Business, Energy and Industrial Strategy Committee
Oral evidence: Post-pandemic economic growth: UK labour markets, HC 306
Tuesday 10 January 2023
Ordered by the House of Commons to be published on 10 January 2023.
Members present: Darren Jones (Chair); Mark Jenkinson; Ian Lavery; Andy McDonald; Mark Pawsey; Alexander Stafford.
Questions 194-236
Witnesses
I: Joeli Brearley, Founder and CEO, Pregnant then Screwed, Sarah Douglas, Director, Liminal Space, and Lizzie Penny, Workstyle Revolution (Hoxby).
Witnesses: Joeli Brearley, Sarah Douglas and Lizzie Penny.
Q194 Chair: Welcome to this morning’s session of the Business, Energy and Industrial Strategy Committee for our latest hearing as part of our UK labour markets inquiry. Today we are talking about a whole host of issues related to the changing nature of work. In our first panel we are delighted to welcome Joeli Brearley, who is the CEO of Pregnant then Screwed; Sarah Douglas, who is the director of Liminal Space; and Lizzie Penny, who is the CEO of Hoxby and co-author of the book “Workstyle”. Good morning to all three of you, and thank you for coming in today.
The last time the Government looked at the changing nature of work in a wide way was with the Taylor review, which was quite a long time ago. My question for each of you, to get us started, is this. Since the Taylor review was completed in, I think, 2016, we have obviously had a pandemic and lots of other things happen in the meantime. Does the Taylor review need to happen again, or are the findings in that review still relevant for us to consider today? I will go from left to right, so Lizzie Penny first, please.
Lizzie Penny: From our perspective, there is lots of good thinking in the Taylor review. Recognising the vital importance of good work to social justice, economic dynamism and civil engagement is still of utmost importance, and that is why it is right to be having this conversation today; but what good work is has fundamentally changed. It had already fundamentally changed and then we had a pandemic that accelerated that change, after 200 years of minimal change to our working structures, which were inspired by thinking in 1817.
Some of the recommendations are still very relevant, such as those on employment status, but pre-pandemic thinking did not incorporate in any way working from home or remote working, and there is no mention of that in the report. Also, while the value of autonomous working was recognised in terms of being able to improve wellbeing and productivity, it was not recognised as a route to bringing more people into the workforce, which is obviously pertinent to this conversation. It also champions flexible working rather than autonomous individualised working, which is a way that we can move to more individualised and radically inclusive ways of working. We feel that that is an area that is really missing from the report.
Joeli Brearley: The Taylor review had a few flaws in it, partly that it did not look at the gendered impact of flexible working and precarious forms of work, which is something that we work on. What we would like is not for the Taylor review to be done again, but for the report that was conducted by the Equality and Human Rights Commission in 2016, which looked at cases of pregnancy and maternity discrimination, to be conducted again. We know from that report that 54,000 women a year are pushed out of their jobs for getting pregnant or for taking maternity leave, and we know that the pandemic and the recession have had a really significant impact on that. We are seeing a huge rise in the number of women coming to us saying that flexible working requests have been rejected and that they are being pushed out of their jobs because they have got pregnant. We have no idea what is going on in the current labour market for women who have a baby, so I think it is really important that we do that research again. The Government did commit to doing that research again, but so far we have not seen them doing so.
Sarah Douglas: To give you a bit of background on the angle that I bring to this, I run a programme called Night Club. We exist to help mitigate the rising health and economic crisis associated with long-term night-shift work and sleep disruption.
In our opinion, Taylor does not go far enough. Night workers are not recognised as a category within the Taylor review, nor are they recognised within the “Good Work Plan”. There is of course the working time directive, but that is very disconnected from how night workers are recognised. Night work has huge effects on people’s health—heart disease, cancer, diabetes, depression—which cost the UK economy. Lack of sleep costs £50 billion per annum in attrition rates, accident rates and low productivity. There is a rising health and social crisis too: night workers are six times more likely to get divorced than those in the average population, and to be working in low-income roles. The reason I am here today is to ask for your support to recognise night workers as a distinct group with distinct needs. Taylor certainly does not do that.
Q195 Ian Lavery: Lizzie has already mentioned that good work has fundamentally changed since the Taylor review. There are lots of examples, variations and opinions of what good work actually is. Listen to the ILO, the Good Work Commission or the CIPD, for example; they all have different views. What do you think that good work looks like in the workplace? That is a question to each of you.
Lizzie Penny: For us, it is about autonomous working, where people have the freedom to choose where and when they work in order to fit their work around their lives to improve their wellbeing, productivity and, radically, inclusion in work. That is about what we call workstyle—the freedom to choose when and where you work. That individualises work. With changes in technology and attitudes to work, the rise of portfolio careers and an ageing population, we are at a point now where we need to change work in order to do that, to be more inclusive.
Joeli Brearley: Good work includes looking at your member of staff and their particular needs. For women, certainly, they are quite likely to have children, so you want to consider their needs when they have a baby. That includes enhanced maternity pay and opportunities for flexible working. Men are also likely to become parents. So good work means having conversations with your staff about what their particular needs are and ensuring that you can fulfil those needs in a way that makes sense for your business. Obviously, it also includes good pay.
