Government Record on Education, Employment and Welfare

Thursday 16th July 2026 Lords Chamber

Motion to Take Note

11:51

Moved by

[Baroness Lady Evans of Bowes Park]

To move that this House takes note of the Government’s record on education, employment and welfare since July 2024.

[Baroness Evans of Bowes Park (Con)]

My Lords, I am delighted to open this important debate on the Government’s record on education, employment and welfare, as we reach the end of the Starmer premiership and move to the Burnham one.

Over the past two years, an unfortunate pattern has emerged across the Government’s policies on these issues. Whether intended or not, their interventions have too often served to restrict opportunity rather than broaden it. Opportunity is the foundation of a free, prosperous society and economy. It is what allows a child from any background to succeed in education, a young person to secure their first job and an individual to build an independent life through work. Yet across education, employment and welfare, the Government have appeared increasingly determined to substitute individual aspiration and institutional freedom with central direction and state intervention. The result is not only a larger state—we just have to look at the eye-watering levels of government spending—but a society in which the pathways to fulfilling an individual’s potential are increasingly constrained and, in too many cases, cut off entirely. At a time when Britain faces economic and technological change, that is the wrong direction in which to travel.

I begin with education. The central question for any education system should be simple: are we giving the next generation the greatest possible opportunity to succeed? For much of the past two decades, the academies programme has helped answer that question positively. By giving schools greater freedom over recruitment, curriculum delivery, governance and innovation, academies have been an important driver of the significant improvements in standards and outcomes that have been achieved. Between 2009 and 2022, England rose from 21st to 11th in the PISA league tables for maths, from 25th to 13th for reading, and from 11th to 9th for science. Yet rather than building on this success, the Government in the Children’s Wellbeing and Schools Act chose to curtail many of the freedoms that helped enable this progress. The reforms introduced by the Government to academies have represented a shift away from institutional autonomy and back towards central control. Schools now have less freedom to innovate, less flexibility to respond to local circumstances and fewer opportunities to develop distinctive approaches to excellence.

At the same time, concerns have been raised that the proposed curriculum reforms may reduce academic rigour, at precisely the moment when the demands on young people are increasing. This matters because today’s pupils will graduate into a labour market unlike any that we have previously known. AI is transforming entire sectors of the economy. Entry-level roles that once provided a foothold into professional careers are rapidly changing and, in some sectors, starting to disappear altogether. Young people will need stronger skills, higher levels of knowledge and greater resilience than ever before. So, if opportunity is our objective, we should strengthen the institutions that have delivered educational improvement, not restrict them.

It is not just academies that the Government have weakened; they have deliberately undermined the independent sector. Independent schools offer choice and the chance for social mobility through the standard of education they offer and the scholarships and partnerships they provide. Yet because of the Government’s decision to impose VAT—an unprecedented tax on education—four times more students have left independent schools than expected, and a number of schools have had to close entirely, putting unnecessary strain on the state school system. The closest thing we have to a silver bullet in public policy is education, to give children the best chance to realise their potential, so we should back all institutions that broaden their horizons, raise standards and equip young people for the challenges of a rapidly changing world—we should not undermine them.

The same concern around restricting opportunity applies to employment. Britain today faces significant labour market challenges, global economic uncertainty, technological disruption, high energy costs, a high tax burden and changing patterns of work. All these are affecting employers and employees alike. Many of these forces are not within the Government’s control, but the policy response most certainly is. As the curtain is drawn on the current Prime Minister’s and Chancellor’s tenures, their signature policy—and possibly one of the most damaging—has been a £25 billion a year increase in the tax on jobs. Despite warnings of the damage that would be caused, the Government imposed a higher rate and lowered the threshold at which national insurance is levied. Instead of focusing on creating the conditions for job creation, investment, economic dynamism and growth, government action has led to employers facing rising costs and growing regulatory burdens through the Employment Rights Act that increase both the cost and the risk of taking on staff.

The consequences are felt most acutely by those trying to enter the labour market for the first time. In the hospitality sector alone—one of the biggest employers of young people—the 2024 Budget amounted to £3.4 billion of annual tax increases, resulting in 100,000 job losses, falling mostly on those seeking entry level and part-time work. The figures show that more than 1 million young people aged 16 to 24 are now not in education, employment or training—the first time that figure has exceeded 1 million since 2013. Until the pandemic, NEET figures fell to below 10% in 2021 from nearly 17% in 2010. Youth unemployment has increased to 16.2%, equivalent to around 735,000 young people actively seeking work but unable to find it. We know that these are not merely statistics: they represent opportunities lost; young people unable to gain their first experience of work; skills left undeveloped; confidence undermined and ambitions postponed. Indeed, the recent Milburn review warned of a growing risk of a “lost generation”, because when opportunity disappears at the beginning of a career, the effects can last for decades.

There is of course an important role for programmes that support young people into work, particularly if they find that they do not have the skills needed to do the jobs in their area, and the previous Government had such schemes. However, we are now in the slightly surreal situation of the Government offering subsidies of £3,000 to employers to fund jobs for young people to deal with the damaging consequences of the employment taxes they have increased and the regulatory and wage costs they have imposed. That surely cannot be the answer to increasing opportunity across the jobs market.

That brings me, finally, to welfare. A compassionate welfare system is essential. It should provide support during periods of hardship, illness and transition, but at its heart it must be designed to help people move towards independence and participation in the labour market wherever possible. Increasingly, however, we appear to be moving towards a model that places greater emphasis on long-term dependency than on economic mobility. Every day, 1,000 people are signed off on to benefits with no requirements to look for work. Welfare spending is set to hit £370 billion by the end of the Parliament. This is simply unfair. It is unfair to taxpayers—the people going out to work to pay for those who do not—and to the people who are written off and not supported to find a job.

The Work and Pensions Secretary has said that all his colleagues want to talk about is how to raise more tax to spend on welfare. This is not simply fiscally unsustainable; it leads to the gradual erosion of the principle that work provides dignity, purpose and independence. When young people see limited rewards from entering employment and growing financial incentives to remain outside the labour market, the long-term effect is fewer opportunities for advancing and greater dependency on the state. That is neither socially desirable nor economically sustainable.

The Government’s response to the challenges we face in education, employment and welfare has too often been the same: more intervention and regulation, greater centralisation and increased cost. Yet the evidence suggests that lasting opportunity is rarely created by government direction. Opportunity is created when schools are trusted to excel, when businesses are confident enough to invest and hire and when individuals are empowered to build independent lives through work.

The challenge facing Britain today is not merely one of economic growth; it is a question of whether the next generation will enjoy greater opportunities than the last. On education, welfare and employment, the Government should ask themselves one question: are their policies expanding opportunity or restricting it? Unfortunately, too often over the past two years, the answer has appeared to be the latter. If we want to give young people the chance to succeed in an increasingly competitive world, we must reverse that trend. We must trust individuals, institutions, business and enterprise more, and place opportunity, not state control, at the centre of public policy.

I hope that the new Burnham Government will learn the lessons of the past two years and look to change course: to reduce the welfare bill and focus tirelessly on supporting those who can work into employment; to cut taxes on jobs and ensure that businesses can grow their workforces, invest in their futures and thrive again; and to once again trust head teachers to deliver the best education they can for their pupils. I beg to move.

12:03

[Lord Rooker (Lab)]

My Lords, my text for this simplistic opposition attack on the Government is simple: I will point out the legacy of the noble Baroness who has just spoken. She was in the Cabinet for six years. On 20 January 2025, the Economic Affairs Committee of your Lordships’ House produced a 42-paragraph letter to the Secretary of State for Work and Pensions. This followed a short inquiry to understand what was driving the massive change to incentivise benefits and inactivity under the Tories. Time permits me to mention just two paragraphs.

Paragraph 1 read:

“Spending on incapacity and disability benefits has risen by more than 40 per cent in real terms since 2013 … This is around 20 per cent higher than the UK defence budget and equal to 22 per cent of the total health budget. Spending on incapacity and disability benefits is forecast to rise to £100.7 billion … pushing the total welfare bill above £370 billion. The latest figures show that around 3.7 million people of working age receive the health component of Universal Credit … 1.2 million more than in February 2020. As the Office for Budget Responsibility note, since before the COVID pandemic this rise has been uniform across age groups. This is in the context of there being 1.51 million people registered as unemployed”.


In Paragraph 7 of the letter, the committee said:

“While it is difficult to unravel the data to provide a clear picture of the level of economic inactivity, administrative data show that spending on health-related benefits has risen. This has occurred in all parts of the country and in all age groups. As the OBR notes, ‘The proportion of the working-age population in receipt of an incapacity benefit reached a post-financial crisis high of 7.0 per cent in 2023-24 and is forecast to reach an all-time high of 7.9 per cent in 2028-29. This reverses the steady decline in caseload prevalence from the early 2000s to mid-2010s’”,


which was Labour’s time in office. It was a complete reversal of what had been happening under the Labour Government.

My final quote—I want to keep this short—is from an interesting piece by the Financial Times data expert John Burn-Murdoch, “What if the UK isn’t actually the sick man of Europe?”, from 6 December 2024. Time permits me to read only the final paragraph of his piece:

“It turns out the apparent rise in Britain’s illness-related inactivity is mostly not about deteriorating health, but about incentives within the benefit system”—


incentives that were put there by the Government in which the noble Baroness served in the Cabinet for six years. To finish the quote:

“Policies focused on the latter stand the best chance of getting Britons working”.


In other words, it is an absolute con. There was good progress under the Labour Government until 2010, and after that it reversed. We on the Economic Affairs Committee could not understand it. We thought we had got rid of the system whereby it paid not to work. Everybody around the table was gobsmacked, yet it had been made possible to be better off not working under the Tory Government of which the noble Baroness was a key member.

12:07

[Lord Mohammed of Tinsley (LD)]

My Lords, I thank the noble Baroness, Lady Evans, for securing this important debate. I looked at the list of speakers and thought this was going to be a fantastic debate about our children’s future. I do not want it to be about how bad one side or the other was, because that will not help any young person. I have always been passionate about young people—I will return to that—and I will always fight for them. I did it before I arrived in your Lordships’ House and I do it now. Earlier this month I spoke about helping young people gain work experience in your Lordships’ House by coming in to assist us. This week, a fantastic A-level student from north London, Oliwia Pietrusa, helped me draft my speech and did some of the research for it.

