Universal Credit – “forcing many into debt”

Jul 07 Dealing With Debt - Magnifying Glass

By Heather Cameron

“The biggest change ever made to the benefits system… is currently failing too many people and forcing many into debt.”

This is the conclusion of a new report from Citizens Advice on Universal Credit (UC). It warns that the roll-out should be paused to allow ‘significant problems’ to be fixed.

What is Universal Credit?

UC was introduced in 2013, with the aim of simplifying the benefits system, making transitions into work easier and making every hour of work pay. UC replaces six means-tested benefits and tax credits with one benefit, to be paid in arrears, as a single household payment, on a monthly basis.

The objective of UC is to help people on low incomes or not in work to meet their living costs. It affects a range of people, both employed and unemployed, disabled people with health conditions, single people, families, homeowners and renters.

Roll-out so far has been gradual but the process is to speed up considerably from October. By the end of roll-out in 2022, it is expected around 7.2 million households will receive UC, over half of which will be in work.

With such a significant number of people affected, it is imperative that the system works in their interests. But evidence from Citizens Advice suggests the system has a number of flaws that need addressing to prevent 7 million households from facing serious financial risk.

And this isn’t the first time similar conclusions have been reached.

Flaws

Back in February, a Guardian investigation found that policy design flaws in UC are pushing thousands of benefit claimants into debt. Former welfare minister Lord Freud also admitted to MPs that administrative problems and design issues with UC are causing around one in four low-income tenants to run up rent arrears, putting them at risk of eviction.

In 2016, an inquiry into UC and its implementation by the Public Accounts Committee highlighted the inflexibility of the payment systems which may cause financial hardship for some claimants.

Citizens Advice highlight three “significant problems” with UC:

  • people are waiting up to 12 weeks for their first payment without any income;
  • UC is too complicated and people are struggling to use it; and
  • people aren’t getting help when the system fails them.

The data shows that:

  • more than one in three people helped on UC by Citizens Advice are waiting more than six weeks to receive any income, with 11% waiting over 10 weeks;
  • nearly a third of people helped have to make more than 10 calls to the helpline to sort out their claim;
  • 40% of people helped said they were not aware they could get an advance payment to help with the initial waiting period for their first payment;
  • over half of the people helped borrowed money while waiting for their first payment; and
  • UC clients are nearly one-and-a-half times as likely to seek advice on debt issues as those on other benefits.

A recent report from the Joseph Rowntree Foundation similarly highlighted the issue of waiting time, arguing that it required immediate action.

While Citizens Advice support the principles of UC, it argues that pushing ahead with roll-out while these problems remain will only put thousands more families at financial risk.

Recommendations

In response to these findings, a number of short and longer term considerations were highlighted where action will be needed to help secure the aims of UC by the end of roll-out. These include reducing the six week wait for initial payment, improving the support available for those moving onto UC, and helping people achieve financial stability on UC.

The charity recommends that the roll-out is paused while the government addresses the significant issues that have been highlighted. If improvements are not made, it is argued that both UC claimants and the government will face significant financial risks, which will increase rapidly if thousands more households move onto the benefit later this year.


If you enjoyed reading this, you may also like our previous article on in-work poverty.

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The 5G arms race: the UK’s strategy to become a global leader in 5G technology

By Steven McGinty

On 8 March, the UK Government published their strategy for developing 5G – the next generation of wireless communication technologies.

Released on the same day as the Spring Budget, the strategy builds on the government’s Digital Strategy and Industrial Strategy, and sets out the government’s ambition to become a global leader in 5G.

Accelerating the deployment of 5G networks, maximising the productivity and efficiency benefits to the UK from 5G, creating new opportunities for UK businesses, and encouraging inward investment, are the strategy’s main objectives.

If the UK makes progress in these areas, the strategy argues, 5G infrastructure has the potential to become an enabler of smart city technologies, such as autonomous vehicles and advanced manufacturing, and to support the expansion of the Internet of Things – the interconnection of people, places, and everyday objects.

5G Innovation Network

Although the strategy highlights the enormous potential of 5G, it makes clear that 5G technologies are still in development, and that the majority of funding will need to come from the private sector.

To support the growth of a commercial market, the strategy explains, a new 5G trials and testbed programme will be introduced – through a national 5G Innovation Network – to coordinate the development of 5G services and applications. This programme will help government and private sector partners understand the economics of deploying 5G networks, ensuring that technologies can he delivered in a cost-effective way, and enabling best practice to be captured and knowledge disseminated.

The government is investing an initial £16m into the programme (involving partners such as UK Research and Innovation and the Government Digital Service), and has targeted a trial of end-to-end 5G (high speed connectivity without the need for intermediary services) by 2018. In February, Ericsson announced that they had a successful end-to-end 5G trial in Sweden, alongside partners SK Telecom Korea.