Sarah Douglas: Looking at this issue from a night worker perspective and to give you some figures, one in five people works nights, which is 7 million people who are helping to keep our 24/7 society running. Over 50% of those people are key workers. As we know, frontline staff are not able to work flexibly and to enjoy hybrid work, as many of us are able to—although a lot clearly still needs to be done in that space—but the theme of agency and autonomy is still very relevant.
From our work with business and thousands of night workers, we know that treating night workers as individuals and recognising the specific health challenges that they face are very important. There is a huge amount that employers can do. Good work for night-shift workers and for employers of night workers is where employers recognise their duty of care by improving conditions for night workers and by raising awareness in their organisations of how to manage night workers. When they do our programme, they see health and wellbeing improve, and so too does business performance. The employers that we have worked with have seen absence and attrition rates reduced by investing in how they support their night workers. That is something we feel passionately about—how employers can improve their practice and be supported by Government to do that.
Q196 Ian Lavery: I support everything that has been said, but when there is an issue in a particular workplace—you mentioned night working, for example—the employer might have a completely different view, absolutely 100% opposed to what the employee does, on what good work actually means. What happens if there is this huge impasse? What do you think should happen if there is a difference of opinion on what good work is?
Like probably everyone here, I have worked in industry. There has always been a difference of opinion on what’s good for you and what’s not. That is normally different from what the employer says.
Sarah Douglas: In running this programme, we have worked with over 25 business such as the Co-op, Network Rail, ISS, the NHS and BAE Systems. I am fortunate enough to work with the leaders of those businesses but also very closely with their workforces.
As you highlight, there are clearly big challenges there. What we find is that when the case is made to business that this health issue is also a productivity and social issue, and they can see how it is going to improve their bottom line, that helps shift the dial with our employer partners, but it is important that all sides are working together to define what good work looks like for the future. That is where we would really welcome Government support to play a convening role in bringing industry together to shape what good work looks like with respect to night workers.
Lizzie Penny: I think it also depends on whether you see the prevailing model in future as employee-employer or whether over time that relationship might change. For example, in future there might be communities of self-employed people who work with a number of organisations, and the balance of power changes a bit because individuals can choose which projects they work on within a project economy.
We are already seeing that trend: there are 4.7 million freelancers in the UK—roughly 10% of people over 16 are working as freelancers or self-employed. That has grown by 7% over the past 10 years. There is a move towards that—a relatively slow one, but one that has been accelerated by the pandemic. It is partly about people regaining control over how they work so that they can choose what good work is for them. What good work is may be different for each individual, so the issue is about creating a system of work where what is important for you as an individual can be satisfied.
Joeli Brearley: In the work I do, I see the really extreme end of this. I see the employers who kick women out of their jobs because they are pregnant, who refuse flexible working requests and who put pregnant women in dangerous situations and do not see a problem with that. They think, “If you’re going to work, you will do as I say—and this is how I will manage my business.” I have heard some really shocking and extreme stories. There are things the Government can do that will reduce these horrific experiences of women in the workplace.
The last Equality and Human Rights Commission report was done in 2016; it made many recommendations to the Government on how we can reduce the number of women being pushed out of their jobs because they are pregnant and how we can keep women safe in the workplace. Sadly, in the time since, not a single one of those recommendations has been implemented.
We are seeing a really lacklustre approach—let me start again: we are seeing from the Government a reluctance to legislate in a way that would encourage employers to do the right thing because they believe intrinsically that employers just will do the right thing. Let me tell you that they really won’t.
Q197 Andy McDonald: You have already touched on some of this already, but where do you look for your evidence to support the views you hold about the people excluded from work who want to work but the current system militates against that? What I am really trying to get at is what you look at to say that there are people here who want to be in the workplace. We have already touched on some of the practices that deter people, but is there anything else we should be looking at in terms of an evidence base?
Lizzie Penny: We specifically look at this in our book. I am conscious of time, so I am not going to be able to talk you through all of these, but we highlight seven groups who are structurally excluded from work as long as the prevailing system is 9 to 5, five days a week. They are older workers, carers, people with chronic illness, physical disabilities or mental health challenges, people who are neurodivergent, and parents, which is Joeli’s specialism. We feel that there is a lot of focus on parents and the brilliant work that Joeli is doing, but the other groups are not as focused on as they should be.
I am going to pass these around because I do not think there is time to talk it through, but I think this is really relevant. To address your point about evidence, it is hard to quantify. We have tried to quantify as much as we can how many people restructuring work could bring into the workforce for each of the groups. We have created what we call gap statistics. For each of those groups, we have looked at the closest available data that shows how many of the group would like to work. For example, only 39% of retiring workers do so voluntarily; the other 61% would like to keep working in some capacity. That is a 61% gap, so roughly 610,000 people aged 50 to 64 who could be brought into the workforce and who want to work. They could get fulfilment, income, independence and motivation from it, but they aren’t able to do so because of structural barriers.
We feel that the structural barriers for all of these groups are that you are required to be in a certain place at a certain time, when you should now be able to choose when and where you work, and that would mean that many more of these people could be included in work. Obviously, we can’t get to an aggregate number because there are overlaps—if you add all these numbers up, you get 30 million people. I for one am part of, I think, four of these groups.
Andy McDonald: Joeli, do you want to add anything?
