Lord Leigh of Hurley
That this House takes note of the latest employment figures and the steps being taken by Her Majesty’s Government to increase employment rates.
Lord Leigh of Hurley (Con)
My Lords, why the focus on employment? I have always considered this to be central to our country’s success and quality of life. This fact was brought home to me by my right honourable friend Robert Halfon MP, who, having lost Harlow by 97 votes in 2005, went on to win well in 2010. He is disabled and not mobile. He told me the story that during his campaign he had to have a new tyre for his car. As he was waiting in his car, a large, heavily tattooed tyre-fitter came up to him with the greeting, “Oi! Are you the Tory? I want a word”. Rob admitted, with some temerity, that he was the candidate. “Well,” the fellow said, “I am voting for you lot this time”. “Why is that?” asked Rob. He replied, “Because I’ve got a job”. Jobs are central to our economic success.
This is a time when capitalism itself is being questioned and the siren song of socialism rings out from the party opposite—or, if not exactly from the noble Lords opposite, certainly from some of their colleagues in the other place. Frankly, I was horrified to read John McDonnell’s comments in the weekend press that he wants to replace capitalism with a system of common ownership and businesses run by workers’ votes. He has said publicly that his job is “to overthrow capitalism”. I hope all speakers will distance themselves from this aspiration as, meanwhile, Conservatives continue to believe that the market economy and the jobs it creates provide the best route from poverty to prosperity.
We have today 32.7 million reasons to be cheerful; that is the number of people currently in work, earning a wage, providing for a family and contributing to a community, which is 354,000 more people than a year before and the highest number since records began in 1971. The female employment rate stands at 71.8%, the joint highest on record, and the unemployment rate is currently down to 3.8%, the lowest since 1974—a remarkable achievement and cause for some optimism, as the UK continues to work through this difficult period for its political economy.
I called this debate for two reasons. The first is to celebrate these numbers, and I hope noble Lords will join me in so doing. The other is to probe them, to make sure that we are doing everything we can to future-proof our labour market, drive up the quality of work, create more high-paying jobs and, of course, increase productivity—something I feel sure that the noble Lord, Lord Haskel, will focus on—to improve the UK’s ability to compete globally. And there is more cause for optimism. To those who say these are the wrong sorts of job, either low quality or low wage, I would draw noble Lords’ attention to a recent report from the Resolution Foundation, which found that the proportion of workers on low wages is now at 17%, its lowest level since 1980. When this is combined with the Government’s progressive approach to tax policy, taking low-wage earners out of tax altogether, the picture is a compelling one for social mobility.
The shadow Secretary of State for Business recently described this as a “time of low wages”. I believe she could not be more wrong. That said, there are some underlying issues which we need to address to ensure that we drive up employment numbers and productivity, and that wages continue to grow. To their credit, the Government commissioned a review to look at the changing labour market. The Taylor review was quick to highlight the success of high employment and, as we have seen, that success continues apace. But it also concluded that there were:
“a number of persistent weaknesses in the UK labour market, particularly real wage growth and productivity performance”.
The Government have now responded, and I would be grateful if my noble friend the Minister could provide further updates in her remarks today. Since publishing the Good Work plan, the Government have moved to address wage growth and unfair working practices, to ensure in particular that agency workers receive the same wages as permanent staff doing equivalent jobs and more clarity from agencies on their entitlements. Indeed, the plan offers a comprehensive package to address unfairness, transparency and enforcement to help protect workers, and I commend it accordingly.
However, while the plan works to establish parity between agency workers in both pay and treatment, it says little about how we can drive wages up in the round while boosting productivity. The Chancellor, in his Spring Statement, referred to low wages and low productivity as “the twin demons”, as well he might. We are now seeing progress on low wages but can it be matched by progress in productivity? We now have a £37 billion national productivity investment fund, which I hope will go some way to address this. Investing in road, rail, airports and fibre-optic broadband must surely help with productivity. Upgrading our infrastructure is often overlooked and is overdue. Will the Minister offer a progress update on the deployment of this much-needed capital?
I would like briefly to return to a theme I have raised in this House before: whether our current measure of productivity has kept pace with the modernisation our economy has undergone. Services, not manufacturing, are now the mainstay of our economy, yet in my opinion they are still not properly accounted for in the metrics. We may be doing better than the headlines suggest. Also, as I have argued here before, full employment is bound to impact negatively on productivity as we employ the least productive people. I still do not like the measures used, particularly that of output per hour; it is misleading and bound to be an estimate, whereas the only hard figures that the Government publish, and which we can totally rely on—namely, tax receipts and employment rates—show a much better, if not rosy picture.
One thing we cannot do is punish and undermine those who do more than anyone to further the cause of employment: namely, businesses and entrepreneurs. Without a policy platform that supports business, we have no hope of sustaining near-full employment and continuing to drive up wages and productivity. Yet, strangely for an organisation that purports to care deeply about the least well off, Labour’s policy towards business would hurt those very people by killing jobs. I am talking about the policy of drastic hikes in corporation tax, a tax ultimately borne by workers through lower wages, and the leader of the Opposition’s pledge to reverse what he calls,
“tax giveaways on capital gains tax”.
It is telling that the Labour Party is often confused by tax, thinking of it as the Government’s money to give away when in fact, of course, it is individuals, entrepreneurs and businesses who create that wealth in the first place. Such tax hikes—that is what they are—would hurt investment and, through that, ultimately impair job creation and punish workers.
Likewise, the proposed hikes in income tax will, I am afraid, drive out employers, as will the reversal of two important measures: first, the changes made to allow employers to hire people knowing that, if it does not work out, they can be released; and, secondly, the changes to employment tribunal fees. I cannot overemphasise the importance of the first measure. As an employer myself, I can say that looking to increase our workforce is more likely to happen if we know that we can release employees in a downturn or if a new employee is not right for the job; this can take over a year. Change the time limit from the current two years, as Labour has indicated, and there will be a sharp fall in new employment; employers simply will not take the risk.
On the second measure, as noble Lords will be aware, the Supreme Court ruling that tribunal fees cannot be charged has led to a 165% increase in the number of single-claim cases in 2018 and a significant lengthening of the time these cases take to be resolved; this is in part because the judges who are specifically trained to sit in those tribunals were themselves let go. Will the Government commit to look again at this issue?
If we want full employment, high wages and high productivity, we have to combine smart labour market reform with comprehensive and consistent support for job creators. Broadly speaking, that is what the Government have done. In my opinion, the prospect of renationalisation—so that politicians of all people, not businessmen, will again run rail, energy and mail services—threatens failure and job losses. Today, we celebrate a record number of people in work and a record few out of it. This shows that, despite the present uncertainty, the fundamentals of the UK economy are strong. We need to ensure that everyone can secure not only a job, but a high-quality, higher-wage job that will bring prosperity to their family, their community and our country.
With noble Lords’ permission, before I sit down, I would like to remind your Lordships that this is the last parliamentary day with the current leader of the Conservative Party. My nomen dignitatis relates to the village of Hurley, which is close to the town of Maidenhead where I have lived for some dozen years, so I am honoured to have known our Prime Minister well, personally, for many years. I hope noble Lords will allow me a brief moment to express my thanks to her for all that she has done and tried to do for our country, and to express my personal view that history will record that she was dealt an impossible deck of cards but no one could have devoted more selfless effort to public service than her. She leaves her post with nine years of continuous growth, with a first quarter of growth greater than France, Germany and Spain and indeed projected growth for the rest of the year likewise. No one loves her country as she does, and very few have given as much. She has of course given us record full employment, and I salute her publicly for that.
I very much look forward to the contributions from all noble Lords today.
Baroness Goldie (Con)
My Lords, I bring some news that may be joyous to Back-Benchers. It has been possible to extend the time for Back-Bench contributions to seven minutes. However, noble Lords should not think this will introduce an uncharacteristic mood of indulgence on my part; seven minutes is the limit.
Lord Shipley (LD)
My Lords, I thank the noble Lord, Lord Hurley, for the opportunity to hold this debate. A few years ago, I had the privilege of leading Newcastle City Council, and I remember being asked in an interview what I worried about most as council leader. I think the expectation was that I would reply, “Keeping council tax down”, or perhaps, “Getting re-elected”, but I actually said that I worried most about the next generation of jobs—what they would be, where they would come from, whether there be enough to generate full employment, whether they would be good jobs and whether they would offer career progression to encourage graduates to stay in the city. I worried about that then and I still do, because I lived through the 1970s and the 1980s with the huge loss of jobs in mining, iron and steel, chemicals, shipbuilding and manufacturing.
Thanks to the automotive industry, the growth of services and the major achievement of our local universities in attracting students and some cutting-edge research, employment in my region—as elsewhere—is very high. But too many jobs are low-paid and insecure, with too many employees stuck in jobs that they do not enjoy and without opportunities for career progression. It is not just about employment rates, as the Taylor review demonstrated.
I want to talk about people and places. Today, job losses have been announced or forecast: by Aviva, of 1,800; by BT, amounting to 13,000; and by Ford, of 1,700 at Bridgend. Job losses are pending in the steel industry, and it was recently reported that car production has dropped 44% between April 2018 and April 2019. Foreign direct investment is down, and investment generally is below its pre-referendum level. These trends are worrying in the context of our debate about Brexit.
I mentioned BT. Today, site closures have been announced by BT of 270 sites—the company is moving from 300 sites to 30—with a loss of 13,000 jobs. BT has identified eight key future locations in Belfast, Birmingham, Bristol, Cardiff, Edinburgh, Ipswich, London and Manchester. It is reported in the Times this morning that BT claims these places demonstrate its commitment to the whole country, but it has missed out Yorkshire, the east Midlands and the north-east of England. In the north-east, over 6,000 jobs are at stake in the absence of any information on the remaining sites—none of which will be key sites with the implication of good jobs going there. This means that no BT key site is planned anywhere on the eastern side of England between the Scottish border and London, other than Ipswich. I ask the Minister specifically what discussions Her Majesty’s Government have had with BT and what impact assessments have been done, by anyone, on communities that may see large-scale job losses proposed.
In that context, I draw attention to two recent reports. The first is by the Institute for Fiscal Studies, which asked whether inequality was killing capitalism. It is a complex question, but there are signs that suggest it may be. The trickle-down effect to poorer people and places has proved largely ineffective. We used to be one of the most equal societies in the world, but we have moved to being one of the most unequal.