A lot of speakers will follow me, so I will restrict my speech to two bits: NEETs—young people not in employment, education or training—and primary schools. As we have seen from the recent Milburn review, young people are being devastated by the side-effects of a lack of government intervention. Research by the House of Lords Library showed recently that 1.012 million young people aged 16 to 24 are not in employment, education or training. As the noble Baroness, Lady Evans, reminded us, Alan Milburn warned of a rising “lost generation”. The real issue now is about the system. Is it obsessed by ticking boxes? Are we just pushing our young people to chase qualifications but not finding destinations for them, by which I mean long-term, secure jobs? We are missing a proper participation system that guides our teenagers from the classroom into a career.

We also need to support schools that are struggling, which brings me on to the issue of the Government’s target of recruiting 6,500 new teachers. In my opinion, that completely ignores the challenges of primary schools. There has been a massive drop in primary school trainees. I am worried that falling rolls in primary schools are putting pressure on teacher recruitment and that the drop in primary school pupils will make its way through to secondary schools. There is a challenge there. We can see that happening here in London in particular, where places such as Lambeth and Hackney are now seeing pressures in schools. In open evidence to the Public Services Committee, we heard from one head teacher who said his school was closing.

So there is a real issue around how the Government looks at the funding formula, because it is based on pupil numbers rather than the actual cost of running schools. It is a huge issue, and not just a London-based one; it also affects rural and coastal communities. We are not going to be able to build a strong economy if our school system is hollowed out.

I have some questions for the Minister. We know from Milburn and House of Lords Library research that over 1 million young people are NEET now, and we are going to get Milburn’s recommendations. First, can the Minister confirm that the Government will fully fund all the recommendations from the Milburn review? Secondly, what will they do about tackling the drop-off in primary school teacher trainees? As I said, if we do not fix this problem now, it will follow through. Both Milburn and the fantastic work that the noble Baroness, Lady Morris, has done on tackling the issues around white working-class boys not achieving their potential identified that these issues start at a very young age. Finally, as I am running out of time, can the Minister please comment on the funding formula, which is causing huge issues for our primary school children and schools?

12:11

[The Lord Bishop of Newcastle]

My Lords, I am grateful to the noble Baroness, Lady Evans of Bowes Park, for bringing this debate today, and it is an honour to follow the noble Lord, Lord Mohammed of Tinsley.

I want to focus my comments on opportunity and social mobility. In assessing the Government’s record on education, employment and welfare since July 2024, we cannot ignore the growing loss of humanities provision across higher education. Universities are autonomous institutions, but their decisions are shaped by the wider financial and policy environment.

A successful education system is measured not simply by qualifications or apprenticeships but by the breadth of opportunity it offers. The Social Mobility Commission’s State of the Nation 2024 reminds us that opportunity remains profoundly shaped by geography. When courses disappear from universities across whole regions, it is often students without the financial means to relocate who lose more opportunities first. Those from more affluent backgrounds can frequently move elsewhere or absorb the additional costs of studying further from home; those from less advantaged backgrounds often cannot. As a result, talent is constrained not by ability but by circumstance.

Social mobility depends not only on opening doors but on ensuring that those doors exist in every part of the country. If whole disciplines become concentrated in a handful of institutions or regions, educational choice increasingly becomes a privilege rather than a right. That risks reinforcing existing inequalities and undermining the Government’s stated ambition to widen opportunity and spread growth beyond our major cities.

On employment, these cuts affect lecturers, researchers, librarians and professional staff, whose expertise underpins teaching, innovation and the wider economy. Humanities graduates go on to become teachers, civil servants, diplomats, lawyers, journalists and leaders in our creative industries. They also develop the critical thinking, and communication and analytical skills, that employers consistently value across many sectors. Weakening that pipeline weakens the nation.

These concerns have been brought home to me through a friend and colleague at the University of Exeter, who has described the uncertainty surrounding proposed reductions in humanities posts. Sadly, Exeter is not alone. Similar pressures are being felt across the sector, with consequences for staff, students and local communities alike.

If we are serious about improving social mobility, we cannot allow educational opportunity to become narrower or more geographically uneven. A country that values aspiration must ensure that students, wherever they live and whatever their background, continue to have full access to the breadth of higher education. Social mobility is not simply about helping individuals to succeed; it is about ensuring that every community can retain and develop its talent, and that no young person’s ambitions are limited by where they happen to grow up.

I therefore ask the Minister: what steps will the Government take to ensure that our universities remain financially sustainable, that students continue to enjoy a broad range of subjects, and that the vital contribution of the humanities to our economy, our public services and our national life is not lost?

12:14

[Baroness Shephard of Northwold (Con)]

My Lords, I congratulate my noble friend Lady Evans on her excellent introduction to this important debate, and it is a pleasure to follow the right reverend Prelate the Bishop of Newcastle.

I will concentrate on NEETs: that is, young people who leave school without entering sixth form or FE, employment or training. They are at the centre of Alan Milburn’s interim report on Young People and Work, which reveals very bleak prospects for NEETs. There are nearly a million of these young people—that is, one in eight of our school leavers—and the numbers are rising. Nearly 60% of them are economically inactive, which means they are detached from the labour market and not looking for work. The Milburn report describes this as a “moral crisis” with “economic consequences”. The economic consequences are that the annual cost to the taxpayer for the present numbers is £125 billion. All other EU countries, apart from Romania, are doing better than us on this issue, and, alarmingly, over the past decade, the number of NEETs citing health problems has risen by 70%, four out of 10 citing mental health problems.

I accept that the position has developed under successive Governments. We now have the aftermath of Covid, war, and a volatile world. We need economic growth. I can do no better than quote the noble Lord, Lord Walker of Broxton—I think he is not in his place today—who said in the welfare debate on 11 June that

“we will cure the problem”

of NEETs

“only by growing the economy … the Government need to be more business friendly. It is only business that creates wealth and jobs and pays tax”.—[Official Report, 11/6/26; col. 1443.]

He is of course right. Employers are key players for NEETs. They provide entry and part-time jobs in retail, hospitality and hairdressing. How many people here started off in that way? I certainly did. They also support apprenticeships. However, those functions, for which we depend on business, have been made well-nigh impossible for many employers by the Government’s imposition on them of higher national insurance costs—which have already been mentioned—increases in the national minimum wage, higher business rates and heavier regulation.

In the past, local government also was a key partner in helping to equip school leavers for the world of work. But, sadly, the Government are creating yet another barrier to the improvement of NEETs’ prospects by the chaos they are currently imposing on that sector, with uncertainty, delay and confusion surrounding its structure and its functions. Nor can there now be any sensible planning because we are told that the new Prime Minister is intent on creating a new regionalised structure on top of, or maybe instead of—we are currently not to know—the structures that we have, which means that any kind of sensible planning that is taking place will be ended by the uncertainty that the Government are imposing on the entire thing. However, of course time does not stop for the NEETs. They need urgent help to get on with their lives.

The Minister in the last debate on 11 June outlined a number of measures to be useful, and indeed many of them were. But, actually, the Government need not to introduce limited measures but to tackle the fundamental issues I have described. I look forward to hearing the Minister’s response at the end of the debate.

12:19

[Lord Baker of Dorking (Con)]

My Lords, the level of youth unemployment in England today is 16.2%. So many youngsters are leaving school at 18 without any employability skills, and that is a disgrace for the fifth-richest country in the world. It is also an indictment of the failure of the education policy of Conservative and Labour Governments since the year 2000, because they have created 1 million people now between 16 and 24 who are unemployed, which is an absolutely shaming figure.

The colleges that I have been trying to stimulate over the last 15 years, university technical colleges, have an unemployment rate of lower than 3%: 20% of our students become apprentices, 50% go to universities to study STEM subjects, and the rest get jobs locally because they have worked with local employers for four years. That is what is needed.

We need a revolution in education. I think that it will be introduced by our new Prime Minister, Andy Burnham, when he is appointed on Monday. He has made many speeches on the importance of technical, practical and vocational education. No Prime Minister since Thatcher, from John Major to Keir Starmer, has made any speech on technical and practical education and learning by hand. No Prime Minister has done it. Search as you will, you will not find them. I think that Andy Burnham will introduce significant changes. About two years ago, he made a statement in Manchester that he wanted to scrap the EBacc, which has an academic curriculum, and replace it with the MBacc. Since then, my charity and organisation of UTCs have been working with him to find a way through.

We have found one. The answer is to look at the curriculum of all secondary schools, particularly Church schools and bog-standard comprehensives, and make sure that you can insert into them good technical education. You can do so only by inserting a sleeve of education from 14 to 18. That is what Andy Burnham asked us to provide him with over the last two years. A school in Manchester will open next September with a sleeve and one will open this September in Barrow-in-Furness. That is the headquarters of BAE Systems, which cannot recruit students who are talented and committed from the schools in Cumbria. Some 120 students will join that school in September. Of those, 90 have already selected the technical sleeve and 30 have selected the academic sleeve. I think the Prime Minister will try to repeat that pattern substantially over the country. We should welcome this. That is the only way that we will get economic growth. It is the only way that we will be able to reduce youth unemployment significantly. We are going to face a revolution, which I very much welcome.

At times in our country, you need to make great changes. I was lucky in the 1980s, when great changes were necessary. I think Andy Burnham will be lucky, because there are now great changes that have to be made. I am not just talking about young men; in our colleges, we have many young women, particularly from ethnic minorities, who desperately want to study and master engineering and computing. I am very optimistic.

I add one warming word for the Minister. She is the only Minister in the Government, including the Commons, who understands education deeply. She is deep into it. If there is any justice, she should be the new Secretary of State. I do not think that the new Prime Minister will appoint a Secretary of State from this House, but I hope that we do not lose her. She likes UTCs. She went to one only last week—one of the most difficult ones to reach, up in the north-west of England next to Sellafield. I hope very much that she keeps her job, because she does like UTCs.

12:24

[Baroness O'Grady of Upper Holloway (Lab)]

My Lords, I thank the noble Baroness, Lady Evans, for introducing this debate. It is a pleasure to follow the noble Lord, Lord Baker, who always has important and interesting things to say about vocational training—and, it seems, about ministerial appointments.

I am very proud that this Government’s mission is to reindustrialise Britain, make work pay and lift living standards. There has been real progress. The UK is now the fastest-growing economy in the G7. Better job security and higher wages through stronger employment rights incentivise workers and reduce turnover costs for business. NHS waiting lists are falling, delivering a healthier workforce. That benefits business too. The Resolution Foundation reports that this year the lowest-income half of families in Britain will see a significant improvement in their standard of living. Let us remember that the single greatest contribution to social mobility in this country has been this Government scrapping the two-child benefit limit, lifting half a million children out of poverty. That is the kind of schooling that I am interested in, because it will transform not only their lives but the lives of their families and communities.

