One of Britain’s most pressing socio-economic problems, as highlighted by the Social Mobility Commission report this week, is that geographical location has a huge impact on an individual’s life chances and access to opportunity. When Theresa May first addressed the nation on the steps of Downing Street last year, she promised to do all she could to spread opportunity and prosperity more widely.
If the Conservatives are to have any chance of defeating socialism and the unmitigated economic and social disaster a Corbyn-led government would unleash, these words must translate into concrete action. Addressing the ‘postcode lottery’ of opportunity should therefore be at the core of this governments’ social mission.
Happily, spreading opportunity would also do wonders for the Chancellor’s deficit and productivity problems. Every life wasted on benefits, in prison, or even in a job that prevents people from fulfilling their true potential is not only an ethical tragedy, but an economic one too. The government currently spends around £46 billion a year on working age benefits and it costs over £40,000 a year to keep just one criminal in prison. This is a calamitous waste of economic and human resources.
One way to help minimise this prodigality could be to encouraging businesses to improve their commitment to corporate responsibility.
While classical economic liberals are likely to counter that the only responsibility firms have is to their customers – to provide goods and services people want to buy, at a price they can afford – this overlooks the other obligations of business: to provide for their workforce and facilitate social mobility. Meritocratic societies are not only morally advantageous, but also inherently more productive.
Through the apprenticeship levy, the government has already recognised that companies can be incentivised to upskill their workforces and offer training to non-graduates. The levy acts as a tax deducted from all companies operating in the UK with a total wage bill in excess of £3 million, amounting to 0.5% of their total annual remunerations. Businesses are then able to claim this money back for providing training and assessment for apprentices.
It’s an admirable idea, but figures released last week revealed a 59% fall in individuals taking up trainee posts since the new scheme was introduced in April. Such a programme could be improved no end by reducing taxation on firms, rather than raising it.
A more liberal approach could see the government introduce a scheme which provided businesses with tax breaks for employing and training people from local disadvantaged areas and/or with criminal records, helping to break the cycle of crime and deprivation. For instance, for every individual local to the area without formal qualifications or with a criminal record a firm employs and places on a training programme, the government could exempt from employer’s National Insurance Contributions – the so-called ‘jobs tax’.
For a firm employing someone full-time on £8 per hour, adopting such an initiative would save them £1,486 a year in tax. A significant sum for the participating business, but a drop in the ocean for the government in comparison to what may be saved at the DWP and MoJ as a consequence of lower long-term unemployment and crime figures.
The biggest draw for businesses to such a programme may not even be the tax advantages, but the positive press they would receive as a result.
You don’t need to go far in Britain today to hear people who seem to think that big business is the root of all evil and that nationalisation is the only way to prevent companies exploiting workers. Views like this would be much harder to square with reality if businesses began going out of their way help local disadvantaged people get on in life.
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For giant corporates like Amazon and Google, ministerial visits and photo opportunities with smiling, well-trained employees from local housing estates would be manna from heaven for their marketing departments.
Such a programme could therefore be a proverbial ‘win-win’ for government, business and society. Something then for MPs to ponder in light of worrying recent reports.