A work in progress

A work in progress

From being an inside left to making a substitute appearance on the right, Matthew Taylor talks about how he came to conduct the review into modern working practices

Being asked to head the review into modern employment was the “equivalent in public policy terms to being asked to play for England,” says Matthew Taylor, whose two sons went to America on soccer scholarships - with one now playing at a professional level in the MLS (Major League Soccer).

From working as an adviser for Tony Blair’s Labour government to producing a report for the current Tory government, Taylor has been a significant figure in British politics for a long time. But it is only in the past year, that he hastruly stepped into the spotlight.

The 56-year-old chief executive of RSA (Royal Society for the encouragement of Arts, Manufactures and Commerce) explains that he has always cared about employment and the issue of “quality of work”, so when the opportunity to lead a review arose, he snapped it up.

“To provide independent advice to the government and to have a public role, knowing that the government is going to respond to what you say – that’s an incredibly exciting opportunity,” he says.

“It’s not so much about the political leadership as it is about the task. When I worked for Tony Blair, I was an insider, I was there to advise him and to work for him. Nobody knew who I was, I didn’t speak to the press and I didn’t have a public profile. 

“The role I had with Theresa May was to review meant that I was on the road, doing events, talking to the press… I had become a public figure.” 

Taylor admits that although he had been in talks with Downing Street about conducting a review – partly because the RSA had done some work on self-employment, gig work and the future of work – he was rather sceptical about it actually being done.

“I suspected that it would never happen,” says the father of three, “my experience of the government is that people are always posting ideas but very few of them actually end up happening. But then I got a phone call to say it was going ahead and that was it.”

When asked if he had any preconceived notions about the world of work that have changed following his research, Taylor claims there were none.

In fact, he confidently says that “there were no huge surprises”.

“There wasn’t some bit of truth or a bit of reality that I was completely unaware of, that I suddenly had to confront. Nor was there one really big idea which I had never thought of.”

The former Institute for Public Policy Research (IPPR) director goes on to explain his initial process going into the review and his anxieties about it one month in.

“I felt that untangling this, setting up an approach and developing policy ideas was going to be very, very difficult given that it is such a complex set of issues.

“I realised that this is not just about gig work, agency work or work in general. Once I’d got a handle on that, we were able to identify three broad areas to look at.”

The three key areas he set out to address in his review included:

  • Exploitation – who is being exploited; why they are being exploited; what can be done about it?
  • Why is the system so confusing and complex and what can be done about it?
  • How can we address the underlying incentives that are driving what goes on in the labour market? 

According to Taylor, policy making is like being a “painter or a poet”.

“You go into something with a set of skills and you look, and you search for inspiration to solve a particular problem and try to fine tune the product – that product is the policy recommendation.” 

Whether or not you agree with his analogy, Taylor certainly looked to address the issues he had identified – but was he successful? 

Matthew Taylor with Theresa May at the launch of the review

The review, published in July, called for “seven steps towards fair and decent work”. These recommendations included making the “taxation of labour more consistent across employment forms”; introducing a new dependent contractor status; and calling for the government to “explore ways to improve pension provision amongst the self-employed”.

IPSE welcomed the review from the outset and backs many of the recommendations. However, it has questioned the new dependent contractor status, which is based primarily on control, adding that it could lead to greater confusion rather than simplifying the system.

IPSE has long called for the government to bring in a statutory definition of self-employment based on a set of principles, which include day-today control of tasks, mutuality of obligation and the ability to substitute, to address this confusion.

In response to this, Taylor labelled IPSE’s matrix “very interesting” and explains that his recommendation for a new dependent contractor status is “not new”, but falls within the worker category.

“It felt to me in the end, the common sense idea of what it means to be self-employed is that you exercise a high level of control over the work that you do; so I wanted to put more emphasis on control and supervision.

“This is, by the way, what HMRC use as their primary criteria for determining someone’s status.

“I suggest that over time we move to aligning HMRC categories and employment categories.” This is one of IPSE’s long-standing recommendations.

He went on to add: “I also wanted to address a particular problem, which some delivery companies are known to do. They use substitution as a kind of get out of jail card on workers’ rights and I don’t think they should do this.

“The fact that you can get someone else to do your job for you, doesn’t change the nature of the relationship. The capacity for substitution might distinguish someone from a worker and an employee, but it shouldn’t be something that distinguishes a worker from a self-employed person.”

