Future of Work

Viscount Younger of Leckie Excerpts

Thursday 12th October 2017 Lords Chamber

[Viscount Younger of Leckie (Con)]

My Lords, I congratulate the noble Lord, Lord Knight of Weymouth, on securing the debate on this fascinating and topical subject.

The future of work holds much promise, prosperity and opportunity but also challenges, some of which have been highlighted today, not least by the noble Lord himself. The quality of the contributions on the subject is typical of this House and I believe it adds a great deal of value to the wider discussion. As an aside, I hope that, over time, I do not become a noble cobot.

I also congratulate my noble friend Lady Wyld on such a personal and insightful maiden speech. I hope some of the educational reforms I will touch on later will provide her with some reassurance on what the Government are doing to prepare our young people for future work and, indeed, future patterns of work. She is right that the next generation can learn and practise the latest technology to the highest standards but that the soft skills—or should I say essential skills, as alluded to by the noble Lord, Lord Young—linked to its optimum use and dissemination are equally important.

We believe that the UK is starting from a strong position. We are the fifth-biggest economy in the world. We enjoyed faster growth than the US and Japan last year. We have the most competitive tax regime in the G7. We have world-leading universities, with four in the top 10. Our light-touch approach to labour market regulation makes the UK a great place to start a business, encouraging innovation and creating jobs. The employment rate is 75.3%, the highest since comparable records began in 1971. The unemployment rate is 4.3%, its lowest point since 1975.

Perhaps I may give a brief vision of the future. The world of work will feel very different but the Government are ensuring that we put the right measures in place to embrace this: investing in new technologies; improving our skills system; ensuring that our labour market enables new ways of working; and embracing new industrial opportunities.

Technology and innovation can improve the lives of working people, boosting productivity. With the best people equipped with the right skills and performing the most appropriate jobs, both employers and individuals can thrive. It is good to note that a number of speeches were positive about technological change, including from my noble friend Lord Sherbourne and the noble Lord, Lord Knight.

An underlying theme in this short debate concerned robots. There is good evidence to show that making greater use of robotics and automation in manufacturing will increase productivity. Although there may be job displacement in manufacturing, this will most likely be balanced by gains in higher-skilled jobs—in marketing, sales, design and support roles—as productivity increases. Barclays suggested in 2015 that moderate investment in robotics would create an extra 33,000 UK manufacturing jobs by 2020 and 73,500 jobs by 2025. The RSA’s recent report notes a range of occupations where automation complements more traditional skills and job roles, providing benefits for workers and consumers; for example, connected systems that enable overburdened social care workers to focus on the “human touch” of care—another theme that came up today—diagnostics that enable doctors to improve healthcare, and chatbots operating in call centres to speed up customer support.

My noble friend Lady Stowell was reflective about who is best placed to help with change—including clever people and practical people, and a mixture of both. She was right that everyone has a role to play: employers, workers, trade unions—as the noble Lord, Lord Knight, said—consumers and, of course, government. I want to take your Lordships through the three areas where I believe government has an important role to play: technology, skills and people.

Many in this House, like me, will recall the days before emails—up to the late 1980s, as I recall—and a time when “tablets” were small objects to be taken three times a day. Now, many of us would be lost without this new technology. Smart technology will continue to revolutionise the way we work. As we move towards driverless cars and drone technology, people may no longer need to drive to get about, and the thought of taking a day off to have a parcel delivered could become an alien concept. As the noble Lord, Lord Giddens, hinted, the pace of change is almost too fast to comprehend, and he is right.

