A Better Recovery

The UK faced significant industrial challenges before the coronavirus pandemic hit. The necessity of meeting the government’s target of net zero-carbon emissions by 2050 remains urgent. Regional inequalities in the UK remain stark and are likely to be exacerbated by the economic impact of the virus. The skills infrastructure is still not in place. And the hollowing out of the UK’s manufacturing base which underlies these challenges has been starkly exposed by our failure to be able to source and deliver adequate personal protective equipment in the UK.

The pandemic should add to the urgency, rather than distract from, our efforts to tackle these challenges. And we should recognise that in tackling them, we have one of our best opportunities to rebuild. As new research from Oxford University sets out, investment in the move to a net zero-carbon economy delivers significant benefits in terms of jobs, finding that ‘green projects’ can lead to higher levels of job creation than traditional stimulus packages. [1] And as our increased consciousness of clean air has shown us during the crisis, change is possible.

But following the hollowing out of the UK’s manufacturing base in the 1980s, and globalisation and offshoring pursued beyond that, the UK’s record in delivering swift infrastructure and green supply chains is weak.

The plan for a recovery must therefore set out how it will

• chart a path towards a net zero economy that delivers a just transition for workers across the economy
• rebuild the UK’s industrial capacity that will be necessary to deliver this transition, including by investing in the skills of the workforce
• use this programme to tackle the UK’s regional inequalities that rest on the failed de-industrialisation policies of the past.

The urgency of tackling climate change

The TUC warmly welcomes the commitment made by the last government, and reaffirmed by this one, to move to a net-zero economy by 2050. This commitment was recommended by the Committee on Climate Change (CCC) in its report, ‘Net Zero: the UK’s contribution to stopping global warming’, published in May 2019.

We know that the move towards a greener economy could deliver good new jobs, and a just transition for those who currently work in carbon intensive industries. The UK could, for example, become a world leader in the development of electric cars: Nissan builds the Leaf at its Sunderland plant. Alongside electric cars, there are similar questions to be asked of industries such as aerospace, steel and construction. 

But at present, the UK is failing to achieve these benefits. The Office for National Statistics have shown that although the low carbon economy is growing there were 11,100 fewer green jobs in 2018 (now just over 220,000 jobs) than four years earlier in 2014.

Too often the jobs that are delivered aren’t of good quality: the offshore wind sector in general has four times more accidents per hour worked than the offshore oil and gas industry. Although there were no reported fatalities in 2015 or 2016, the latest years for which data is available, the lost time injury frequency for these years was 2,96 and 2.12 respectively. This measures the number of recordable injuries (fatalities + lost work day incidents) per 1,000,000 hours worked. The equivalent figure for offshore oil and gas was 0.52, which adds weight to fears that hard-won advances in offshore health and safety are being put at risk. 

More broadly at present we are losing the wider opportunities to build it in Britain and support key industries across the board. We should be world leaders in the production of low-carbon steel, and the specialist steel that is needed for a new generation of electric car charging points. But Unite has found that the government’s own ‘Steel Procurement Pipeline,’ shows that of the £158m of steel product procured by the public sector less than 43 per cent – or £68m – was actually produced in the UK. [2] We need the whole of our industrial strategy focused both on meeting our net-zero commitment and delivering better jobs.

The hollowing out of the UK’s industrial base fuels regional inequalities

The neglect of industry during the 1980s, and the push towards globalisation then and beyond has left the UK’s manufacturing industry falling behind. Between 1960 and 2015, UK manufacturing employment has declined more sharply than any other advanced economy except Switzerland. [3] This hollowing out has been exposed in the inability of the UK to source the Personal Protective Equipment needed – despite the heroic efforts of workers in the sector, who led the drive for a co-ordinated effort with employers.

And it is hampering our efforts to build the low-carbon supply chains we need to achieve an effective transition. At present, the UK can win relatively low-skill, low-value work, but multinational firms tend to direct the high-skill, high-value work to countries like Germany and Denmark. Those countries have robust industrial strategies – with excellent apprenticeship systems, good transport links, high quality infrastructure and social dialogue systems that ensure workers voice – making them a safer bet for long term investment. If the UK seriously wants to rebuild its economy post Covid-19, we must narrow this gap.

This hollowing out also lies behind the stark regional inequalities that still mark the UK. The decade since the financial crash saw annual growth in the North East of less than one per cent, more than half the UK average of 2 per cent. Most other regions and nations struggled to even keep pace with the UKs sluggish growth, with some exceptions, notably London, where the economy grew on average at 3 per cent a year and employment twice as fast as the rest of the UK.

These unequal growth rates are reflected in the pay packets of workers. Going into this pandemic, wages had barely recovered from the last crisis, with many workers still struggling to make ends meet. Looking at the proportion of people paid less than the living wage (£10.55 for London and £9.00 for everywhere else), the UK average is 19.9 per cent. London is in line with the national average, but there are big gaps between the lowest proportion of people earning less than the living wage in the South East at 16 per cent, and the highest proportion in the East Midlands at 23 per cent.