Joeli Brearley: I have been working in this field for a long time and I talk to women every day who tell me what the barriers are to them working. In addition, we know from Office for National Statistics data that in the last year 43,000 women have left the labour market to care for family—an increase of 3% on last year. We also do surveys with over 20,000 parents simultaneously and get data from them.
We know from Government data that in 2017 there were 870,000 stay-at-home parents who wanted to work but could not because of childcare costs. We know that there are 1.7 million women who work fewer hours than they want to because of childcare costs. And we also know that flexible working, access to part-time working, compressed hours, working from home and job shares are a massive barrier to women in the labour market, as is our parental leave system, which favours women taking time out to care for their children. It does not do the same for men, which means that women end up doing the majority of the unpaid labour and therefore less of the paid labour. The big barriers for women in the workforce are childcare, flexible working and our parental leave system. If we fix those, you will see a huge increase in the number of women in the labour market working long hours, and obviously that is a massive benefit to our economy.
Lizzie Penny: And we know that mums of two children are the most productive members of the workforce, quickly followed by mums of three children, and I am one of those.
Q198 Andy McDonald: And grandparents who provide childcare could otherwise be engaged. Sarah, do you want to add anything?
Sarah Douglas: From our perspective, when we think specifically about the night worker category, the huge reason why people are excluded from the workforce is that they are on long-term sick leave because of the consequences of working nights and the impact that that has on their systems. I know this because it is in the data, but it is also in the conversations that I have with business leaders and the businesses that we work with. They struggle with absence and the same things that their workforce are struggling with, which is the toll that it takes on people’s mental and physical health, and how that equates into absence rates and attrition.
To get more granular, what we hear from business is that absence and attrition rates are highest with night workers in their first six months to a year, because the body simply cannot cope, so they know quite quickly that they cannot continue with that work. So one of the things we would like to see is better induction and better best practice information for both workers and businesses on how they can identify and support those who are struggling most, particularly in that first phase of work. That is the biggest cause that we see of people being excluded from this particular labour market.
Q199 Andy McDonald: Lizzie, can I ask you a couple of things? You have already touched on a lot of the workstyle issues, but this is your chance to tell us a little bit more. If you had to try to summarise what workstyle is, could you tell the Committee what you would say?
Lizzie Penny: Workstyle is, essentially, about giving autonomy to individuals to choose when and where they work in order to fit their work around their lives, rather than the other way around. More than 200 years ago, the great Sir Robert Owen came up with the concept of the eight-hour day, which was very progressive at the time, but we cannot believe that we are still working in this way now. A hundred years ago, the five-day week was introduced, and we are still working in this way now.
Technology means that you can now work anywhere you have your mobile phone and mobile phone reception. Anywhere that you can tether to your phone, you can work. We are in a time when people are working in a portfolio-career mentality—the rise of the “multi-hyphen method”, as popularised by Emma Gannon.
We also have an ageing population, and if we do not continue to retain them in the workforce, first, it will put huge amounts of pressure on a nation state that, realistically, cannot support them with pensions and social care. Their families and communities also cannot support them, so we need to find a way to keep those people in work for longer. Those are the catalysts that are creating the conditions for a fundamentally new way of working.
Whenever we hear positive conversation about flexible working, we are excited by the progress but disappointed by the fact that what flexible working is doing is still flexing around an industrial-age system. It is tweaking a system that was fit for a time when we were a fundamentally different economy—we were a product-based manufacturing economy rather than a service-based economy.
For us, autonomous working and people having the freedom to choose is the answer to fundamentally reshaping the way that we all work. That may be in the form of an autonomous working Bill passed in Parliament in 2050—we are not expecting that change straight away—but it is important to recognise the importance of freelancers and how the growth of the freelance economy is essentially the precursor to that. We know that there are people who become freelancers as their only route into work. That is a route to bring people into work. IPSE found that 83% of freelancers do so because they want to be able to choose where they work and 84% because they want to choose when they work. This is a key motivator for people who work in that way.
For place-based people—key workers and people who have to be in a physical place—even having autonomy over when they work and looking at shift patterns in a broader perspective rather than necessarily thinking that shift patterns have to be in a certain shape can not only significantly improve motivation but create inclusion in the workplace.
For us, that is a really important change that we need to start to embrace as individuals and as a society: recognising the importance of autonomous working through supporting the freelance economy and fostering organisations and supporting them in considering freelancers or autonomous workers as a source of competitive advantage or a key part of their labour strategy or their worker strategy, rather than demonising that and seeing it as something that should be avoided at all costs.
I think it is really just about being progressive as a nation in understanding what we see as the medium-term labour market strategy for the United Kingdom, rather than just saying, “We need people to all be in employment because that is a much simpler mechanism to create change.”
Q200 Andy McDonald: We visited Japan and saw how it was approaching the issue of older workers and trying to bring them back into the workforce. How would you address this challenge? Employers may say, “We are persuaded by the veracity of your argument about the benefits and dividends that would flow, but we are here to provide a service”—or a production line—“which we need to sustain, and that is the dominant imperative here.” How does that demand reconcile with the philosophy that you have just espoused?