To generate fair growth, we must tackle Britain’s record of low investment and poor productivity. Government action to accelerate clean energy production shows what can be achieved. The CBI reports that the net-zero sector now supports over 1 million jobs and over 23,000 firms whose productivity is 48% above the national average. We need to see that success across sectors, to fund decent welfare and education and to deliver the good, skilled jobs that the British people demand.

That brings me to a new report by University College London for the ETUC which was published last month. For two decades, the debate about economic competitiveness has been framed around the diagnosis that labour costs are too high, which in turn requires pay restraint and deregulation. This new report draws on a 25-year firm-level analysis of Europe’s 300 largest publicly listed corporations and provides evidence that that diagnosis is wrong. What is holding back growth is not the cost of labour but the misdirection of capital. Profits have been increasingly diverted away from productive investment into shareholder payouts, debt-funded distributions and financial reserves.

The report recommends making government business support conditional not only on decent labour standards but on meeting reinvestment requirements. It also highlights the importance of corporate governance reform. This is vital to address the British sickness of short-termism, which puts shareholder returns above the long-term interests of the company. Does my noble friend the Minister agree with the diagnosis that Britain needs more value creation and more productive investment? Does she agree that we need more government action, including on procurement power and corporate governance rules, to drive it?

12:28

[Baroness Bottomley of Nettlestone (Con)]

My Lords, I also most warmly congratulate my noble friend on a brilliant speech in which she said all that needed to be said. Many of us will repeat the same message, but that is what you do in church—as the right reverend Prelate will understand—and you learn the message in the end, so I hope that I will be forgiven for doing so.

Education, employment and welfare cannot be judged in isolation. Together they determine whether people can build secure and independent lives. Much of what the Government want to happen is commendable, but too much of what has actually happened is deplorable. Mission is not the point. I have always had a great regard for the noble Baroness who just spoke, but lifting the two-child limit is not the point. This Government are so good at doing easy things. They do not seem to have any stomach or courage to introduce unpopular measures, yet most of us know that to achieve success you have to do difficult things. I had to shut hospitals. The noble Lord, Lord Heseltine, had to shut mines. If you want progress, you have to do extremely tough things. This Government too often play to the gallery and are not prepared or do not have the courage to tackle what must happen.

I will say a bit about teachers and lecturers, who provide such a vital service. It again shows commitment that 4,000 of the promised 6,500 additional teachers have been delivered, but the real problem is retention. How can we make teaching a more worthwhile activity? I have just returned from the University of Hull, where I received an honorary degree, I am delighted to say. Mine was a long service award for 17 years as chancellor, and I was being given it alongside the most distinguished noble Lord, Lord Norton, who has done decades of proper service at the university. But the ceremony was a teacher graduation, and I was so impressed by the dedication, professionalism, commitment and, above all, the support the university can offer teachers in the region the moment they get burnout. When they get depressed, demoralised and have compassion fatigue, they can provide mentors, networks and further training. I commend that example.

Much has been made of this appalling figure of 1 million young people not in education, employment or training. Those who do not study history are destined to repeat it. Many of us came into public life at the time of the race riots and terrible unrest, when young people, then Black people, had no work, no self-esteem, no recognition and no respect. That leads to crime, lawlessness and despair. The urgency of the practical steps needed to lift this generation forward cannot be exaggerated.

I commend my noble friend Lord Baker. I visited his UTC in Hull, the Baker Dearing UTC, and it is extraordinary to see the way it works with employers and the university to deliver results. At a time when there is disenchantment with university—my noble friend Lord Willetts will no doubt address this problem—more and more young people want skills, a vocation and a job. It is extraordinary how many have said, “I don’t think university is for me”. So we have to look even more urgently at technical and other education.

I support those who argue for greater regionalism. I have long been a great admirer of the noble Lord, Lord O’Neill of Gatley, whom I very much hope will be a leading light in the new Burnham Government. He argues that skills should be completely devolved, because Whitehall cannot know what each labour market needs. He makes a powerful case for joining health, welfare and employment. I very much hope that, in the same way as Andy Street did in Birmingham and as happened in Manchester, we have a better result with more regionalism, innovation and opportunity. The critical test is in delivering a complex achievable plan. Let us bring an end to government by press notices.

12:33

[Lord Knight of Weymouth (Lab)]

My Lords, I am grateful to the noble Baroness, Lady Evans, for introducing this debate at a time when over 1 million young people are NEET.

In 2009, I was appointed Employment Minister in the teeth of the global financial crisis. The Prime Minister was clear: my job was to prevent the scarring effect of long-term youth unemployment and to get the headline rate to fall in time for the 2010 general election. When I told the then Permanent Secretary at the DWP that this was my task, he told me that to do so would defy history and was impossible. He was wrong. We rapidly rolled out the future jobs fund to give young people who had been on benefits for more than six months real paid work, rather than a life on benefits. It created some 150,000 jobs, and the department’s later evaluation found participants far more likely to be in unsubsidised employment two years on, and a net benefit to society of around £7,750 for every young person who took part. With determined focus, we can tackle impossible problems.

The future jobs fund was, of course, scrapped by the incoming Government in 2010 before they published the evidence that it had succeeded. This Government inherited 872,000 young people—more than one in eight—who are NEET. The number is rising much faster today. The Milburn review tells us that the cost of NEETs is £125 billion a year, which is more than our entire schools budget.

The attainment gap between poorer children and their peers stood as wide as it did three decades ago, and a generation’s mental health was left to fray: close to 1 million children were referred to mental health services in a single year, yet fewer than a third were seen. Tens of thousands were waiting over two years, many reaching crisis before anyone had reached them. Apprenticeship starts for young people fell by more than 40%. The entry-level rungs of the ladder were pulled away for over a decade, and artificial intelligence is now removing the very junior roles that are a way in. This is not a blip. It is not about NI and the minimum wage; it is structural and it was many years in the making. We should all hold our hands up.

This crisis begins in our schools. We need a curriculum that develops and challenges all young people. I am with the noble Lord, Lord Baker: I would love us to end the national curriculum at 14 and build a single 14-19 phase with genuine academic, technical and applied routes; and a space for local content, designed with employers, that fits with local industrial strategies. What the Minister is achieving post 16 is important, but it needs a better experience in key stage 4.

We must also change school behaviour by introducing accountability measures built on destinations—on whether a school actually lowers a child’s risk of becoming NEET, as suggested in the Milburn report. When we reward only exam results, we should not be surprised when the system loses sight of the child.

Behind the headline figure of 1 million are 1 million lives. These young people have not given up on work or on learning. They have not given up on the hope of a better life. The only question that should trouble this House is whether we have given up on them. In 2009, we did not. Let us resolve that we will not now—that we will stop building exam factories and start, once more, to build hope.

12:37

[Lord Willetts (Con)]

My Lords, I too congratulate the noble Baroness, Lady Evans, on calling this debate. One can sense in the interventions from all sides of the House the deep disappointment and frustration that we now—once again, shockingly—have 1 million young people who are NEET. It is particularly frustrating, as tackling the problem is not a deeply mysterious intractable issue that cannot possibly be addressed; it is absolutely solvable. The noble Baroness, Lady Evans, set out in her excellent speech the wider policies that are necessary to bring down the number of NEETs. I will focus on specific policies aimed at those young people who, tragically, are already NEET or may be about to become so.

The evidence from a range of initiatives under successive Governments, including those going back to the 1980s and 1990s, is that some combination of the following is needed: direct support for building up employability skills, so that employers do not think that it is high risk to take on someone who is NEET or about to be NEET; plus some lowering of the costs to employers of taking them on, either through a general reduction or specific incentives and rewards. There have been lots of initiatives over the decades. They work, but the trouble is they cost money, partly because there is a dead-weight cost. Some young people get off benefits and into work anyway and the Treasury does not like expensive schemes, so to win the argument for more of these programmes they have to be as well targeted as possible.

There is an increasing amount of data across Whitehall now—from the NHS about family circumstances, from the Department for Education itself and from other government bodies—that would enable us to identify young people who are at greatest risk of being NEET for whom interventions would be most effective. However, across Whitehall you hear, “GDPR stops us sharing the data”. The data is not brought together and those 16 and 17 year-olds are tragically lost to the system.

There is an initiative, Kickstarter, that tries to break down data barriers to pooling information across Whitehall. The Department for Education participates in this initiative and its programme typically, and admirably, is about early years. It identifies children at the age of two and a half who are at risk of turning up at school, at five, underprepared. Why does the Department for Education not also run a Kickstarter initiative to identify NEETs by pooling data from across Whitehall, so that policies and programmes to help young people into work are effectively targeted and more affordable?

It is just possible that these programmes will still have a cost, so we need to find a means of financing them. It is striking that the triple lock on pensions is now costing £12.6 billion a year extra in benefit expenditure than if the pension had simply been linked to earnings since 2012 when the triple lock was introduced. So, if, as well as effective use of public spending through linking data, further resource is needed, I suggest that pension expenditure, which is the most rapidly rising and most expensive part of the total welfare budget, should be where savings are found to tackle the problem to which all sides of the House are clearly committed.

12:41

[Baroness Coffey (Con)]

My Lords, I congratulate my noble friend on introducing this debate so well. I am conscious that a lot of statistics have been thrown around. I was genuinely surprised to hear the figures given by the noble Lords, Lord Rooker and Lord Knight, and I am curious as to where they got them from, because they are not what the ONS says. The ONS says that in 2001, seasonally adjusted, which is the preferred figure being used, there were 833,000 NEETs. By March 2010, that figure was 1.128 million. In June, it was 1.074 million. When the Conservatives left office in May 2024, it was 935,000, and by that June it was 921,000. We have seen a disaster in what is going on, a lot of which is due to the policy, sadly, put in place by this Government, thinking that it would do more to help jobs, which has in fact killed off growth and jobs.

Let us give them some credit: there are more people working now than before. That is true, and I am not surprised, given the rise in population. I support most of the changes that have been made to the apprenticeship schemes and the apprenticeship levy. I welcome the fact that a lot has been moved out of education, which showed no interest in young people and what they would do in the future once they had left school, and is now with the DWP. That has been a good move. But let us not shy away from this: unemployment is up and NEETs are up.

We need drive. I was very proud of my record at the DWP during Covid. Working with my noble friend Lady Stedman-Scott, we got the unemployment rate down to a record low since 1974. We had the lowest figures on NEETs and youth unemployment. That was not done by accident; it was done by drive and making sure that different parts of government worked together and were working in the areas. That is why we tried to enhance our working with not only mayors but also councils through our Jobcentre Plus network.

