Alec Reed: Scrap income tax, work 35 hours and on a Saturday

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Sir Alec Reed is founder of Reed, one of the most familiar names in recruitment. He started the business in Hounslow in 1960 and was knighted in 2011. 

Below, he outlines a five-point plan to get Britain back to work – including a 35-hour working week and basic income tax to be scrapped. 

Before beginning to outline each stage in my proposal, I must applaud the Government for introducing its furloughing scheme which has allowed so many incomes to be protected up until now. 

Sir Alec Reed, founder of Reed Executive, one of Britain’s largest private companies

My only question surrounding the Government’s action here is why furloughed employees couldn’t continue to work? 

Although furloughing has alleviated the hardship on staff, it has also removed the productivity of those employees and distanced them needlessly from many businesses.

1. Reduce the working week to 35 hours

With the country facing the prospect of unemployment reaching five million, work is precious, particularly lower paid work, and so it should be shared more evenly. 

Following on from furloughing, lower paid work should be restricted to 35 hours per week. 

The French government introduced a 35-hour working week at the start of the millennium when they were confronted by mass unemployment, and they have been able to share the national workload more effectively and create more jobs ever since. 

The burden of less pay for already low paid staff, caused by a reduction in hours, can be alleviated by their savings on tax, which is explained below.

We introduced an emergency 30-hour working week at Reed when lockdown was first imposed. 

Not only did it enable the workload to be shared between more staff so that we could retain as many jobs as possible, but as we experienced a 50 per cent loss of revenue, we were able to reduce our staff costs by 25 per cent to avoid catastrophic losses, ensuring that the company, and with it thousands of jobs, were protected.

Part-time work is something which we’ve long embraced at Reed, we’ve even found that it can increase productivity and improve performance. 

Reluctant employers should now to be ready to accept part-time working and see the positive results for their businesses.

2. Rethink taxation on work

Rishi Sunak, Chancellor of the Exchequer, will outline a package of emergency financial measures in the autumn

Rishi Sunak, Chancellor of the Exchequer, will outline a package of emergency financial measures in the autumn

Although work is a good thing, it is heavily taxed by the government. 

Setting allowances aside, even the lowest earners pay income tax at a rate of 20 per cent, there is then a 12 per cent national insurance contribution and a further 13.8 per cent national insurance charge on the company, totalling 45.8 per cent. 

This means that the combined rate charged by the government on low paid employment exceeds the 45 per cent rate of income tax paid by the super rich. 

The government should make the lowest earners exempt from income tax and remove both national insurance contributions on their wages. 

Ironically, businesses can purchase labour-saving machinery more tax efficiently than they can employ people. 

Whilst economic demand is contracted, we should encourage work to be performed by people rather than machines, all other things being equal.

3. Domestic employment should be encouraged

More people could be working in personal services such as gardening, housework and childcare. 

The government should facilitate this by allowing wages paid for such services to be deducted from the employer’s salary before income tax is calculated, this would enable many parents to get back to work.

A hairdressing salon owner putting social distancing measures in place ahead of opening

A hairdressing salon owner putting social distancing measures in place ahead of opening

4. Extend the traditional working week to include Saturday

If we just use Saturday, we are increasing our access to assets by 20 per cent. 

We could begin by adopting a 35-hour working week for employees which is spread across six days for employers. 

This would allow greater flexibility for families and individuals when deciding which days of the week they want to work. 

Universities and schools encouraged to follow suit would have the advantage of being able to offer smaller class sizes. Sundays would be left free for socialising.

By making facilities available to employees for six days but reducing their working week to 35 hours, we are already creating significant empty space, and this is without allowing for those who can work from home.

Are we willing to be radical enough to accept the end of the weekend? Or at least half of it? 

 Are we willing to be radical enough to accept the end of the weekend?

After all, the retail sector realised the advantage of a seven day working week decades ago; why has the rest of industry been so slow to follow suit? 

Reed Business School is a relatively small part of Reed, but it teaches at weekends. 

In fact, as I am writing this on a Sunday, the school is running an online course in economics, so why couldn’t schools and universities share this approach and operate six days per week? 

Companies will also benefit by doing the same, in order to access greater use of their plant and machinery.

If my proposed changes to the working week prove to be successful in the long-term, it would surely release a lot of redundant office space which could be converted into much needed affordable housing. 

Furthermore, it would reduce pressure on public transport.

Companies should invest in the technology capable of facilitating remote working

Companies should invest in the technology capable of facilitating remote working

5. Companies should invest in the technology capable of facilitating remote working

Where technology has evolved to accommodate home working, our attitude as employers must reflect this in order to realise its full potential for businesses. 

The coronavirus has already forced us to become accustomed to home working, the scale of which would have been unimaginable before lockdown. 

Poll

Which of Sir Alec Reed’s policy ideas do you back?

  • 35-hour working week 10 votes
  • Working on Saturdays 1 votes
  • Scrap basic income tax 11 votes
  • Make domestic wages tax deductible 1 votes
  • Work from home permanently 5 votes

And although the importance of human interaction and physical offices shouldn’t be overlooked, they should be balanced by home working where possible.

Whilst each of these steps can be implemented on a national scale, their impact must be assessed on a local basis to accelerate the UK recovery. 

Too frequently the government has focused its attention on the all-important R figure from a national perspective, overlooking significant regional variations. 

If this continues, infected areas will prevent less vulnerable regions from kickstarting their economies sooner.

In the immediate future, the number of people employed should take preference over maximising profits. 

By embracing the restrictions forced upon us by this deadly virus we can reinvent the workplace and transform businesses. 

I firmly believe that our strategy as a nation must be one of shared sacrifice, with everyone coming together so that we can design a path to return to a healthy economy under a new version of normality.

Sir Alec Reed 

Sir Alec Reed is founder of Reed, one of the most familiar names in global recruitment. 

He started the business in Hounslow in 1960 after persuading his boss, an estate agent, to rent him half of his shop to start a recruitment company.

The firm has grown to be one of the UK’s largest privately owned companies today. 

In 1995, Reed.co.uk launched, making it an early presence on the internet, known then as the world wide web and viewed with caution by many other business leaders.

He was knighted in 2011 for his contributions to both business and charity, having founded seven charities in all and been actively involved in another four.

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