Employment

Lord Freud Excerpts

Thursday 23rd October 2014 Lords Chamber

[Lord Haskel]

To ask Her Majesty’s Government what measures they are taking to tackle under-employment and to help those working part-time who want a full-time job.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud) (Con)]

The Government’s long-term economic plan is working. A record number of people are in work and the proportion of part-time workers wanting full-time work has fallen for the last 11 months. Under universal credit we are, for the first time, creating clear incentives and supporting claimants to progress in work and increase their earnings.

[Lord Haskel (Lab)]

I am not sure where the Minister gets his numbers from but recent figures show that there has been rise in the number of people seeking more hours. Could this be due to the low pay that people who are already in work are getting—that they need to work more hours? This is partly due, I should have thought, to the government policy of subsidising low wages through the welfare system. Instead of incentivising these low wages, would it not be better for the Government to encourage businesses to raise their game, and become more productive and efficient? In this way, people can earn more and employers can get more of a return from people’s work.

[Lord Freud]

My Lords, the simple fact is that the number of people working part-time who want to work full-time has had the largest but one drop over the last 12 months that we have ever seen—down 1.7%. Clearly, one needs an economy recovering. We have had a terrible shock to this economy—it went down 6%. We are now pulling people back and, as the Bank of England Governor said, what will get everyone working to the extent that they want to work will be improving productivity in this economy.

[Baroness Gardner of Parkes (Con)]

The Minister will be aware that I have often raised the issue of carers, who are grossly underpaid because they are paid only for the jobs they do—going in for 15 minutes or half an hour—and nothing for travel between jobs. Is he also aware—I have met such cases—that there are people who have worked as carers for all their lives but when their client dies and they go for re-employment, because they have been so loyal to them over many years they are told that they must take voluntary work? What they desperately need is an income to live on and they have to take voluntary work before they will be considered even for a job paid at the very poor rate of something like £2 an hour, which they get because they are considered to be self-employed. Does he not think that that is an abuse of this whole employment system?

[Lord Freud]

We are most concerned that people should be able to work as much as they want to. We are creating a new system to allow that, supporting people as they progress, in universal credit, into full-time work. We have extensive in-work progression trials right round the country, to find ways in which we can most effectively support people to work the amount that they want to and get the earnings that they need.

[Lord McFall of Alcluith (Lab)]

My Lords, in a speech in April this year the Chancellor was explicit in committing the Conservatives to the concept of full employment, and in a contradictory echo of a previous Conservative Chancellor said that unemployment was a price not worth paying. Can the Minister inform me what the Chancellor meant by “full employment”? Did he have a particular equilibrium unemployment target in mind, or was it just an empty rhetorical gesture to fit the occasion?

[Lord Freud]

As the noble Lord knows, that is an extraordinarily complicated economic question. The Chancellor has clarified that the target around full employment is a better employment rate than other countries are seeing. We are currently not far off the full employment rate, at 73%, that we have seen in the past.

[Lord German (LD)]

My Lords, as the unemployment levels fall, the focus naturally shifts towards in-work progression, with people wanting to earn more money and have more hours. Can my noble friend tell me whether we should in fact incentivise the Work Programme so that after someone being 26 weeks in work, when a company gets paid, there should be further incentives to help people earn more money and get more hours, so we can move people into better work in their lifetime?

[Lord Freud]

My Lords, we now have the real-time information system working, whereby we know what people are paid every month. That gives us a new opportunity with the Work Programme in its next stages to look not just at sustainment in work, which was the key new feature of the original Work Programme, but at progression in work. It will be entirely possible to devise ways to encourage providers to help people make that important progression.

[Baroness Howe of Idlicote (CB)]

My Lords, I am sure that the Minister agrees that many women want to work part-time, because it fits in well with their life plans. Can he reassure me that men have equal chances, in their employment, of getting part-time work? As I understand it, many men are felt to be able to work full-time and therefore not given the other option.

[Lord Freud]

We have one of the most flexible structures of work in Europe. In other countries you see a huge concentration of people working the full number of hours, whereas here there is a much smoother position. We have systems to support people doing partial and full work hours. In fact, in the way in which it is devised, universal credit will make the situation even more flexible in the future.

[Lord Kinnock (Lab)]

Does the Minister recall this week’s worse than anticipated borrowing figures, attributable in large part to worse than anticipated revenues from income tax? Does he recognise and share the view of many independent economists commentating yesterday, who said that this was because we are having a very low-wage recovery? Does he concede the truth of that and understand that on the present basis the recovery is very fragile and will remain so as long as wages are low in so many sectors of the economy?

[Lord Freud]

There are major flows going on in this structure. We have had a very large increase in employment, with 1.7 million more people in the workforce. Clearly, some of those coming in for the first time tend to be at the lower level and then work their way up. In 2012-13 the earnings of those who have stayed in work grew by between 3.7% and 3.9%—far more than the average, which was between 0.7% and 0.9%.