Universal credit was designed to make it so that you would be better off in work than not working. It was always estimated by Sir Iain Duncan Smith that it would cost taxpayers more, because it wrapped six benefits into one. But the underlying principle was that you are better off working than not, and that was still true until recently. What has happened recently is that, thankfully, we got rid of tax credits. I understand the incentive there. The thinking was that we would subsidise low pay through tax credits. I do not think that was the right approach, but I understand why it happened. But the way that was designed meant that, if you worked a minute over 16 hours, you would be worse off. So, big employers redesigned their work systems so that people basically had 16-hour contracts, and it has been difficult to shift that.

UC allowed the opportunity to do so, but the reason why it is now more of a challenge is that we have a quarter of a million families with a household income of over £40,000 who will now get free school meals. There are a number of incentives not to come off benefits and a huge number of incentives not to go full-time. There are definitely still challenges, which I appreciate the Government will continue to try to tackle, in the availability of childcare all year round, not just when schools are sitting.

We will debate PIP next week, so I will not devote much time to that. All I will say is that, with the cost of living challenges, a lot more people started applying for benefits who did not do so before.

To go back to the beginning and education, we can see the difference that happened in the United Kingdom. When the Conservatives came in, working in partnership in the coalition, there was a big drive by my noble friend Lord Gove and Nick Gibb on phonics—getting into the foundations and the basics. When I first visited schools, I was astonished to find that the poorest-performing school in my constituency offered 50 GCSEs, and it wondered why it was struggling. Let us get back to the core of what will give a young person the opportunity to grow and contribute to our great country.

12:45

[Lord Frost (Non-Afl)]

My Lords, I congratulate the noble Baroness, Lady Evans, for securing this debate and for her excellent opening speech. Britain’s economic problems did not begin with this Government. That would be an unjust accusation. I am afraid Governments of all parties have laboured diligently over many years to produce today’s situation.

The fundamentals can be summarised in one simple set of figures. Since 2008, productivity growth has consistently fallen back. The ONS tells us that, before the financial crisis, multi-factor productivity grew at nearly 2% annually. It is now growing at about 0.5% or less and has recently stagnated. In 2025, per capita GDP was lower than in 2022.

No party in government over this period can regard this record with satisfaction. All three—that includes the Liberal Democrats, of course—to varying degrees regulated, taxed, subsidised and drove energy costs up and industry out. Then came Covid, Ukraine and inflation; each inflicted genuine damage but also provided Whitehall with that most renewable of resources: a convenient explanation to hide bad policy.

Now, there is perhaps a glimmer of something better. Maybe artificial intelligence will finally raise output per worker. Indeed, the ONS’s experimental measure on productivity suggests that it has risen by 4.2% since 2019, rather than 2.3% under the old measure. So, perhaps something is going on.

But at precisely this delicate moment, the Government have chosen to test whether a green shoot can survive being repeatedly struck with a Treasury shovel. The tax burden is forecast to rise to 38.5% by the end of this decade—the highest since records began. The Government are planning to spend nearly half of all the money in the country. The reforms to education brought in by the noble Lord, Lord Gove, have been reversed, and we know from Wales and Scotland what the result of that is likely to be. As we have heard, the Employment Rights Act has undone one of this country’s few remaining strengths—our flexible labour market. Unemployment is at its highest level for a decade. Youth unemployment is even worse.

Net zero is compounding the problem, zeroing one industry after another. Denby Pottery, in my own home region of Derbyshire, survived the Napoleonic Wars, two World Wars, the early 1980s recession and the pandemic but could not survive Ed Miliband.

Of the terrors yet in prospect under Andy Burnham, we are currently left to guess, since he refuses to face any parliamentary scrutiny until September. We know, though, because he told that pillar of our constitution, Gary Lineker, a day or two ago, that he is going to

“ask for a little more”.

It may be a wealth tax or maybe a land value tax. Certainly, we will get municipal corporatism on a grand scale.

I am at a loss to know what question to ask the Minister today. After all, she comes to your Lordships’ Chamber without, I suspect, knowing what is going to come next, so that she can tell us anything about it. Yet she has to defend, as a programme for growth, an economic record of higher taxes, higher spending, riskier and more expensive jobs, a return to union-dominated schools and among the most expensive energy in the OECD.

We know that Ministers want prosperity—of course they do—but the problem is they do not know how to get it. Maybe they have got lucky. After nearly 20 years of stagnation, maybe they just might have been handed the first genuine prospect of a positive productivity shock in a generation. But the problem is that their instinct, faced with something that might at last grow of its own accord, is to reach for weedkiller and try to convince us that it is really fertiliser—a persuasive effort that I suggest is most accurately described as a different kind of fertiliser altogether.

12:49

[Lord Sharpe of Epsom (Con)]

My Lords, I am grateful to my noble friend Lady Evans for securing this debate and it is a pleasure to follow the noble Lord, Lord Frost. The Government’s stewardship of the economy over the past two years has been little short of catastrophic for our labour market. When the Government took office two years ago, they inherited a labour market that had recovered from the pandemic, although it still bore some of its scars, and what did they do? As my noble friend Lady Evans so powerfully explained, they immediately taxed employers for the act of hiring. Unsurprisingly, as we have heard, unemployment has risen rapidly ever since and now stands at just under 2 million, with over 1 million young people unemployed.

If business had not had enough already, the Government then introduced their business-busting Employment Rights Act, which their own impact assessment forecasts will cost employers at least £5 billion a year, with smaller businesses bearing much of the burden of course, further harming the prospects of the very people the Government claim to champion. Noble Lords opposite usually mischaracterise our arguments against the most damaging aspects of this Act as that we are somehow against workers’ rights. This is absolutely not the case. The simple fact is that the most fundamental right is to have access to a job in the first place. The argument we advance is that extending rights to the moment a worker enters the building for the first time, removing the flexibility that suited both employer and worker, and making employment unaffordable leads inexorably to the fact that too many aspirant workers do not even get a day one, never mind the rights that attach.

What has been the Government’s response to the unemployment that they have created? It is a youth jobs guarantee, under which they now propose to pay employers to hire the young people those employers can no longer afford to take on because the Government put up employers’ national insurance in the first place. You genuinely could not make it up. My noble friend Lady Evans rightly called it surreal; I think she was too polite.

Throughout this period, we have had nothing but confirmation of what Pat McFadden admitted in private: that in the Labour Party, every conversation is about who we can tax in order to pay benefits to others. That is precisely what has happened, with the benefits bill rising and rising, and disincentives to work multiplying with it. It became so serious that the Chancellor was forced to concede before the Treasury Committee in March that her jobs tax is responsible for the rise in youth unemployment—perhaps timed with an eye to saving her own job, which looks like another fail.

There was a rare moment of humility last week. The other place passed a Motion regretting the combination of the rise in employers’ national insurance, the impact of the Employment Rights Act 2025 and the regulations that make it harder for young people to get their first job. We now look to Mr Burnham to reverse the failed policies of the past two years, although nothing in his conduct so far gives us confidence that he will. Perhaps the Minister can tell us exactly what Mr Burnham thinks of the Government’s employment-related policies so far.

In the previous century, not a single Labour Government left office with unemployment lower than when they arrived. Every other Labour Government since, including the last two, have left with it higher. Unless the Government radically change course under their new Prime Minister, that unbroken and unenviable record looks set to continue.

12:53

[Baroness Stedman-Scott (Con)]

My Lords, I have been reflecting on why the lifelong learning commitment matters: the world of work has changed and continues to do so. People will need new skills throughout their working lives. We need to help people get into and, just as importantly, stay in work as jobs and industries evolve. So I share the Minister’s ambition, but there is a simple question we have to ask, and forgive me for putting it plainly: what is the point of helping people gain new skills if there are no jobs for them to move into?

If 32 years of helping people get and keep a job has taught me anything, it is this: opportunity depends on business being willing to hire. What do we see? Unemployment rising, vacancies falling and a diagnosis that the labour market is not at all well. A job needs two things: someone who is ready and willing to work, and an employer who is ready and willing to hire them. Too often, the Government talk about the first and forget the second. For a business employing somebody full-time on the national living wage, employer national insurance costs have risen by around 68% over the past two years. At the same time, the cost of employing a full-time 20 year-old has risen by around 26% since 2024. When it becomes more expensive to employ people, businesses hire less, opportunities become scarcer and more people end up relying on welfare instead of wages. My noble friend Lady Coffey put it very well: there are too many incentives to stay on benefits rather than get off them.

We have all had a briefing from UKHospitality. It says that UK hospitality is a barometer for the health of the UK economy. When the sector suffers, high streets, businesses and, most importantly, people suffer. As already referenced by my noble friend Lady Evans of Bowes Park, £3.4 billion of tax increases were put on business in 2024 and as a result 100,000 jobs were lost. Some 38.7% of the workforce in the hospitality sector aged between 16 to 24 has been lost—their first job denied to them. The hospitality sector represents 10% of jobs in coastal communities, 50% of local employment comes from it and there has been a 25% drop in summer jobs.

I found it extraordinary that Stephen Timms recently said that the current size of the welfare bill is not a matter of great concern. Can you believe it? Does the Minister agree with that statement? I believe that a growing welfare bill should concern every one of us and so should rising unemployment. I urge the Minister to speak to her colleagues in the DWP about what can be done to make it easier and more cost effective to hire the people who we are in business to serve. I congratulate my noble friend Lady Evans on getting this debate. I commend the contribution by my noble friend Lord Sharpe and will just say in all honesty and with genuine commitment that we have a few ideas for how that position could be improved.

12:57

[Baroness Lister of Burtersett (Lab)]

My Lords, I welcome this opportunity to take stock of what I am sure the Minister will demonstrate is a pretty positive record. I will focus on social security—called “welfare” in the Motion—but first I shall mention the education reforms that have contributed to the child poverty strategy by reducing the costs of education: action on school uniforms, free breakfasts and free school meals. On the last, I will quote Davina, a member of the Child Poverty Action Group’s youth panel, on why they matter so much:

“It’s not just about food, it’s about dignity, equality and belonging. Hunger makes you tired, embarrassed and left out. A hot meal gives you the energy to focus and the confidence to feel like you belong in the room”.


The Government can take pride in a number of measures on social security, including the modest real increase in the real value of universal credit, the fair repayment rate that reduces the overall level of UC deductions and, most significantly, the abolition of what the noble Lord, Lord Freud, described as the “vicious” two-child limit. A self-described mother in a hard-working family of five writes that,

“it feels like a heavy weight has been lifted off our shoulders; we can finally breathe”,

after the “devastating financial impact” of the limit.

Of course I was not happy about the cuts, but at least the worst of them was averted by the establishment of the Timms PIP review, which was co-produced with disabled people. This is such a positive initiative, as has been the ongoing engagement of the child poverty strategy with parents and children experiencing poverty. I very much hope the Government will build on such initiatives in their policy-making.