Improving regulations

To support the development of 5G, the strategy suggests that there may need to be regulatory changes, particularly in the planning system. As such, the government has committed to reviewing current regulations before the end of 2017, and then to conduct regular reviews, as partners learn more from their 5G trials.

Local connectivity plans

The strategy highlights the important role local regions play in the deployment of mobile technologies, and explains that the government will be consulting with councils on how planning policies can be used to provide high quality digital infrastructure.

However, it also suggests that there may be a case for introducing ‘local connectivity plans’, which would outline how local areas intend to meet their digital connectivity needs. Interestingly, the strategy highlights that evidence, such as local plans, may be taken into account when the government is making funding decisions for local infrastructure projects.

Coverage and capacity, infrastructure sharing, and spectrum

The strategy accepts that the move towards 5G won’t be as straightforward as the move from 3G to 4G. Instead, 5G technology will be developed alongside the expansion of the 4G network.

In addition, the government has accepted the recommendations of the National Infrastructure Commission (NIC)’s ‘Connected Future’ report, which states that unnecessary barriers to infrastructure sharing between telecommunications companies must be tackled. The strategy states that it will explore options for providing a clearer and more robust framework for sharing.

Increasing the available radio spectrum was also highlighted as key to developing 5G technology. The strategy notes that the government will work with Ofcom to review the spectrum licensing regime to help facilitate the development of 4G and 5G networks.

5G strategy’s reception

Natalie Trainor, technology projects expert at law firm Pinsent Masons, has welcomed the new 5G strategy, explaining that:

“…technology and major infrastructure projects will become much more interlinked in future and that the plans outlined can help the UK take forward the opportunities this will present.”

In particular, Ms Trainor sees the establishment of the Digital Infrastructure Officials Group – which will bring together senior staff from across departments – as a way of providing greater awareness and co-ordination of major public projects that involve digital infrastructure. Ms Trainor also hopes that the new group will encourage the Department for Transport and the Department for Culture, Media & Sport (DCMS) to work with industry to develop digital connectivity on the UK’s road and rail networks.

Professor Will Stewart, Vice President of the Institution of Engineering and Technology, similarly welcomes the new strategy but highlights that the funding announced will ‘not come anywhere close’ to the investment required to deliver 5G across the UK. In addition, he also makes it clear that coverage and regulatory change will be vital, stating that:

The biggest challenge for government will be improving coverage for all, as 5G cannot transform what it doesn’t cover. And achieving universal coverage for the UK, outside high-capacity urban areas, will not be affordable or achievable without regulatory change.”

Former Ofcom director and author of The 5G Myth, Professor William Webb, has also applauded the government’s plans, even though he is an outspoken critic of the 5G industry. For Professor Webb, the strategy recognises that we are in the early stages of 5G technology, and that there is still a need to develop 4G networks.

Final thoughts

5G technology provides the UK with the opportunity to become a genuinely smart society. Yet, as the strategy acknowledges, 5G is still in its infancy and the idea of a 5G network across the UK is a long way down the road.

The new 5G strategy includes a number of positive steps, such as listening to the recommendations of the NIC report, and exploring the realities of deploying 5G networks. This cautious approach is unlikely to show any significant progress in the short term, but does provide a focal point for academia, government, and industry to rally around.


Follow us on Twitter to see what developments in public and social policy are interesting our research team. If you found this article interesting, you may also like to read our other smart city articles.

The power of personal budgets

Image by Tristan Martin via Creative Commons

Image by Tristan Martin via Creative Commons

Described by supporters as having revolutionised the way the social care system in England is organised, personal budgets have developed to become the norm in social care commissioning in England.

One of the ideas underpinning personal budgets is the development of a new relationship between people who use care services and the organisations who provide them. The new approach was designed to move away from previous prescriptive services towards more bespoke, personalised models of care, where service users are directly involved in planning and deciding what care they receive, and how they receive it.

Within the personal budgets model an allocation of money is given to a specific person from their local authority, following an assessment of need. Money is allocated to the individual, who then works with a professional to work out the most appropriate support. The idea is based on the ideas of transparency, empowerment and personalisation of care.

There are 4 options for service delivery which recipients can chose from to best suit their care needs:

  1. Managed council budgets – where councils arrange the care that is needed following an assessment and an agreed set of outcomes to go alongside a pre-agreed care plan;
  2. Individual service funds – marketed as a more flexible option than local authority led management, this allows recipients to select an alternate organisation to manage an individual’s care budget, and deliver the required services;
  3. Direct payments – this option sees the money paid directly into the account of the person in need of support and allows them to buy care services from an agency or to employ their own carer, or a mixture of both;
  4. Mixed package – a combination of any of the options above, where recipients of support may give some of their budgets to a care provider (either a charity or local authority) but may get a portion of the budget paid directly to them so they can pay, for example, for additional carers to visit during the night.

