Opinion: John Healey’s first test: make it easier to hire

Finito World

John Healey has a difficult Budget ahead of him, though perhaps that is simply part of the job description. The British electorate has always had the understandable habit of wanting Scandinavian public services, American levels of taxation and, if possible, a balanced budget at the end of it.

Amid all the larger arguments about fiscal headroom, growth forecasts and the size of the state, there is one rather more modest question which I hope the Chancellor keeps in mind: how easy is it, in Britain today, to give someone a job?

At Finito World we naturally spend a great deal of time thinking about employability from the point of view of the person seeking work. We tell young people to acquire skills, improve their CVs, learn how to interview, understand AI, network effectively and develop that mysterious quality known as resilience. Much of this is excellent advice, but it can obscure the fact that employability is a transaction requiring somebody on the other side.

The difficulty is that we have spent considerable sums trying to make people more employable while also making them more expensive to employ.

Employer National Insurance is now 15 per cent above the relevant threshold, to which must be added pensions, holiday and sick pay, equipment and, especially with younger employees, training. Each measure has its rationale, but an employer doesn’t encounter government policy one measure at a time. He encounters the total at the bottom of the spreadsheet and decides whether to hire.

The people most vulnerable to that calculation aren’t usually the experienced accountant, the brilliant engineer or the proven salesperson. Businesses find ways of employing people they absolutely need. The casualty is more likely to be the person they might employ: the bright graduate without experience, the school-leaver who will need six months of training, or the junior assistant who might become indispensable but isn’t yet.

This is where I think Healey could usefully apply what might be called the first-job test. Whenever the Treasury proposes a measure affecting employers, it should ask whether the result makes a business more or less likely to take a chance on an inexperienced person.

There is a wider point here, since the first job is arguably the most important one anybody gets. It provides the experience required for the second job, the reference required for the third and, somewhere along the way, the confidence required for a career. It also teaches the innumerable small lessons about working life which no employability course can quite reproduce.

Government will inevitably continue to spend money on training schemes and initiatives designed to get people into work, and some of them will do considerable good. But there is something faintly absurd about subsidising people to become employable while simultaneously increasing the cost of employing them.

When Healey stands up on 28 October there will be endless discussion of winners and losers, tax rises and fiscal rules. Somewhere away from Westminster, however, a small employer will be wondering whether to take on one more person.

A successful Budget might simply make it easier for them to say yes.