The second report—and I am very pleased to see the noble Lord, Lord Kerslake, in his place—was published a few days ago by the UK2070 Commission on regional inequality, which he chaired. It forecasts that half of all new jobs will go to London and the south-east. To tackle regional inequality, the commission proposes: four new super-regional economic development agencies; a spatial plan to guide the future development of the whole of the UK; action to harness new technologies and strengthen local economies; and, crucially, a national renewal fund that would rebalance the economy over a 25-year period. I find all those recommendations very positive; they would reduce pressures on the south-east and rebalance wealth. At present, in London the UK has the richest region in northern Europe. That helps the rest of the UK financially, but we also have six of the 10 poorest regions, making the UK the continent’s most geographically unbalanced economy.
I am arguing not that the Government should do the job of the private sector but that they should create the conditions to address spatial inequalities through their leadership and intervention, as occurs elsewhere in Europe. If this debate were taking place in Edinburgh, it would be about the third spatial strategy in Scotland. England does not have one at all. Perhaps the Minister could explain why the Government leave so much to the market in England.
In 2017, the Government rightly committed themselves to the industrial strategy, saying that they wanted:
“An economy and labour market which works for everyone”.
I concur with that, but you cannot simply run England out of London—it is too big. Devolution within England to date is half-baked, with nothing like the powers available to Wales and Scotland. We have local enterprise partnerships that are underpowered, Whitehall departments that are unco-ordinated at a regional level and only one local industrial strategy, published recently in the West Midlands. We need national and local industrial strategies, national and local spatial strategies and a private sector that understands its duties and obligations to specific communities when it restructures.
Lord Haskel (Lab)
My Lords, I can understand why the noble Lord welcomes these figures. We all do; we have the highest number of people in work since records began and the lowest level of unemployment since December 1974. So I congratulate the noble Lord on moving this debate. However, I do not agree with him about what lies behind these figures. He spoke of a high rate of jobs for women. The Office for National Statistics tells us that this is due to the change in women’s state pension age, since fewer women are retiring because their pension age has been increased. There has been a significant rise in the number of self-employed from 4.75 million to 4.93 million, raising concerns that more people are in insecure self-employment in the so-called gig economy.
However, those are not my major concerns. My major concern, as the noble Lord intimated, is that employment is increasing while productivity remains virtually static and investment is declining. That can only mean one thing: companies prefer to hire expendable workers rather than raising productivity by investing in machinery and new technology. The noble Lord seems to agree with me, and he seems to want to solve the productivity puzzle by manipulating the numbers. I suggest that instead he addresses himself to the overstrong financial sector, which seems reluctant to support the intangible investments that he is calling for, especially in the service sector. He should also ask his own Government what is happening to the industrial strategy, which is meant to help provide this support and encourage the necessary innovation.
Workers are not being displaced by the new technology that the noble Lord spoke about. This explains the research from the Joseph Rowntree Foundation, which shows that 4 million UK workers are in poverty, roughly 12% of the people in work. Its research also shows that the number of people with a job but living in poverty has risen faster than employment.
It is this picture which is reflected in the report from the United Nations Human Rights Council on poverty in Britain, to which the noble Lord referred. The Department for Work and Pensions has called this report “barely believable” and “completely inaccurate”. But it is believable. It is believable because the employment figures deal with individuals, but most of us live in households. It is the household that is the significant economic unit for receiving income and making expenditure. This explains why the Government’s claim that jobs are a route out of poverty is just not true. It is a productive job, plus social housing, training and a safety net, that is the route out of poverty. Society and the economy have to go together, but that is just not happening in the noble Lord’s scenario.
What is happening is that the number of poor people out of work has fallen, but the number of poor people in work has risen. This is why there are now 2,000 food banks in Britain. This is why the United Nations report is believable. And this is why the report speaks of inequality. Increased pay and increased productivity have to go together; otherwise, all it does is increase inequality, as the noble Lord, Lord Shipley, pointed out.
There is a brighter side. Poverty among pensioners has dropped. Certain measures of well-being are high, probably because of the number of people in work. The number of skilled vacancies is also high. This requires giving priority to non-university-based further education, which the Government seem to have accepted in the Augar report. At last, after two years, the Government have recognised that the apprentice levy scheme is a disaster, which is failing young people and wasting money. Hopefully, this will now be reorganised.
With so much poverty in working families, calling the minimum wage the national living wage does not bear any relationship with reality. Fortunately, a report from the Resolution Foundation last week, to which the noble Lord referred, demonstrated that the minimum wage has not reduced employment. Both the Government and the Opposition seem keen to build on this. However, enforcement is essential. Too many employers in the UK are getting around minimum wage and labour standards by employing gig workers or operating so-called “dark” places of work. Better enforcement will encourage the investment, productivity and training. Labour’s plans for a £10 an hour minimum wage will end low pay and, together with the planned investment, bring most families out of poverty by raising both pay and productivity. Until this happens, full employment and family poverty will go hand in hand.
Of course, employment figures are backward-looking, telling us what happened several months ago. As the noble Lord, Lord Shipley, told us, quite a lot of job losses have been announced recently, so I agree with him that high employment may not go on. What plans do the Government have to make work pay, so that all families are lifted out of poverty? Experience over the last 20 years has taught us that the market-based economics that the noble Lord, Lord Leigh, seems to favour just will not do the job. All it seems to do is generate even more inequality, and we all know where that is leading us.
Lord Freud (Con)
My Lords, I congratulate my noble friend Lord Leigh on obtaining this debate. I would like to make some observations on the role of the changes to the welfare system in the record levels of employment. I acknowledge that any such impact has taken place in the context of various other levers, such as a flexible labour market and a healthy economy.
In 2007, I wrote a report for the Government on the welfare to work system which endorsed an “aspiration” to achieve an 80% employment rate, compared to the contemporaneous level of 72.7%. The financial crisis of 2008 meant that the 72.7% level proved a high point and the rate collapsed to little more than 70%. From there, employment has clawed its way back to above 76% in 2019—the highest level on record. The various changes in the structure of employment in the UK, such as the increase in the female working age and the greater number of students, mean that this figure is now probably more or less equivalent to the original 80% aspiration.
The welfare system must perform a difficult balancing act between providing an adequate safety net while giving an incentive for people to take economic control of their lives. In particular, it should be designed in a way that does not trap people in inactivity—and the legacy system does have the effect of trapping people in this way. Employment increased in the first decade of this century, but the bulk of the gains derived from people born abroad. It is remarkable how little the number of inactive people living in social housing changed, for instance, through a full economic cycle.
Perhaps the most important piece of work underlying the reform programme was Waddell and Burton’s summary of research published in 2006, entitled Is Work Good for Your Health and Well-being?. I know that it was a major influence on my own report. The positive response to the question meant that the state could pursue work for citizens as an unequivocal goal.
To what extent do the record employment figures we are now seeing reflect the reform programme that was set in train after 2007? The most radical elements were introduced under the coalition Government, but there were major steps under the previous Labour Government, too. Moreover, in parallel with the reform programme, led by the DWP, there was a series of rounds of cuts to benefit payments, led by the Treasury. At this stage, it is much too early to reach a definitive conclusion. There is hard evidence on three of the reforms, and I am indebted to Robert Joyce of the Institute for Fiscal Studies for steering me to them.
The change to lone parent obligations recommended in my original report for the Labour Government boosted the work rate by around 7 percentage points. According to the research, changing the requirement for lone parents to find work when their youngest was five years old rather than 16, has had,
“a much greater impact on moving lone parents into work than other previous programmes and initiatives aimed at this group of claimants”.
The impact of raising the female state pension age was bigger still. This was a reform legislated for in 1995, but accelerated under the coalition. Research by Carl Emmerson of the Institute for Fiscal Studies and Jonathan Cribb of University College London found that the proportion of affected women in work increased by about 10 percentage points.
The reform introduced by George Osborne to cap benefit levels also had a positive effect. The IFS estimated that about 5% of those affected responded by moving into work within a 12-month period, when they would otherwise not have done so. Although that is a fairly sizable effect by the standard of most benefit reforms, its narrow focus meant that it did not have a notable impact on overall employment numbers.
However, there is as yet little definitive work on the employment impact of the two major changes in the years between 2010 and 2016: the cuts programme pushed through by George Osborne and the introduction of universal credit. It is worth pointing out that the cuts programme itself would tend to encourage people into work, as the relative advantage of work and benefits changes.
The latest official estimate for the impact of universal credit, made in 2018, estimated that it would increase employment, when fully rolled out, by about 200,000 people. The early research showed that recipients spent less time out of work than if they were on JSA. There are still only 1.8 million people on universal credit, compared with the 11 million or so when it is fully rolled out. However, it is a well-known phenomenon that people anticipate changes, so that often up to two-thirds of the impact of a new benefit regime can be observed before it is in effect. That phenomenon may well have been amplified by the consistent message that the Government have applied for the past decade or more about the importance and value of work.
There are a number of specific impacts of universal credit quite apart from the financial incentives. There are structural changes, such as the changes to mixed pension and non-pension households. There are two areas of enhanced simplicity. The single taper means that people can straightforwardly forecast their earnings when they work more. At the same time, the combination of tax credits and benefits under one umbrella gets rid of the discontinuities involved in moving between two systems.
We will not obtain a full measure of the impact of these changes for many years. However, as the country faces the new challenges ahead, it may not be a coincidence that the starting point is the highest level of employment on record.
Baroness Fall (Con)
My Lords, I too thank my noble friend Lord Leigh for holding this debate. We should all take at least some cheer from the recent employment figures, which show that employment rates are at a record high and unemployment is at a record low. Signs that demand for labour is finally working to help drive up wages is particularly welcome. There is all this good news despite the chronic uncertainty facing our country as we continue to an ever-more polarised debate about our nation’s future.
As with most good news, it does not come without complications and challenges, not least the huge questions around low productivity and inherent inequalities, which I shall return to. Before I do, I will cast our minds back to a decade when the financial crisis and the following recession started, because we would be wise to remember the long and painful journey to restoring our public finances, not as an exercise in self-congratulation—however tempting—but so that we should not forget away our hard-fought victories.
In 2010 the coalition Government inherited one of the biggest deficits in the western world. We were hurtling towards economic disaster. If we ask ourselves what that actually means in terms of people’s lives, we had only to switch on the television and the answer was right in front of us: images of riots in the street of Greece, hard-working families queuing at soup kitchens, lives ruined thanks to mismanagement of the economy. An unstable economy means failing businesses, high unemployment, high interest rates putting stress on mortgages, and money that could be spent on a hospital or a school being spent on servicing our debt.