Lizzie Penny: I think we are in an exciting time when change needs to happen for two reasons. One is the ageing population. For instance, Unilever recognised that a third of its workforce were within five years of retirement, so it had to create change, because it had an ageing population of workers that it needed to retain.
The other reason is the pandemic. A lot of change was happening; we believe that the change to autonomous working really started in 2014, long before the pandemic, but what the pandemic did was bring into the public consciousness the ability to work from home and the ability—albeit in exceptionally difficult conditions—to fit your work around your life, because people had to do that in a way they had never had to do it before.
So I think there are two different things. There are organisations either having a business need and a burning platform that means they need to create change, or starting to see diversity as a source of competitive advantage, which we know it is, and therefore wanting to work differently. But also, there are individuals in the labour market or leaving the labour market who are now saying, “I’m not willing to engage on your terms. I want to engage on my terms. I don’t want to be in the office five days a week, but actually I don’t even want to be in the office three days a week. I want to work from home.” We are hearing from lots of businesses that hybrid working is not the perfect solution, because it’s still one size fits all, and for many people, particularly those with childcare responsibilities, that doesn’t work anymore.
Q201 Andy McDonald: On people who are disengaged at the moment getting back into a work environment, I know the TUC has done some work about the Treasury benefits of that, in terms of tax and national insurance contributions. I don’t know whether you have applied your mind to it in any way.
Lizzie Penny: We have not quantified that, but I think a big part of the case for this is our not being able to support the level of pensions and social care that is needed and therefore, as a society, needing not only to keep people in work longer as they age, but to bring people into working.
One study has shown that people live 11% longer if they work for one extra year beyond retirement. It’s good for our health to keep working. We know this from all the groups that we are looking at here. It’s good for people’s mental health to remain in work, remain engaged. But we would be really interested to look at that from a financial perspective as well, because there is a clear case both for businesses and for society here.
Andy McDonald: Thank you.
Q202 Alexander Stafford: My questions are mainly about women and pregnant women and about going back to work and having children. Ms Brearley, you have obviously highlighted a lot of problems with regard to women being pregnant in the workplace. The Government are supporting Bills on flexible working and redundancy protection for pregnant women. You clearly don’t think that those go far enough. What would you like to be changed? You highlighted three things that need to be solved. They seem quite complex. What is the answer?
Joeli Brearley: Okay, we could be here a while, so buckle up. Let me start by talking very briefly about the importance of flexible working. We know that flexible working improves the wellbeing of your team and it improves productivity and has an economic benefit. A report done by Sir Robert McAlpine and Mother Pukka found that if we increased access to flexible working by 50%, that could have an economic benefit of £55 billion for the Exchequer. That is just setting the scene on flexible working.
Q203 Alexander Stafford: Sorry to interrupt, but by “flexible working”, do you mean people working from home?
Joeli Brearley: No. I mean people working from home but I also mean part-time working, concentrated hours, job shares, flexitime—there is a plethora of different types of flexible working that employers can mobilise. The flexible working Bill means you have two opportunities in a year to request flexible working. It means that the employer has to give you a response within two months rather than three months. It removes the requirement for employees to explain how their application will impact the business, and it requires employers to consult the employee if they are going to reject it. All of these are good things; they are a step in the right direction. The Government have of course supported the Bill. What will be added is a day one right to request flexible working.
There are three problems with the Bill. First, a right to request is a right to decline. We know that half of employees who ask for flexible working have that request rejected—that was research done by the TUC in 2021—so all you are doing is to make the same thing happen faster. Rather than it happening at 26 weeks, it will happen on the first day of employment. Also, the right to request has very little impact on flexible working. It was implemented in 2003, but in 2013, 74% of people were not working flexibly, and in 2020, 70% of people were not working flexibly—we have seen a 4% difference in a decade. Obviously, the pandemic had an impact on that, but that is a separate issue.
A day one is also a waste of everyone’s time. What will happen is that you start a job, and then you have to request the type of flexible working that you need. If that request is then rejected, for many women in particular with caring responsibilities that means that they have to leave the job. An employer has spent all that time trying to recruit—they found someone, they waited for them to start in the role and then they find out that they are not the right fit for them—but they have to start all over again.
We would therefore like the day one right to request to start not from the first day of employment, but from job offer. That makes sense for everyone, right? It makes sense for the employee, because they can see whether the job works for them before accepting; it makes sense for the employer, because they are not wasting their time waiting for that person before starting the recruitment process again.
Q204 Alexander Stafford: May I pick up on that point? In that system, would there be any concern about unscrupulous employers? If someone puts in a flexible request during the process, whether at offer, interview or whatever stage, such an employer might automatically reject that person for the role, discriminating against them. What can we do to mitigate that sort of thing?
Joeli Brearley: Yes, of course, that does happen. No matter what laws we put in place, employers will not necessarily abide by them. If we have a system whereby people wait for the job offer to be sent to them by email, but that job offer is refused once they ask for flexible working, they will then have proof that the employer had broken the law. That is the same for any type of flexible working request. If you tell someone you are pregnant when they offer you the job, but then they remove the job offer, that is discrimination. There have been court and employment tribunal cases on the back of that.