Seniorin mit Pflegerin

Those in favour of personal budgets point out that the model promotes the personalisation agenda within health and social care in a way that no other policy does. It gives control of spending directly to the person in receipt of the support and has been heralded as a new age for transparency, increasing choice and control, reducing bureaucracy and cutting costs. Personal budgets have also become a key part of the health and social care integration agenda, as well as being highlighted within the recent reform of SEND (special educational needs and disability) care and provision.

Supporters also argue that one of the best and biggest changes between personal budgets and the original direct payment pilots are that personal budgets are designed to produce outcomes, not pay for a service. They are co-produced with the person in receipt of care, as well as professionals from a number of sectors, care providers and family, if appropriate, to ensure that care plans and agreed outcomes are established when the budget is allocated and that the payments achieve those outcomes.

pregnant carer giving pills and medication to her elderly pacient

However, studies have shown that there are big variations in service provision, choice can be limited and poor practice and processes can have a big impact on personal budget delivery and effectiveness. There has also been criticism of the high level of support within government for the model, despite the limited number of pilot roll outs and reviews into outcomes.

In 2016 a National Audit Office report was critical of the way that public services have monitored the impact of personalisation through personal budgets, as very little evaluation of their long term benefits and efficacy have been completed. The report stated that the Department of Health needed to “gain a better understanding of the different ways to commission personalised services for users and how these lead to improvements in user outcomes.” It is clear that there is a lack of evidence as monitoring does not allow service providers to understand how personal budgets improve outcomes.

Critics also argue that personal budgets are ineffective and cannot provide suitable care for everyone in need. They argue that there has never been, and never will be adequate funding to implement personal budgets properly. The principle is only effective, they argue, if there is an unlimited supply of both funds to pay for services and service providers delivering high quality service, which under current conditions of austerity there is not. Supporters counter however, that the concept of “self-directed support” is fundamentally a good one, but admit that poor delivery can deter some people.

Conclusion

Personal budgets can empower people in receipt of care, allowing them to take control of how their care is delivered. This recognition that care should be individualised is a big step forward for people who rely on care services on a daily basis.

However, reduced budgets, inconsistent service provision, and a lack of information for recipients has meant that some people have missed out on the benefits of personal budgets. In practice, services are patchy and evidence of actual benefits, in terms of improved outcomes, is lacking due to the limited number of research studies.

In order to fully realise the power of personal budgets for everyone in receipt of care, the provision, implementation and understanding of the model must be improved. Support for people to help them make the most informed decisions about planning their care packages should also be increased.

The economy and Brexit – what’s next?

money-economics-growth

By Heather Cameron

‘Uncertainty and volatility’ – these were two key terms highlighted at a recent event focusing on the impact of Brexit on the economy, hosted by STEP Stirling.

Following the historic decision of the UK to leave the European Union and all the press that has ensued, it was interesting to hear from experts in the field on what they believe the true impact will be.

Speaker: David Bell, Professor of Economics, University of Stirling

Professor David Bell from Stirling University delivered the first presentation, providing an overview of the key economic implications of Brexit.

David suggested that the negative impacts from a leave vote have not materialised as predicted, noting that “the economics of Brexit has moved at a slower pace than the politics.” Many predicted that there would be an immediate impact on the economy and on consumer confidence, but this hasn’t happened. Retail sales have shown no signs of collapse, with recent research actually showing growth.

Nevertheless, David noted that things were different for businesses, which are experiencing a lot of uncertainty. He indicated that this business uncertainty has dragged UK business output and optimism to a three year low.

What is clear, is that there has been a significant depreciation in Sterling which is unlikely to be reversed in the short to medium term. David considered the implications of this, including that we are poorer, more time will be spent working to benefit smaller businesses, there is lower borrowing costs and it is bad news for pensions.

David also highlighted the issues around the UK’s deficit in goods and surplus in services and trade agreements, which are particularly complicated. To conclude, David acknowledged that negotiations will be difficult and that we will be in the same position for some time to come – with a lot of uncertainty.

Speaker: Craig Wilson, Senior Director Treasury Solutions North England & Scotland at Clydesdale Bank

Following David, was Craig Wilson from the Clydesdale Bank. He considered the impact of Brexit from a financial markets perspective.

To begin, Craig highlighted that what was surprising about the Brexit vote was that ‘the bookies were wrong’, with odds as much as 2/9 suggesting an 82% probability of a remain victory. He noted that the immediate reaction, as similarly highlighted by David, was a drop in Sterling. He said:

“We had a reaction to a recession without the recession taking place.”

