Dianne Sharp: More needs to be done to tackle inequality

Regional head of the CBI says Government needs to do more to help low income families

Dianne Sharp, the regional director for the CBI
Dianne Sharp, the regional director for the CBI

The economy is on firm ground but the financial crisis and the slow recovery have hit people’s finances hard. Although living standards will gradually improve as the economy does, growth on its own will not be the miracle cure.

There’s a deep seated problem that stems back even before the recession – the income of a child’s parents determines too many of their future life chances.

That means a 16-year-old child from a disadvantaged background has a 48% chance of achieving at least five GCSEs A*-C, including English and maths. That compares with a 77% chance for a child from a better-off background. And aged 25, these young adults are still behind, earning around £71 less a week.

So we need to face up to some long-term challenges. Changing skills needs, greater global competition and low social mobility mean for many the pathway to a better life is tough and far from clear.

In our new report, A better off Britain, we’re calling on the Government to help ease the pressure on families and people on low incomes now by cutting employee National Insurance and making childcare more affordable.

Then we have to tackle the long-term issues – productivity, skills and education.

Business leaders need to step up to the plate here, as well as politicians.

Productivity – how much value an employee adds to the business in every hour they works – determines how much firms can afford to pay their staff. But productivity growth has been much weaker than we expected. Our report sets out ways in which firms can work together on areas like management skills, job design, innovation and investment that will boost productivity and their ability to pay more.

Education is the best long-term tool to boost living standards and social mobility: the higher your skills, the higher your pay. The good news is that our economy is creating more highly-skilled jobs better paid. It used to be the case that getting A-levels (a Level 3 qualification) was enough to get a middle-skilled job. Now to get an equivalent role, you need to have a level 4 qualification, like a certificate of higher education.

But we also need to do better at the very start of education, at helping all young people find the right path for them – whether that’s academic or vocational. That’s why we’re calling on the Government to introduce a new vocational A-level. The education system must support every single young person with their individual needs, not just to pass exams, but to become rounded and grounded people who can get on outside the school gates.

So schools should provide work-related learning again and introduce a national network of local brokers to support schools to deliver it.

And firms can and must do more to help their staff progress, develop their skills and increase their earnings - we want to see all businesses making this a board level priority.

Business wants to help build a more prosperous Britain where everyone has the chance to get on in life. This is the right thing to do to build a stronger and fairer society, and it makes good business and economic sense too.

  • Dianne Sharp is Regional director - North East CBI

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