The final reason why we do not think a day one is great is that it does not extend to all workers; it extends only to employees, not to workers such as those on zero-hours contracts, who are freelance or who have other types of working conditions. For a long time, we have been campaigning alongside the TUC, the Fawcett Society, Gingerbread and the Fatherhood Institute for an advertising duty on employers, so that they have to stipulate in job adverts what type of flexible working is available.
We think that that would have a positive impact: it would change the culture around flexible working; it would mean that jobs are designed as flexible from the outset; and it would mean that people were less likely to experience discrimination in the workplace if they worked flexibly. We know that 84% of people who work flexibly say that they experience some form of discrimination or detriment as a result.
We also know that people are not asking for the type of flexible working that they need: 47% of mums say that they think there is no point in even asking for that type of flexibility. An advertising duty would therefore make a big difference. Sadly, however, we have campaigned on that for a long time and have not got anywhere. We see that it is not something that the Government will adopt. In this Bill going through Parliament, we would like to see the day one right changing from when you start the job to when the job offer is made. That would make such a big difference. That is flexible working.
On redundancy protections, there is a problem with the Bill at the moment. The current law is that, when you are on maternity leave, you have enhanced protection from redundancy. What that means is that if you are made redundant, you must be offered another job, if one exists, above other people who are being made redundant. The Bill would extend that protection so that it applies when you are pregnant and up to six months after you return from maternity leave.
The problem is that the current law isn’t working. If you look at the report by the Equality and Human Rights Commission, they found that one in 20 women are made redundant when they are pregnant, when they are on maternity leave or when they return. Breaking that data down, they found that 1% are made redundant when they are pregnant, 3% are made redundant when they are on maternity leave, and 2% are made redundant when they return. You are more likely to be made redundant when these protections exist than when they don’t, so we are extending protections that are not working. That is what this Bill will do.
Of course, the Bill will put some employers off making people redundant, which is a good thing. We would have liked to see those protections not only extended but enhanced, which is what Maria Miller’s Bill did. It looked at the German model, which says that you can only make women redundant in extreme circumstances, such as when your business is going bust. That would have made such a massive difference.
There is also the potential that this could make things worse. We know that a third of employers avoid hiring women of child-bearing age because they do not want them to get pregnant on their watch; they do not want to deal with what they perceive is the complexity of managing maternity leave. If we make a big song and dance about the fact that there are these enhanced protections for pregnant women, it may put more employers off hiring women. That is invisible discrimination; you do not know you are being discriminated against when you are in an interview if it is based on the fact that you have a wedding ring on and you are of child-bearing age. We would have preferred this Bill to not only extend but enhance protections.
Q205 Alexander Stafford: Do you think there is a problem with the wider culture of many companies? Do you think there should be more quotas—for women on boards, for instance?
Joeli Brearley: Yes, I believe in quotas. I know lots of people don’t, but we have seen from other countries that implementing quotas makes a difference. We saw the Labour party implement a quota for the number of female MPs, and we saw a big leap in the number of female MPs in the Labour party. Quotas are a very blunt tool, but they do work. Obviously, in addition to quotas, there are lots of other things that we need to do to ensure that women reach the position where they are on boards, such as fixing our childcare sector so that more women don’t have to leave the labour market or work fewer hours.
Q206 Alexander Stafford: I will come on to childcare in a second. I know that quotas are a blunt tool, but if you were to introduce a quota for women on boards, would it be 50%, 40%, 30%?
Joeli Brearley: It would be 51%, because that is the population.
Q207 Alexander Stafford: I have seen that in businesses where voluntary quotas are introduced, there is almost a pool of people at senior level being moved around; women are not brought up through every stage of the company, but brought around. How do we ensure that women throughout the ranks of a company get to board level to look after women’s rights?
Joeli Brearley: What companies really need to do is collect data and analyse their data. We have seen that when people have been forced to publish their gender pay gap, they have looked at what is happening in their organisation and realised, “Oh, wow, we’re not promoting women” or “We haven’t got good maternity leave policies in place, so they’re not returning to us after they’ve had a baby.” Companies really need to look at their data and analyse it so they can understand where the problems are in their organisation.
They also need to understand their own bias and do training with their staff, because we know that most people—not most men; most people—view women who have a baby as distracted and less committed than other types of employees. If you ask for flexible working, you are seen as somebody who can’t be bothered to do their job properly, and women tend to face discrimination as a result. There is an issue with bias and there is an issue with data collection and analysis.
Lizzie Penny: I would add that diversity at the broadest level improves business performance, so there is also a business imperative to improve diversity in all aspects. A McKinsey study found that companies in the top quartile for cultural and ethnic diversity, for example, outperform those in the fourth quartile by 36% in profitability. There is a bottom-line issue here as well. Yes, there are systemic issues to overcome, but if we can overcome them, we have better collective intelligence and perform better as an economy and as businesses.
Q208 Alexander Stafford: Let me go back to the childcare point that you made, Joeli. Obviously, that is one of the biggest impacts for people going back to work. There clearly is not enough provision and it is clearly unaffordable. How can we solve the problem? The Government did have some ideas to increase the ratios; they have now dropped that. Did you agree with that proposal, or is there another way of dealing with the exorbitant costs? I declare an interest: I have two children who go to nursery. How do you deal with that?