Craig also highlighted what has happened since the vote in terms of GBP/Euro stats, interest rate cuts and the price of Brent oil. Interestingly, Brexit hasn’t been shown to have affected commodities as oil prices only dropped slightly and have now increased again.

In agreement with David, Craig argued that there will be a negative impact on the economy in the short to medium term. Economists have cut UK GDP growth going forward to just 1%. Craig suggested that house prices will be important because if they hold up, consumer confidence is likely to remain.

The future, however, was also emphasised as uncertain by Craig. He highlighted that there are lots of variables, both within the UK and abroad, including:

  • UK data
  • Public perception and consumer sentiment
  • Recession?
  • Bank of England monetary policy – will there be more cuts?
  • Negotiations – timing of these, will they be positive or negative?
  • House of Commons/Lords may ignore the vote
  • The US presidential elections
  • US interest rate increases?
  • The Italian debt crisis
  • Emerging markets

In conclusion, Craig suggested the one thing to take away is that so many factors will make the markets volatile.


If you enjoyed reading this, you may also be interested in our other recent blogs on the impact of Brexit:

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Local Enterprise Partnerships – the story so far

 

Business strategyBy Heather Cameron

Following the abolition of the Regional Development Agencies in 2010, 39 local enterprise partnerships (LEPs) were established in England by 2012. Each was designed to represent a functional economic area and steer growth strategically in local communities. These business-led partnerships between the private sector and local authorities are central to government plans for local economic growth.

According to a new report from the National Audit Office (NAO), the role and remit of LEPs has expanded both significantly and rapidly but there are concerns over whether they have the capacity and capability to deliver.

Rapid growth

Since their inception, LEPs have rapidly developed from new start-up organisations to bidders and delivery managers for substantial amounts of national and European funding initiatives to strategic leaders of their local economies.

Between 2010 and 2015 total central government funding directed through LEPs was approximately £1.5 billion. Through the Local Growth Fund, £12 billion will be available from 2015-16 to 2020-21. Growth Deals were agreed with each of the 39 LEPs in 2014, through which £6.3 billion of the Local Growth Fund was allocated. With a further £1 billion allocated in January 2015, the total to date is £7.3 billion. LEPs estimate that the Growth Deals combined will create up to 419,500 jobs and 224,300 housing units.

On the whole, LEPs have been perceived positively and are well established as the main agencies for promoting local growth.

Development has been anything but uniform, however, with a varied pace of evolution. Considering the differing levels of size, urbanisation, population, and existing infrastructure within the LEPs, this is no surprise.

The most advanced LEPs have been identified as those with a history of collaborative working. Greater Manchester leads the way, having already been given powers over skills, welfare and transport, and to be given new powers over the criminal justice system as announced in the 2016 Budget. Greater Manchester has been working in partnership since the 1980s through its local government association, and formally through its Combined Authority since 2011.

And according to a recent Localis report, including London, there are at least a third of LEPs based in and around urban areas which are or could soon be in a position to take on greater powers, with 2017/18 a feasible timeline for them to assume greater powers.

Uncertainty

Despite their rapid development and increased responsibility for substantial amounts of government funding, concerns have been raised over LEPs’ power, resources and accountability.

The NAO report found that only 5% of LEPs agreed that resources available to them are enough to meet government expectations. Additionally, 69% of LEPs reported that they did not have sufficient staff and 28% did not think that they had sufficiently skilled staff.

A survey by the Federation of Small Businesses in 2014 found that: there is a disparity in the levels of funding and capacity across LEPs; a lack of clarity on the remit, purpose and function of LEPs from government has resulted in widespread misunderstanding and friction in practice; and inconsistencies in performance monitoring across LEPs is hampering accountability to local stakeholders and hindering assessment of LEP performance nationally.

Further recent analysis argues that their role and influence are being compromised by a fragmented and changing landscape of economic development governance and the absence of any longer term vision and plan for their evolution.

Given this lack of long term vision and strategy, the fundamental tensions yet to be resolved and their institutional shortfalls and limitations in authority, accountability, capability and resources, the analysis concludes that many LEPs will struggle to exercise substantive influence on economic development at the local level.

Indeed, LEPs reported to the NAO that they were uncertain about their place in the wider devolved landscape. LEPs were also concerned that the government had not made clear their role in economic planning and development as devolution progresses.

Further concerns were raised over funding in terms of pressure to spend their allocation within the year at the risk of not receiving future funding, which could potentially lead to LEPs not funding projects most suited to long-term economic development. And the sustainability of reliance on local authority support at a time of reduced local government funding was another worry.

