People are the engine of our economy. In its Budget submission, the REC said fixing labour supply challenges in the NHS, for example, would be the way to deliver on at least two of Labour’s five missions for this government. It is possible to both improve care and save money – but this would require a fundamental change to how the past government approached workforce issues.
REC Chief Executive Neil Carberry said:
“This Budget must show an appreciation of our workforce challenges if it is to drive growth. Business and public investment underpin growth, so boosting these needs to be a priority over short-term issues. Savings today to spend more in three or four years is not the way to underpin public services or bring the tax burden down.
“There is a positive trend in employer sentiment regarding the economy – but it is only gradually coming back from a very low base. We understand that there are some difficult choices to make in the Budget – but businesses need measures next week that help them to unlock investment. An additional pound spent on rising government charges, tax or complying with badly designed regulation is a pound that can’t be spent on investing in the future.
“In light of the impact assessment of the Employment Rights Bill forecasting billions of pounds of additional costs to business, the last thing firms want to hear in the Budget is news of even more costs, or more complexity for how they run their businesses.”
Part of meeting the fiscal challenge will be about how the government spends. A more effective NHS, for instance, will be critical to reducing economic inactivity, improving lives, and saving money over the long-term. Yet short-termism in NHS staffing thinking has driven rising costs and greater gaps in service. We need an urgent review of NHS procurement frameworks to create a sustainable supply chain of NHS staffing, which recognises the value of substantive NHS staff, and why Bank and Agency staff have a role, especially as many people are choosing to work in more flexible ways.
Neil Carberry added:
“The NHS staffing model is in dire need of an overhaul; it is failing to deliver value for money. Huge investments go into the training of medical and clinical staff in the NHS who end up overworked and undervalued – and then leave the service, unless they take a temp job where they can better manage their working lives.
“But government then treats non-permanent NHS staff abysmally, excluding them from pay rises for years and then wondering why these workers don’t take shifts at bargain basement on-framework rates – they have other options. In the long run, the government ends up paying a lot more in high emergency shift rates than it would have done making a fair offer to temporary medical staff in the first place. This raises NHS costs while complicating service delivery.
"Previous attempts to address this have missed the mark. We now have the puzzling “solution” where NHS internal banks are often more expensive than agency staffing models. This is because the problem is about how the system is managed, not who the suppliers are. Now is the time to seize the opportunity to transform this system and create a powerful partnership between government, the NHS, unions, and permanent and temporary staffing experts to fix this for a generation.”
Putting a UK workforce plan at the heart of the Industrial Strategy will give the government and business a clearer understanding of the modern labour market and its challenges, and how to work with business to address these. Fundamental to this is to protect flexible and agency working which places around a million people into work on any given day in both private and public sector organisations such as the NHS. This contribution must be built into workforce plans to give job seekers access to the labour market and allow employers to flex productivity. An important first step to this plan is to conduct the first Workplace Employment Relations Study (WERS) for a decade to inform policy based on an accurate view of the current jobs market.
The Chancellor must incentivise investment in skills needed to build a UK workforce aligned to the jobs of the future. This includes ensuring the long-overdue reforms to the Apprenticeship Levy to allow recruiters to better utilise the millions of pounds they pay into the levy pot which go to waste every year.
And set out a multi-year plan for investment in our regional and inter-city public transport networks. From the Elizabeth Line to the Borders Railway, this type of investment repeatedly outperforms Treasury growth expectations and has a significant labour market activation effect.
Neil Carberry said:
“By addressing skills and labour shortages, reducing economic inactivity and boosting productivity, we can ensure our prosperity and lower the tax burden. Improving access to quality jobs, especially flexible, temporary roles, and equipping people with the necessary skills will enhance their well-being and drive productivity."
