23 July 2012
Government should tackle youth unemployment through localised approaches that stimulate demand among employers, a new report by CentreForum suggests.
The report finds that reputed enemies of youth employment, such as immigration and the national minimum wage, have contributed little to recent rises in youth unemployment. It says that the most prominent factor has been a drop in demand for the labour of young workers with low skills.
The report urges government to focus on schemes which stimulate demand for young workers and are responsive to local labour markets. It points to the Netherlands where municipalities are given cash by central government to get all young people into work or further training within three months of leaving school.
It also points to Manchester where the city council's work and skills partnership has generated over a thousand extra jobs for young unemployed people. The report praises the Manchester scheme for providing participants with 'real' jobs that reflect normal working conditions, and for using demand side incentives that encourage businesses to take on more young workers. It calls for such schemes to be rolled out elsewhere in the country.
Report author Callum Biggins said:
"The trouble with coalition policy is its focus on improving the employability of young people through work experience, rather than providing them with sustainable employment opportunities. We need to go to the heart of the problem which is a lack of demand for low skilled labour."
CentreForum's chief economist Tim Leunig, who contributed to the recent 'Wasted youth' episode of BBC Radio 4 Analysis, added:
"Youth unemployment is a long term problem that central government cannot tackle alone. Local government schemes in Manchester and the Netherlands have proven to be highly successful at getting young unemployed people into work. It is vital that we learn from best practice at home and abroad."
NOTES TO EDITORS
The CentreForum report 'A demanding job: finding sustainable employment for Britain's youth' can be downloaded.
Concerns about the coalition government's flagship youth contract, which 'went live' on 20 July, can be found on page 30 of the report.
16 July 2012
The New Economics Foundation (nef) has today published a report criticising government proposals to introduce local and regional pay in the public sector. The report was commissioned by the TUC and can be accessed by clicking on this link.
CentreForum, a longstanding critic of national pay bargaining, has made the following observations:
- nef has essentially modelled the economic impact of a further reduction in the pay of every public sector worker in the country. nef's model oddly does not account for what might be done with the money saved.
- The report does not say anything about increasing pay in some areas, be it areas with high costs of living or deprived areas that cannot currently use higher pay to attract teachers or doctors who could otherwise work in affluent areas for the same pay.
- The CentreForum report 'More than we bargained for', by Alison Wolf, does cover these benefits. In contrast to nef's abstract report, real world examples include using the pupil premium to pay for better teachers in deprived areas, or for some institutions to pay less but employ more people. One size does not fit all.
- The nef report addresses well the difficulties of comparing public and private sector pay, and that many firms have national pay structures too. But it is odd that having argued there is no pay gap, the nef report then models the effect of closing a large pay gap.
- It is important to ask whether the private sector really is 'crowded out', but the report fails to address other important questions such as the difference between institution level and regional pay bargaining, or why it is currently okay for the London region to pay special rates but not okay for anywhere else.
4 July 2012
Earlier in the year the deputy prime minister told CentreForum that the government would be appointing an independent adviser on employee ownership, who would present recommendations at a summit in July.
That summit took place this morning at the ICAEW. (1)
Graeme Nuttall, the adviser appointed to lead the review of employee ownership, was tasked with identifying barriers to employee ownership and to "help find solutions to knock them down". The Nuttall review says that policy should focus on:
- raising awareness of employee ownership.
- providing for a 'right to request' employee ownership, encouraging more discussions between employees and employers about employee ownership.
- promoting employee ownership as a 'business succession solution'.
- reducing the complexity of employee ownership.
Similarly the CentreForum reports 'Employee empowerment: towards greater workplace democracy' (January 2012) and 'Employee ownership: unlocking growth in the UK economy' (March 2012) recommended:
- an awareness raising campaign targeted at employers, raising the issue of workplace democracy and its positive consequences for productivity.
- giving employees working for a firm that employs more than 250 people the 'right to request' a broad based employee share scheme.
- creating a 'right to request' employee ownership on business succession.
- taking steps to simplify the tax and legislative systems to boost employee ownership.
Patrick Brione, co-author of 'Employee empowerment' and 'Employee ownership', said:
"We are extremely pleased to see the government taking notice of the mounting body of evidence in favour of more employee ownership. It should be at the very heart of the growth strategy."
"The measures announced today, including giving employees the right to request shares, reflect many of CentreForum's recommendations. We look forward to seeing the government take concrete action to implement the recommendations of the Nuttall review."
CentreForum's chief economist Tim Leunig added:
"In an economy based on human capital, employee ownership offers an important route to success. The government is right to take this seriously."
NOTES TO EDITORS
(1) The BIS media release 'Government shows support for employee ownership' (4 July 2012) can be accessed by clicking on this link. It includes responses to the Nuttall review from the deputy prime minister Nick Clegg and employment relations minister Norman Lamb.
3 July 2012
Anaerobic digestion plants that turn waste and purpose grown crops into energy have the potential to power more than 2.5 million UK homes by 2020, a new report by CentreForum suggests.