Sound finance is not just some accountant’s dream; it protects people’s lives and futures and it should be the first call of any competent and responsible Government, which it was under the Cameron-led coalition. How was this achieved? First, it was by cutting the deficit, which we did by two-thirds so that we returned to living within our means, not maxing out our nation’s credit card and passing debt down to our children. By 2014 we were one of the fastest-growing economies in the western world. We also started a national conversation about welfare. We were clear that we must help those who cannot support themselves, but for those who can we should help them stand on their own two feet. It was a conversation about what was fair—fair to the people who needed support, but also fair to those who paid for it.
We also asked ourselves: was it fair to entrench worklessness by making it pay not to work? That was the simple but strong idea behind many of our welfare changes and the introduction of universal credit. It is worth remembering that after the 2015 election the then acting leader of the Opposition, Harriet Harman, urged Labour to support our welfare Bill and to listen to what people were saying.
Changes to welfare, however, involve difficult and highly emotive judgment calls. We got some things right, but not everything. These are adjustments that should be made carefully, with Ministers in listening mode as they go. I welcome signs that our Secretary of State, Amber Rudd, is mindful of this as she rolls out universal credit to some of the most vulnerable in society.
First came the growth and then came the jobs— 2.5 million of them by the following election—but it remained a great concern to us that wages were so sluggish for so long. There was also an uncomfortable feeling among some that those who had caused the financial crisis had got away scot free, while those who had not took too long to feel the benefits of the recovery. As a Government, we have tried to mitigate this with the increase in the minimum wage and then the introduction of the national living wage, which was a big step in the right direction. Last week a report for the Resolution Foundation said that the national living wage had had a beneficial knock-on effect for low-paid workers—welcome news.
Taken together, there is much in this success story to celebrate, but also much to mull over. At the core of our democracy lies a fragile commitment to respect the will and authority of the Government—whether we voted for them or not—to live by the rule of law and to play our part in society. That is what some like to call the social contract. But it can feel stretched to breaking point if majorities take a winner takes all attitude to governance; if people feel alienated and that they have no voice; if inequalities are so large that it feels as though people live in parallel worlds; if businesses disregard pay restraint on boards and do not care or think about the relationship with their employees; if we allow women to do the same work but not be paid the same as men; if we ignore the challenges of other generations, with young people burdened by debt from their university and with little hope of being able to buy their own homes; and if, as a Government, we do not face up to difficult choices and are straight with the electorate about what they are.
While we move away from austerity, we should not lose sight of the need to deliver a stable economy. If you spend more money, ultimately you need to make a choice of how that is paid for. Is it by borrowing more, taxing more or making other cuts? There is no magic wand, only hard choices. We should not forget that it was through tough decisions and the hard work of the citizens of our country, who are responsible for the figures we celebrate today—figures that translate into hope and opportunity for people and families—and remember that our economy is built on competent governance and that we face many challenges ahead. Yes, we should pause and for a moment smile, and then reflect on all that we must do next.
Lord Monks (Lab)
My Lords, I too congratulate the noble Lord, Lord Leigh, on securing this debate on employment. It is certainly understandable that he has focused on the good news. The headline job figures have been impressive. That is what Governments do though, is it not—accentuate the positive? The employment figures have certainly held up well since the 2008 crisis, perhaps surprisingly so to many of us who have been through other recessionary periods. But it is also understandable, as my noble friend Lord Haskel pointed out, that others of us should peer under this sunny side up approach and look at the more negative features of the world of work in Britain. The noble Baroness, Lady Fall, touched on those in her contribution. On a day when we commemorate the heroic D-day landings—a period when the country came together impressively—it is particularly disturbing to see the current divisive state of the UK.
A central problem is that wage rises have been traded for jobs. The share of earnings in the UK national income has fallen markedly, and within the earnings figures, the share of pay going to high earners has risen at the expense of the lower paid. In 2017, the CEO of a FTSE 100 company earned 145 times the salary of the average worker—up 47 times from just 20 years earlier. As the noble Lord, Lord Shipley, said, we were one of the most equal societies in the world in the 1970s. We have become one of the most unequal nations, with one of the worst records in the world. Those on the lowest incomes, despite the work done on the national minimum wage and the national living wage, earn little more in real terms than they did in the mid-1990s.
There are some dire consequences of these figures. The suicide rate has grown. Drug and alcohol abuse are on the rise. A bigger proportion of jobs are classed as precarious. We used to think of them as atypical, but now they are the norm in many parts of the country, particularly in those regions to which the prosperity of the south-east has not really spread. More families are increasingly chaotic and insecure in our society today—it is not a happy story. The only plausible defence of this would be that economic performance has improved, but in important respects it has not. Growth, productivity, investment, innovation and the trade balance show clearly that there is a huge amount of work to be done, and huge challenges. We are in a low-growth, low-productivity, low-investment, low-innovation economy in many parts of Britain, where people work long hours to compensate for nugatory pay levels. The prospect of Brexit is resulting in the loss of some good jobs already. I shall not labour the Brexit debate—we have debated it many times in this House—but today’s tragic news about the closure of the Ford plant in Bridgend is an indicator of what we might be looking at in the car industry and other key industries.
Apart from Brexit, how did we allow the UK labour market to unbalance itself in this way? It is true that more insecurity and more inequality in labour markets is an international phenomenon, but it has gone further and faster in the UK and the USA than in most other advanced economies. That is not a natural phenomenon; it is because of successive Governments’ policies of deregulation of business and encouragement of the flexible labour market, and the Conservative Government’s strict regulation of trade unions. As the recent IFS report, which will be debated fully next Thursday, shows, all this insecurity and inequality has coincided with a decline in trade union membership and the coverage of collective bargaining. Collective bargaining now covers only about 30% of the workforce, mainly in the public sector, and outside important sectors in the private sector—I would pick out engineering, construction and steel—industry-wide agreements have largely disappeared. What bargaining does take place, takes place at the plant and the enterprise level, and is often vulnerable to changes in management styles and policies.
What can we do about this? This is an opportunity to share some ideas. The dark side of the British labour market needs urgent addressing. I pay tribute to Greg Clark, who has made a start on all this with his response to the Matthew Taylor review on good work. I hope that will not be held against him when the Cabinet is being considered by a new Prime Minister. However, we need more ambitious plans than those announced so far—on productivity, on performance and on promoting longer-term business perspectives, which distribute the benefits of growth more fairly. A more collaborative approach to work cultures, greater emphasis on skills and respect for workers and, indeed, for trade unions, seems to me very important.
Finally, central to this should be a reform of government departmental responsibilities. Stanley Baldwin knew that the Ministry of Labour was important to promote collective bargaining and to tackle inequality and overmighty employers. We should take a leaf out of his book and return to a department charged with tackling many of the problems that have already featured in this debate.
What the noble Lord, Lord Leigh, said, in his spirited, optimistic presentation earlier, is important. I acknowledge that. In turn, I hope he will acknowledge that the dark side of the UK’s labour market also needs attention and acknowledgement.
Lord Lupton (Con)
My Lords, I too thank my noble friend Lord Leigh of Hurley for raising this important issue. It seems to be one of those issues which brings out both the best and some of the less attractive aspects of our British culture today: the best being a certain modesty and reserve in promoting what are good numbers; the less attractive being a reluctance to even report what is basically good news because it does not seem to sell newspapers, and a relentless pursuit of the tree in a wood on which you can notch a negative point. I am going to try and contradict myself on both counts, slightly overpromote the numbers and perhaps find one tree at the end I would like to put quite a large notch on.
In his opening speech, my noble friend Lord Leigh did not refer to what we inherited. In May 2010, when David Cameron stepped into No. 10, unemployment was, at 8%, just over 2.5 million. Things were so bad that John Philpott of the Chartered Institute of Personnel and Development, said:
“The big task for the government is trying to stimulate growth whilst also cutting the deficit. … There’s nothing to suggest that we’re going to get a return to anything approaching full employment anytime soon”.
How cruel hindsight can be, and how unwise forecasting like that can be. As my noble friend Lord Leigh has said, now we have unemployment at 3.8%, with 1.3 million unemployed. Both numbers are almost exactly half what we inherited in 2010. Unemployment for men is at its lowest since 1975, and for women, at 3.7%, is the lowest since records began in 1971.
The most remarkable statistic of all, which I do not think has been mentioned yet today, is that, since 2010, 3.6 million extra jobs in aggregate have been created over and above where we were in 2010, and so we are at 32.7 million people in work, as we speak. It is a remarkable number and testament to the effectiveness of government policy in a period of very difficult economic circumstance that started in 2010. They are truly extraordinary numbers. They evidence the Conservative belief in what Iain Duncan Smith called “the dignity of work”.
For the first time in my life, I almost feel sorry for the Labour Party. Labour is the party whose Government have never left office with unemployment lower than when they came into office. Perhaps we should both rebrand? Both parties seem in a bit of turmoil at the moment. Perhaps Labour can become “the Labourless Party”, and this side can become “the Working Class Party”.
Others will no doubt talk about the stubbornly recurring issues of poor productivity—the noble Lord, Lord Haskel, has already done so—and slow real wage growth. I will say only that, while wages are now rising at a faster rate than inflation, and in particular the minimum wage is rising considerably ahead of inflation, there is still a lot of work to do to improve the hardship of those who work hard but earn less than 60% of the adjusted median income per household.
But this is not just a numbers game. For the United Kingdom to flourish and prosper harmoniously, employers have to get a lot better at providing emotionally satisfying work. They have to offer variety, not permanent routine, as well as offering flexibility, training, mentoring and physical and mental health support at work. They need to give employees a route to progress as an individual and good reasons to have ambition to improve themselves and receive pay which creates some feeling of satisfaction rather than envy. Get those right and you create a vibrant 21st-century model for capitalism with true pride in, and dignity of, work. The Taylor review highlighted many of these features in its report in July 2017, and the Government were right to accept the vast majority of the recommendations.
Western capitalism faces a technology-led inflection point. We have to seek, and find, a way of narrowing the divide, which is at present increasing, between flat-lining, low-paid and often poorly skilled hard-working people and the premier league. Whether we like it or not, we need to achieve a better economic balance within what I describe as the working class—by which I mean everyone in gainful employment, from the FTSE 100 chief executive to poorly paid service workers. The huge upsurge of entrepreneurialism in the UK, which has been the main driver behind the success in creating jobs, has in my opinion been a triumph of economic policy since 2010. I love reading about hard-working risk-takers staking all and making fortunes through their own hard work and ambition, and their ownership of that most capricious class of risk capital—equity.