Future direction

Going forward, the NAO report recommends that the government:

  • clarifies how LEPs fit with other bodies to which it is devolving power and spending
  • distributes Local Growth Funding to LEPs in a form that will give them medium to long-term funding flexibility, subject to performance, to reduce risk of funds being spent on projects that LEPs do not regard as offering the best value for money
  • sets out specific quantifiable objectives and performance indicators for the success of Growth Deals
  • ensures that there is sufficient local capacity within LEPs to deliver Growth Deals by taking a more explicit and consistent account of the financial sustainability of local authority partners
  • uses its approach to monitoring Growth Deals as an opportunity to standardise output metrics for future local growth initiatives, allowing for comparative performance assessment and reducing reporting burdens
  • tests the implementation of local assurance frameworks before confirming future funding allocations, and works with LEPs to ensure that the required standards of governance and transparency are being met.

Only time will tell whether the government expectation of LEPs to deliver Growth Deals effectively and sustainably will become a reality.


If you liked this blog post, you might also want to read our previous post on innovation districts and sustainable growth

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Budget 2016 – 5 messages for local government

One pound coin on fluctuating graph. Rate of the pound sterling

By Heather Cameron

Last week George Osborne revealed the details of his 2016 Budget, at the centre of which was a major deterioration of the forecast for productivity growth. Last year, the Office for Budget Responsibility (OBR) projected an average growth in productivity per hour of 1.9% between 2015-16 and 2020-21; that average is now 1.7%.

As a result, a further £3.5 billion of savings from public spending is to be found in 2019/20. While Osborne has suggested these savings are equivalent to 50p in every £100 the government spends, experts have warned that the figure is closer to £2 or £3 for services that haven’t been protected.

What does it mean for local government?

Despite no direct cuts for local government, it remains unclear where these savings will come from. And with ring fencing of much public spending, local government may yet again bear the brunt of these cuts one way or another.

Business rates

Concerns have been raised over the announcement to extend business rate relief, the revenue from which is 50% retained by councils. It was revealed that this will remove £7 billion from the total take in England over the next five years; 600,000 small businesses will pay no rates at all from next year.

While good news for small businesses, there are fears it could leave a huge hole in local government finances as all locally raised business rates are to be fully devolved by the end of 2020. This will be accompanied by the phasing out of central government grants, and the devolution of additional spending responsibilities.

The government says that “local government will be compensated for the loss of income as a result … and the impact considered as part of the government’s consultation on the implementation of 100% business rate retention in summer 2016.”

But details of how such compensation will work remain unknown. The Institute for Fiscal Studies (IFS) has suggested that the government’s plans for reimbursing local government is “nigh on impossible”.

According to the Joseph Rowntree Foundation (JRF), if protection for council budgets isn’t extended to beyond the devolution of business rates, councils stand to lose £1.9bn per year, or 2.9% of their total revenues.

Benefits cuts

Further cuts to welfare spending could also have a knock-on effect. The Chancellor outlined controversial plans to reform Personal Independent Payments (PIP) for disabled people, to save £1.3 billion. Overall, £4.4 billion will be cut from benefits for disabled people over the course of the parliament.

The cuts to PIP have been described as ‘devastating’ for disabled people, with many relying on them to live independently. They could therefore lead to increasing pressure on already stretched local services.

Even the government’s own party members criticised these cuts, which have since led to the shock resignation of Iain Duncan Smith and a government U-turn on the reforms to PIP, which will now not go ahead.

But there is no alternative plan to fill the hole left by this U-turn so local government may still need to brace themselves for cuts elsewhere.

Education

Under the education reforms, every state school in England is to become an academy by 2020 or have a plan in place to do so by 2022, ending the century-old role of local authorities as providers of education.

But, as our recent blog has highlighted, there are ongoing concerns over the academy programme with little evidence to justify it.

The plans have been criticised by councils and teaching unions. Chairman of the Local Government Association (LGA) children and young people board, said:

We have serious concerns that regional schools commissioners still lack the capacity and local knowledge to have oversight of such a large, diverse and remote range of schools.”

Ofsted rated 82% of council maintained schools as good or outstanding, while the results of recent HMI inspections of academies has been described as “worrying”. The findings also highlighted a “poor use of public money”, something that has been reiterated by the LGA.

In response, the LGA noted that “councils have been forced to spend millions of pounds to cover the cost of schools becoming academies in recent years”.

Devolution deals

There was some better news for local government in the form of new devolution deals with the West of England, East Anglia, and Greater Lincolnshire. The West of England and East Anglia will each receive a £900 million investment fund over 30 years to boost economic growth, while Greater Lincolnshire’s deal is worth £450 million.

New powers over the criminal justice system are also to be transferred to Greater Manchester and business rates are to be fully devolved to the Greater London Authority next year, 3 years before everyone else.

The LGA welcomes these deals as recognition of the economic potential of all local areas and calls for a return to the early momentum in which similar deals were announced last year.

