major part of the £40bn of this investment will be raised through changes to employers’ National Insurance contributions – a significant challenge for firms, but one hopefully eased slightly through important announcements on support for smaller businesses.
In sum:
At the national level, the publication of a much-needed Industrial Strategy is, we feel, a welcome move to set out a considered, joined-up approach. We support its aspiration – through wide consultation with regional mayors, unions, CEOs and multinationals - to deliver growth and good jobs, while developing an improved skills system and stronger employee rights – something that research we supported shows helps to deliver a more productive economy.
Our Disruption Index highlights the very serious geographic variations in investment and venture capital flows, leading to a highly skewed picture of technological transformation across the country. The newly created National Wealth Fund must take these inequalities seriously and look to support stronger regional investment and support for dissemination of innovation from current tech hotspots so that the whole country can benefit from the opportunities that new technologies can bring. While we await further details, the creation of a National Data Library should help fill in some of the data-gaps that our Disruption Index identified, meaning more rich sources of infor-mation for local regions that could inform support regional future of work strategies to increase good work in their areas.
Extra local authority funding has been limited in these announcements, and we know that much of this will be taken up in increased social care costs as well as the extra costs in National Insurance payments. Central to the work that we have done is a renewal of our regional innovation ecosystem, and we believe that increased funding for local authorities to create innovation hubs would be welcomed.
The Chancellor was keen to promote the ways that new technologies could improve the efficiency of public services, and prevent fraud across the benefits and tax system. Research from our Pissarides Review, which considers the implications of new technologies at the system, firm and individual levels, combined with our earlier research, strongly emphasises that a socio-technical approach is needed to oversee and govern technology adoption. This will help ensure that a hu-man-centred approach is taken right through the technology lifecycle. It is also vital that proper consideration is given not only to privacy and equality concerns, but also Good Work more broadly, and that the divergent impacts of new workplace technologies are taken seriously to prevent the negative impacts on people’s wellbeing and job quality that our work has uncovered.
With big spending announcements on new technology to drive NHS reform, this will be particularly relevant in the health sector. Our recent Firm-level AI Adoption Case Studies report includes an examination of the impacts AI adoption in healthcare, including a robotic surgery system and a generative AI digital dictation system for automating patient letters. These highlight very clearly the need to engage workers as stakeholders in the design and development process to prevent waste and to realise productivity improvements. Else, it would be easy for more money to be wasted on technology that does not deliver properly, as suffered by the NHS in the past.
While this may be seen as a challenging Budget for firms, with a bigger share of the tax burden having to be shouldered by them in increased National Insurance contributions, we hope that the support measures announced will ease these extra demands, especially for small businesses. The rise in the minimum wage will also need to be absorbed, but fears that a minimum wage would be punitive for firms did not materialise on its introduction, and we hope that the wider benefits of higher pay will spill over into better outcomes over the whole economy.
The extension of Breakfast Clubs is a progressive measure that we have called for in the past, and should support working families to help people back into more rewarding work. Similarly, the changes to the Carers’ Allowance will help the very many people trying to juggle caring commitments with work – a move that will ease some of the frictions that women have faced in participating in work and training. However, we know that social care is a major cost pressure for local authorities, and we have concerns that the extra resources needed in this area – which will help ease pressure on the NHS, and allow more people to return to work – have not been provided in this budget.
However, changes to welfare support in other areas – particularly the reforms of the work capability assessment – are controversial, and the public consultation of them will face a judicial re-view. Support for all to access work is a key dimension of our Good Work Charter, but where people feel compelled to work when they are genuinely not able clearly falls outside of this aspiration.
The Budget contained many welcome announcements aiming to support skills, training and edu-cation – vital foundations for human flourishing in the future of work. The establishment of new skills bodies, and extra funding for Further Education and schools is important if we are to help young people enter an economy experiencing technological transformation – and support work-ers already being impacted by it. Our research on changing skills demands and identifying new clusters of skills highlights the importance of an innovative and adaptive approach. Focusing – as our work suggests – on building the capabilities of people, and environments which afford people the agency to build their skills within firms, this approach will be far more effective than simply increasing the number of ‘tech’ courses and training more people through them. New investment in skills announced today should be spent carefully by each body entrusted with stewardship of these funds, ensuring that they are directed to those most in need, and on development that truly helps people better navigate a labour market in flux, and better able to access the good quality jobs that formed part of the manifesto on which this government was elected.
A ‘big’ budget then, with ambition to modernise, stabilise and grow our economy. It is one that is asking firms in particular to trust that the extra contributions that they will be making will deliver for the country, and lead to better growth. It is one that is also placing great trust in the power of new technologies to deliver gains in efficiency and productivity. This will make interventions to ensure that technology is trustworthy and serves this objective alongside the public interest ever more important. We welcome the emphasis on investment and creating good jobs and a higher-skilled labour market.
We stand ready to offer our expertise to both firms and government to help make the choices the Chancellor made ones that do lead to a fairer future of better work.
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Anna Thomas MBE