During the past 15 years, the UK has benefited from a technology-driven shift from low-skill, routine jobs to higher-skill, non-routine roles. While 800,000 jobs have been lost, 3.5 million have been created, presenting a wealth of opportunity. The digital sector was worth £118.4 billion in 2015, employing 1.4 million people. Three-quarters of digital tech businesses in the UK are based outside London. The noble Lord, Lord Knight, produced his own powerful statistics on job losses and job gains, and was right to point to the importance of managing the transition effectively. The noble Lord, Lord Giddens, took up the theme and spoke about changes in manufacturing. My own thoughts are that we are moving away from mass production in huge factories to production in smaller units. That does not mean that the percentage of GDP—I think it is about 11% at the moment—is necessarily changing; it is just a change. If one looks at centres of excellence and activity around places such as Oxford, Cambridge and the M4 corridor, one sees that we have moved to high-value economy in the UK. The noble Lord, Lord Giddens, stated that in the 1960s 40% of jobs were in manufacturing and now it is only 9%. He, too, spoke about the transition between types of jobs and sectors.

We are learning from the mistakes of the past: I am very mindful of what happened in the 1980s. By keeping one eye on the needs of tomorrow we are helping to keep our employment levels at a record high. We are taking steps to ensure that the UK stays at the cutting edge of technology, because we want the positive effects of a world-leading digital sector to be felt countrywide. Innovate UK has invested around £1.8 billion, which has been more than matched by the private sector, returning between £11.5 billion and £13.1 billion to the economy. Innovate UK has also supported innovation in 7,600 organisations, creating around 55,000 new jobs. In addition, IUK has established a network of catapult centres to commercialise new and emerging technologies in areas where there are large global market opportunities and a critical mass of UK capability to take advantage, such as offshore renewable energy and digital.

In 2016, the World Economic Forum placed the UK third in the world for technological readiness. Going forward, the digital strategy we published in March puts in place the conditions for the UK’s digital sectors to remain world leading. Moving on to our preparedness for the future, new skills will be required to make the most of technological developments. The skills system must deliver for all, from the student finishing their secondary education to the experienced worker looking to retrain. My noble friend Lord Sherbourne emphasised the word “adaptability” and he is right; yes, the individual concerned must be adaptable, but the Government must provide the right framework for that adaptability. For the skills system to work for the individual, it must also work for the employer. Partnering government investment with industry expertise will help ensure that we have a resilient workforce. As my noble friend Lady Wyld said, this resilience will be built on confidence and emotional intelligence as well as technical knowledge and skill.

Our reforms put employers at the heart of the process. New technical routes, designed to improve the technical and vocational education offer, are being developed in partnership with industry. The noble Lord, Lord Fox, raised the question of T-levels. I can reassure him that the T-level will be more than just a qualification: as well as the technical qualification the programme will include a substantial, high-quality work placement of up to two months, English and maths up to an appropriate level and digital training appropriate to the route. The content will be determined by a T-level panel of professionals. Giving employers the lead on this will ensure that the qualification will have real labour market value. We are investing £170 million in institutes of technology to deliver higher technical education in STEM subjects between A-level and degrees.

Since 2010 we have delivered 2.4 million apprenticeship starts. We are now going further, committing to deliver 3 million apprenticeship starts in England by 2020. Through the Institute of Apprenticeships we are ensuring that quality is championed and that employers are at the forefront of design. I took note of the eloquent speech by the noble Baroness, Lady Morris of Yardley, who asked how we can make education more flexible and, indeed, a gate opener. She is quite right. The Government understand this as well as the challenges of the skills gap and ensuring parity of esteem between vocational and academic training. As I said to the noble Lord, Lord Fox, the Government will also oversee the creation of a genuine technical option in T-levels, equal in status to A-levels.

It is not only about technological advances, it is also, as some noble Lords have said, about people. We also need to recognise that the demographics of the UK labour market are changing. More women are in work. The female employment rate is now 70.8%, up 18 percentage points since 1971. We should applaud that. More older people are choosing to remain in work. With the number of people aged 50 and over expected to reach 30 million by 2035, support for older people in work is essential. And there are more people with disabilities in work, as new ways of working make the workplace more accessible. The noble Lord, Lord Fox, highlighted the importance of this aspect of the workforce. This means that the inactivity rate, so called—the proportion of working-age people not in work or looking for work—has fallen to 21.2%, the lowest since records began.