Flood defences

Another positive for local government was the £700 million funding boost for flood defences by 2020-21, including projects in York, Leeds, Calder Valley, Carlisle and across Cumbria, to be funded by a 0.5% increase in the standard rate of Insurance Premium Tax.

Considering the extent of recent winter flooding, this was welcomed by local government as a “step in the right direction”.

However, the LGA has stated that councils will need further help from government once the full cost of recent damage emerges. It has also called for flood defence funding to be devolved to local areas so the money can be spent on where it is really needed.

Final thoughts

So despite no direct cuts for local government, and the welcome boost to local economies and flood defences, it remains to be seen whether local government will lose out financially in the longer term.


Read our related blog on the total academisation of schools.

Follow us on Twitter to see what developments in public and social policy are interesting our research team.

 

Costs and benefits of the National Living Wage

English money

By Heather Cameron

Britain’s bosses have been urged by the government to prepare early for the introduction of the National Living Wage (NLW) in April next year.

Firms are advised to follow four simple steps:

  • know the correct rate of pay – £7.20 per hour for staff aged 25 and over
  • find out which staff are eligible for the new rate
  • update the company payroll in time for 1 April 2016
  • communicate the changes to staff as soon as possible

Support

This push coincides with a new poll revealing that 93% of bosses support the Living Wage initiative, with a majority believing it will boost productivity and retain staff.

This is supported by new research by the University of Strathclyde and the Living Wage Foundation (LWF), which uses real-life case studies and evidence from employees working for accredited Living Wage employers. It suggests that paying staff a living wage leads to many business benefits – such as staff retention, more efficient business processes, improved absenteeism and better staff performance.

Potential benefits

Many of the findings highlighted relate to research on the London Living Wage (LLW). Among these include:

  • 50.3% of employees receiving the LLW registered above average scores for psychological wellbeing, a sign of good morale, compared to just 33.9% of non-LLW employees studied
  • an average 25% reduction in staff turnover was reported for organisations moving to the LLW
  • and 70% of employers studied reported reputational benefits through increased consumer awareness of their commitment to being an ethical employer

Estimates show that 4.5 million employees will see a rise in their wages as a result of the introduction of the NLW in 2016, with a further 2.6 million gaining from spillovers. By 2020, 6 million employees are predicted to have received a pay increase.

Up to one in four workers are expected to experience a significant positive impact from the NLW. If the result is indeed a happier workforce, perhaps the knock-on effect for businesses will be improved productivity.

There will however be variation across different parts of the UK and across different households, depending on how the NLW interacts with the tax and benefit system (it should be noted that many estimates were made prior to the u-turn on welfare reform). And let’s not forget that the NLW is not for all as under-25s will not be eligible.

Costs to employers

The impact on employees and therefore employment generally, will also depend on the actions firms take to prepare for the NLW in order to mitigate costs.

Indeed, the research from Strathclyde and LWF recognises that implementing the NLW will inevitably involve initial costs to businesses and could represent an issue for some companies more than others.

According to the Federation for Small Businesses, a negative impact on business is expected by 38% of small employers, with many expected to slow their hiring and raise prices.

It has been estimated that the NLW may lead to an increase in the unemployment rate by 0.2% points in 2020; resulting in around 60,000 more people unemployed and total hours worked per week across the economy around 4 million lower.

Businesses may also look to employ those under the age of 25 who won’t be eligible for the NLW. This could particularly impact on those sectors with a high proportion of lower paid employees, such as social care – a sector that is already under financial pressure.

The roll out of the Living Wage has certainly raised concern over potential costs for councils, which are having to deal with increasing budget cuts. The Local Government Association (LGA) has estimated that the NLW could cost local authorities £1bn a year by 2020/21.

So while increasing wages for low paid workers may seem like a no-brainer in the bid to help reduce in-work poverty, the full impact on employees, employers and therefore the economy, remains uncertain. Only time will tell what the true impact of the NLW will be.


Further reading: if you liked this blog post, you might also want to read our previous blog on the Living Wage

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Fossil fuel divestment:an idea whose time has come?

Introduction

Within just a few years, fossil fuel divestment has overtaken previous campaigns targeting apartheid in South Africa and tobacco advertising to become the fastest growing divestment movement in history.

In September, a report from Arabella Advisors found that 436 institutions and 2,040 individuals across 43 countries and representing $2.6 trillion in assets had committed to divest from fossil fuel companies.

What is Fossil Fuel Divestment?

Organisations, communities and individuals commit to fossil fuel divestment (FFD) by making a public pledge to stop buying stocks, bonds and investment funds from energy companies whose primary business relies upon coal, gas or oil. They also promise to invest in climate solutions, such as clean energy and sustainable agriculture.