Joeli Brearley: The only way you deal with it is investment. Not only do we have a problem with cost and availability, but we have an issue with the fact that people are leaving the workforce in droves because they are not being paid properly for this really valuable, really important job that they are doing. Part of the issue has been caused by the 30 hours free scheme for three-year-olds, which underfunds providers by almost £3 per child per hour. Inevitably, the providers have to pass those costs down the chain.
When you are returning to work, the mother—usually it is the mother—takes nine months to a year off work. They look at returning, and that is when the costs are the most expensive. We know from our research that a third of mothers say that they just break even, or they are paying to go to work because of childcare costs. Why would you do that? It doesn’t make any sense to pay somebody to look after your child, so firstly, we need to shift the subsidies so that they work for when women are looking to return to work, or parents are looking to return to work.
However, the key thing—the only way we fix the childcare sector—is not tweaking around the edges, and it is definitely not increasing ratios, which will decrease the quality of the childcare provision: it is investment. As a proportion of GDP, we invest very little in our childcare sector compared with other countries.
Q209 Alexander Stafford: So what do you mean by investment? Do you mean more Government spending—more Government subsidies?
Joeli Brearley: Yes, and we know that if you invest in childcare, you get more back into the economy. If you look at what Canada has just done, they have invested $55 billion in their childcare sector to create a system that costs no more than $10 a day, and they have done this because they crunched the numbers and found that for every dollar you invest in childcare, you get between $1.50 and £2.80 back into the wider economy. It is an investment in the economy and an investment in families.
Q210 Alexander Stafford: I notice you have not mentioned a role for companies investing in childcare, just the Government. Is there a role for companies to invest in childcare support? If you want to work for them, surely their role is to step in and help that in some way—subsidies, vouchers, or nurseries at work.
Joeli Brearley: It is an open goal for companies, particularly at the moment, when everybody is trying to get the skilled workers in their company. I think companies are mad if they do not offer either on-site childcare or other forms of childcare provision, but we also have to remember that many companies cannot afford to do that, particularly smaller and medium organisations. We also have to remember that actually, you cannot access childcare at the moment. It is really difficult to get it, so it is all very well and good companies saying, “We’ll subsidise your childcare”, but if you cannot get it, you are throwing money at nothing.
Q211 Alexander Stafford: Could the Government do more in that sense, such as offering tax cuts or VAT off childcare for companies that step in and do that?
Joeli Brearley: Absolutely, yes, they could. There is a lot that could be done there.
Q212 Alexander Stafford: At the start of our conversation, we talked about flexible working, and I talked about working from home. Obviously, there are a lot more people working from home now since the pandemic. How has that helped or hindered women with children in the workplace?
Joeli Brearley: Initially, it was great for many women, because it means that you do not have to commute, so it reduces your time. It means that you are able to pick up your children from school, or if they are sick, you are able to pick them up.
What is happening now is that we are seeing a reversal of working from home. Companies are suddenly saying to their employees, “You can no longer work from home, or you must move to a hybrid model where you are coming into work, say, three to five days a week”, but they are not giving them any time to put in place the measures that they need to be able to go back to the workforce. They are perhaps giving them a month, when we know that waiting lists at nurseries are up to 12 months, and sometimes even longer. After-school clubs are really hard to get hold of, as well as breakfast clubs, so we are hearing from women who are being forced to leave the labour market because they cannot get the provision that they need and are being forced to go back to work very quickly.
The other thing I would say is that because we have had this really drastic movement towards working from home, and many employees had to adapt the way they worked very quickly to accommodate that, the number of flexible working requests being rejected—other types of flexible working, not working from home—has massively increased. Actually, what parents need more of is not necessarily working from home: women are more likely to need part-time work, flexible hours or concentrated hours than they are to need homeworking. But we are seeing this big increase in the number of flexible working requests being rejected, and that is causing all sorts of problems, particularly for mothers and disabled people in the workplace.
Q213 Mark Pawsey: I want to ask Sarah some questions about night working, but first of all, I have a couple of follow-ups for Lizzie and Joeli. It is to do with the role and thinking of businesses. Joeli, you just said that companies were “mad” if they did not offer childcare facilities. Why do you think they are mad?
Joeli Brearley: Because companies at the moment are saying they cannot get the skills they need in their workforce, yet we know that we have 870,000 stay-at-home mums who are highly skilled, who want to work, but they cannot.
Q214 Mark Pawsey: Given that they have this need for workers, why do you think they are not doing something about it?
Joeli Brearley: Why do I think the companies are not? Because I do not think, like many people who do not do my job every day, they do not see these barriers that women are headbutting every single day trying to access the labour market.
Q215 Mark Pawsey: Nobody is telling them about it. There is no awareness on the part of business owners and managers, in your view.
Joeli Brearley: I think some businesses are not aware of that, just like they are not aware of the benefits of retaining women in their workforce once they have a baby, and instead they want them to leave because they think they are not committed to their job. We have seen from companies that have done something about this, that have created on-site childcare facilities or have brought in other measures to support women with childcare needs, that they have data that shows that they are more likely to retain women in the workforce and that that has a positive benefit for their bottom line. We know that it increases their profitability.