However, to echo comments made by my noble friend Lady Fall and the noble Lord, Lord Monks, senior business leaders must set the example for rebalancing the divide that I refer to—this is why I am putting a notch on the tree. They need to grasp the dangers of increasing social division through the relentless and excessive chasing-up of senior executive pay in major established companies. Leaders in these companies are, in most cases, highly competent and ethical stewards of capitalism, but they should not fool themselves that they thereby are the creative risk-takers who have a right to enormous rewards whether or not they succeed. The dining rooms of commerce are, believe me, full of concerned, even nervous, discussion on this point. We know that there is an international problem, but we cannot quite muster the courage to face up to it and, in any event, unenlightened self-interest gets in the way. Business must grapple with this as a matter of urgency, failing which it may find the issue being taken out of its hands.
Baroness Rock (Con)
My Lords, I too congratulate my noble friend Lord Leigh on securing this debate and on leading us off today with such trenchant commentary. I echo much of his analysis when it comes to highlighting the Government's track record on supporting private sector job creation. While this month’s ONS statistics are cause for celebration—indeed, for optimism in this uncertain time—the narrative is a longer one and dates back to the formation of the coalition Government, as others have already mentioned. That act kicked off an extended period of private sector job growth, which we are still talking about today. At the time, the long-term economic plan spearheaded by George Osborne was criticised and many said that it would not work, but it did. For every public sector job cut, there were 11 private sector jobs created. What is more, the Government took steps, through the tax system and the national living wage, to make work pay. So jobs have not only been created but are paying more, allowing people to keep more of the money they earn.
But challenges remain, and it is to those that I now turn. I particularly want to focus on technology, its possible impact on the labour market and the opportunities it presents to give a much-needed boost to our productivity, which, as my noble friend Lord Leigh has pointed out, still languishes. I will highlight the important role that artificial intelligence might play in this, following the report of last year’s House of Lords Select Committee, of which I was fortunate to be a part. We heard evidence from a variety of sources that artificial intelligence could boost productivity but that we have work to do when it comes to adoption. Evidence from Sage said that,
“companies currently spend an average of 120 working-days per year on administrative tasks. This accounts for around 5% of the total manpower for the average Small & Medium Sized Business”.
The tools exist to change this, but they are not being deployed. Sage further suggested that if UK business was to become 5% more productive, GDP could increase by £33.9 billion a year. The committee proposed an enhanced role for government to support the uptake of AI solutions by businesses large and small.
The committee also found that one of the central challenges to realising this opportunity was access to skills. Balderton Capital, a venture capital firm, told us:
“The skills required to build competitive … start-ups today are relatively rare, and as a result the costs for starting a company in”,
the artificial intelligence space,
“are higher than other areas of technology”.
The committee worked through some possible solutions, focusing on the number and nature of degree, postgrad and PhD places available in the field of AI, and what the Alan Turing Institute could do to support this.
But one area we also looked at was more obvious yet more profound still—the lack of women working in technology. The ONS statistics we are debating today show female employment is at 72%, the joint highest on record. This is a milestone to be celebrated, but few of these women are working in technology. If we want to build a pipeline of talent to support industries such as AI, we cannot do so by working with only half the labour force.
PwC research has found that 27% of female students only said they would consider a career in technology, compared to 61% of males, and only 3% of females said it would be their first choice. This needs to change. The PwC research underpins an important initiative called “Tech She Can”, a charter for companies to sign up to, which sets out commitments they will take to increase the number of women working in technology. Importantly, this involves a strand on creating role models. Too many girls in school think technology is not for them, because of the lack of visible successful women working there. This too must change.
Similarly, organisations such as the Return Hub enable women to relaunch a career after an extended break. We need to do more to promote women returners, capitalise on the talent that already exists in our labour market and better connect it to the industries of the future. If we can achieve this, sectors such as AI may access the talent they need to realise the potential of the technology and, importantly, deliver productivity gains for the whole of the UK. More women in work is a good thing. More women working in our productive cutting-edge technology-driven industries is better still.
Baroness Meacher (CB)
My Lords, I too applaud the noble Lord, Lord Leigh of Hurley, for moving the Motion for debate today. The employment statistics are indeed impressive and we are all aware that, in general, employment improves the well-being of us all. But in 21st-century Britain, as the noble Lord, Lord Haskel, has already indicated, for too many people employment does not equate to well-being—quite the opposite.
I have worked closely with the noble Lord, Lord Freud, over the years, through his welfare reforms. I hope that the noble Lord agrees that, with all the good that has happened, there is a bleak underside to the welfare reforms we have seen unfolding. As pointed out in the 2018 statement of Professor Philip Alston, UN special rapporteur on extreme poverty and human rights, almost 60% of those in poverty in the UK are in families where someone works. That is a remarkable figure. Some 2.8 million people in poverty are in families where all the adults work full-time—I could go on. Low wages, insecure jobs and zero-hours contracts mean that, even with unemployment at a record low, which we should celebrate, 14 million people in this country live in poverty.
The Government have introduced swingeing cuts to tax credits for working people—driven by the Treasury, I emphasise, and not by the noble Lord, Lord Freud. I cannot resist pointing out that the US banks created the crisis of 2008, but our poor and in particular our disabled people are expected to pay the debt. I would be grateful if the Minister assured that a serious review, both of working people’s poverty and the plight of disabled people who are denied benefits, will be or is being undertaken.
I will reflect on two aspects of the human cost of driving up employment: growing levels of debt; and the harassment of disabled people to drive them into employment, with devastating consequences. I use the word “drive” intentionally. As employment has increased, so has the level of debt and stress. For example, the website of StepChange, a debt charity, received no fewer than 2.5 million visits in 2018. Those 2.5 million people are in debt and need help. A striking fact is that reduced income in work is as important a factor to people seeking help with debt as unemployment is. Too many people are in insecure, spasmodic or very low-paid jobs—employment that does not enable people even to feed themselves. Too many employed people need access to food banks.
However, the swingeing cuts to the welfare budget over recent years have ensured that the loss of a job, however poor that job is, is often financially catastrophic. The rules applied to universal credit applicants have greatly exacerbated the suffering of those involved. The complexity of the application process, the delays before benefit is paid, the sanctions—often based on errors that are then very difficult to rectify—and the sharp drop in the level of benefits for many have massively increased debt levels and caused extreme distress and fear, affecting many millions of households in the UK today.
I turn to the policy of driving disabled people into employment. One of the ugliest features of the welfare system, in my view, is the work capability assessment, a tool designed to put pressure on sick and disabled people to motivate them—that is the term used by officials—into employment. I make it clear that I am a strong supporter of help for disabled people in overcoming the real hurdles they face in finding and keeping a job. One of the most important objectives for any disabled person is to work, if they can reasonably do so. However, it is quite another matter for the state to seek to make the benefit claims process so difficult and unpleasant, and the level of benefits so low, that a sick or disabled person who is unable to work is literally traumatised, may die or attempt suicide in desperation. That is what I am referring to.
Mo Stewart, in her book, Cash Not Care: The Planned Demolition of the UK Welfare State, demonstrates brilliantly the horrors of the WCA as experienced by sick and disabled people. At the heart of the cruelty is the biopsychosocial model of assessing a person’s capability to work, whereby medical diagnoses are ignored and replaced by simplistic psychological and physical capacity measures, applied too often by non-medical staff to very vulnerable disabled claimants. I recently visited a wonderful service for people with severe brain injuries and was appalled to meet people in wheelchairs with multiple disabilities, both mental and physical, caused by their brain injury, who had no prospect whatever of recovery and yet had just been recalled for another work capability assessment. It is hard to describe the distress involved, knowing how arbitrary the system is.
The architect of the scheme, Professor Sir Mansel Aylward, admitted in 2012 that it is “unsatisfactory” and,
“no longer addresses the real needs of disabled people”.
However, it remains in place. Few people know that between December 2011 and February 2014, 2,380 people died after a work capability assessment declared them fit for work. A further 7,200 claimants died after being assessed as well enough to prepare to get back to work. According to staggering NHS statistics for 2014, almost 50% of sick and disabled claimants of employment and support allowance had attempted suicide while claiming that benefit. I find the figure hard to believe, but it was published in NHS statistics. These deaths and near-deaths are the tip of the iceberg of huge and pervasive suffering generated by work capability assessment processes and other tools of successive Governments determined to boost employment. Will the Minister tell the House what plans the Government have to reform the work capability assessment?
Baroness Wheatcroft (Con)
My Lords, I am delighted that my noble friend Lord Leigh of Hurley secured this debate on the important subject of employment. A huge number of positives have been spoken about today: it is harder to reflect on those having just heard the very powerful contribution from the noble Baroness, Lady Meacher, but we should not lose sight of the good news on the job creation front. However, as others have pointed out, statistics can tell very different stories. When it is cheaper to employ people than to invest, that is what will happen; productivity will not rise and neither will wages, and many people are suffering the upshot of that situation. It does not add to a national feeling of well-being if your real wages have barely moved in a decade.
We have heard much about the inequalities that are causing such friction in our country. My noble friend Lord Lupton put his mark on the tree and I want to add mine, because there is a real issue in the discrepancy between the top and the bottom in so many companies in our country. It is simply not right, as far as I can see, that people on very low wages are subsidised by the taxpayer, who is effectively subsidising dividends to investors and the remuneration of the chief executive. There is something wrong in that system and we need to address it. First, the owners of those businesses need to address it. Companies have duties that go beyond paying dividends: they have a duty to their staff and to broader stakeholders. That has to be taken very seriously by the people who own those companies.
Nevertheless, we have been growing companies, and the growth in entrepreneurship is to be applauded. There are things that could be done to help those small new companies grow. We need to get better at scaling-up businesses. One thing I would really like to push for is larger companies investing in those smaller companies. Some of them are doing this, by providing mentoring and introducing them to export opportunities, which really help them grow. We have seen it happen in the pharma sector—Unilever is very good at it—but we need much more of it. It is much cheaper for a small business to sacrifice a bit of equity to a big business than to take on loans from banks.
Today, though, I would like to talk about a few specifics, one of which is access to jobs. Yesterday, I talked to a man who runs a manufacturing business in the Midlands. He was deeply unhappy about the fact that, of the very good apprentices he had taken on this year, half had left within three months. It was not because they did not like the work—they loved it—it was the two and a quarter hours on public transport it was taking them to get from the rural areas where they lived to where he was in the city. Even though the Government are improving infrastructure, there is a huge amount to be done. Rural areas are particularly deprived. If we really want people to have access to work, then £2.5 billion for the Transforming Cities Fund is not enough. We need to look far more at rural areas and at how we are going to get people to where the jobs are.
