The Road to Recovery: What the new Prime Minister needs to do

By Stephen Evans


06 09 2022



The new Prime Minister needs to prioritise additional help for people on the lowest incomes, a plan to widen participation in the labour market and get more people back to work, and investing in skills to improve growth. That can start us on the road to recovery.

It would be fair to say Liz Truss takes office in far from ideal conditions. Energy prices and inflation are rocketing, public services say they’re underfunded, recession is looming, and real wages are falling. But here’s three ways our new Prime Minister can make a real difference.

1. Get help to people and businesses quickly

It’s fairly obvious that we would face a major crisis without more help, particularly for households on the lowest incomes and for SMEs. People need extra help and quickly. Some combination of limiting further rises in the energy price cap, increasing payments to people particularly those on the lowest incomes, and cutting taxes seems likely. Whatever the mix, the ultimate test is whether it provides sufficient help, particularly for those with the lowest incomes, and is provided simply and quickly. Plus we need to invest in energy efficiency and production to cut future bills. We need swiftly delivered extra support of sufficient scale to tackle rising energy bills, particularly for those on low incomes.

2. Introduce a plan to boost participation in the labour market

Vacancies are near record levels, hiring is at record levels, and yet …. employment is still hundreds of thousands below pre-pandemic levels. Learning and Work Institute research has shown that falling participation in the labour market by over 50s and people with long-term sickness is the explanation and that other countries haven’t seen the same falls. The cost of living crisis may force more people to seek work to make ends meet, but we can provide more positive help and support too.

We should broaden employment support which is currently overly focused on people on out-of-work benefits – everyone who wants to work should get employment support that suits them. Employers also need to think about how they design jobs (increasing flexibility) and recruit. We need to invest more in employment support as part of a plan to increase participation in the labour market.

3. Invest in skills to improve growth

Economic growth since 2008 has been, to coin a technical economics term, rubbish, contributing to funding pressures on public services and stagnation in real wages. A weaker skills base than other countries, not helped by cuts in public investment after 2010, hasn’t helped. Spending more now would add to the deficit in the short-term. But failing to invest costs us much more in the long-term. It’s like a club selling their best striker and then boasting about their bank balance as they slip down the league table.

I’d like to see more focus on literacy, numeracy and digital skills, apprenticeships for young people, and increasing entitlements for learning and education for people of all ages. We also need to get employers investing too – perhaps a Skills Tax Credit could help reverse the 28% fall in training spend per employee seen since 2005? We should invest an extra £1.1 billion in adult skills and education, to reverse cuts since 2010 and incentivise employers to invest more too.

But it’s not just about the Prime Minister, there’s lots local government can do too including:

  • Supporting businesses and lower income households including through financial support where possible, limiting rises in council tax, and maximising uptake of benefits
  • Helping households reduce energy demand through providing guides on what people can do, and accelerating rollout of insulation, renewable energy installation, and other energy efficiency measures
  • Looking at how to join up employment and skills provision to accelerate the transition to low carbon energy and meet employers’ needs. That includes using devolved skills and employment powers and taking a joined up approach with other responsibilities, such as regeneration

The challenges we face can’t be solved simply or quickly. But we have some enormous strengths and we’ve overcome great challenges before. We can do so again.


This article was originally published by FE News