Four ways for Theresa May to ensure the Brexit process helps make a UK that works for everyone.
When Theresa May triggered Article 50 on Wednesday it felt a bit like the start of a chess tournament. Interlocking games of strategy are being played out between the UK Government and the European Commission, between the different parts of the UK and with individual EU countries. But this is very far from a game.
The Brexit vote was strongest in areas of long lasting and entrenched deprivation, with high levels of poverty and economies which don’t provide decent living standards. UK Government and EU funding has been used for many worthwhile projects in these areas, but it has not been enough to transform the underlying conditions of life for many - low paid jobs, unemployment, poor health, inadequate education and lack of opportunities.
The economic impact of Brexit is hard to predict but even the most optimistic scenario (a fast, smooth process delivering beneficial trade deals for the UK with the EU and other parts of the world, leading to a rebounding economy) does not guarantee that those who voted for Brexit will see their lives significantly improve. If Theresa May is to be judged a success she does not only need to oversee a successful negotiation, she needs to deliver a real revolution in opportunity and security: she needs to break the back of UK poverty. That means taking action to protect low income families from rising prices and falling incomes, improving the prospects of struggling places and putting forward a real plan for adult skills. It also means demanding analysis of the impact of changes to our international trade arrangements on people in poverty so her negotiating team can aim for the best deal.
The Government’s most recent poverty figures showed that 14 million people live in poverty in the UK. Numbers started to rise last year and we project that by 2020/21 there will be over a million more children in poverty than there are now. The real incomes of the poorest tenth are set to be lower in 2020 than they are today, whilst those in the middle and at the top will see their incomes rise. With inflation rising, earnings growth weak and many tax credits and benefits frozen, life is set to get harder for those at the bottom over the next few years.
Times may be about to get harder, but many of those who voted for Brexit also saw far fewer benefits from the economic good times over the last few decades. Education was a big dividing line in the Brexit vote; those with higher qualifications were overwhelmingly likely to vote Remain while those with no or low qualifications mostly voted Leave. For example, 70% of people with no qualifications voted for Brexit, 70% of those with a postgraduate degree voted Remain. That makes sense as changes to the labour market and the global economy in recent decades mean that higher skills and qualifications are increasingly necessary to get a good job and to benefit from economic growth. We are in a period of hollowing out – the middle ranking jobs which let people with few formal qualifications work their way up are disappearing, leaving many trapped at the bottom of the labour market. Our research showed that there was a powerful ‘double whammy’ underpinning the Brexit vote – the combination of lacking qualifications (and therefore finding it hard to compete in the modern economy) as well as living in a low-skilled community, where there are fewer opportunities in the first place.
The UK needs to get the best possible deal from the negotiations, but the Prime Minister simultaneously needs a plan to make sure that those at the bottom are protected from the imminent economic pressures and will benefit from the opportunities and changes to come. As the ‘talks about talks’ begin in Brussels, she should take four steps at home to put us on the right path:
- Use the Autumn Budget to deliver the support that low income families desperately need. Unfreezing benefits so that people’s incomes can keep up with price rises and increasing the amount of earnings that families keep before Universal Credit is withdrawn should be high priorities.
- Demand analysis of how changes to our international trade affect people in poverty. The Joseph Rowntree Foundation will be carrying out work on this in the next few months – but the Prime Minister should ensure that her own civil servants deliver it to her team before the EU negotiations begin in earnest this Autumn.
- Develop a real plan for struggling places. The Government’s focus so far has been on devolving power to Metro Mayors who will run the cities which power the Northern Powerhouse, Midlands Engine and other city regions. But the Brexit vote highlighted the dissatisfaction of people who live in the struggling towns and villages which may be near to thriving cities but are not benefiting from their success. The Government has promised that their Industrial Strategy will deliver ‘wealth and opportunity across every community’, but the Green Paper currently falls far short of that. The Government’s next step should be a plan for struggling places, and an Industrial Strategy with a clear focus on improving productivity in low pay sectors.
- Low qualifications and skills were the strongest predictor of voting Leave. The Spring Budget included a small amount of funding for lifelong learning but no serious plan to boost adult skills. The Government should commit to meeting all basic skills needs (literacy, numeracy and digital) by 2030 by doubling the current numbers of adults getting basic skills training from 100,000 a year to 200,000. At the same time they should work with employers and local authorities to improve training for people stuck in low paid jobs.