Employment

Baroness Kramer Excerpts

Thursday 6th June 2019 Lords Chamber

[Baroness Kramer (LD)]

My Lords, well, follow that speech! I feel unfortunate to stand up at this moment, but fortunate that the noble Lord, Lord Leigh, has achieved this debate. I congratulate him, because so often when we talk about employment, in Parliamentary Questions or in passing in a broader economic debate, it is at the very superficial level of numbers announced the day or week before. I have found absolutely fascinating the way in which speaker after speaker today has explored particular issues in much greater depth and opened up the much more complex picture that drives employment, the risks we face in future and the strategies we have to take on board.

As I listened to the speakers today, what frightened me most—it is something I knew, but it was underscored so often, and I defy people to identify whether the comments were made from the Government or Opposition Benches—was the sense that we are almost creating two Britains here: a country in which people are indeed in work but, to paraphrase the noble Lord, Lord Haskel, in which the greatest growth has been in poverty in work, far greater than the growth in those gaining work. That pattern is one that should trouble us—to go from a society in which to be in work essentially guaranteed what you would consider to be an acceptable and reasonable lifestyle, to a situation where work no longer comes close to guaranteeing that for a very significant number of people.

My noble friend Lord Shipley picked up the regional imbalances. I know that the noble Lord, Lord Willetts, said just now that job creation has been spread across the country. Indeed, it is most likely that you tend to see the biggest pick-up in areas of greatest employment, but that still leaves a real pattern of inequality across the regions of the UK. Although new jobs have occurred in each area, they have not come close to rectifying or dealing with that imbalance. That leaves us with a divided society and we allow that to continue at our peril. It drives a whole series of policies of local decision-making, support and a great deal of rethinking. My noble friend covered that very carefully for us.

I was also fascinated to hear the noble Lord, Lord Lupton, and others speaking from the Conservative Benches, echoing the same comments from people such as the noble Lord, Lord Monks, on the inequality of pay and the message to businesses. The noble Baronesses, Lady Fall and Lady Rock, picked that up as well. The message to businesses is that they have to re-look at the social contract that they have with their stakeholders, workforce, the community and the country about allowing multiples of pay for senior corporate players, while those at the bottom find their wages compressed. The noble Baroness, Lady Meacher, talked about the stress of debt, the growth in food banks and the difficulties.

But then noble Lords spoke about the people in the middle finding their wages constantly squeezed. The noble Lord, Lord Willetts, spoke on that issue. I hope that the Government are picking up and understanding that there is a drive for real and fundamental change in the contract between business and the broader population. It has to be crystallised in a new, responsible way of carrying through capitalism. I know some on the Labour Benches would agree with me and some would fundamentally disagree. I do not go for the nationalisation strategy that has been so broadly described by some leading Labour Members, but we must recognise that a new model is absolutely required. Indeed, when it comes to public utilities, many have talked, although not today, about public benefit corporations. In a way, you create a public/private partnership—the term has been somewhat disgraced—that operates utilities and fundamental services.

I want to highlight two or three things before I sit down. One is an issue that never seems to be addressed in any of these discussions: the age dependency ratio. I suppose it was picked up by the noble Lord, Lord Northbrook, in a way when he talked about the shortage of unskilled as well as skilled workers. Although the numbers are outdated, look at the age dependency ratio—the ratio of dependants to the working-age population. In 2017 it was just about 57%, and I suspect that when we get current figures it will be closer to 59%. That is unsustainable. When we look at the breakdown, it is not because we have more young people. In fact, the youth dependency ratio remains almost constant. It is because we have so many more older people. Who would not want older people to live longer? But the stress that they create for the working-age population becomes greater and greater. If we look at our population demographic forecasts, we do not have on tap the working-age population that will bring that number down. That underscores that the immigration of a working-age population into the UK has to be part of the fundamental economic strategy if we are to offer a civilised standard of living to our older people, our younger people and our community at large. I wish the Government would try to come to grips with this. I never hear them talk about this. We talk about the fact that older people have issues with social care and we look at the problems they have, but that falls back on to the working-age population. We only have to look at places such as Japan, where the problem is utterly severe, and Germany where it is serious. We are very much headed in that direction, and we have to understand that that requires us to change our language and our policies on immigration.

Quite a number of noble Lords talked about what is in effect the fourth industrial revolution. This is an area where we have not yet delved deep enough into what we need to do. New jobs are always created when new technologies become available, but will they be jobs that our current employed people will be able to take, or do we create new jobs requiring a set of skills so that those in the current workforce who will potentially lose their jobs will find it almost impossible to transition to them? How do we achieve that transition? I do not hear that language from the Government.

The last area that I want to tackle before I sit down is productivity. The noble Lord, Lord Leigh, and I somewhat disagree on it. I fully accept his argument that a service-based economy requires us to look at productivity numbers in a different way, but our long-term productivity forecast is 1.2%. I do not care how you adjust the numbers, that is appalling. We have to get productivity levels well over the 2% benchmark if we are to see a recovery of long-term growth. That means that this is a deeply embedded inherent problem. While the Government have a strategy that encourages current cutting-edge technology, the irony is that the companies that are interested in cutting-edge technology are very productive and will seize that technology. Our problem is an economy driven very largely by middle-sized and small companies that are not attached to cutting-edge work, and where the big difference in productivity comes from discarding the 12 year-old machine or the five year-old computer and buying one that is 18 months old, rather than from getting them embedded in trying to catch the wave of whatever new IT or AI capacity is available. If our industrial strategy does not capture that, we will endlessly find ourselves with deep problems.

The noble Lord, Lord Leigh, basically said that we had to protect business if we were to have a future and future jobs. In response, I say that that I can think of nothing more likely to drive jobs away from our economy than the words “WTO rules” and a no-deal departure from Europe—indeed, any kind of departure from Europe. We are already seeing the impact on investment numbers. I was talking to the tech field, which is down 57% this year from last year. I was taking with venture capital groups in Parliament earlier this week and they have seen a shocking cut in the levels of venture capital investment in this country. You can follow through all those kinds of various numbers. If want a strong economy, we must listen to the Treasury forecasts and, frankly, stay in Europe.