There is also an awful lot of talk about flexible working. It is very clear that people want it; they have caring responsibilities, families to bring up and all sorts of demands on their time. They have a legal right to ask for flexible working, and companies are offering it, but all too often they offer flexible working without quite believing in it. A survey last year by Deloitte and Timewise looked at 1,800 professionals who were doing flexible working: 30% felt that they were regarded as less important than their colleagues; a quarter felt that they had fewer opportunities; and 25% believed that they missed out on promotion. That is not really flexible working; that is people being penalised for not playing the game the old way. Today, there is no need for everybody to be in the office all the time. Technology means that flexible working really can and should work. A survey by YouGov found that 89% of those asked believed that, if they had truly flexible working, they would be much more productive. We need companies to embrace it.
I will also talk about people with disabilities. The noble Baroness, Lady Meacher, talked about those who were unable to work being driven into work, but she also talked about those who would like to work. It is so important that we do more to help those who would like to work find jobs. There are 1 million disabled people in the UK who want to work but are not given the opportunity. The rate at which disabled people are employed compared to non-disabled people has been around 30% lower for at least a decade. If they want to work, we should enable them to do so. A new campaign, the Valuable 500, aims to get 500 big businesses signed up to increasing the number of disabled people they take on in their workforce. We should give it full backing. Is the Minister aware of the campaign? Does she believe anything can be done to bolster it?
Finally, I will highlight the work being done to help people move from prison into work. The need for this is overwhelming. Statistics from the Ministry of Justice show that only 17% of offenders get a job within a year of leaving prison, yet if they do so they are far less likely to reoffend. This is really important to the economy, because recidivism costs an estimated £15 billion a year. If we get these people into work, we save money and have a happier workforce and a happier country. The Government have been seeking solutions to this and launched the education and employment strategy. However, two years ago, there was a manifesto promise of NIC holidays for companies taking on ex-prisoners. Are those holidays still available?
Lord Addington (LD)
My Lords, before I progress with my speech I should remind the House of my declared interests—I am president of the British Dyslexia Association and work for Microlink plc—because what I will say refers to both areas. I will talk about the range of disabilities. I thought I would be alone, but the noble Baronesses, Lady Meacher and Lady Wheatcroft, have beaten me to the punch. However, having a little bit of the ground in front of you ploughed always helps.
In my experience, historically, when you talk about full employment for a period of time, you know, first, that it will not last, and, secondly, that people start talking about improving skills in certain hard-to-reach groups, such as offenders, ex-offenders and various disability groups. We are in that process at the moment, and I am afraid that the noble Lord, Lord Leigh, may well have fallen under sod’s law by having this debate today, when a series of redundancy figures were suddenly announced, as my noble friend Lord Shipley referred to. We have been here before and, likely as not, will be here again.
One thing that has changed is technology. For most disabled groups, technology will improve their employability and enable them to have productive jobs for far longer. I have a huge personal interest in this as a severely dyslexic person who depends on voice-to-text technology to operate. Without it, I could not function normally in this age of computer-driven communication. I am not alone in this; it is not just about dyslexic people but about anybody who has any problem with the keyboard. The technical capacity is out there to deal with this problem. It also works the other way round: it will take text and read it to you. Are we making sure that most people will get this quickly enough and well enough? The answer is no. We are not utilising the capacity there. It is a type of technology that will help virtually everybody.
One of the groups I have found myself dealing with through my connection with Microlink is that of people who have degenerative conditions, to look at how you can step in and support them at work. If you cannot use a keyboard, voice recognition suddenly becomes important to you. Your eyesight may suddenly start to disintegrate. When we deal with disability, we tend to have the idea of someone in a wheelchair or somebody who is blind or profoundly deaf, but most people are not. They have a problem in these areas but there is not an absolute brick wall. The technology can get in and help them, even if they have a deteriorating condition, so they can have longer periods in work. The important things are to make employers realise that this is not a barrier to their employment—recruitment comes in here as well—and to make sure that, once they are in there, we give them the assistance to make sure that they maintain their employment.
The fact is that the disabled worker is the least likely to take days off sick if he gets assistance and help. They are also not liable to move jobs very quickly. That may be an indictment of the entire system, because such jobs are difficult to find, but if you support these people they will not move jobs quickly. The cost to an employer of having to replace somebody, let alone having to take them through a series of legal challenges to get rid of somebody who is stopping functioning, is incredibly high. The cost of intervention is comparatively small, and the Government have recognised this.
I am afraid that I will give the noble Baroness who is to reply rather an unfair challenge. Somebody reminded me that there was to be an upgrading of the Access to Work scheme to make sure that employers received more of the money, and in certain cases all the money, for all the assistance needed. This seems to have disappeared. It was announced in April last year—what has happened to it? From my experience of working in the field, it seems it has disappeared. If you are not going to take on this support, you are making sure that there will be greater problems.
I am reminded of the appalling record that certain jobcentres and some people have in dealing with disabled people. The various work tests seem designed to get the lawyers an easy hit when you appeal, because most appeals get through. If you can get this tech or knowledge in place, and make sure that people undertake to use it, you stand a much better chance of getting people into jobs that they can do, and they can retrain with it.
Are we going to embrace this? If we do not, we will continue to have the problem of a group of people who are commonly unemployed or, more commonly, underemployed, and stuck in jobs below their capacity. This is very true of my own neurodiverse sector of dyslexics; you avoid things because you cannot handle the paperwork. This assistance has to come in. The Government have examples of good practice, including the Civil Service. What are they doing to disseminate that, at least within the government sector? If we do not do that, we are making this group incredibly vulnerable, and making them a problem when we could make them an asset. Can we please have some examples of doing sensible things with the advantages we have at the moment? We have enough problems here without shooting ourselves in the feet all the time when we have an answer to making sure that people not only get employed but stay employed and reach their capacity.
Lord Northbrook (Con)
My Lords, in 2010, when Labour left office, unemployment stood at 2.5 million. As my noble friend Lord Lupton has already noted, remarkably, every Labour Government have left office with unemployment higher than when they came into power. So I am very pleased today, a decade on from the worst recession since the 1930s, to welcome the latest employment figures.
It is clearly excellent news that at 76%, the employment rate is the joint highest on record, UK unemployment is at its lowest level since 1974 at 3.8%, and wages are rising higher than inflation, at their fastest rate for nearly a decade. Thanks to successive Conservative-led Governments, 3 million more people now enjoy the security of a job. According to the Office for National Statistics, the number of people in work is at the highest level since records began in 1971. By giving workers a pay rise through our national living wage, successive Conservative led-Governments have helped the UK economy recover.
Of course, there will be those who say that the increase in employment is down to the creation of part-time, unskilled work—but this is simply not borne out by the figures. More than 75% of the jobs created are in full-time work; only 3% of jobs are on zero-hours contracts, the exclusive terms of which the Government outlawed in 2015.
A year later, the Government commissioned the Taylor review into the changing labour market. The June 2017 report stated that the UK was “good at creating jobs”, but that there were a number of,
“persistent weaknesses in the UK labour market, particularly real wage growth and productivity performance”.
The report proposed a seven-point plan which recommended that a British national strategy for work should be explicitly directed towards the goal of good work for all.
While applauding the Government’s positive reaction to the Taylor review, I shall focus on an area that the report does not cover so well. The Migration Advisory Committee produced a recent report pointing out major skills shortages in the UK economy which it believes cannot be filled by the UK workforce. It states that migration rules should be relaxed. It believes that the shortage occupation list, whereby jobs are effectively allowed to jump the queue for workers from outside the European Economic Area, needs a big expansion. The suggested MAC list would cover 9% of jobs in the labour market, compared to approximately 1% currently. Alan Manning, chairman of the MAC, said:
“Today’s labour market is very different to the one we reviewed when the last SOL was published in 2013 … That is why we have recommended expanding the SOL to cover a range of occupations in health, information and engineering fields”.
The SOL is a useful reminder—an alarm bell, even—to government, industry and the education sector about the areas where the UK has a skills deficit. Some of the labour market shortages, particularly in engineering and health, have existed for decades and are clearly getting worse. It begs serious questions about the quantity and quality of technical and vocational training in the country, and whether enough thought has been given to planning for the long-term needs of the economy.
My noble friend Lord Bamford put the issue succinctly in his 2014 maiden speech. He compared the UK economy to that of Germany. Germany’s success, he said, was achieved,
“by having a coherent, long-term industrial strategy and by focusing on high value-added products. They did it by spending more on R&D than we do—70% more … Germany did it by supporting family businesses under its Mittelstand model”.
We should do likewise in Britain, where family businesses provide more than 9 million jobs—far more than public companies. Finally, and crucially, Germany did it by showing a real commitment to technical education. My noble friend said:
“Technical education is … especially dear to my heart. I believe that we have a duty to identify and nurture young talent”.—[Official Report, 10/6/14; col. 267.]
There is no better example of a successful family business in the UK than my noble friend Lord Bamford’s company, JCB, so he speaks with great authority.
Let us look at the current rules for non-EU citizens who wish to work or study in the UK. They need to apply for one of a number of visas. In my view, there are two main problems with the system. First, people now need to be paid at least £30,000 to apply for a tier 2 visa as an experienced, skilled worker; that figure is up almost £10,000 since 2011. This threshold appears senseless as it excludes skilled workers needed in quite a few job areas. Secondly, I understand that no tier 3 visas for unskilled workers are being given out at present. Will the Minister confirm this? Should there not be a shake-up in the tier 2 visa regime to allow shortages, for instance in the NHS, to be dealt with, and in the tier 3 visa regime to retain the seasonal workforce required by the agricultural industry, especially in the fruit and vegetable sectors?
In summary, I praise the Conservative-led Governments since 2010 for reducing the unemployment rate so successfully. I also compliment them on the Taylor review and their sensible reaction to it, while noting the CBI’s concerns. I am cautious about job losses in the motor industry and in large companies such as BT, and about how much worse matters will get if there is a no-deal Brexit. Finally, the Government need to look at the shortage of skilled and unskilled workers, as well as at the hugely important issue of technical training.