The Timms review’s excellent interim report pulls no punches in its critique, including of the dehumanising treatment of those claiming PIP, which raises wider questions about the need for a culture of dignity and respect in the social security system. The report also questions the false narrative of a ballooning overall working-age benefits budget. One consequence of cuts by the Conservative-led Governments has been a significant reduction in the real value of benefits, according to the child poverty strategy documents.

The strategy makes it clear that social security plays a vital role in reducing child poverty, critical to the goals both of security and opportunity, a point also emphasised by charities in the field and by academic and think-tank analysis. Far from restricting opportunity, as the noble Baroness, Lady Evans, said, the child poverty strategy is increasing opportunity for children with experience of poverty. So, wearing my Olivia Twist hat, I hope that serious thought will be given to further action, in particular on the benefit cap, the frozen local housing allowance and the adequacy of UC in meeting need.

The End Child Poverty coalition speaks for many charities when it says that we

“must shift from viewing social security as a sign of failure towards viewing it as an essential investment in children and families”.

According to research by Turn2us, a more positive political narrative could increase public trust in the social security system. I urge the Government not to listen to the siren voices of those baying for cuts but instead to defend social security robustly as, to quote Minister Johnson,

“the bedrock of our welfare state”.—[Official Report, Commons, 30/6/26; col. 875.]

13:01

[Lord Leigh of Hurley (Con)]

My Lords, I congratulate my noble friend Lady Evans on securing this debate and on her excellent opener. We are at an end-of-term moment, not least because the PM who promised us economic growth in his manifesto has clearly failed and, somewhat extraordinarily, the Labour Party has not found one MP in its ranks who put himself or herself up for the job. The mess we find ourselves in as a nation is due largely to actions and words from the current Government.

The Minister should not underestimate the huge damage done in the early days of this Government, when we were misled about a £22 billion black hole—yes, misled. Not one credible economist supported that contention—

[Noble Lords]

Oh!

[Lord Leigh of Hurley (Con)]

I would welcome an intervention from anyone who can claim that there was such an economist who did support the contention. There is none.

The negativity that ensued was disastrous. I understand the tactics, perhaps emulating George Osborne, but the response was to break a manifesto commitment and increase taxes, which killed any chance of economic recovery and, of course, jobs growth. It was not just the retrospective taxation, such as the IHT on pensions, but the NI increases which sent the economy and youth unemployment into a tailspin. I put down amendments to exempt charities, care homes or even hospices. The CEO of a hospice, no Tory supporter, told me that she would have to cut jobs as a direct result, and consequently people would die in greater pain and agony than need be the case. I am not sure that Labour were proud of that, because it was unnecessary.

Even worse, the increase in NI has failed. We were told that it was going to raise £25 billion a year, but the OBR figures reveal that it will be nearer £16.6 billion. I am happy to be accused of being a siren voice, as the noble Baroness, Lady Lister, referred to, but all the Prime Minister and the Chancellor had to do was to stand up to their own colleagues and bring welfare back to a reasonable level, and that would have been avoided. They will now pay the price.

Unfortunately, as a result, the cost of employing an 18 to 20 year-old rose by £4,095 between 2024 and 2026. As the former Labour Education Secretary Ruth Kelly put it:

“You cannot put up the cost of hiring young people and then wonder why fewer of them are being hired”.


Then the Employment Rights Act, mentioned earlier and dubbed the unemployment rights Act by many, has not just forced employers to reconsider hiring new staff; it is forcing businesses to find ways to lay off staff and automate much faster than they had planned. I have spoken to manufacturers, whose names I can reveal, that have done that. That cannot be what HM Government expected to see.

Unemployment for over-16s is now at 4.9%. Inactivity rates are at 21%, according to the excellent Jobs Foundation’s recent report. This week alone, the Entrepreneurs Network, which runs the APPG for Entrepreneurship, of which I am an officer, published its fourth survey: 79% of founders of businesses feel that the Government do not understand their needs. Only 18% are optimistic about the year ahead for the economy as a whole and, most interestingly, 82% have a negative view of the level of taxation in the UK. That is the point.

It is not surprising when one reads the Policy Exchange study published this month, which points out that the tax burden is at a 70-year high and that the UK’s tax take of 34.4% of GDP in 2024 has risen to 36% this year. That is way higher than for any other successful members of the G7. This situation will not be improved by the incoming PM, a man with very little economic experience, talking about land taxes and wealth taxes increasing. The question I have for the Minister is: does she understand the connection between increasing the tax take, specifically on businesses, and the consequential, inevitable rise in unemployment?

13:05

[Baroness Fall (Con)]

I congratulate my noble friend Lady Evans on this timely debate and on her excellent remarks. It is always a pleasure, too, to follow my noble friend Lord Leigh.

The first duty of government is the national security, including economic security, of our country. By that, I mean delivering a functioning economy which creates jobs, underpins our national services and provides a safety net of welfare. It also means living within our means and protecting the right for future generations to do so. Education, employment and welfare are the topics of this timely and well-chosen debate, and key to all of this is growth. Today, I will focus my short remarks on employment and welfare.

The legacy of the last two years of the Labour Government has seen unemployment up, hirings down, a welfare bill through the roof and growth flatlining. The OBR’s latest Fiscal Risks and Sustainability report made for sombre reading by pointing out: first, that the fiscal problem is mainly spending-led and will likely worsen with the pressures of an ageing population; and, secondly, that debt is rising to unsustainable levels and the tax burden is already close to historic highs. On the eve of a new Prime Minister, I have a plea for Mr Burnham: we simply cannot afford more poor policy which will only make our country worse off and less able to deliver good schools and good jobs and support those who cannot support themselves.

What is Mr Burnham’s plan for growth? We hear that he wants to put taxes up, has ruled out so-called crude cuts to welfare and is sceptical about what he calls “tech boosterism”. His growth plan is devolution, which may or may not boost growth, and I hope that it does, but it is for the longer term and is not an immediate growth plan. Yet this is just the moment to be getting behind tech. We have the potential to play a leading role in AI to reinforce our competitive advantage for innovation in start-ups, quantum and cyber, and to boost the productively we desperately need in the NHS.

Let us look at tax policy. Mr Burnham is considering bringing capital gains tax in line with income tax, which would give us the highest rate in Europe, with less money to invest in new businesses, businesses which create jobs. As the Tony Blair Institute warned just this week:

“Taxing our way to prosperity is both bad policy and bad politics”.


By hiking national insurance and the minimum wage for the youngest, and adding regulation to working rights, Labour have hammered businesses, not helped them: worsening job prospects, especially for the young, as many noble Lords have mentioned, and adding to their job struggles, as even the Resolution Foundation warned. We now have over 1 million NEETS, as many have said, with one in five working-age adults on benefits and that number is growing. Where is the balance here? This is a tragedy that our society can ill afford.

Let us remember what our commitment is: to help people who cannot and support those who can back to work. If the Government do not want to listen to me, they should listen to their own advisers: Alan Milburn, who speaks devastatingly of the silence of the unheard voice of young people applying for jobs; Stephen Timms, who warns that PIPs are due to double by 2030 and must be addressed, or even Charlie Mayhew, who tries to tackle sickness at work. We need urgently to reassess and rebalance. I urge the new Prime Minister to have a strategy for growth and the bravery to address some of these very difficult issues in our country by getting behind businesses and entrepreneurs, incentivising work, getting young people a footing in life and tackling the tragic and increasingly unaffordable welfare bill.

13:09

[Baroness Gill (Lab)]

My Lords, parliamentary tradition prevents me using the precise words required to describe the inheritance that the previous Government left behind on the topics of this Motion. Allow me to remind the House of that baseline: a classroom workforce in freefall, an economy addicted to insecure labour and a welfare state that ran up a staggering £2.8 billion bill. Nevertheless, I welcome and thank the noble Baroness, Lady Evans, for the opportunity to set up this Government’s record of achievement. We have had to step in to make good the severe macroeconomic impacts of a botched Brexit deal, the real impact of which has been felt up and down the country, permanently fracturing our supply chains, driving up core costs, squeezing our public finances and giving us the cost of living crisis. They built the crisis on their watch, yet in just two years this Government have systematically reversed their negative trends and delivered measurable progress.

Let us look at the hard numbers in education. The noble Baroness’s party oversaw a catastrophic depletion of our classrooms, leaving just under half a million full-time equivalent teachers with real-terms wages slashed by 9%. This Government have not just lamented the crisis: they have fixed the system. They have set an ambitious target to recruit 6,500 new, expert teachers in critical shortage subjects such as maths and physics. In just two years, the data shows that we have already successfully delivered over 70% of that workforce. Furthermore, this Government have funded the national rollout of free breakfast clubs in primary schools—although I will not go into that: my noble friend Lady Lister has spoken amply on that topic—proving that opportunity in Britain is once again a basic right and not an afterthought.

In employment, the previous Government built an entire economic model on low-wage, insecure, low-productivity labour. That allowed exploitative zero-hours contracts to explode. I spoke to countless people in my old West Midlands constituency who shared the reality of zero-hours contracts with me. They did not know whether they were going to work that day, they did not know how long they would be working and they did not know how much they would be paid. Try to sort out your childcare, or manage your weekly shop, with that reality. That is why this Government brought in the Employment Rights Act. In under 24 months, we have legally banned exploitative zero-hours contracts, instantly granting a statutory right to guaranteed hours to over 2 million workers.

My final couple of points are on welfare. The previous Government used the DWP to penalise vulnerability, pushing people into destitution. In two years, we have transformed the DWP into a genuine Department for Work, launched a £240 million Connect to Work scheme to move 100,000 people safely back into careers, and introduced a Right to Try guarantee. This Government did not create the post-Brexit fiscal headwinds, nor did we cause the decay of our public services, but we are fixing them. In two years, we have done more to restore education, worker security and basic human dignity than the previous Administration managed in over a decade. The data is quite clear. The reversal is under way and Britain is finally moving forward.

13:13

[Lord Evans of Guisborough (Con)]

My Lords, it is a pleasure to take part in the debate. I express my gratitude to my noble friend Lady Evans for presenting the case against the Government so eloquently at the start of the debate. It has been very interesting to follow a number of distinguished speakers. It is a particular privilege to follow the noble Baroness, Lady Gill, who made a stirring attempt to defend the Government’s record. I hope that Mr Burnham is watching this somewhere, and that he will be able to provide the rewards which are so clearly deserved for that effort. I merely point out that, sooner or later, it will be impossible to blame the previous Government for the current Government’s failings and, of course, much sooner it will be impossible to blame the previous Prime Minister for the current Government’s failings. We will see how things develop.