Q216 Mark Pawsey: Similarly, Lizzie, you have given us a document showing that 610,000 people aged 50 to 64 are not in employment but would like to work, yet we hear from businesses week in, week out about the problems of getting hold of labour. Why don’t business owners and managers understand the points that you are making? You have a company and have gone out and worked with a whole load of clients and presumably got some of those people back into the workplace. Why are other business owners and managers resistant to the proposals that you are making?
Lizzie Penny: I think that they are unaware, rather than resistant. Until now, it has not been a business imperative, so businesses have not been looking for new ways of working.
Q217 Mark Pawsey: But they need workers.
Lizzie Penny: Now they do.
Q218 Mark Pawsey: They are entrepreneurs, they are in the markets they operate in, they are flexible. Why do you think in this area of employing people they are so blinkered and resistant to what is coming?
Lizzie Penny: I think a lot of it is cultural change. It is a way we have worked and a way we have been comfortable with working, inspired by working practices 200 years ago.
Q219 Mark Pawsey: But we should not be comfortable with it because businesses are crying out for staff.
Lizzie Penny: Exactly. What we find is that at the middle management level there is a lot of vision for change and often at a leadership level, people have worked this way their whole careers and they can predominantly—
Q220 Mark Pawsey: Are they too old and out of touch?
Lizzie Penny: Not necessarily. Do not catch me out on old people necessarily being out of touch. There is a whole section on how fluid and crystallised intelligence changes. It is about where there is a business need that obviously drives change, and where there is also a social need that can drive change. What we need is businesses to say, “Where do I get that labour from? What I need to do is operate in a different model.” However, that is also restricted by Government, by things such as IR35, which make those businesses fearful of using more progressive or dynamic structures.
Q221 Mark Pawsey: Can I turn it round the other way? The businesses which you have worked with and which have embraced these groups of workers who want to be in the workplace, which many of them have had difficulty getting into, at what level have you engaged with those organisations to be successful? Has that been at a more junior management level? Clearly, not from what you are saying, at board level, because if you had engaged with them at board level, they would be making changes in their organisations.
Lizzie Penny: The specific context of this is Hoxby, the social enterprise that we set up in order to run this as a prototype to see how workstyle works in practice. We have been running that for the last eight years. We have been delivering marketing, creative and PR services and we have been delivering it ourselves by working in a workstyle way, rather than consulting to organisations to move to more workstyle working themselves. We are very much at the beginning of that journey, and that is now something that we are doing. We have not been consulting in organisations that are moving to workstyle working. We have been delivering output.
Q222 Mark Pawsey: There is a whole new market for you, presumably.
Lizzie Penny: Absolutely. There are so many businesses that need it, and not just in the private sector. With the NHS, whenever I hear about these record numbers of vacancies, I am desperate to have a conversation with someone to say, “Let’s bring some workstyle thinking into this.” Because these are the people who want to work. They want to be working and we have record numbers of vacancies. There must be a way to bring these two together.
Q223 Mark Pawsey: What is preventing getting those two together?
Lizzie Penny: The thing preventing us doing that is that we have never done paid work with Government. That means it is very difficult to start doing paid work with Government—that is my understanding. We don’t have the contacts or the connections.
Q224 Mark Pawsey: So do you think the Government as an employer are more cautious and conservative than enterprising businesses who have adopted some of the principles you have been talking about?
Lizzie Penny: Yes, I think so. That is partly because of a macro issue, that there is no recognition of more dynamic, progressive ways of working; and at a total level, the Government cannot seem to recognise that. Therefore, the same thing carries through into the actual working structures.
Q225 Mark Pawsey: Thank you. Sarah, if I may come on to you on night working, the message I am getting is that night working is a pretty bad thing; we really need to avoid it if we can. It seems to me that night working falls into two categories: essential—which we might consider to be ambulance workers, for example—and non-essential, which are businesses that are seeking to make more effective use of the capital in which they have invested, for example in a 24-hour production process. Would you do away with the non-essential night working?
Sarah Douglas: Where it comes to night work, the genie is out of the bottle and it is not going back in. Night work is not going anywhere. We live in a 24/7 society. For the workers we are talking about, first, the distinction is not that easy to make in the way that you have described. To paint a bit of a picture, the night workers we are talking about are people who are driving our buses, people who are cleaning our offices when we have gone home. They are powering our NHS.
Q226 Mark Pawsey: Those are essential tasks, that cannot be done at any other time, are they not?
Sarah Douglas: We work with major retailers such as the Co-op, Morrisons and Aldi. They have 24-hour operations that are virtually impossible to do at any other time. Most of the industries that we are working with are workforces that have 24-hour operatives.
Q227 Mark Pawsey: But the manufacturing process that puts on a night shift—that is not essential, is it?
Sarah Douglas: I think that there is a lot that automation can do.
Q228 Mark Pawsey: Somebody needs to mind the shop while automation is taking place.
Sarah Douglas: Exactly. We work with John Lewis & Partners, for example. They have a state-of-the-art automated warehouse. They still have at least 500 employees in that space who are making sure that that operation runs. I do not think this is something that is going away any time soon. That is really what we are asking for—better recognition of the specific needs of those workers.
Q229 Mark Pawsey: Okay. What does “better recognition” mean? You said at one point that Government needs to intervene. What do you want Government to do?
Sarah Douglas: Really, what we would like the Government to do is use their convening and influencing power to raise awareness of this issue.