Lord Willetts (Con)
My Lords, I begin by congratulating my noble friend Lord Leigh of Hurley on securing the debate. I particularly thank him for referring to the work of the Resolution Foundation. Several noble Lords have referred to it in the course of the debate so I had better declare an interest as its executive chair. Our work has shown not only that has there been a significant increase in employment but that this increase has been very progressive in many ways, reaching out and including in the jobs market the most marginalised and disadvantaged groups. For example, the bulk of the increase in employment has been among those in the less affluent half of households, and a third of the people moving into employment have disabilities.
This jobs recovery has also been spread broadly across the country. The increase in employment has not been concentrated in London and the south-east—far from it. In fact, the biggest proportionate increases in employment have been in South Yorkshire and Merseyside. There has also been a lot of debate about atypical work. Although it surged until about 2016, since then, as the labour market has continued to tighten, the surge has been in classic full-time employment. My noble friend Lord Leigh was right to draw attention to this excellent performance by our jobs market.
Perhaps our jobs market’s most striking feature, however, is that it is absolutely not what anyone expected; my noble friend Lord Lupton also made this point. We have just had the biggest recession since the war, with a 5% loss of GDP. We have heard from people closely involved in those tough decisions in 2010, which were necessary to bring the deficit under control, but none of us expected at the time that employment would perform so well and that pay would perform so badly. Let us face it: we are talking about a painful but inevitable trade-off. Our response to this recession has been different from that for previous recessions because pay has adjusted more and employment has adjusted less. In the decade since the economic crash, pay has increased on average by about 2.5% a year; that is basically keeping up with inflation, compared with increasing by 4.5% a year in the decade before. When faced with a choice, in so far as any policy-maker can shape this response, I suspect that most of us, whatever our political affiliation, would say—quite rationally—that a recession where the response is on pay, with pay being spread as a result of general poor performance, is better than one where the adjustment is borne by unemployment.
I speak as someone who was a policy adviser in No. 10 in the 1980s, when we had a very different type of recession—one where real pay rose for people in work, often quite considerably, but we had 10% or more trapped in severe unemployment. However—and I do not relish this—I observe that in the 1980s Governments won landslide victories, whereas in the past decade the perhaps more benign response to this deep crash seems to have been associated with a bleak, sour political mood in which more people feel more pessimistic, because their pay is not going up. I suspect that the policy combination we have ended up with, despite being one that most of us here would advocate, has not necessarily ended up working so well for the political economy and the political mood in our country.
I will venture one other observation about the political economy of this. I apologise to the House, because I will talk briefly about Brexit. I do so because a lot of Brexiteers, my Brexit friends, say to me that the performance of the jobs market—continuing to create these jobs even when there is a plan for our departure from the EU and we have all this uncertainty—shows that Brexit is not a problem. I think there is a different lesson to draw from all this.
Euroscepticism entered the bloodstream of the Conservative Party almost exactly 30 years ago when Jacques Delors went to the Trades Union Congress and said he would use the powers that Brussels held, the regulatory powers of the single market, to introduce tighter regulation on jobs. Margaret Thatcher’s Bruges speech was a response to that. After years of battling for a flexible labour market, the fear—a genuine fear—was that Brussels was going to reregulate our labour market. My view is that the performance of our jobs market in the past 10 years shows that there never was a Brussels imposition of heavy-handed regulations on the British labour market. If it ever was Delors’s plan, it never happened.
In fact, the main extra regulation on our jobs market was a domestic policy decision: the minimum wage, subsequently the national living wage. It was initially controversial; speaking in the other House when it was all introduced many years ago, I warned that I thought it would increase unemployment. We have a domestic labour market regulation, not imposed by Brussels, which fortunately has not had a deleterious effect on jobs. Instead, I think we should look forward with some anxiety—with the news today from Bridgend—at whether we are now leaving an environment where we could promote investment and R&D and be active in the new technologies of the future, driven by a misplaced fear that somehow Brussels has imposed red tape and regulation on our labour market, when what we are really celebrating today is the fact that clearly it has not.
Baroness Kramer (LD)
My Lords, well, follow that speech! I feel unfortunate to stand up at this moment, but fortunate that the noble Lord, Lord Leigh, has achieved this debate. I congratulate him, because so often when we talk about employment, in Parliamentary Questions or in passing in a broader economic debate, it is at the very superficial level of numbers announced the day or week before. I have found absolutely fascinating the way in which speaker after speaker today has explored particular issues in much greater depth and opened up the much more complex picture that drives employment, the risks we face in future and the strategies we have to take on board.
As I listened to the speakers today, what frightened me most—it is something I knew, but it was underscored so often, and I defy people to identify whether the comments were made from the Government or Opposition Benches—was the sense that we are almost creating two Britains here: a country in which people are indeed in work but, to paraphrase the noble Lord, Lord Haskel, in which the greatest growth has been in poverty in work, far greater than the growth in those gaining work. That pattern is one that should trouble us—to go from a society in which to be in work essentially guaranteed what you would consider to be an acceptable and reasonable lifestyle, to a situation where work no longer comes close to guaranteeing that for a very significant number of people.
My noble friend Lord Shipley picked up the regional imbalances. I know that the noble Lord, Lord Willetts, said just now that job creation has been spread across the country. Indeed, it is most likely that you tend to see the biggest pick-up in areas of greatest employment, but that still leaves a real pattern of inequality across the regions of the UK. Although new jobs have occurred in each area, they have not come close to rectifying or dealing with that imbalance. That leaves us with a divided society and we allow that to continue at our peril. It drives a whole series of policies of local decision-making, support and a great deal of rethinking. My noble friend covered that very carefully for us.
I was also fascinated to hear the noble Lord, Lord Lupton, and others speaking from the Conservative Benches, echoing the same comments from people such as the noble Lord, Lord Monks, on the inequality of pay and the message to businesses. The noble Baronesses, Lady Fall and Lady Rock, picked that up as well. The message to businesses is that they have to re-look at the social contract that they have with their stakeholders, workforce, the community and the country about allowing multiples of pay for senior corporate players, while those at the bottom find their wages compressed. The noble Baroness, Lady Meacher, talked about the stress of debt, the growth in food banks and the difficulties.
But then noble Lords spoke about the people in the middle finding their wages constantly squeezed. The noble Lord, Lord Willetts, spoke on that issue. I hope that the Government are picking up and understanding that there is a drive for real and fundamental change in the contract between business and the broader population. It has to be crystallised in a new, responsible way of carrying through capitalism. I know some on the Labour Benches would agree with me and some would fundamentally disagree. I do not go for the nationalisation strategy that has been so broadly described by some leading Labour Members, but we must recognise that a new model is absolutely required. Indeed, when it comes to public utilities, many have talked, although not today, about public benefit corporations. In a way, you create a public/private partnership—the term has been somewhat disgraced—that operates utilities and fundamental services.
I want to highlight two or three things before I sit down. One is an issue that never seems to be addressed in any of these discussions: the age dependency ratio. I suppose it was picked up by the noble Lord, Lord Northbrook, in a way when he talked about the shortage of unskilled as well as skilled workers. Although the numbers are outdated, look at the age dependency ratio—the ratio of dependants to the working-age population. In 2017 it was just about 57%, and I suspect that when we get current figures it will be closer to 59%. That is unsustainable. When we look at the breakdown, it is not because we have more young people. In fact, the youth dependency ratio remains almost constant. It is because we have so many more older people. Who would not want older people to live longer? But the stress that they create for the working-age population becomes greater and greater. If we look at our population demographic forecasts, we do not have on tap the working-age population that will bring that number down. That underscores that the immigration of a working-age population into the UK has to be part of the fundamental economic strategy if we are to offer a civilised standard of living to our older people, our younger people and our community at large. I wish the Government would try to come to grips with this. I never hear them talk about this. We talk about the fact that older people have issues with social care and we look at the problems they have, but that falls back on to the working-age population. We only have to look at places such as Japan, where the problem is utterly severe, and Germany where it is serious. We are very much headed in that direction, and we have to understand that that requires us to change our language and our policies on immigration.
Quite a number of noble Lords talked about what is in effect the fourth industrial revolution. This is an area where we have not yet delved deep enough into what we need to do. New jobs are always created when new technologies become available, but will they be jobs that our current employed people will be able to take, or do we create new jobs requiring a set of skills so that those in the current workforce who will potentially lose their jobs will find it almost impossible to transition to them? How do we achieve that transition? I do not hear that language from the Government.
The last area that I want to tackle before I sit down is productivity. The noble Lord, Lord Leigh, and I somewhat disagree on it. I fully accept his argument that a service-based economy requires us to look at productivity numbers in a different way, but our long-term productivity forecast is 1.2%. I do not care how you adjust the numbers, that is appalling. We have to get productivity levels well over the 2% benchmark if we are to see a recovery of long-term growth. That means that this is a deeply embedded inherent problem. While the Government have a strategy that encourages current cutting-edge technology, the irony is that the companies that are interested in cutting-edge technology are very productive and will seize that technology. Our problem is an economy driven very largely by middle-sized and small companies that are not attached to cutting-edge work, and where the big difference in productivity comes from discarding the 12 year-old machine or the five year-old computer and buying one that is 18 months old, rather than from getting them embedded in trying to catch the wave of whatever new IT or AI capacity is available. If our industrial strategy does not capture that, we will endlessly find ourselves with deep problems.
The noble Lord, Lord Leigh, basically said that we had to protect business if we were to have a future and future jobs. In response, I say that that I can think of nothing more likely to drive jobs away from our economy than the words “WTO rules” and a no-deal departure from Europe—indeed, any kind of departure from Europe. We are already seeing the impact on investment numbers. I was talking to the tech field, which is down 57% this year from last year. I was taking with venture capital groups in Parliament earlier this week and they have seen a shocking cut in the levels of venture capital investment in this country. You can follow through all those kinds of various numbers. If want a strong economy, we must listen to the Treasury forecasts and, frankly, stay in Europe.
Baroness Sherlock (Lab)
My Lords, I too thank the noble Lord, Lord Leigh, for getting this debate off the ground, and I thank all noble Lords who have contributed to it. It has been much more interesting than I expected, and I do not mean that rudely. I feared we might get rather more Whips’ hand-out speeches, but in fact we have heard some very interesting speeches—that sounds more patronising than I meant it to be. I apologise.
Let me just dispatch a few of the points that were chucked in my direction first because I do not really want to play in the party sandpit too much. Just for the record, Labour did not cause the global financial crash, we do not hate business, we want people to work, we want work to pay, tax credits were not a disaster, UC is not going swimmingly and the Treasury is part of the Government. I hate to break that to noble Lords, but I am an ex-Treasury spad and I know that.
