\n<\/p>\n
Unlock the Editor\u2019s Digest for free<\/p>\n
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.<\/span><\/p>\n The UK has lost the labour market flexibility that once underpinned growth and needs to rethink policies on tax, immigration and workers\u2019 rights to restore economic dynamism, according to the think-tank set up by former prime minister Sir Tony Blair.<\/p>\n Moves by the Labour government had made the UK economy less agile just as it became essential to adapt to changes driven by the adoption of artificial intelligence, the Tony Blair Institute said in a report published on Sunday that urged ministers to unpick some of its flagship policies.\u00a0<\/p>\n \u201cDynamism should be at the heart of the government\u2019s growth strategy,\u201d said Tom Smith, the TBI\u2019s director of economic policy, arguing for reforms that would make it easier for young, expanding companies to raise capital, take risks \u2014 and fire staff.\u00a0<\/p>\n Among other proposals, it said the government should make it easier to dismiss high earners; restrict the use of non-compete clauses that hinder job moves; make increases in the minimum wage contingent on economic conditions; and create new visa routes for low-paid construction and care workers.\u00a0<\/p>\n The think-tank\u2019s prescription for restoring the UK\u2019s economic dynamism is in stark contrast with the calls by leftwing Labour MPs for Prime Minister Sir Keir Starmer to step up social protection and intervene to support jobs as unemployment rises.\u00a0<\/p>\n But its proposals echo concerns by business groups and policymakers including the Bank of England\u2019s chief economist Huw Pill that a combination of post-Brexit restrictions and government policies is driving up labour costs and holding back growth.\u00a0<\/p>\n Many economists say chancellor Rachel Reeves\u2019 decision to raise employers\u2019 national insurance contributions while pushing up minimum wages has led to an increase in UK youth unemployment.\u00a0<\/p>\n One of the TBI\u2019s proposals is to restore the Low Pay Commission\u2019s authority to slow, pause or reverse increases in the minimum wage if they are damaging jobs. The current policy of holding the main rate at two-thirds of median earnings and seeking to raise youth rates to match was a \u201crisky strategy\u201d against a backdrop of rising unemployment, Smith said.\u00a0<\/p>\n The TBI also wants the government to reverse recent legislation giving workers earlier protection against unfair dismissal six months into a new job and instead adopt a \u201ctiered\u201d system where high earners could opt out of protection to win better pay.\u00a0<\/p>\n The cost of axing staff was three times higher in the UK than in the US, Smith argued, and this was \u201csignificant if you\u2019re a fast-growing company trying to take a risk on a new venture\u201d.\u00a0<\/p>\n Other proposals are centred on making it easier for companies to raise capital, including by using the British Business Bank to kick-start lending using intellectual property instead of physical assets as collateral and extending the UK\u2019s capital allowance regime to cover investment in intangible as well as tangible assets.\u00a0<\/p>\n The TBI also wants to reform the bankruptcy regime, including lenders\u2019 tying of business loans to personal savings and homes, to reduce the costs when entrepreneurs fail.<\/p>\n","protected":false},"excerpt":{"rendered":" Unlock the Editor\u2019s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. The UK has lost the labour market flexibility that once underpinned growth and needs to rethink policies on tax, immigration and workers\u2019 rights to restore economic dynamism, according to the think-tank set up by former<\/p>\n","protected":false},"author":1,"featured_media":45580,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49],"tags":[5107,23449,2041,134,306,275,2636],"class_list":{"0":"post-45579","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-blair","9":"tag-dynamism","10":"tag-institute","11":"tag-labour","12":"tag-market","13":"tag-restore","14":"tag-tony"},"_links":{"self":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/45579","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=45579"}],"version-history":[{"count":0,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/45579\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/media\/45580"}],"wp:attachment":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=45579"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=45579"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=45579"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}