Q230 Mark Pawsey: To use their convening and influencing power—what do you mean by that?
Sarah Douglas: We would like to see the Government put a tsar or Minister responsible for this issue, so that real action can come.
Q231 Mark Pawsey: A night-working tsar; a solution to the problem.
Sarah Douglas: That is our solution. We are early in our campaign; it has taken us three years to get here. We have been focusing on working with industry. We have been focusing on working with the people who are on the frontline dealing with this issue every day, gaining our insight. We now work with 25 employer partners who represent over 1 million employees, who back our mission to raise awareness about this issue and start to bring all parties round the table. When I say all parties, I mean workers, businesses, employers and unions, to work out how best business can support its workforce. It is not just a health cost that we are talking about, but a cost to business. £50 billion per year is lost as a result of lack of sleep in the workforce, so there is a business imperative to the issue.
Q232 Mark Pawsey: Let me twist that round and ask the same question that I asked Lizzie. With the businesses that have adopted the practices you have spoken about, how have you managed to persuade them of that, and at what level of management have you gone in with the proposal? Are board members, again, too old and lacking in understanding, or in those businesses are the principles adopted throughout the organisation?
Sarah Douglas: With all change, you are trying to find enlightened people who are willing to give something new a try. I do not think that you can know where those people are going to be. In many cases, we have started working with people at middle management level, and as they have risen through the ranks they have adopted those practices. With all of the businesses we work with, we have got to board level eventually, even if we have not started there. What we find is that the businesses we work with come to us because they have a problem. They have a problem with their workers being absent, a problem with high attrition rates, and a problem with recruitment. Those are all issues that are exacerbated on the night shift. They have a problem that they need to solve—a business problem. That is why they come to us, and one solution to that problem is to provide better health and wellbeing support for the workforce.
We work with retailers which, as you know, are in a very competitive, low-margin industry. Where people cannot compete on price and wages, health and wellbeing is something that they can do to make a difference to their workforce. They are seeing positive results and business benefits, and they see that this is an economic as well as a health issue.
Q233 Mark Jenkinson: I have a question for Lizzie. In your written submission to the inquiry, you said that “the government needs to simplify the legislation in order to benefit from the positive contribution that a growing freelance economy can bring.” What needs to change?
Lizzie Penny: We aren’t in the specific detail of this. This is the first time we have contributed to an inquiry. We are very much enjoying it, but we are new to this. There are a number of things that we could do to improve autonomous and workstyle working. The first is: support freelancers more. That might be things like commitment to fair payment or mandatory 30-day payment terms. It might be around IR35, access to mortgages, or around saving for later life, which is being implemented through employers for employees, but not for freelancers. There is also a more general sentiment that does not make freelancers feel demonised and like a contingent workforce, but like a strategic and important part of the workforce.
The second thing is about fostering autonomous working within employment and supporting organisations to change their working structures. Currently it feels very binary—there is employed and self-employed. The third thing would be a specific focus on how autonomous working can bring excluded groups into the workforce. Looking purely from a labour market inclusion perspective, how can those groups be supported? Finally, as I say, a broader view on emerging structures of work and why they are important in order to address those economic and social issues. Those are the four areas that we consider important.
Q234 Mark Jenkinson: I understand fair payment terms. Mortgages are probably a culture change in banks, rather than a legislative change. Saving for later life—pensions—seems to be an additional barrier to entry because it would involve a scheme, I imagine something similar to the construction industry scheme, where employers are mandated to take a percentage off the gross payment and then send it to HMRC in some way, shape or form.
Lizzie Penny: I feel that what needs to happen is more of a conversation about what this looks like. With the construction industry comparison, you are presupposing that those freelancers are working for one construction company rather than in a portfolio—
Q235 Mark Jenkinson: The scheme forces employers to take 20% off the gross upfront and hand it to HMRC. That’s from any employer. That is captured by the scheme and then you claim back what should not have been handed over.
Lizzie Penny: Yes. I guess I would say, to be totally upfront, we have not got into the detail of what all these might look like, but we would want to be part of that conversation. We would love to start having those conversations. Rather than “Here are the changes and they are going to be made through employers”, we would want to look at other people who can only access the workforce by working other than in structured employment for five days a week.
Q236 Mark Jenkinson: On the IR35 point, I will put on record again my dissatisfaction with IR35 and successive changes in the last 23 or 24 years, particularly around employment status, where workers are treated the same as employees financially but do not receive the benefits that employees receive under IR35. Is IR35—particularly those recent changes—a barrier to entry?
Lizzie Penny: There are two elements: one is the technicalities of IR35 and the other is the sentiment around IR35. Even when IR35 was briefly repealed, interestingly, freelancers and self-employed people still felt really intimidated by tax, so there is also a cultural element—a genuine fear that they will get their own tax wrong and that they are responsible for that. It is about revisiting both those elements to make sure that we are supporting freelancers and people working in a self-employed way more fully.
Mark Jenkinson: Thank you.
Chair: Lizzie, we have timed out, but I would be really interested to have more detail about what changes you might want to see in terms of universal credit or pension schemes to enable the workstyle approach, where they have to think about hours worked, and how that aligns with social security payments.
Thank you to all three of you for your contributions; we are very grateful. We will move on to the second panel.