Yet the think tank warns that this vision will only be realised if certain barriers to sector growth and development are removed. (1)
The report 'Hit the gas' sets out a number of advantages to expanding the anaerobic digestion sector. It praises anaerobic digestion for generating a multi purpose biogas that is easy to transport and store, and for diverting food waste from landfill.
Anaerobic digestion currently produces around 1.3 TWh of energy in the UK - enough to power 300,000 homes. CentreForum believes that the sector can expand by more than 800 per cent (11 TWh or 2.5 million homes) over the next eight years if the recommendations of its report are followed.
The coalition agreement made a firm commitment to support this expansion.
Ed Davey, Secretary of State for Energy and Climate Change, said:
"The government is committed to promoting an increase in energy from waste schemes through anaerobic digestion. CentreForum's report offers some interesting ideas for how this increase can be achieved."
Report co-author Quentin Maxwell-Jackson said:
"Anaerobic digestion technology has so many clear advantages over other waste treatment and energy generation options that it is very surprising it has not taken off in a big way yet in the UK. But that is because trying to get an anaerobic digestion scheme up and running at the moment is like trying to win a cycle race with the brakes on."
The report's other author Thomas Brooks added:
"There are some simple things government can do to release the brakes on anaerobic digestion. For instance, simply banning organic waste to landfill in England, as they are already planning to do in Scotland, would give anaerobic digestion a huge boost."
Lord Redesdale, Liberal Democrat peer and chairman of the Anaerobic Digestion and Biogas Association (ADBA), said:
"This is an important report which lays out clear recommendations for how government can better support the anaerobic digestion sector and realise the benefits it could bring to economic growth, waste management, renewable energy and climate change."
"CentreForum have shown that anaerobic digestion already represents a significant part of the UK's renewable energy mix - generating four times more electricity than solar PV - and are pushing for government to support an 800 per cent increase in that generating capacity by 2020..." [full quote in NOTES TO EDITORS]
NOTES TO EDITORS
'Hit the gas: how to get the anaerobic digestion sector moving' by Thomas Brooks and Quentin Maxwell-Jackson can be downloaded.
(1) The report identifies six barriers to growth and development in the anaerobic digestion sector, and offers six solutions. The NFU has argued that the government should set a target of 1,000 farm based anaerobic digestion plants by 2020. Today there are only 27 farm based plants, so this represents a major opportunity.
- Obtaining financing | Many anaerobic digestion schemes have struggled to secure financing. ADBA should build on the experience of its finance forum to produce a succinct guide for developers and future funders. The guide should contain information on key financial risks and how they can be managed.
- Feedstock supply | Waste treatment anaerobic digestion plants often struggle to secure long term supply contracts for feedstock. Only 13 per cent of households in England have the benefit of separate food waste collection, whereas in Wales 82 per cent are covered. The government should move to ban all food waste to landfill in England by 2020.
- Confusion about government support | There is a widespread perception that government policy on anaerobic digestion is not coherent, consistent or stable. Developers need more certainty.
- Government appears opposed to purpose grown crops | Using purpose grown crops for anaerobic digestion has several advantages, including the relative technical simplicity of anaerobic digestion plants treating purpose grown crops, the virtuous cycle in which digestate returns nutrients to the land where purpose grown crops are grown, and a simpler digestate regulatory regime. Government concerns over purpose grown crops promoting monoculture, diverting incentives from waste schemes, harming the environment and compromising the UK's food security do not stand up to scrutiny.
- Cost and regulatory complexity of making grid connections | Injection to the gas grid is the most efficient use of biogas, but only two plants are currently connected. Amendments to the gas regulations, already being contemplated, such as increasing the amount of oxygen bio-methane may contain and relaxing the stringent accuracy requirements on calorific value measurements would make a major difference.
- Underdeveloped market for digestate | Although the anaerobic digestion digestate market has a potential value of over £200 million a year, for most anaerobic digestion plants digestate is currently viewed as a cost. Defra and WRAP have recognised the need to help the market develop, and CentreForum welcomes the initiatives they have taken. It would help further if regulations were amended so that farm cooperatives could spread waste co-digested with on farm waste as long as both were pasteurised. More education about the benefits of digestate among farm end users and major supermarket buyers is also needed.
Lord Redesdale's quote in full:
"This is an important report which lays out clear recommendations for how government can better support the anaerobic digestion sector and realie the benefits it could bring to economic growth, waste management, renewable energy and climate change."
"CentreForum have shown that anaerobic digestion already represents a significant part of the UK's renewable energy mix - generating four times more electricity than solar PV - and are pushing for government to support an 800 per cent increase in that generating capacity by 2020. As they also recognise, this is about more than just renewable energy. By leading the world in waste treatment through anaerobic digestion, the UK could create export markets which support tens of thousands of jobs in manufacturing and other sectors. Anaerobic digestion will also be central to the future of sustainable food production, by recycling critical nitrates and phosphates back to land and providing economic support to the farming industry."
"As CentreForum have clearly shown, realising all those benefits requires action from government - a ban on biodegradable waste to landfill, more source segregation of waste, sensible support for the use of purpose grown crops, and funding from the green investment bank. We look forward to working on all of these areas and more over the coming year."