Having got that out of the way, I turn to the fact that the noble Lord, Lord Leigh, invited us to do two things: to celebrate the headline figures and to probe underneath them. I will do both. I am very happy to welcome the headline employment rate. It is good news and I am glad that we are in that position. However, I would like to probe underneath it and then go on to look at how to drive it up. How we do that matters. I could drive up employment very easily. For example, I could raise the state pension age to 90 and abolish the welfare state. Those would be very effective ways of driving up the employment rate; they just would not be good ways of doing it, and it would not be good for the country. Therefore, it matters.
I am also worried about some of the risks coming down the track. A number of noble Lords mentioned the recent spate of announcements about closures and redundancies in sectors from retail to steel. They have not yet filtered through to the employment figures because of the time lag involved.
I want to talk briefly about how weak business investment is—a point raised by my noble friends Lord Monks and Lord Haskel, and the noble Baroness, Lady Wheatcroft, among others. A very interesting speech was given last week by Dave Ramsden, one of the deputy governors at the Bank of England. I do not know whether noble Lords read it. In it, he commented on the fact that investment has fallen over the last three years. As he pointed out, it fell for four consecutive quarters in 2018 by a total of 2.5%. That has never happened before. He pointed out that normally business investment and employment rise or fall together. Now, we are seeing business investment going down and employment going up. That is unusual, so what is happening?
He offered two explanations. One, in common with what my noble friend Lord Haskel said, is that businesses are substituting labour for capital because it is cheaper and quicker to lay off workers than reverse capital investment. The other, he suggests, is that maybe demand is shifting away from capital-intensive, export-oriented businesses and into labour-intensive, domestically focused ones. The first of those explanations highlights a risk to jobs and employment levels from a shock coming down the track. The second raises some serious issues about the structure of our economy in the future, and it plays into some of the AI, tech and skills issues raised variously by the noble Baronesses, Lady Rock and Lady Kramer, and a number of other noble Lords.
We have some serious problems even in today’s labour market. My noble friend Lord Haskel, the noble Lord, Lord Shipley, the noble Baroness, Lady Wheatcroft, and others highlighted issues around insecure employment. The noble Lord, Lord Northbrook, might think that this is only a marginal issue but we have some 850,000 workers on zero-hours contracts and over two-thirds have been stuck on them for a year, suggesting that this is not just a temporary blip. The TUC commissioned a poll of workers on zero-hours contracts and found that more than half had had shifts cancelled at less than 24 hours’ notice; nearly three-quarters had been offered work at less than 24 hours’ notice; and, crucially, more than a third were threatened with not being given shifts in the future if they turn down work. That is serious. In addition, only 12% of them got sick pay; only 7% would get redundancy pay; 43% got no holiday pay; unsurprisingly, only a quarter preferred being on zero-hours contracts; and 47% did not get written terms and conditions. I say to the noble Lord, Lord Leigh, that if we want effectively to push up the fees for employment tribunals to the point where nobody can use them, it becomes meaningless to give workers the right even to have written terms and conditions. A right that one cannot enforce is not a right, and I worry very much about any move back in that direction.
Other TUC analysis found that if you are on a zero-hours contract you are twice as likely to work at night and twice as likely to work seven days a week. The average hourly pay rate is about 50% higher if you are on a fixed contract than if you are on a zero-hours contract. This is not good work.
The noble Lord, Lord Leigh, said that work should be a route from poverty to prosperity. However, I fear that for too many people at the moment it is simply a move from one kind of poverty to another, and that is a serious challenge for our economy. If a parent works full time, or potentially both parents work full time, and they cannot feed their kids, something has gone badly wrong with the state of our economy. We have to address this. I am not convinced at all that the Government have got to the bottom of it but I would be very interested to hear what the Minister has to say.
I will not dwell on this because my noble friend Lord Haskel and the noble Baroness, Lady Meacher, made some very good points about working poverty. However, we have to ask why it is happening. Poor pay growth is clearly part of the story. Like the noble Baroness, Lady Kramer, I was very pleased to hear comments from around the House about pay ratios and extremes, because those really do not help. Although pay is beginning to creep up, median pay is still not back to pre-recession levels in real terms.
My noble friend Lord Monks made some very interesting points on how we might go about developing the economy in this area in the future, his prescriptions for the future, and the impact of losing collective bargaining. Given my role, I need also to lay down a marker about the incredibly damaging effects of significant cuts to social security for people in work. After five years of cuts to benefits in real terms, the Joseph Rowntree Foundation estimates that already 200,000 people have been dragged into poverty simply by that benefit freeze, which is not finished yet and will run for another year.
It certainly has not helped to have universal credit repeatedly slashed before it was even brought into being. In particular, the reduction in work allowances—although they have been partly restored—has really damaged trying to make work pay. These were terrible decisions and I wish the Government would revisit them.
I also worry that the benefits of employment are being unevenly distributed; this is partly geographical—a point made by the noble Lord, Lord Shipley, and touched on by the noble Baroness, Lady Kramer. I live in Durham. In the north-east, the employment rate is 71%, according to the latest statistics; in the south-west it is 80%. In the north-east, unemployment is 5.4%; in the south-west, it is less than half of that at 2.4%. This makes things feel very different if you lose your job somewhere like Country Durham, especially given its history.
On job creation, I worry. It is estimated that between September and December last year, workforce jobs in the south-east increased by 59,000, while in Wales they decreased by 9,000. Something is going on and, notwithstanding the comments made by the noble Lord, Lord Willetts, in a very interesting speech, it is significant that parts of the country have struggled and are struggling now. I want to know what the Government are going to do about that.
Finally, I want to touch on a few other sources of inequality. The noble Baroness, Lady Meacher, and the noble Lord, Lord Addington, made some interesting points about disability. Eighteen per cent of our working-age population report that they have a disability; 51% of these people are in employment, compared to 81% of non-disabled people—that is a 30 percentage point disability employment gap, which is an absolute disgrace. I was pleased to see that, in their 2015 manifesto, the Conservatives pledged to halve our disability employment gap. Unfortunately, by 2017, that had been watered down to talk of getting an extra million disabled people into work; that is good but I fear that quite a bit of it will come from demographic changes, as we have an ageing population.
The DWP has introduced a new Work and Health programme, but it is much smaller than the programmes it replaced. Learning and Work Institute analysis suggests that it will support only some 10% of out-of-work disabled people. If that is right, we are talking about a 2 percentage point movement in the participation rate, which does not seem very strong. I am also worried that most employment support for disabled people is now generalist, provided by generalist coaches in jobcentres. The Work and Pensions Select Committee at the other end pointed out that support for specialist help for disabled people getting into work had been slashed from around £1 billion to little over half that across the lifetime of this new programme. Meanwhile, a million sanctions have been imposed on disabled people since 2010. The fact that the disability employment gap is not closing suggests that this is not a very effective strategy for helping disabled people into work. So, can the Minister tell the House how the Government’s plans will make serious inroads into the disability employment gap?
I have two more quick comments. First, the TUC found that, compared to white workers, black and minority ethnic workers are more than twice as likely to be stuck on agency contracts, much more likely to be on zero-hours contracts, more likely to be in temporary work, and twice as likely to report not having enough hours to make ends meet. What are the Government doing about that?
Secondly, on young people, 15% of all unemployed 16 to 24 year-olds have been unemployed for over 12 months. The unemployment rate for 18 to 24 year-olds is 10% compared to 3.8% for the whole population. What the Government have done about this is to create something called the “youth obligation”. If you are aged 18 to 21 and you make a claim for universal credit, you are put into the scheme, given help and you have to do things. Centrepoint has just carried out a longitudinal evaluation of the youth obligation. It found that, after a year, only 24% of those young people were in employment and almost half were doing informal, cash-in-hand work such as babysitting, ironing or cleaning; 31% were not working and were claiming benefits; and 35% were neither working nor claiming benefits. Most worryingly, 45% of young people left before the programme finished because they just could not cope. It seems that many were people who had serious issues; they were homeless, had mental health issues, or had drug or alcohol problems. It became clear, the report said, that they would never be able to cope with the programme. Has the Minister read that report? If so, what are the Government going to do about addressing the challenges facing young people in this area?
There is much more that I would want to do. I simply say that I would welcome it if every time the employment statistics came out, rather than just going for the headline figures, the Government took a deep breath, looked down the track and thought, “What kind of country are we trying to create?” If we want to bring people together again, we have to find a way for everyone to have a stake in this country. If we want capitalism to be the future, it has to work for most people. For that to happen, if you go to work and do a job, you should be able to feed your family. Is that not the basic that you should expect?
Baroness Stedman-Scott (Con)
My Lords, like the noble Baroness, Lady Sherlock, I have been delighted at the content of the debate. It has endorsed those things that have gone well and really challenged us on the things that we need to work on. I share her hope on that. It is a privilege to respond to this important debate and I join noble Lords in congratulating my noble friend Lord Leigh on having secured it. I shall try to address some of the specific points raised, but before I do I want to take this opportunity to share with the House this Government’s record on employment and our plans to address the challenges and opportunities of a rapidly changing labour market.
We are in a strong position. There are now around 32.7 million people in employment. That is an employment rate of 76.1%, which is a joint record high. It is also an increase in the number of people in employment of over 3.6 million since 2010 and an increase of 354,000 on the year. The female employment rate and number of women in employment are at record highs. The unemployment rate is at just 3.8%; it has fallen by more than half since 2010 and is at its lowest rate since the 1970s. The youth unemployment level has halved since 2010, and real wages are starting to rise. The UK compares well internationally when it comes to employment: our employment rate is markedly above both the eurozone and EU averages, and the UK had the third highest employment rate and the fourth lowest unemployment rate in the G7.
Those figures are tremendous, but we are not complacent. That is why the Government’s industrial strategy sets out an ambitious long-term vision to make us the world’s most innovative economy, future-proofing our jobs market so we can be at the forefront of emerging industries. A key component of building resilience in the economy that can sustain strong growth in the labour market is ensuring that no one is locked out of the jobs market. That is the kind of country that this Government want.
As a Government, we know how important it is that the labour market works for everyone, and I am pleased to say that we have seen improvements for underrepresented groups. Noble Lords have made different contributions in relation to these underrepresented groups, but let me be a little clearer. There are 3.9 million black, Asian and minority ethnic workers in employment. The employment rate among this group, at 66.5%, is a record high, though still obviously lower than we would like it to be. After the 2015 election, the Government made six commitments to improve the employment outcomes of people from BAME backgrounds. I am proud to say that we have pledged to increase the level of BAME employment by 20% by 2020, and already we have achieved 91% progress. The BAME employment gap has closed to 9.3 percentage points—2.1 percentage points lower than 2015.
