How a new approach to benefits could build a greener, more productive Britain after Covid-19

Before Covid-19 Britain faced a productivity puzzle and climate crisis. These challenges will remain after our current crisis; addressing them will require economic upheaval that will only be fair or possible if workers are properly supported through them. This demands a radical new approach to our benefits system. 

Productivity is a measure of how much a worker produces in a period of time. Throughout most of human history productivity was flat. It skyrocketed in the Industrial Revolution and, broadly speaking, we’ve never looked back. That’s until the last ten years or so, when productivity growth has flatlined in the UK. This has led to a range of social and economic ills, most importantly stagnant wage growth. 

Automation has the potential to boost productivity. Put simply, a worker and a machine is more productive than a worker alone. Indeed, many economists argue that we are currently experiencing a new ‘age of automation’ due to the rise of technologies such as artificial intelligence. 

Yet there is likely to be considerable public and political resistance to automation because of what happens to displaced workers: forced into a benefits system characterised by meagre payments and a punitive culture of sanctions. If the productivity-enhancing promise of new technologies is to be realised, the stakes for displaced workers must be reduced. This means increasing the generosity of our benefits. £74 per week, the current rate of Jobseeker’s Allowance, is not an acceptable amount to be asking people to live off in 2020. It also means providing tailored, resource-intensive support so that workers can move to new sectors to cope with the disruption of automation. 

The same goes for tackling climate change. We know this will rightly be a priority for the public after Covid-19. Through our initial survey about life during coronavirus we have heard countless calls for some of the environmental improvements seen as a result of lockdown to be preserved post-crisis. 

But decarbonising our economy will inevitably mean significant job losses in certain sectors. With our benefits system as it is today, politicians will understandably face significant pressure to preserve jobs in these sectors, ‘baking in’ a carbon-dependent economy. Radical decarbonisation will only be possible if people can move out of these sectors without being thrown into destitution and are offered the support to retrain. 

A generous, supportive benefits system could be an agent of change, supporting the workforce through the economic upheavals that might be necessary for a low carbon or more productive economy. Yet today the stakes are too high for a worker replaced by a robot or in an industry with no future in net zero Britain. This must be addressed if the UK economy is to emerge more productive and greener from Covid-19.