Despite this success, we know there is still more to do. We must continue to take action to remove the remaining barriers people face in the labour market, including by supporting women in returning to work after having children, ensuring older workers can continue to use their skills to help the economy later on in their career, which my noble friend Lord Patten mentioned, and ensuring that ethnic minorities are able to progress in work.

The actions we have taken so far include investing £5 million to support people who left paid work to take on caring responsibilities returning to work. The noble Lord, Lord Rees of Ludlow, succinctly asked how we should care for the elderly and recognised the human element of caring, which is so important. That is why in the context of an ageing population, the Government are considering how best to support carers who are in work and require flexibility and support to carry on in both roles. We are looking at the effectiveness of existing rights in meeting the needs of carers and the possible creation of new rights.

The noble Lord, Lord Young of Norwood Green, asked what we are doing to support phased retirement. We have already removed the statutory retirement age, as he knows, and our labour market supports more flexible ways of working. This year we published a new employer-led strategy Fuller Working Lives: A Partnership Approach setting out the importance of fuller working lives for employers and individuals.

My noble friend Lady McGregor-Smith, who is not in her place, wrote an insightful report which showed that the UK is missing out on up to £24 billion a year by not fully utilising ethnic minority talent. The Government are working with Business in the Community to support the delivery of the changes my noble friend recommended.

I shall now go on to ways of working because they are also set to change significantly. The future of commuting could look very different, and the idea of a set shift may be a distant memory, with people being more likely to be able to work at times and in ways that suit them. We are already seeing a move from traditional employment towards atypical forms of work, and we know the drive for this change is both employer and worker-led. For example, the number of people in part-time work has increased by 2.5 million since 1992. There are also a record 4.8 million people who are self-employed, up from 3.2 million in 2000. These are large figures.

With more people working atypically, with more flexibility to suit them, their employer and their lifestyle, it is important that the regulatory framework underpinning employment remains ready to meet the challenges ahead. That is why the Prime Minister asked Matthew Taylor to review modern working practices. In his report, he said we had achieved labour market success to date “the British way” with regulation which protects the vulnerable while encouraging businesses to employ. He made it clear that, given the UK’s success in terms of the quantity of work, it is now time to focus more on the quality of work with all work designed to be,

“fair and decent with realistic scope for development and fulfilment”.

The noble Baroness, Lady Bakewell, pointed out that different people look for different types of work and that what represents quality work to one person may not necessarily do so for another. That is an interesting point, and one of the challenges for the Government is to agree exactly how we define quality work. Like the noble Lord, Lord Knight, we welcomed the report, and we are now considering each of the 53 recommendations ahead of responding later this year.

I will now touch on the industrial strategy, an important subject which was mentioned by the noble Lord, Lord Fox. Supporting technology, investing in skills and giving everyone the opportunity to fulfil their potential will help ensure that the UK makes the most of globalisation and technological advances. Through the modern industrial strategy, we will set the blueprint against which we will do this. In July, my right honourable friend in the other place, the Business Secretary, made it clear in his speech at the University of Birmingham that the industrial strategy will build on our strong employment position by reaching people who find it harder to participate in the job market.

Productivity is the key point. There is much more that I could say about productivity, which is a most important subject, but I am running out of time, so I may well have to write to noble Lords who made points about it.

In drawing my remarks to a conclusion, I thank all noble Lords for their input to this fascinating debate today. I would like to comment briefly on globalisation, which was raised by my noble friend Lady Wheatcroft, who made the interesting reflective comment that free trade and globalisation have brought many benefits to our society, ensuring that more people can access a wider choice of goods at lower cost.

Our approach will help us to succeed in future but there is more that we can do. We need to be ready to embrace the change that further globalisation, technological advance and demographic change will bring. We will make the most of the opportunities on offer. To paraphrase my noble friend Lady Wheatcroft, the future is here and we must embrace it.