The employment gap between disabled and non-disabled people is also closing. There is an employment rate gap between disabled and non-disabled people of 29.9 percentage points. That is too high, but it has fallen by 3.8 percentage points since 2014, and since then an extra 947,000 disabled people have entered employment. The Government have a goal to see 1 million more by 2027. There is currently a record number of 10.4 million people aged over 50 in work, an increase of 1.4 million in five years.
These figures are tremendous, but the Government are not complacent. I emphasise that we still have more work to do. We must continue to improve access to the labour market so that everyone is able to get that vital first job, wherever they live and whatever their background. We know that some groups still face disproportionate barriers to work, ranging from practical issues, such as childcare or accessibility, to straightforward discrimination. For the next stage of labour market growth, the Government are focusing on how to drive up participation for these underrepresented groups.
For example, as noble Lords mentioned, we know that caring responsibilities can be a huge barrier to work for many women. We have trialled more flexibility for parents submitting their UC childcare claims and are updating our guidance so our work coaches can use greater discretion to support parents’ claims for this essential service. Jobcentres can also use their flexible support fund to help bridge the gap to a parents’ first pay cheque. The flexible support fund is flexible in every sense and is doing great things to help people in difficulty.
Similarly, we continue to do everything we can to tackle discrimination against BAME workers. In 2017, the Prime Minister launched the world’s first Race Disparity Audit to show how outcomes across society differ by ethnic group. To try to counter this, local initiatives are taking place across the country, with jobcentres tailoring the way they deliver their services to the local people they serve. There is not time to go into these wonderful initiatives in detail now, but I can tell noble Lords that jobcentres are reaching out to particular communities, working with partner organisations to help individuals take the first steps towards employment. The DWP has run mentoring circles in the 20 areas with the largest number of ethnic minority people across the country, working with national employers to offer specialised support to help build confidence and raise aspirations in these groups. Following the success of this initiative, from April the mentoring circles will be expanded to all young claimants.
Equally, we are committed to helping disabled people and people with health conditions get into and stay in work, which they want to do. We know that the right type of work can have a positive effect on an individual’s health and that having the right health support can have a positive effect on an individual’s ability to flourish at work. We believe that the Work and Health programme, Access to Work, the Disability Confident scheme and the support offered by Jobcentre Plus are all key to supporting employers to work with the Government to see 1 million more disabled people in work by 2027. Noble Lords should feel free—I hope they do—to write to me if they want to know more details about these initiatives.
What all of this shows is this Government’s conviction that work can, and does, transform people’s lives, not just by creating a sense of value and economic security but because it can benefit an individual’s mental and physical well-being. This underpins the Government’s programme of welfare reforms.
This Government are acutely conscious that society is changing and that it is important for the labour market to evolve, but this is not easy. For example, people are living longer, healthier lives but, despite this, the average age of labour market exit for men is still lower than it was in 1950, while for women it is similar to that in 1950. Employers need a flexible labour market as the population ages and fewer people enter the labour market from education and training relative to those aged 50 and above. We need to prevent unnecessary early exits from the labour market. For example, by retiring at 65 instead of 55, a male average earner could have £280,000 of extra income and increase their pension pot by 55%.
As I have said, this Government are committed to supporting disadvantaged groups and those with multiple and complex needs, such as care leavers, as discussed, ex-offenders and those with a drug or alcohol dependency, to move closer and into employment, working with local employers and partners to provide opportunities. I would like to mention the impact that work coaches and Jobcentre Plus are having. They are more highly trained than ever and more understanding of the complexities that people face. Only last week, even in the village where I live, where everything is wonderful, a victim of domestic abuse needed the services of a work coach. They got it and it was excellent. We should all be very proud of that.
I wanted to outline what we are trying to do and what we have tried to achieve, but I am not stupid enough not to realise that there is more to do. Noble Lords have given a lot of thought as to how that might come about.
I will now try to deal with many of the questions that noble Lords have asked in their contributions. I do not think that I will be able to answer them all—in fact, I am dead certain that I will not. Please do not take that as meaning that I do not want to answer the questions—after this we will go away, look at Hansard and make sure that noble Lords get the answers they wanted.
My noble friend Lord Leigh asked about progress on the Taylor review. There is no lessening of our efforts on this. We need to ensure that the labour market continues to work for everyone. The review was commissioned by the Prime Minister and has been delivered. On 17 December we published the Good Work Plan, which sets out our vision for the future of the labour market and our ambitious plans for implementing the Taylor review’s recommendations.
My noble friend Lord Leigh, the noble Lord, Lord Haskel, and others asked how we could drive up wages. The Government have already introduced the national living wage, which is now £8.21 per hour and which provided the biggest pay rise for low-paid workers in more than 20 years. But be under no illusion: we want to go further. The Chancellor has already announced our aspiration to end low pay, and there is more that we can do.
My noble friend Lord Willetts will be pleased that I am going to read out a reference to the Resolution Foundation:
“The proportion of workers on low wages has fallen to its weakest level since 1980 and low pay could be eliminated by the middle of the next decade, an equality think tank has suggested. The Resolution Foundation said that 17.1% of workers in Britain were low-paid, which is defined as having wages below two thirds of median hourly earnings. However, it said in a new report that this proportion could fall to zero by the middle of the 2020s”.
May that happen.
On the national productivity investment fund, which my noble friend Lord Leigh and others referred to, we are committed to providing high-quality infrastructure to support economic growth and prosperity across all regions of the UK. The Government have established the productivity investment fund to deliver additional capital spending in areas critical for improving productivity. It is now set to deliver £37 billion of high-value investment to 2023-24 in transport, R&D, housing and digital infrastructure. There is a breakdown of how this money will be allocated.
My noble friend Lord Leigh asked whether the current measure of productivity had kept pace with modern society. He is right that measuring productivity is challenging, given the pace of change in the economy. The independent Office for National Statistics measures productivity for the UK and, following Professor Charles Bean’s 2016 review of economic statistics, has increased the volume and timelines of productivity available. Since 2016, the Government have provided £25 million to ensure that the UK has world-leading statistics that capture what is happening in our modern economy. That is work in progress.
A number of noble Lords referred to flexibility in the workplace not being used to cut and run with employees as and when it suits. Our employers are the ones who create jobs. They need a flexible workforce and a high degree of flexibility. We should ensure that employers have this, but, where there is a system where, unfortunately, the workforce needs to be downsized, we must make sure that people stick to the rules, that things are carried out compassionately and, at the end of it, when people lose their jobs, we must get work coaches and Jobcentre Plus to pick them up and get them back to work as quickly as we can.
My noble friend Lord Leigh asked about courts and tribunals fees; we will arrange for the relevant department to write to him. The noble Lord, Lord Shipley, outlined the situation with British Telecom. It is alarming, but I am advised that it would be premature to comment as this is a matter for BEIS. Of course, we always need to be alive to the threat of widespread economic downturn, or to be there to support individuals facing isolated but life-changing redundancies when firms close, and I am absolutely sure that Jobcentre Plus will do this.
The noble Lord, Lord Shipley, and a number of other noble Lords, mentioned that the north of England has suffered and not had the increase in jobs that London and the south-east have had. I disagree—60% of the jobs that have been created have gone into the north of England, although it should be more. The noble Lord, Lord Shipley, and other noble Lords, mentioned the industrial strategy, which sets out an ambitious long-term vision to make Britain the most innovative economy, with good jobs and greater earning powers. Every region in the UK has a role to play, and we have an ambitious agenda of devolution deals, working with the newly elected metro mayors and with local enterprise partnerships, and another £1.6 billion for the Stronger Towns Fund, which we hope will come.
We are absolutely committed to helping people progress from low pay. The Government have already introduced the national living wage, as I have said, and the Chancellor has announced our aspiration to end low pay. There is more that we can and should do, and will do.
I thank my noble friend Lord Freud for his contribution and for the sterling work that he did in reviewing and revising the benefits system. It is a great piece of work that has made a difference to a huge number of people in our country. The noble Baroness, Lady Sherlock, has highlighted some of the issues which, obviously, are concerning; the noble Baroness, Lady Meacher, has done the same. I have not got the time to go into great detail, but all I would say is, “Please do not think that we are complacent”. We have a compassionate Secretary of State, who is very committed to trying to make life better for people.
The noble Lord, Lord Monks, mentioned the situation where people are potentially losing their jobs. This gives me the opportunity to talk about the national retraining scheme, and getting to people quickly to ensure that they can be prepared for future jobs.
My noble friends Lady Fall and Lord Lupton talked about disparity in pay and being transparent. Boardroom pay is not a matter that is dealt with by the DWP, but the department has done work on executive pay transparency and the representation of women in senior leadership roles.
I am running out of time. Please do not take it personally if I have not responded to your Lordships’ questions, but I must address the noble Lord, Lord Addington, who put a late addition to his question. He spoke about the need for technology to be used in helping people with severe difficulties. Regarding the employer contributions to assistive technology under the Access to Work scheme, it is my understanding that the tech fund pays the full cost of the tech solution. There is no employer contribution. If the noble Lord requires more details, I can help him by writing to the department.
I must conclude there or I will be in trouble again, but I would like to echo the words of my noble friend Lord Leigh and pay tribute to the Prime Minister, who leaves office today. When I first met her, it was in Portcullis House at a poverty meeting about employment and making life better for people. The burning injustices that we all hate are felt greatly by her, and I know that when she is in a different role those burning injustices will not leave her. I too pay tribute to the outstanding work she has done and the difference she has been able to make to people’s lives. I wish her well for the future, as I hope the House does.
I thank my noble friend Lord Leigh for securing this debate and thank everybody for the time they have spent preparing for it. I hope that, together, we can all move on to take up some of the points that everybody has raised.
Lord Leigh of Hurley
I thank my noble friend the Minister for her remarks and thank every Member who has participated in this debate. I can honestly say that I have taken something from every single speaker, and that every single speaker has given me some new information and pause for thought. In many cases, they have countered my arguments absolutely with some interesting observations. I am clearly on the sunny side of the House, hence my positivity. If you look at things such as the FDI coming into the UK, you cannot help but feel positive about the road ahead in many respects, tempered by the circumstances in which we find ourselves. Clearly, we are not going to agree about productivity but perhaps we can agree that we have done extremely well to reduce a two and a half hour debate to a much shorter time, showing your Lordships’ House at its best.