In the third of the CPS' 'UK Policy Resolutions for 2012' series, Dominic Raab, MP for Esher and Walton, looks at regulatory reforms that will create jobs in the coming year. This morning, in the second in the series, Dr. Tim Morgan of Tullett Prebon argued for a further increase in the personal allowance of taxation to reward work.
UK Policy Resolutions for 2012:
Over two and a half million people are out of work – the most since 1994. More than one in five 16-24 year olds are unemployed. The Office for Budget Responsibility predicts that the search for jobs may get harder in 2012.
Beyond deficit reduction, the number one economic priority for the Government is delivering growth, while a top social priority must be to reduce the ranks of the unemployed.
The Government is consulting on a variety of measures to promote job creation. Given the importance of boosting businesses, especially small and medium-sized enterprises, ministers should consider bold action, starting with the following three measures.
UK POLICY RESOLUTIONS FOR 2012
First, tackle the surge in employment tribunal claims – there has been a 173% increase in the last 5 years. Each case costs the employer an average of £2,000 just to complete the tribunal form, and up to £4,210 for advice and representation after the claim has been submitted. Many choose to settle out of court to avoid costs and the risk of arbitrary adverse decisions.
Employers of all sizes will not be encouraged to hire so long as they face a system which is weighted against them. There are a number of changes that would help reduce the volume of weak and vexatious claims. These include strengthening the power of tribunals to strike out claims which have no reasonable prospect of success, and increasing the deposits required for weak claims. The Government could also introduce modest fees for taking a case to a tribunal, which litigants will get back if they win, to deter spurious or frivolous claims.
Second, provide targeted help for start-ups and micro- and small businesses. These businesses cannot afford large Human Resources departments. They should be excluded from costly proposed extensions to the right to request flexible working and time off for training, as well as the need to provide workplace pensions. These firms will be deterred from taking on new staff, if they are worried about being saddled with extra costs.
Furthermore, to help young people, why not exempt these firms from the requirement to pay a minimum wage to people under 21? Creating opportunities for young people to gain experience to climb up the economic ladder is vital – and the talented and hard-working won’t stay on the bottom rung for long.
Third, introduce “protected conversations” between employers and employees, which cannot form the basis for a legal claim. This change would allow employers to manage the consequences of the end of the Default Retirement Age. The evidence is that many people will choose to work past 65. Managers should be able to discuss issues such as hours, duties, pay and thoughts about ultimate retirement. Being able to do so would help ensure they are not deterred from hiring older staff. Employees would also benefit from better line management – it is neither realistic nor fair to expect older workers to perform like they did when they were twenty years younger.
Dominic Raab is the Conservative MP for Esher and Walton and author of the Centre for Policy Studies publication ‘Escaping the Strait Jacket: Ten Regulatory Reforms for Jobs’.
This article represents the views of the author only and does not necessarily represent the policy outlook of the Centre for Policy Studies, its board, staff or affiliated members.
Tomorrow, the series continues with CPS Head of Economic Research Ryan Bourne on sustainable spending.