George Osborne is right that businesses should be freed from the shackles of high tax and unnecessary regulation so that they can focus on driving growth in our economy by creating new jobs and wealth.
Wednesday’s announcement that corporation tax will be dropped by 2 per cent from this April is welcome. As is the abolition of 43 tax reliefs and the gradual merger of National Insurance and income tax.
But the Chancellor, in his desperate rush to appear pro-business, has taken the axe to a regulation that in fact boosts productivity: the extension of flexible working rights for employees.
Clear the clutter, set businesses free from top-down diktats, is his view. The Chancellor ought to drop the ideology and cultivate a more sophisticated, evidence-based critique of regulations. Some hamper growth, and must surely be repealed, but others have proved positive for both society and business.
One such case is parents’ right to request flexible working, introduced by the Labour government in 2003. Slowly, it has been expanded to more and more parents, so today over ten million with children under the age of 16 have the right to request flexible working from their employer.
The regulation has brought about a positive cultural change in our society. Between 2003 and 2007, there was a sizeable increase in flexible working arrangements available to parents – whether that be part-time working, flexitime, working from home or compressed hours.
It has contributed to increased lone-parent employment in the 2000s, ensuring that these parents can access jobs which are compatible with their familial duties. Research shows that both men and women, who report wanting to spend more quality time with their children, are now doing just that.
More businesses, many initially sceptical, have gradually embraced flexible working, the regulation helping to demonstrate its advantages. Fifty-eight per cent of employers report significant improvements in staff productivity with family-friendly working arrangements . From Microsoft and BT to Sandwell Community Caring Trust in the West Midlands, employers say productivity has improved. They open themselves up to a wider recruitment pool, enhancing their ability to attract and retain the best staff.
During the downturn at the back end of the last decade, employers reached for flexible working as a solution to cutting costs: keeping staff but reducing their hours. KPMG offered 11,000 employees a four-day week in 2009, impressively holding on to most of its staff members.
Flexible working really is the future, with nine in ten 16-year-olds aspiring to flexible work. It provides solutions to many pressing policy problems. Congestion on our transport network can be eased by staggered starting times and home working. Time is one of the principal obstacles to volunteering; flexible working gives us that time, supporting the development of the “big society”.
Lamentably, Osborne’s Budget has halted the extension of the right to request flexible working to parents with children between the ages of 16 and 18. It is both odd and unnecessary, as it was only a right to request, not demand, flexibility: businesses have the right to veto. What this does is send the signal to businesses, wrongly, that flexible working is burdensome.
On top of this, the moratorium for small businesses on the implementation of any new domestic regulation, coming in addition to the review of all existing regulations, threatens plans for the extension of flexible working to all, proudly trumpeted only a year ago in the Coalition Agreement. Gone are the days before the general election when the Tories talked of building a “family-friendly Britain”, boasting of their plans to go further than Labour on flexible working.
Family life and the “big society”, bedrocks of Cameron’s Conservatism, will suffer from this careless policy.
Ryan Shorthouse works at the Social Market Foundation and was an adviser to the Conservatives on family policy before the last general election.
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