Economy

Baroness Donaghy Excerpts

Thursday 10th September 2015 Lords Chamber

[Baroness Donaghy (Lab)]

My Lords, I thank the noble Lord, Lord Haskel, for initiating this debate and for the passionate and comprehensive way in which he did so. It is a positive move to encourage us to look and plan ahead. I intend to say something about good employment relations.

First, I congratulate the Minister on emphasising the importance of productivity. If I were his public relations adviser, I would caution against setting himself up as such an easy target. In planning for the future we do not know what the state of the economy will be by the time of the next general election. It is clear that thousands of jobs will be lost in local government, which will decrease its capacity and capability at a time when it is being given more responsibility for both local entrepreneurial development and picking up the pieces of the human cost of our unequal society. The future must include better financial settlements for local government, as well as for capacity building in what will be a much diminished area.

There is also huge uncertainty about the future of pensions, which will impact on a generation and on our economy. I believe that the abolition of annuities was foolish and that reform, which was of course overdue, would have been more sensible. The rush to swap pension pots for buy-to-let properties might look good at present but there is great risk. Pensions are so complicated that the state has a duty of care to protect its citizens from the market. I do not believe the Government are doing this.

On higher education, if the Government do not take action on the unsustainable student debt levels, that will also impact on our economy. Inflexible restrictions on foreign students going to British universities will mean that vital courses in STEM subjects and languages will close. Engineering firms are crying out for well-qualified postgraduates—who, unfortunately, are primarily from overseas—but they are not being allowed to stay. They are needed for those jobs now.

On skills shortages, particularly in the construction industry, there needs to be a step change in government action. The suggestion of a compulsory levy on the larger employers is welcome but further government intervention is vital if we are to tackle what I accept is a systemic problem.

Turning to good employment relations and their link to a successful economy, the general secretary of the TUC, Frances O’Grady, has said:

“When workers are engaged and getting a fair share from growth, they deliver better results”.

The Minister referred to the excellent work by ACAS in his speech on productivity earlier this week. His praise of ACAS is very welcome and I am pleased that he indicated that he would continue that dialogue. I had the privilege to chair ACAS for seven years. It has produced some excellent policy papers on UK productivity and the link with good management and good employment relations. One of the publications, Closing the Gap: Workplace Innovation and UK Productivity, suggests that,

“we need to rediscover the importance of how people are managed and deployed in the workplace if we are to make inroads into the productivity problem … Well under 30 per cent of UK workers are involved in decisions about how work is organised and the number has been declining steadily since 2001 … The UK compares unfavourably with several other Northern European countries against many comparable indicators. Unlike these countries, the UK also lacks a coherent policy framework to stimulate the adoption of better ways of working”.

Ineffective management is estimated to be costing UK businesses more than £19 billion a year in lost working hours, and 43% of UK managers rate their own line managers as ineffective. Yet how many line managers are given sufficient training and support to manage change effectively, to have that difficult conversation and to motivate? These workers are key to the solution but too often they are the weakest link because they are unsupported.

ACAS has also produced a paper giving seven practical solutions to improve workplace productivity. As my noble friend Lord Monks said on Tuesday, I hope the Minister will continue his welcome approach to good employment relations and his dialogue with ACAS. It makes a pleasant change from his Government’s ghastly Trade Union Bill and its shopping list of shoddy measures.