And if he had to choose one element from the report for the government to prioritise, Taylor suggests higher minimum wage for variable hours, mostly as it has two main aims. 

He explains: “If it were to mean that people on minimum wage got a bit more money, then that is of course a good thing.

“But more broadly, it is an appropriate way of making sure that employers don’t simply transfer all their risk on to the most vulnerable. So, if we gradually introduce the principle that if you don’t guarantee people the hours, you have to pay them a little bit more – which is a principle that is applied in Australia, America and many other places.

“Then if that principle starts to work, over time you could increase that differential. Although my recommendation only applies to those on minimum wage, you could, hopefully, start to increase this as more of a norm across the rest of the economy.”

The whole of the review is based around moving “towards a more consistent and fair way of taxing labour”.

In the spring budget, chancellor Phillip Hammond’s initial announcement that he would increase class 4 national insurance contributions was met by outrage, particularly in the self-employed sector. But Taylor is an advocate for this rise and firmly believes this is the way forward.

He says: “At the moment, the way we tax labour depends on the form through which that labour is provided. Employees and workers are generally taxed at the highest level – they pay higher national insurance themselves and employers pay national insurance on them. Whereas the self-employed pay a much lower level of tax.

“There is a widespread misconception that somehow the lower taxes the self-employed pay is due to the fact that they don’t get the benefits you get from employers like holiday and sick pay. But the reality is that holiday and sick pay are not things that the government provide – employers provide this.

“It is not the job of the government to compensate people for the fact they have made a decision to go self-employed.”

Taylor adds: “The real issue here is access to public services and state benefits. Self-employed people get more than 99 per cent of the same benefits as people who are employed – they only miss out on paid parental leave and earningsrelated jobseeker’s allowance, which are very small parts in the overall expenditure of the state.

“So over time we should move towards a more consistent and fairer way of taxing labour. We think to do that will take a long time and it will be very difficult, but we do say the chancellor was right earlier in the year when suggested increasing national insurance contributions for the self-employed.

“However, we do need to explore ways of tackling the much more pronounced difference at the lower end of the self-employed spectrum and reduce that gap. For example; if I employed a gardener to sweep leaves in my garden – I would implicitly pay 13.8 per cent extra for that labour if they were employed by a company to cover the cost of the employer’s national insurance than Iwould if they were self-employed.”

It has now been two months since the review came out, so how does Taylor feel it has been received? So far, the RSA boss believes the reviewhas been received “pretty well”.

“It’s difficult when you dedicate a large part of your life to something, to be objective about it,” he says.

“But broadly speaking, the more people that have actually read the report, the more they come at it with a reasonably objective perspective – and tend to be more positive.

“The people who are less positive are those who haven’t bothered to read the report or whocome at it from a very ideological perspective.”

From when the report was commissioned to when it was published, there has been a general election and we now have a minority government. On the one hand, this could prove a challenge when it comes to implementing the recommendations, but Taylor believes there are things in the reportwhich have cross-party support.

“There are some things that ought to have general support, such as every worker and employee should get a basic statement of their terms and conditions in plain English on the firstday of their engagement,” he says.

“And the idea that casual workers must be told they have an entitlement to holiday pay and they have the option of rolling that holiday pay up.”

He went on to point out that some of his recommendations are already out of date, which include limiting employment tribunal fees.

Now that the review is over, what’s next? Firstly, according to Taylor, who is currently learning to play the guitar “badly”, there is a danger of what he calls “uberisation” of the economy and this should be addressed.

“It is not particularly helpful that there is a kind of obsession in the media with the gig economy and firms such as Uber and Deliveroo. Although these companies are important as they are very visible and have a distinctive model – if you take away the technology, it is not that different from models that have existed before.

“There are some people arguing that this model could be explored in the retail sector and this is where the issues can arise.”

According to Taylor, “this is where organisations like IPSE can play an important role”.

“They can help us to know more about what is going on, because there are certain areas where our knowledge isn’t very strong.”

He finishes off by saying: “You [IPSE] should keep your feet on the ground in terms of the change that is likely to happen. There is a tendency at the moment to say that everything is going to be utterly transformed by technology in the next few years.

“I’m not so sure that is the case and I think it is important that we focus on what is really happening.”

So, has Matthew Taylor scored a winner with his report on the changing face of employment or has the UK’s 4.8 million self-employed decided he’s well offside? We’ll need extra time for that result!