My own experience in this area comes from having been the Deputy Mayor of London, where I dealt with schools, businesses, employment and skills. It is perhaps a slightly unusual spread of experience in the House today: we have heard from a lot of former Ministers. However, as the new Prime Minister takes over, perhaps this will become a more relevant piece of experience, because he has talked a lot about learning things from the regions and applying them to national government. I will be interested to see what he does, and to see whether the Minister can raise the curtain on some of the things that we can expect from the new Prime Minister. There are good things to be learned and not just, of course, from Manchester, although I am sure that there are other things we can pick up from there as well.

My noble friend Lady Coffey talked a lot about incentives, and I will just touch on the way that regulation—in particular, taxation around national insurance—has disincentivised business from employing people. We hear a lot about how having a low-paid job is a bad thing, but I would suggest that having no job at all is an even worse thing. That is where a lot of people are heading, given the current policies that are being pursued.

I have not had the benefit of a briefing from UKHospitality but I know, because I go out in my own high street in Romford probably a bit too often, and meet people running restaurants and bars there, how challenging it is for them to employ people now under the new national insurance rules. It is a very employee-intense industry. You need to employ a lot of people and everyone you employ is an additional cost, so national insurance has hit them particularly hard. They were doing well last night—the high street was absolutely full of people—but usually they do not do so well. The Government need to start thinking about how they are going to help the hospitality industry to provide those entry-level jobs that so many people take on when they first leave education.

My noble friend Lord Leigh talked about the impact on the care sector. We have hospices in Essex which have struggled to deal with the national insurance impact. I know the Government provided some extra money for hospices as a result, and that is very welcome; we should be grateful for funding from government. But we should also be aware that that funding was intended for capital projects. It will make no difference to the extra costs imposed on the hospice sector by the national insurance problem that it is trying to deal with.

I look forward to the Minister’s response to this debate. She and I spent some months working together in the Middle East in the past, so I know how indefatigable and tough she can be. Resolving this problem will require every bit of her strength, so, rather like my noble friend Lord Baker, I hope that she retains her role in the next Government.

13:18

[Baroness Nargund (Lab)]

My Lords, I thank the noble Baroness, Lady Evans, for securing this debate. I declare my interest as pro-chancellor of the University of Portsmouth and honorary professor of women’s health at City St George’s University of London.

Education, employment and welfare are interconnected. When education fails, employment suffers. When secure work is out of reach, welfare dependency rises. If we are serious about breaking that cycle, the ambition must be a country where opportunity is decided not by your social status but on your potential. This is exactly the future that this Government are working towards.

I will focus on the education aspect of this debate. Education is where opportunity begins. Research shows that over a third of children start reception not ready for school, and one in four arrive without basic language skills. I welcome the expansion of Best Start family hubs, free breakfast clubs and 30 hours of childcare for eligible families put in place by this Government. These are investments in our children and our country’s future.

Education must prepare young people not simply for examinations but to live healthy, happy, productive and informed lives. I have long argued that more health modules, such as reproductive health and women’s health modules, should form part of secondary and post-16 education for all pupils. Too many girls grow up believing that pain is normal. Too many women spend years fighting to have their symptoms believed. Knowledge changes attitudes, breaks stigma, helps tackle the gender health gap and prevents medical misogyny.

The need for change must continue in medical education itself. Our healthcare workforce should reflect the communities it serves and understand the inequalities people face, particularly in access, experiences and outcomes. That means embedding cultural competency throughout healthcare education and ensuring future clinicians understand the wider determinants of health, which account for 80% to 90% of health outcomes. I know that our Government are introducing cultural competency education, and I hope it is there throughout the healthcare profession.

As pro-chancellor of the University of Portsmouth, I have seen how medical education can drive regional renewal. Portsmouth’s new medical school is training future doctors entirely within the local health system, with a grow-your-own approach to reduce inequalities and strengthen local communities over time. The aim is also to encourage students to stay locally rather than moving to bigger cities such as London, demonstrating a novel model to connect higher education with local employment and long-term local economic growth. Will the upcoming workforce plan consider a recruit locally, train locally, retain talent locally approach to create local growth? Will cultural competency be embedded throughout to tackle health inequalities?

Good growth needs good education. Good education needs good health. Together, they build a healthier, happier, fairer and more prosperous Britain.

13:22

[Baroness Spielman (Con)]

My Lords, my noble friend Baroness Evans of Bowes Park, in her excellent speech, and many others, have made strong points about the previous Government’s achievements in education. I will not repeat them, except to say that we are in the bizarre position of having delegations from overseas visiting our schools to see how we have achieved so much in education—even as the current Government work to dismantle the reforms that enabled this great progress.

I want to speak today about young people and their trajectory from childhood to productive and satisfying adulthood. Our national aim should be to build children and young people’s capacity and resilience on every front, yet the current focus of education and welfare systems is working against that. Government education policies overwhelmingly target disadvantage and low achievement. That sounds lovely, but this policy is built around mechanisms that encourage children and young people to view themselves as damaged or less than capable.

Once a child is defined and sees themselves that way, such as through having a SEND label and then perhaps a child disability allowance claim, it is now all too likely that they will become an early PIP claimant, at which point their chances of ever moving into stable employment are increasingly poor. In fact, a decision to grant PIP to a young person who suffers from, say, anxiety or ADHD, may be the single cruellest thing a Government could ever do to them. All too probably, it consigns them unnecessarily to a lifetime of dependency, yet such claims have rocketed in the past two years.

I am afraid that the Timms review shows, by its weakness and its omissions, that there is no real appetite to address this appalling waste of human life. It does not distinguish between some fundamentally different types of condition. There are some disabilities that are lifelong and preclude work entirely. There are some that are lifelong and that will limit some aspects of capacity permanently, but that do not preclude people’s ability and willingness to work; Down syndrome is a good example. There are other conditions that may be temporary or permanent but, for most, need only be temporarily debilitating. Most people diagnosed with anxiety or ADHD should ultimately be successful and happy at work, so a blanket disability label is failing many of them.

The review also does not recognise that the explosion in numbers may partly reflect a loss of confidence and resilience in our population, rather than any real loss of capacity. It also dismisses the very real loss of public confidence in PIP, despite much evidence for this. DWP’s own figures show that detected fraud has tripled in the past year. The review barely touches on the value of work to individuals, but we know that there is a huge human cost of worklessness. The Minister, Sir Stephen Timms MP, seems entirely unconcerned about the apparently uncontrollable increase in PIP spending, described as “not of great concern”. Yet, as Alan Milburn has pointed out, we are spending a lot on young people, but on the wrong things.

My noble friends Lady Coffey, Lady Stedman-Scott, Lord Willetts, and many others have made constructive suggestions. Recent Budgets and legislation have plainly worsened employer willingness and capacity to hire the young, and youth unemployment is predictably rising. Can the Minister tell us whether the Government will direct the Timms review to addressing the difficult questions that, I am afraid, it has so far ducked? Will the Government bring forward measures to modify the policies they have brought in that, no matter how well-intended, are proving damaging to human lives?

13:26

[Lord John of Southwark (Lab)]

My Lords, when I saw that the noble Baroness, Lady Evans, had put this subject down for a debate today, for which I thank her, I thought I should take a look at the statistics to examine whether I had missed a particularly bad report on education or employment. I was reassured to learn that GCSE and A-level grades in 2025 were slightly better than in 2024 and that, while our employment rates have fractionally decreased over the past two years, the number of those classed as economically inactive had also fallen by over one percentage point. Looking at welfare, the latest ONS data suggests that the number of people claiming out-of-work benefits is just over 30,000 higher than in July 2024, but sadly, we find that there has been a significant increase in the number of people claiming universal credit. However, that increase also came at the same time that working tax credits came to an end and those claimants were shifted to universal credit.

My view is that we sometimes get the language around welfare wrong. Moving from a system of working tax credits, predicated on support for those in work, to universal credit, which perhaps suggests a life supported by government, was a serious mistake. I ask the Minister to think carefully about how the Government can better use language to make this kind of government financial support once again appear more supportive of the notion of a hand up to those on low pay.

I do not share the nihilistic view of the subject matter of this debate of some noble Lords opposite. Perhaps the most worrying figure today is the number of young people, 16 to 24 year-olds, who are not in education, employment or training. There have always been NEETs; they were not created or invented in July 2024. But it seems to be a post-Covid phenomenon that we have reached 1 million of them at this time.

I am reassured by the preliminary report of Alan Milburn and the response of Pat McFadden, the Secretary of State, who have rightly focused our attention on what we need to do. It is ludicrous that we spend only £1 on helping a NEET into work for every £25 we give them in benefits. Sometimes we need to invest to save, and to give hope to those younger people who are entering a very different world of work with the challenges of the gig economy and AI.

The noble Lord, Lord Willetts, talked about employability schemes. It is important to recognise the work of organisations such as the Old Vic Theatre, of which I am a trustee, which run employability schemes. Take the Lead and Front Line help over 1,000 young people each year with basic employability; that is commendable for a charity, the Old Vic, and others like it.

The final version of the Milburn review is due in September, but the work has already begun to make it a central mission of this Labour Government to reduce the number of NEETs and create a workforce fit for our times. I know that will not change on Monday or Tuesday next week. I suppose the clue is in the name, but I am reassured that this is a Labour Government who care about labour.

13:29

[Lord Addington (LD)]

My Lords, I am afraid I could have predicted some of the lines of this debate. Indeed, in the first speech, we heard the noble Baroness, Lady Evans, saying how dreadful everything is. The response from the noble Lord, Lord Rooker, reminded me of a guard dog having its tail stood on. He went back, justifiably, because what have we got here? We have the Government doing what Governments always do: reacting to what has happened before.

Although we can say wonderful things about various bits of the education system, there are things that did not go right. The first report I received was about off-rolling—a wonderful product of the academy system, where everybody goes out and passes more exams but we also have fewer people in education. That was in 2020, before Covid. The report brought forward by the noble Lord, Lord Johnson of Marylebone, titled Requires Improvement: Urgent Change for 11–16 Education, looks at further education and the fact that, once again, the system is overly academic. There were problems that came with the academisation programme and things that were not embraced. The first one was that not everybody is good at passing exams, yet they were being told, in a very loud voice, “No, that is what matters”.

We need to start to address that in the education programme and in the preparation for what comes next, which for many people is further education. There is an agreement, possibly going back to new Labour, that we put too much emphasis on universities, or that universities stopped doing level 4 and level 5 courses. Let us face it: some of the new universities came from a world where they successfully did this and it was dumped. We all have our history to deal with here. The noble Lord, Lord Baker, has a solution, as he always does. It is one that we have probably not totally mined to get the best out of it, but it is certainly one way forward: making sure that we take on further education and up its status. There is also a degree of agreement that we have not done that properly.

