Office for National Statistics Labour Market Data
Lord Hunt of Wirral
To ask His Majesty’s Government what assessment they have made of the Office for National Statistics labour market data published on 21 April; and what steps they are taking to address rising economic inactivity and falling vacancies.
Lord in Waiting/Government Whip (Lord Katz) (Lab)
My Lords, April’s statistics show that economic inactivity has fallen by nearly 360,000 since we came into office. Vacancies began falling in 2022, but we have stabilised and slowed the rate of decrease. In the last 21 months of the previous Government, vacancies fell by 363,000, more than double the rate that we have seen under the first 21 months of this Government. We inherited a broken economy from the previous Government, but we are taking a different approach and driving a more inclusive labour market for all.
Lord Hunt of Wirral (Con)
My Lords, with over half a million 18 to 24 year-olds unemployed, nearly a million 18 to 24 year-olds not in training, education or employment, and vacancies now down to 711,000, the Government’s answer seems to be to commission a review by Alan Milburn. Is it not blindingly obvious to anyone with an iota of common sense that the problem lies with the jobs tax, the unemployment Bill and rising taxes across the board? What a waste of human resources that now so many young people are just unable to find gainful employment.
Lord Katz (Lab)
I note that the noble Lord has changed the usual formulation of his regular Question on unemployment figures because the unemployment figures fell to below 5%, as seen in the latest figures earlier this week, something I thought that he would have welcomed. It is rather rich that he talks about NEETs, when the number of young people not in education, employment or training increased by a quarter of a million between 2021 and 2024. We are well aware of the problem, and this is why we are investing £2.5 billion over the next three years, through the youth guarantee and the growth and skills levy, to support almost 1 million young people getting into education, employment or training. Unlike the last Government, we take this issue with the utmost seriousness and we are acting.
Baroness Teather (LD)
My Lords, we know that AI will have a profound impact on work, particularly for young people. As it is already getting harder for graduates to get work, will the Minister urgently commission and publish research into the future impact of AI on the labour market, so that we can have a transparent evidence base for future policy-making?
Lord Katz (Lab)
The noble Baroness is absolutely right. AI is very much at the forefront of all our minds as we continue to grapple with the long-term impact that it will have on our economy. That is why, in January, we announced that every adult in the UK is eligible to take free courses to gain practical AI skills for work. This programme has already upskilled 1 million workers. Our ambition is to upskill 10 million by 2030. The noble Baroness mentioned research. We have already launched the AI and future work programme and are establishing an AI economic institute, which will lead cross-government analysis to monitor the emerging impact of AI on the economy and co-ordinate the Government’s response.
Lord Wigley (PC)
My Lords, the Minister will be aware that the GDP per capita of Wales historically ran 20% below that of the UK, largely because of depressed activity rates arising from the work patterns in heavy industries, such as coal and steel. That has persisted. Now, there is a crying need for the activity rates to be raised in order to ensure that the standard of living in Wales can rise to be nearer the UK average. Will the Government undertake to co-operate with the next Government of Wales to give priority to getting this right?
Lord Katz (Lab)
The Government have always worked closely with the current Government of Wales and we will continue to work with any future Government in Wales. It will help if they continue to be led by the Labour Party, but we will see what the electorate decide. We are constantly aware that we must do more to support people into work. That is why we are going further with our jobs and careers services, the youth guarantee and pathways into work across the country.
Baroness Foster of Aghadrumsee (Non-Afl)
My Lords, in Northern Ireland, economic inactivity remains stubbornly high, as it does across the UK. Sadly, we have the highest per capita. In that context, I welcome the Government’s defence growth deal, which was announced in Northern Ireland yesterday—some £50 million of investment. Do His Majesty’s Government see such growth deals as a mechanism to try to deal with those who are economically inactive to get them into worthwhile jobs?
Lord Katz (Lab)
I am pleased to welcome the noble Baroness’s welcome for the defence deal. It is vital. We talk about repairing and improving the country’s infrastructure, and here we are talking about the defence infrastructure. It is a source of many high-skilled, high-paid, good-quality jobs across the whole country, including in Northern Ireland. At this point in time, the defence of our country is foremost in our minds, and this deal shows that we are very serious about it.
Baroness Stedman-Scott (Con)
My Lords, one of the most worrying figures of all, in the most worrying of areas, is the increase of economic inactivity and people who are not required to look for work or who are not even searching for it. Given the impact on young people, which I know the Minister is very concerned about, why does he think that this figure and others are going up on this Government’s watch?
Lord Katz (Lab)
It is important to understand what we are doing through our youth guarantee trailblazers in England to tackle inactivity and to solve the problem of the number of NEETs, which across the House we want to see solved. Through eight youth guarantee trailblazers in England there has been an expansion of youth hubs to more than 360 areas. The youth guarantee gateway being rolled out in jobcentres provides 16 to 24 year-olds on universal credit with a dedicated session and follow-up support to help move more people into work, training or education. That means that there are 300,000 more opportunities to gain workplace experience and training, including up to 150,000 work experience placements and 145,000 employer-designed training opportunities, such as the sector-based work academy programmes. It is important to give young people that start on the ladder of gaining work experience and an understanding of what the world of work is like. That is the way that we will tackle the problem of NEETs.
Lord Purvis of Tweed (LD)
My Lords, does the Minister recognise that one of the great benefits to British businesses and to young people for their employment opportunities was that they had great flexibility in working with our main trading partners in the European Union? Does the Minister see the Government’s reset Bill that we are likely to see in a new Session as a good opportunity to allow youth mobility with our key trading partners? Does he regret slightly that the Government may have said that that was a red line? Might they be a little more flexible for the benefits of our young people and our businesses?
Lord Katz (Lab)
The noble Lord tempts me to cross a red line which is a little above my pay grade in talking about our trading arrangements and any future trading agreements with the European Union. However, it is clear already from what we have done with the Erasmus schemes that we take this seriously. The European Union is our closest trading partner and one of our most important trading partners. It is absolutely right that we promote good links between all participants in the UK economy and those in Europe.
Lord Watts (Lab)
My Lords, has the Minister noticed the improvement in economic performance that we have seen in the Manchester and Liverpool regions? Does that not show what a Labour Government can do with Labour regions to regenerate this country?
Lord Katz (Lab)
I absolutely agree with my noble friend. Strong Labour councils and strong Labour mayors working with the Labour Government have delivered economic prosperity—and, I add, not only in Liverpool and Manchester but just down the road from me, in and around King’s Cross and the Knowledge Quarter that is being created there. The links between the Labour-run Camden Council, the Mayor of London and the Labour Government show that we are developing and are at the cutting edge, being the place to come, across the whole world, to develop jobs and skills in industry, the life sciences and other areas.
Lord Jackson of Peterborough (Con)
My Lords, the Minister will be aware that many young people get their start in the workplace in leisure and hospitality. He will also know that UKHospitality estimates that, because of the Government’s fiscal changes, from April this year there will be an extra burden of £1.9 billion on those businesses and that 70% of them are going to curtail their recruitment, particularly of young people. Is it not the case that the Government’s changes are having a negative effect on youth employment? Is it not time that they review those fiscal changes, if they really are serious about tackling welfare dependency and worklessness?
Lord Katz (Lab)
We have taken action on business rates for businesses in that sector. Positively, just last year we introduced foundation apprenticeships for young people in targeted sectors. In the retail and hospitality sector, we introduced a sector-based work academy programme pilot, which was launched in partnership with UKHospitality and businesses in a number of areas, including coastal towns, which are suffering the most.