The impacts of the pandemic threaten to exacerbate these regional inequalities. The Learning and Work Institute predicts that the impact of job losses will not be felt evenly across regions. As a proportion of employment in at risk occupations, the North West (36.3 per cent) and the North East (36.1 per cent) have the highest proportion of employment in at risk occupations in England. London has the lowest level of employment in at risk occupations, (31.9 per cent), followed by the South East (32.5 per cent). This reflects differences in occupational structure and the ability to work from home. [4]

The UK doesn’t invest in the skills we need to meet these challenges

Massive under-investment in workforce skills has left a legacy of poor productivity and increasingly entrenched barriers for people wanting to improve their job prospects. According to the Institute for Fiscal Studies (IFS) government spending on adult education and skills (excluding apprenticeships and HE) fell by 47 per cent between 2009–10 and 2018–19. [5] TUC research shows that the total volume of employer-led training has declined by around 60 per cent since the end of the 1990s. [6]

Against this backdrop, the demand for skills will be intensifying significantly in the coming years as the impacts of Brexit, automation and longer working lives play out. Research with over 38,000 workers by UNISON, for example, found that Individuals feel they do not have adequate digital and management skills. Two-thirds of respondents felt the main challenges to their skillset was their digital capability and felt they needed to improve their digital computer skills. Nearly half of respondents felt that management and supervisory skills also required improvement.

A plan for a sustainable recovery

We know we urgently need a government investment programme to stimulate demand in the coming economy. This programme must be designed in a way that:

• charts a path towards net-zero carbon that delivers a just transition for workers across the economy
• rebuilds the UK’s industrial capacity that will be necessary to deliver this transition, including by investing in the skills of the workforce
• uses this programme to tackle the UK’s regional inequalities that rest on the failed de-industrialisation policies of the past.

To do this government should:

1. Set out a recovery programme of measures that deliver benefits both in terms of reducing carbon and increasing jobs, overseen by a new Just Transition commission.

Oxford University research suggests that good candidates for this package would include delivering net-zero buildings, energy storage, clean industry, investments in clean transport and greenhouse gas removal mechanisms – including carbon capture and storage. [7] This programme should be overseen by a Just Transition commission, bringing together workers, business and government, to ensure that it delivers decent jobs, and to chart the path towards a long-term energy transition.

2. Work with trade unions to ensure that every investment programme comes with an Olympics style plan for decent jobs attached.

When the Olympics were planned, government and the Olympics Delivery Authority worked with trade unions on a framework agreement that ensured that the project would deliver good quality local jobs and skills programmes. We now need similar framework agreements, which set out how contractors will work with trade unions to deliver local jobs and apprenticeships, for every infrastructure project backed by government investment.

And the government should make sure that complex supply chains cannot be used as a way to deny workers’ rights. The government should extend joint and several liability laws so that workers can bring claims for employment abuses, such as claims for unpaid wages and holiday pay, against any contractor in the supply chain above them.

3. Support workers to get into new jobs, with a new jobs guarantee, an individual right to retrain, supported by a funded individual learning account, and a new drive for quality apprenticeships.

As we set out in Chapter 3, we believe that a new Jobs Guarantee should work with a programme of green investment, to deliver new jobs in growing industries.

But government needs to go further than that to offer skills training to everyone. A major plank of the government’s skills policy framework is a commitment to spend an additional £600m per annum on a new National Skills Fund that will provide “a first step towards a ‘Right to Retrain’”. Welcome as this is, it needs to be put in the context of the sustained long-term decline in public spending on adult skills (the IFS [8] says that this additional spending will only reverse about one fifth of the cuts to total spending on adult education and skills since 2010). This funding should now be be brought forward into the current year rather than starting in 2021-22 as planned.

To open up learning opportunities to those facing the greatest barriers, we need a new expansive skills system that provides lifelong learning accounts for all adults incorporating entitlements to upskill or retrain; a new right to paid time off for education and training for workers, and a new entitlement to a mid-life skills/career review and development of an all-age careers guidance service in England.

And government should reform the apprenticeship system to better serve the needs of a new generation of young people who will be entering an uncertain labour market. The apprenticeship levy should be made more flexible, allowing employers to use their levy funding to provide wide range of pre-apprenticeship programmes and any other training entry routes for young people that would help tackle the decline in youth job opportunities.

There remain significant challenges in delivering quality apprenticeships, including slow progress in tackling the continuing high numbers of poor-quality low-paid apprenticeships and widening access to underrepresented groups. Reforms are required to strengthen enforcement of rights, boost wage levels, improve equality of access, and guarantee progression to an advanced apprenticeship and to develop stronger social partnership arrangements as are found in most other countries. This could be achieved by transforming the tripartite National Retraining Partnership into a National Skills Partnership.

4. Build UK manufacturing supply chains, by increasing the requirement for UK content in any investment programme

When government invests in new infrastructure, it should ensure that this investment is used to build local supply chains. For example, the government’s sector deal for offshore wind currently requires 60 per cent UK content for construction and maintenance. This is a good start, but is too limited; the government should require a raising of that target to 80 per cent.

5. Put a Just Transition at the heart of COP26

The UK government will be hosting the delayed global climate talks in 2021. It should use this opportunity to gather best practice, and showcase how best to deliver a just transition to a low carbon economy in the UK and globally.

6. Ensure that trade deals don’t undermine UK manufacturing

The TUC is concerned the government has proposed weaker protections from the dumping of cheap imports than are currently in place while the UK is in the EU customs union. The government must, as a minimum, replicate the protections from dumping found in the EU and ensure trade unions have a place on the Trade Remedies Authority so that workers have a say on the anti-dumping measures needed to protect jobs.