Writing for The Leaders Council, Peter Reid, president of the National Association of Air Duct Specialists UK [NAADUK], discusses how a perfect storm of recent events has disincentivised adults from working and exacerbated the UK skills shortage, while sharing his proposals for a solution to the problem.
The topics I will address all come as the result of a perfect storm of events and ought to be dealt with not as a political question. The reality is that no government can be held accountable for human nature, be it a Conservative, Labour or Liberal government, any in power would be presented with the same problem. That problem is a shortage of labour, but more specifically it is a shortage of people who are WILLING to work.
I will hold my hands up here, for I was one of the many who were accusing the system in this country of encouraging laziness. However, it has now become clear that this was an incorrect outlook.
To elaborate on this, let us look back at the Covid-19 pandemic: people have become accustomed to two years of being on furlough, sitting at home and enjoying time with their families. There have been no expensive shopping trips or meals out, no expensive weekend breaks, no expensive fashion updates, no travel costs to commute into work, all on slightly reduced wages and therefore reduced taxes from not working. People have gotten used to this way of life.
So much are individuals in this country now accustomed to this way of living, that now faced with higher taxes and higher costs of living, there is no incentive to return to work. Owing to tax increases and the small difference between the amount one receives in benefits and the amount one often receives for working, it is a no brainer for many people to stay at home and simply collect benefit payments. It has become more attractive than going out, earning a salary and having to pay out more.
Of course, no government of any persuasion is naïve enough to cut benefits. However, should the current situation persist, the long-term costs to the government and to taxpayers will be truly horrendous. In time, existing taxpayers will find that there is no longer any benefit to working as the upsides will continuously diminish, eventually resulting in a never-ending spiral to economic disaster.
Yet, I would suggest that the government can act positively to address this problem. My suggestion would not be to increase taxes as has been the case, but instead replace benefits with a complete tax break for anyone not employed for two years or more by allowing them to work for two years completely tax-free. This would encourage people back to work and contributing to society, as well as improving their lot over this period. So, when after that two-year period, they are required to pay taxes, they will do so. For by this time, they will have been incentivised into work and they will not want to socially regress.
The cost to the government and the taxpayer for implementing this solution is nothing. The way things are currently done, taxes are only paid out in benefits to people who don’t pay into the system anyway. The solution I have suggested would cost the country far less than decades of high benefit costs, but the fact we are in this position should not be blamed on no one individual or government. As I have highlighted, we are very much fighting against human nature here.
Implementing this solution should come under an all-party agreement, and something new must be tried because what has already been tried and tested has failed or is still failing. Apprenticeships launched by existing bodies to try to entice people into work are a complete failure, and until the issue around benefits is dealt with, apprenticeships will suffer, and firms will not be able to recruit and grow. The skills gap will only widen. This entire shamble of a situation needs a complete rethink.