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

Our popular Ask-a-Researcher enquiry service is one aspect of the Idox Information Service, which we provide to members in organisations across the UK to keep them informed on the latest research and evidence on public and social policy issues. To find out more on how to become a member, get in touch.

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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.


 

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

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.

Can the Care Act really provide the transformation in adult social care needed for modern society?

pregnant carer giving pills and medication to her patientBy Heather Cameron

The legislative framework for adult social care in England has been described as out-dated by the Department of Health (DH) as it is focused on crisis intervention rather than prevention and early intervention, and on the provision of services, rather than enabling the system to be centred around the health and wellbeing of people and carers. The DH has therefore highlighted the need for government intervention to reform the legal framework so it better fits the purpose of modern care and support.

The government’s objectives for adult social care are to improve people’s quality of life, delay and reduce the need for care, ensure positive care experiences and safeguard adults from harm. The Care Act 2014 was passed into law on 14th May 2014 with the aim of transforming adult social care in England to meet these objectives.  Although the Act is generally concerned with care and support matters in England, some provisions extend to the devolved nations.  The main focus of the Act is on promoting individual wellbeing and preventing the need for care and support. In particular, it makes provision:

  • to reform the law relating to care and support for adults and the law relating to support for carers;
  • about safeguarding adults from abuse or neglect;
  • about care standards;
  • about Health Education England;
  • about the Health Research Authority;
  • about integrating care and support with health services; and
  • for connected purposes.

According to Care and Support Minister, Norman Lamb: “the Care Act represents the most significant reform of care and support in more than 60 years, putting people and their carers in control of their care and support. For the first time, the Act will put a limit on the amount anyone will have to pay towards the costs of their care.”

Due to come into force in April 2015, with its provisions related to funding reform to be implemented a year later, the success, or otherwise, of the Care Act’s implementation is as yet unknown.

Nevertheless, there has been much discussion over the potential issues and challenges with regard to implementation. The College of Social Work (TCSW) argues that the implementation of the legislative reforms “will be challenging and demand significant cultural and attitudinal changes, both strategically and in professional practice”.

The Act presents significant changes for local authorities which will be challenging to implement in the proposed timescale. Concerns have been raised by both local authorities and charities over the funding of the Act’s provisions and the sustainability of adult social care services. A recent article published in Community Care highlights such concerns among councils, noting that nine out of 10 councils believe key parts of the Act will be jeopardised if the government fails to provide local authorities with adequate funding for implementing the reforms.

According to London Councils, London is facing double the shortfall in funding to prepare for the Care Act than previously thought with proposed new funding arrangements unveiled by the government to leave the capital with a £36 million gap.

Moreover, a subsequent article in Community Care suggests that local authorities need to consider the training challenge now in order to negotiate the issues raised by the new funding reforms.

The main costs of the Act relate to improved legal rights for carers (rising to £175 million per annum). However, there may be additional costs, for example where local authorities face increased demand for services due to improved information. Greater clarification on the support available to carers could potentially increase the workload for social care professionals as the number of carers’ assessments could also increase.

The additional requirements of providing support to self-funders as well as carers could also take its toll on councils. Caroline May, business partner in finance at Havering LBC noted at a recent roundtable that:

“There are a lot of unknowns out there that will present us with financial challenges. I think culture shift is going to be huge across the board.”

The Association of Directors of Adult Social Care (ADASS), which represents local authorities, is unconvinced that local authorities can implement the changes required in the proposed timescale. In a joint report with the Local Government Association, they highlight the financial challenges local authorities face, particularly at a time of budget cuts and increasing demand for services. A recent inquiry into adult social care in England has highlighted that there was an 8% real terms cut in spending between 2010/11 and 2012/13; and demand for care provided by adults is projected to rise by over 50% between 2007 and 2032, while the supply of this care is projected to rise by only 20%, according to Carers UK.

Despite these funding issues, however, cost savings have also been identified in relation to public expenditure savings of improved support for carers, according to the DH’s recent impact assessment, which also states that these cost savings outweigh other new costs overall. The potential benefits of the Act for people with care and support needs which could also lead to savings were identified as: “improved wellbeing, better prevention of care and support need, greater clarity, consistency and equality of access to care and support and reduction of unmet need.”

It will undoubtedly be challenging to implement the provisions of the Care Act and it remains to be seen whether the funding provided will be adequate.

Only time will tell whether the proposed reforms will truly transform the currently outdated adult social care system.


 

Further reading

The Idox Information Service has a wealth of research reports, articles and case studies on a range of adult social care issues. Items we’ve recently summarised for our database include:

The Care Act and the care market: conference summary

Adult social care in England: sixth report of session 2014-15 (HC 518)

Using technology to deliver social care, IN Local Government Chronicle, No 7598 17 Jul 2014

Carers’ quality of life and experiences of adult social care support in England, IN Health and Social Care in the Community, Vol 22 No 4 Jul 2014

Transforming adult social care (improving efficiency in council social care services), IN Local Government Chronicle, 5 Jun 2014

Care Act 2014

Understanding personalisation: implications for social work, IN Journal of Social Work, Vol 14 No 3 May 2014

State of caring 2014

Care home top-up fees: research with local authorities

Making our health and care systems fit for an ageing population

N.B. Abstracts and full text access to subscription journal articles are only available to members of the Idox Information Service.

A bumpy road ahead: recent bad weather highlights the state of UK roads

bike in flood

by James Carson

The storms which have continued to batter much of the UK since the end of 2013 have thrown into sharp focus the state of the country’s roads, something highlighted by an article in this month’s issue of The Surveyor. Continue reading