Who’s involved in FFD?

The roots of the FFD movement may be found in the college campuses of the United States, where student campaigning has resulted in around 40 educational institutions (including the universities of California, Georgetown and Stanford) making full or partial divestments from fossil fuels.

The movement has spread rapidly beyond the education sector, taking in religious groups, municipalities, NGOs and healthcare organisations. While most divesting institutions are US-based, FFD has also become a worldwide movement, with the cities of Oslo in Norway and Uppsala in Sweden, and the Australian Capital Territory Government making their own commitments. Pledges to divest from fossil fuels have also been made by some surprising sources, including the Australian city of Newcastle (home to the largest coal port in the world) and the Rockefeller Brothers Fund (heirs to the Rockefeller oil fortune).

In the UK, the FFD movement has also seen exponential growth. Last year, the University of Glasgow became the first academic institution in Europe to divest from the fossil fuel industry. Since then, other higher education institutions, including the universities of Oxford and Surrey and the School of Oriental and African Studies (SOAS) have made pledges to reduce their fossil fuel investments.

Four UK local authorities – Oxford, Bristol, Kirklees and Cambridge – have committed to FFD, while councils in York, Bradford, Reading and Hackney are reviewing their fossil fuel investments.

Other high-profile organisations committing to FFD include the British Medical Association and the Environment Agency’s pension fund.

The factors driving FFD

Moral and economic arguments have converged to propel fossil fuel divestment. FFD advocates say it’s morally wrong to profit from climate change, a view powerfully expressed by Nobel laureate Archbishop Desmond Tutu:

“Just as we argued in the 1980s that those who conducted business with apartheid South Africa were aiding and abetting an immoral system, we can say that nobody should profit from the rising temperatures, seas, and human suffering caused by the burning of fossil fuels.”

There is also a growing recognition in the business world of the financial risks associated with investment in fossil fuels. As the Arabella Advisors report observed:

“Reports by Citigroup analysts, HSBC, Mercer, the International Energy Agency, Bank of England, Carbon Tracker Initiative, and others have offered evidence of a significant, quantifiable risk to portfolios exposed to fossil fuel assets in a carbon constrained world. The leaders of several of the largest institutions to divest in the past year have cited climate risk to investment portfolios as a key factor in their decisions.”

At the same time, falling costs have made renewable energy more attractive both to consumers and investors, although investment in clean energy is far from the estimated $1 trillion annually needed to limit global warming to 2˚C.

Resistance and resurgence

FFD is not without its critics, and some organisations have resisted pressure to change.  Last month the Massachusetts Institute of Technology (MIT) rejected calls to divest its endowment from the fossil fuel industry. Instead, MIT argued that engaging with the fossil fuels industry was a more effective way to address climate change. Similarly, Harvard University has declined to stop buying fossil fuel company stocks, claiming its research and teaching contributes to a better understanding of global warming.

But FFD campaigners are not backing down. In May the University of Edinburgh ruled out a wholesale sell-off of its £27m investments in oil, gas and coal companies. However, after a 10-day occupation by students the university clarified its position, and announced it would fully divest from three of the world’s biggest fossil fuel producers within six months.

There is also growing pressure on local authority pension funds to reduce their fossil fuel investments. In September, it was reported that UK local government pension funds hold over £14 billion in coal, oil and gas companies.

The focus now shifts to the UN Climate Change Conference, starting today in Paris. Divestment campaigners are making it clear that they expect governments attending the Paris summit to follow the lead of the FFD movement by committing to phase out support for the consumption and production of fossil fuels.


 

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Further reading

A beginner’s guide to fossil fuel divestment

The case for fossil-fuel divestment

What’s preventing health and social care from going digital?

Two women using a tablet computer.

Image by Innovate 360. Licensed for reuse under Creative Commons.

By Steven McGinty

In the first of two articles focusing on technology in health and social care, I will be looking at some of the barriers organisations face in adopting digital technologies. Financial pressures such as the reduction in public spending, as well as an ageing society, mean that health and social care will be expected to meet greater levels of demand with fewer resources.

The UK Government believes that the implementation of technology is the solution to helping the health and social care system become more efficient and more effective at delivering patient care. However, before health and social care can reap the benefits of technology, a number of barriers have to be broken down.

Information sharing challenges

Integration has been a main focus of health and social care in England, as well as the devolved administrations. If integration is to work successfully, different organisations must be able to share data securely. At the moment, data is recorded in a variety of ways across a number of different IT systems. We also have a situation where the main method for sharing data securely in local authorities, the Public Services Network (PSN), is not fully integrated with either the NHS in Scotland or England. Eddie Copeland, of the Policy Exchange, suggests that full integration of the NHS with the PSN should be seen as a priority.