Having said that, my questions to the Government now come thick and fast. Aside from what the Government are doing to recruit 6,500 more teachers, what are they doing about getting all those teachers who have left the industry back into it? What about re-recruitment? People who we invested in and trained have left in their droves; what are the Government doing to bring them back in? Have the Government looked at what would be required to make it more attractive to come back and teach? That is fundamental about this process.

I turn to educational needs—anybody who put money on me raising that have won, but they would not have got very good odds. I will reserve my comments on the remarks from the noble Baroness, Lady Spielman. We know that, for years and years, we have ignored and not recognised people who have special educational needs, and we have not found out who they are, in particular girls, who are very good at surviving in the classroom by masking, disappearing in the middle of it and not commenting. Most of the time, they get through without causing too much trouble. They underachieve dramatically in most cases, and have huge mental health problems and scars because of it, but they get through. On the other hand, boys typically—these are, of course, stereotypes—kick off at the back of the class, get thrown out, and get sent to the pupil referral unit. Not long ago, it was confirmed to me that every child in a pupil referral unit is expected to have at least one special educational need.

We have not dealt with this. It was accepted as part of the previous Government’s and the coalition Government’s reforms. Maybe I should not have acquired so many scars on my tongue and the inside of my mouth from not speaking at the time—although maybe some people think I should have acquired a few more. If we are not going to address this historical lag on this historical pressure that has pushed people outside then we are going to have trouble. We have trouble, but we are going to have more. I hope that the Minister will be able to tell me exactly when we are going to get a practical system of support in schools. As I have mentioned on other occasions, we can then take it as read that certain groups will be very difficult to deal with in schools. We will need a mixed economy.

I remind the House that I am chairman of Microlink PC, which works in assistive technology; that I am president of the British Dyslexia Association; and that I am dyslexic myself. What are we going to do to make sure that those people who have traditionally failed are allowed to get through? We had a great emphasis on passing English and maths. Great: we have taken one group, possibly the biggest group, and put an extra load right on the back of their necks. We have said, “You will not go to the next stage because you’ve failed”. There have been exemptions: the children of the middle classes who can get the diagnosis and have the tiger parent to advocate for them get something out of it, but those who do not come from exam-passing backgrounds do not. I hope that the Minister can give us some practical guidance on how the teachers who we are short of, and who we are trying to recruit, will be better capable of spotting and putting in fairly easily administered support structures.

Let us use assistive technology to allow dyslexics to deliver in English in a format that someone can get around. Voice recognition is a standard factor in every computer that has been given to any Member of this House or the other. It is there with the push of a couple of buttons; I can show people how it works. It is also on every mobile phone, hence why I have one or two caveats about the “demon of mobile phones”. What are we doing there?

Then you can go on to other groups, such as those with dyscalculia; with the noble Baroness, Lady Bull, sitting on the Woolsack, I would be a fool not to mention them. We need to think about how we are going to identify, help and support other groups. These people are at their most vulnerable. They will get stopped by an education system that says, “Pass an exam”, and will have to go down a secondary route. People know when they are branded as stupid and they carry it with them for the rest of their lives. I was very lucky; I had that tiger parent. If the Government do not address this properly, they will guarantee the existence of a group of people who will find it increasingly difficult to get employed.

To be perfectly honest, upping any taxation threshold that falls directly on employment is not the best and smartest move in the world to get people out and into the marketplace. That has not helped, but if we are looking for a high-skilled, high-value workforce then we have to start to address those problems and get people ready for that world. Everything is changing. “We do not even know what will be required” is the average recruitment strategy. At the moment, whether it is a bump due to fear or something else, it looks like that the undergraduate route is not going to work any more and it comes with debts. The big question we should all be asking is: what are the Government going to do about accessibility to good further education? Unless we come away with a series of answers and strategies, we will let down that big group who do not find the academic system that easy to access and are not going to succeed at the top end but still have an expectation of being prepared for the field of work. I hope that the Minister starts to answer these questions today. Although these questions were not invented two years ago, the current Government have the responsibility for finding coherent answers.

13:39

[Baroness Cash (Con)]

My Lords, what an excellent debate—the House at its very best. I have lost count of the number of former Ministers and Cabinet members speaking on their areas of expertise. I thank them all. What is striking is how much we agree on. No one here disagrees with the notion that our children should be lifted out of poverty, that they should realise their potential, that they should have productive and fulfilling lives, and that we want to see our country flourish and thrive. Where we differ is about how we get there.

We will not agree on all that, but there may be some things that we can learn from today. It is the case that the Government inherited record employment, some of the strongest reading and numeracy results in the western world, a narrowing disadvantage gap in our primary schools and an economy back in growth. It would be wrong, however, not to acknowledge the profound and lasting effects of the pandemic on school attendance, mental health and our national working culture and the fact that the Government inherited those challenges also. The question today is whether they have risen to the challenges.

I do not know whether noble Lords are aware of parallel play. It is a phrase used in child psychology to describe how children up to the age of two play next to each other with similar toys but do not actively interact. That is how the Government’s own reviewer, Alan Milburn, has described this Government’s lack of strategy. Perhaps that lack of strategy is itself the consequence of what the Prime Minister’s former chief of staff Morgan McSweeney admitted was a failure to prepare for government. Playing at governing has real-life consequences and it is our young people who pay the highest price.

The problems since July 2024 in the Government’s performance can be traced to the contradictions that lie within so much of what they have done. This could not be more vividly or sadly illustrated than by the way in which they have torn down a cornerstone of their own party’s legacy under Tony Blair. In 2021, England’s 10 year-olds were ranked fourth in the world for reading—the best in the West—and, in mathematics, we had climbed from 27th to 11th. By 2018, the disadvantage gap at the end of primary school was down to 9.2 months, the narrowest ever recorded. That work began under the previous Labour Government, and I pay tribute to the part that the Minister opposite played in that when she was Education Minister in the Blair Government.

When we entered government, we built on those foundations proudly. Policy Exchange research has found that 83% of the highest-performing schools serving disadvantaged children are academies or free schools but, inexplicably, this Government’s Children’s Wellbeing and Schools Act will end that success by returning to the old default of central control, without a shred of evidence of how that will affect outcomes. This Government have said that they want to eliminate the advantage gap—we all do—but then inexplicably undid the very reforms begun by their own party that had helped the most disadvantaged.

What about our young adults? We have heard so much about them today. More than 1 million young people are now outside education, employment or training—it is the first time that we have crossed that line since 2013. Alan Milburn is clear that the causes are complex and the Minister has said the same in this House. I agree, but Milburn’s verdict is still damning. He puts the cost at £125 billion a year and describes the young victims of this chaos as a “lost generation”. Eighty-four per cent of them want to work, yet nearly two-thirds have never held a paid job. In his words,

“The aspiration is there. The opportunity is not”.


Why not? We have heard today from the Benches behind me about the economic consequences of the taxation rises. What have the Government done to opportunity? They have raised the cost of taxation on business and hit the cost of employing young people from three different directions. There are some £25 billion of new costs through the national insurance rise; yes, young people are exempted from national insurance, but the burden carried by those businesses has been stated repeatedly by our public bodies as the reason why they are not hiring young people. It is no good to say that young people are exempt when businesses talk about having to cut all their jobs. A record 16% rise in the minimum wage for 18 to 20 year-olds makes them much more expensive to hire, and excessive new employment rights make taking on an untested young worker a bigger risk for many smaller firms, which they simply cannot afford.

The Government were warned so many times. The IFS warned that the combined changes would reduce opportunities for younger workers. The Bank of England’s chief economist told the Treasury Committee that it would hit those aged 16 to 21 hardest. The Low Pay Commission said that employment would fall most among the young. The Government ploughed ahead, and the result has been brutal. Today, two years after this Government were elected, youth unemployment is close to one in six, at 16.2%—according to the Labour Force Survey, that is the highest in over a decade. The number of NEETs is also tracking upwards, according to Alan Milburn. He says it will reach 1.25 million—another quarter of a million—within five years. The ONS has confirmed that firms are not hiring because of the cost of employment.

Again, we see contradictions at the heart of government, with one department spending public money on the youth scheme that we have heard about today to coax young people into work while others have taken the jobs away. As one of the great heroes of the left, Aneurin Bevan, said, we know what happens to people when they are unemployed. Their skill goes, their hope goes and their self-respect goes. They are an army of the defeated. That army is now 4 million people of working age. One in 10 is on health-related benefits, and more than half of the rise since the pandemic relates to mental health.

Here, again, the Government’s left and right hands do not meet. Their Health Secretary says this country overdiagnoses mental health and writes too many people off—so much so that he commissioned Professor Fonagy to examine the striking rise of diagnosis of anxiety, depression, ADHD and autism. But the welfare system continues to pay out in ever greater numbers on precisely those diagnoses. The state has become quicker to pay for a condition than to treat it.

The science reinforces what Bevan knew. The research warns about excessive labelling. One of the world’s most cited neuroscientists, Lisa Feldman Barrett, shows that the brain learns to expect what we teach it to expect. Label difficult behaviours as fixed incapacity and people believe they are incapable. One part of government says we label too much and another is funding the labelling and calling it support. Milburn describes a welfare gateway that has become a one-way valve, cohorts staying longer and longer, funding the problem but not solving it, and so the vicious circle remains closed. The very taxes raised to fund the welfare bill have destroyed the entry-level jobs that, on the Government’s own evidence, would have kept young people busy and well. The revenue measure has defeated the fiscal aim. Funding more diagnosis defeats the health aim. Each department, as Milburn says, plays alone next to the others, and real young people fall through the gaps between them.

None of this evidence is mine. It is their evidence, their data, their reviewer, their Health Secretary, their own party’s research. They were warned. They were asked to stop but they have carried on, and a generation of young people, our nation’s taxpayers and the British economy are paying the price.

13:49

[The Minister of State, Department for Education and Department for Work and Pensions (Baroness Smith of Malvern) (Lab)]

My Lords, I thank the House for some really interesting and wide-ranging contributions today, and the noble Baroness, Lady Evans, for bringing this debate to the House this afternoon. If it is a Thursday afternoon, it must be a debate on education, employment and young people.

As I say, it has been a broad debate, but as a Minister who works across the Department for Education and the Department for Work and Pensions, I know all too well just how interlinked the areas we have covered today often are. Whichever system we are talking about—education, employment or welfare—none operates in a vacuum, and they all have an important role to play in extending opportunity so that everybody can fulfil their potential. This is key to raising living standards and boosting economic growth. Sadly, though, as my noble friends Lord Rooker and Lady Gill identified very robustly, we inherited a broken system that too often did the opposite and held people back.

If we are examining the record of this Government so far, it is important to consider the starting point when we took office. Education was not working for all children, school attendance was at an all-time low and local authorities were being bankrupted by the rising costs of special educational needs and children’s social care. The number of children growing up in poverty had increased by 700,000 since 2010 to 4 million. Nearly 1.5 million adults were unemployed, and between 2021 and 2024 the number of young people not in employment, education or training increased by 250,000. We had a welfare system that all too readily wrote people off and left them without the support they needed. This was an unacceptable waste of human potential. That is why this Government are putting opportunity at the heart of our education, employment support and welfare systems. We are doing this by giving children the best start in life and by lifting 500,000 children out of poverty—my noble friend Lady Lister is absolutely right in identifying the link between poverty and education and opportunity.

We are increasing the number of people, particularly young people, in education, employment and training, and we are shifting from a welfare state to a working state that provides not only a safety net but a platform upon which people can change their lives for the better. The noble Baronesses, Lady Coffey, Lady Stedman-Scott and Lady Spielman, bemoan the fact that the welfare system incentivises people to stay out of work. They are right that that is a bad design. It was of course the design that we inherited from their Government.

My noble friend Lady Nargund was absolutely right to describe education as “where opportunity begins”. That is why this Government stand for excellence everywhere, across education and care, to break the link between background and success. We are fixing the foundations of our education and care systems by ensuring that attendance is going back up; hiring more teachers, social workers and nursery staff; rebuilding more schools and opening free breakfast clubs; stabilising our universities and increasing training opportunities. On universities, I share the right reverend Prelate the Bishop of Newcastle’s view of the significance and importance of humanities for understanding our world and being able to tell the stories and build the analysis of where we need to go. Of course, it is not the role of government to tell universities what courses to offer, but it is our task to deliver financial stability to ensure proper planning and provision of all courses, including humanities courses. That is what we are doing, through our increase in maximum tuition fees and through our focus, in the Office for Students, on financial stability.

Despite this progress, we must go further and faster to ensure that everybody has the opportunity to succeed. We must start early, which is why we are investing £1.5 billion over the next three years, through our best start in life strategy, to expand and strengthen family services and make early education and childcare more accessible, more affordable and of higher quality. It is why we will improve the quality of early education and childcare. It is why we are making sure that every child is achieving and thriving, through the work of our RISE teams that are driving school improvement. It is why we are recruiting more teachers in secondary and special schools. It is our ambition to halve the disadvantage gap for children with special educational needs and disabilities.

The noble Lord, Lord Mohammed, raises the issue of primary schools, where we see a real challenge from the falling numbers of primary pupils. Even this week, we have talked about imaginative ways of enabling school buildings, for example, to be used to develop community and other facilities, and we will continue to consider the challenges for schools as that demography changes.

The noble Baroness, Lady Bottomley, and the noble Lord, Lord Addington, rightly raise the issue of teachers. High-quality teaching has the biggest positive impact on a child’s outcome in schools, which is why we pledged to recruit 6,500 additional teachers across this Parliament in secondary and special schools and FE. We have already achieved over 70% of our target, including 3,008 more teachers in secondary and special schools since this Government came to office. We are continuing to offer bursaries worth £29,000 tax free to encourage more talented people to train to teach key STEM subjects. Both noble Lords suggested, and I agree with them, that retaining high-quality teachers is key to our plans. I am sure they will welcome the fact that we are making strong progress, with leaver rates dropping to 8.5%, one of the lowest ever on record. Of course, part of the reason for that is because we have been willing to find the resources to pay teachers properly, with a 10% pay increase over the last two years and acceptance of the STRB’s recommendations for the next two years. We have set out plans to invest in a new teacher retention programme from autumn 2026.

To ensure that everybody who can benefit from our world-class higher education system is able to, we are reintroducing maintenance grants for courses for the academic year 2028-29. This will ensure that anyone with the ability can access university. We are prioritising skills and further education—as the noble Lord, Lord Addington, demanded that we should, and as we set out in our skills White Paper—including through record investment in post-16 education and skills, with more than £18 billion a year in funding and an additional £800 million for 16 to 19 education in 2026-27.

We are expanding high-quality technical and vocational pathways through new V-levels and more T-levels and by establishing 29 technical excellence colleges. While I am loath to disagree with the noble Lord, Lord Baker, given the nice things he said about me, it was the current Prime Minister who made a strong speech about the need to reinvigorate non-academic routes and to develop a prestigious FE sector, which we have been delivering on. We will also give, and have already given, local leaders more powers and funding to shape provision to meet local skills needs.

To boost employment, we are making sure not just that people get skills but that they get the skills that employers and our economy need. That focus is precisely why I am now working across both departments, with DWP now responsible for adult skills. We are able to link that skills capacity and understanding more closely to the employment support that we are offering through the new jobs and careers service. We set up Skills England to assess skills needs to inform national planning. We have made the skills system more flexible, for example with shorter, more targeted training options to meet specific and fast-changing needs in the form of new apprenticeship units, developing the flexibility in the growth and skills levy to meet the needs of employers. We are investing in skills packages for key sectors in construction, defence, clean energy and advanced manufacturing. We have introduced fast-track approval of new apprenticeship standards to get rapid skills support in place for major projects in England.

All this is about making sure that people are able to seize the opportunities of the future. While some noble Lords may paint a rather pessimistic picture of the labour market, others, such as my noble friend Lady O’Grady, are right to be more optimistic. There are 400,000 more people in employment than last year; we have the third-highest employment rate in the G7; and since this Government took over, real wages have risen more than in the first 10 years of the previous Government. These figures show not a failing Government but one who are creating opportunity and security for their people.

However, we of course know that there is more to do. With over a million young people not earning or learning, and nearly 3 million people out of work due to long-term sickness, we are determined not only to help people into work but to ensure that it is good work. My noble friend Lord Knight is right to say that a determined focus on employment can make a difference, and that is why this Government are determined not to give up on a generation of young people.

That is why we are investing £3.5 billion in employment support for disabled people and those with health conditions, through our pathways to work offer, and overhauling job centres to be places where you sign up for work, not benefits. When it comes to young people who are not earning or learning, as has been emphasised by several noble Lords during the debate, we are creating half a million opportunities for young people to earn or learn, backed by £2.5 billion of additional investment through our youth guarantee. These include hiring bonuses for businesses, more work experience and workplace training, and subsidised jobs for young people who are out of work for 18 months; and we are rebuilding the apprenticeships ladder for young people, given the 40% fall in young people’s apprenticeships starts that we saw over the last decade.

Many noble Lords opposite raised the issue of national insurance increases and the minimum wage. I recognise why, and it is a common refrain, but they do so at the same time as praising the Milburn report that this Government commissioned. As I have pointed out previously, it was Alan Milburn himself who identified the fact that it is neither national insurance nor the national minimum wage which is at the heart of—or even really key to—the number of young people who are out of work. Furthermore, the Resolution Foundation Lost in Transition report found that reverting national insurance levels to the 2024 threshold for under-25s would raise the job total by 7,000 but cost the Exchequer £1 billion. Scrapping NICs entirely for under-25s would create only 38,000 jobs and cost £5.1 billion. Noble Lords opposite who want to talk, and always do, about national insurance contributions need to answer the question of what they would cut to revert this Government’s national insurance contribution changes. Presumably it would be the investment in our health service, which is helping to cut the waiting lists that keep people out of work and create additional burdens for employers. The Resolution Foundation also said that, through our £2.5 billion funding of the youth guarantee, our hiring incentives and jobs guarantee will unlock up to 200,000 employment opportunities.

I believe that we are focusing on the right place. Of course, we also need to prevent people becoming out of work and not learning in the first place. That is why we are also focused on prevention, including better support for young people with SEND and those with mental health challenges, as we roll out support across schools. My noble friend Lord Knight is right that schools need to have greater responsibility for the destinations of their students and the transition of young people at 16, so that they do not fall out of the system.

The noble Lord, Lord Baker, is right about the contribution made by technical education, and I have already outlined the changes the Government are making. The noble Lord, Lord Willetts, is right that we need to use data effectively to be able to identify at an early stage those who are at risk of becoming NEET, which is why we have provided for local authorities the “risk of NEET” indicator tools. These enable them, at the earliest stages of secondary school, to identify the young people who are at risk and take action to prevent them falling through the gaps.

All this is designed to get more people into work, and we are ensuring that it is good work—we make no apology for that—by boosting the national minimum wage, partnering with employers through the Keep Britain Working review to build healthier and more inclusive workplaces, and bolstering workers’ rights with the Employment Rights Act. I wholeheartedly agree with my noble friend Lady O’Grady’s argument for productive, not just cheap, labour.

Much of what I have already set out is welfare reform in action. It is how we are putting work, skills and opportunity at the heart of the welfare state. Welfare spending as a percentage of GDP continues to be broadly stable, as it has been for many years, and we have slowed the increase in the number of people coming on to health and disability benefits. This is where spending is increasing the most.

Far from circling the wagons around the status quo, we are determined to rewire the social security system itself, as my noble friend Lord John argued for, to promote and support work. This includes through the changes we have made to universal credit to reduce disincentives to work; by legislating for a right to try, so that disabled people can take steps into work without fear of automatic reassessment; and increasing the proportion of face-to-face assessments, which collapsed under the previous Government.

In the medium term, the Timms review of personal independence payment, to ensure it is fair and fit for the future, and the Milburn review into young people and work, have both already produced their interim reports ahead of publishing full reports later this year. This will provide the framework for further action in both these crucial areas.

From childhood through to adulthood, across the education, employment and welfare systems, we are ensuring that everybody gets the chance to succeed, equipping people with the qualifications and skills they need, creating the opportunities they need and changing the welfare system, so that instead of trapping people, it helps people to change their lives. Rather than picking up the costs of failure, we are investing in success. That is better for people’s lives and better for the public finances, and it is the change this Labour Government are delivering.

14:07

[Baroness Evans of Bowes Park (Con)]

My Lords, I am very grateful for the contributions of noble Lords across the House to this debate. A wealth of expertise, experience and passion has been evident throughout.

What came across loud and clear in so many contributions—indeed, it was acknowledged by the Minister in her wind-up—was the need for government to consider policies and interventions across education, employment and welfare in the round. They are inextricably interconnected, and policies developed in one silo of government can have unintended and damaging consequences in another—as, unfortunately, we have seen too often over the last couple of years. As we heard powerfully across the House, nowhere is this joined-up thinking more urgently needed than in tackling the growing number of young people not in education, employment and training.

I again thank everyone who has contributed today and commend this Motion to the House.

Motion agreed.