Financial costs

The financial costs of rolling out new technology within an organisation can be significant. These costs can include the procurement of hardware and software, internet connections, and the training of staff. For organisations which are undergoing major budgets cuts, it may seem very difficult to justify the investment in technologies, even if there is the potential for savings in the future.

Management issues

The importance of technology in organisations can be underestimated by decision-makers. For example, according to Martin Ferguson, Director of the Society of IT Management (Socitm), the ICT challenges involved in introducing the new Care Act in England are not being given enough priority. He highlights that if organisations are unable to share information safely by April 2015, they risk failing to comply with new reporting regulations.

Local authorities can also have policies that restrict the use of technology. A recent Skills for Care report into the digital capabilities of social care found that local authorities are still wary of certain technologies, including cloud based systems, which can offer low-cost solutions, and social media, which can lead to savings for local authorities if used correctly.

The health and social care workforce

The Skills for Care report highlights that over 95% of staff feel they are confident in basic online skills. However less than a quarter of managers believe that they have staff with enough skills to make use of digital technology. This mismatch means that managers may be hesitant to introduce new technologies over fears that staff may have difficulties in using the technology, as well as the costs associated with staff training.

There is also a suggestion that social care staff may be resistant to the introduction of new technologies, due to concerns that introducing technology may over-complicate things and move the focus away from the patient. As we noted in a recent article on digital services within government, a key part of introducing any new technology is changing the mindset of staff and having effective leadership in place to champion it.

These are just some of the challenges associated with introducing digital technologies into health and social care. In a future article, we will look more at how technologies can be used within health and social care and the benefits they can bring to organisations. We also look at a case study of an innovative technology partnership between Calderdale Council and Idox, which is addressing the shared services agenda in social care.


Further reading:

 

Who pays for parks? Are ‘green benefit districts’ the answer?

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Southwark Park, London. Photograph: Mike Faherty. Licensed for reuse under a Creative Commons License

The benefits of urban parks are well told. Quite apart from their environmental impact, green spaces really do make a difference to our quality of life: from health to housing, community cohesion to crime prevention, city parks generate spin-offs extending far beyond their green acres.

They also cost money. Even before the economic crisis of 2008, the Commission for Architecture and the Built Environment was highlighting the challenges of maintaining urban parkland:

“We risk a never-ending cycle of large areas of poor quality urban green space that are restored with public money, then decline, then need more public investment to restore them to a good standard.”

In the age of austerity, those challenges have intensified: between 2010/11 and 2012/13 local authority spending on open spaces in England was cut by an average of 10.5%. Now, more than ever, local authorities have to think more imaginatively about sources of revenue and capital funding for urban green spaces.

Last summer, the Policy Exchange think tank came up with some ideas for attracting more money to maintain urban parks. These included:

  • extending the Gift Aid scheme to community civic improvement groups;
  • requiring new green spaces to include a long term funding plan;
  • allowing communities and local authorities to apply for funding to employ park keepers in those spaces identified as crime hotspots.

The report also encouraged the idea of green benefit districts. Also known as park improvement districts, these are urban parks, gardens, and green spaces whose upkeep is funded in part by a tax on nearby residents.

It’s an approach that echoes the concept of business improvement districts, defined areas where participating businesses pay a levy for security, landscaping and other improvements to their trading environment.

Some communities in San Francisco are already exploring the idea, teaming up with housing developers to establish a green benefit district that aims to protect and enhance 25 small parks, community gardens and ad hoc recreation spaces.

In the UK, green benefit districts might prove to be a harder sell. Many people feel that they are already contributing quite enough for the maintenance of parks through the council tax, and the Policy Exchange report stressed that the idea would not be appropriate in deprived areas.

But the authors suggested that home owners living near parks might be persuaded to pay more for amenities that raise the value of their properties.  An analysis of price increases of homes in south London before and after a £2.7m regeneration of Southwark Park revealed a significant increase in prices of properties located within 100m of the park. The report could not conclude that this increase was due to renovation of the park, but suggested that the link between green space quality and property prices was worth further investigation.

The green benefit districts idea has received a cool response from coalition ministers, who suggest that cutting waste and inefficiency in local government is preferable to additional taxation. But, with the prospect of councils’ budgets being squeezed further in the coming years, the idea of green benefit districts might well take root.


 

Further reading

The Idox Information Service has a wealth of research reports, articles and case studies on urban green space. Items of interest include:

The contribution of green and open space in public health and wellbeing

Future parks (Birmingham City Council seeking NHS funding for upkeep of parks)

Time to re-think parks (innovative income generation for public parks)

Park land: how open data can improve our urban green spaces

Rethinking parks: exploring new business models for parks in the 21st century

N.B. Abstracts and access to subscription journal articles are only available to members.