Covid-19: Economic Recovery

Lord Lea of Crondall Excerpts

Tuesday 20th April 2021 Grand Committee

[Lord Lea of Crondall (Non-Afl)]

My Lords, there are so many different pictures in the press and among the think tanks at the moment that it is anybody’s guess how the economy will evolve, but given that this debate focuses on jobs, employment et cetera, I was struck by the remarks by a number of speakers, including, I think, the noble Baroness, Lady Noakes, and the noble Lord, Lord Griffiths, about the fact that we have not got our act together so far as employment policy is concerned.

This can be seen through the prism of the crisis in the universities, which is there. There is a crisis because we have a philosophical contradiction. If you were writing a philosophical book in the 19th century about the nature of the university—we all know that some famous books were written about that—it was not for job creation. It was not to meet the labour market. We are creeping about at the moment implying that universities are to do with jobs and the labour market, but the set-up in universities does not reflect that. I will get shot if I say that in more clear-cut terms because there is a huge establishment for the universities. People with good intentions, including new Labour et cetera, felt that there was a magic wand to be waved and that productivity was at the other end of investment in universities. Why would that be so? Where does the link come? There is no link at all. I agree that if you want to study the classics, ancient Greece et cetera, that is wonderful, but generally speaking that is not why we are putting untold billions into universities.

So how do we change the culture of this debate? It is connected with productivity, certainly. We had in the 1960s, of course, the idea of concerted action, à la Jacques Delors in the 1970s and so on, and I was a supporter of that. But at the moment we actually lack —I do not know whether the noble Lord, Lord Griffiths, said this, or perhaps the noble Baroness, Lady Noakes—a new department of employment. That is my language, not theirs. It could be the department of the labour market, if you like. Because there is currently no such thing.

Even when we had a department of labour and employment, when big economic decisions had to be taken, the Treasury was obviously the most important department—and now we have, side by side with that, the whole of the banking system, which I would say has much more influence than people who are studying the labour market. So I ask the Minister to comment on the question: do not we now need a ministry for the labour market? I know that it is a bit pathetic when you have to call for a new ministry, but the evidence is piling up, so we must not be shy and run away from it just because calling for a different government department is thought to be the last refuge of the scoundrel.

This of course would have to have as one of its concepts buy-in by young people. I do not think we have that. There is not a very bright prospect for many people in the universities at the moment, but more generally that is at what you might call the elite end of the system. But let us look at the statistics at the other end of the system. There is insecure employment: how many people can survive that? An article today in the FT, which is being quoted by everybody, says that

“Britain’s Living Wage Foundation published the results of two surveys last week, based on 2,000 responses … which found that almost two-fifths of UK workers were given less than a week’s notice of their shifts or work patterns. Among full-time low-paid workers, 55 per cent were given less than a week’s notice and 15 per cent less than 24 hours.”

Well, is that not crazy? Is that going to generate a highly productive labour market, particularly with these young people not having relevant qualifications?

So I must say that, if there is one thing that we do not have enough focus on, it is that, unless we see sustaining employment as to do with high productivity, there is a rather misleadingly attractive model in which we just want more jobs. But more jobs per se? You do not need to be, as it were, labour-theory-of-value over the top, but we need to see where the productivity is. At the moment, I am afraid that our productivity position, as well as our trading position, in all the OECD tables, is at the bottom. So I am a bit surprised—well, being a Labour speaker I am not surprised because I am representing this side. However, I think that the Government are lulling themselves into a false sense of security.

I will make a final remark about the nature of improving productivity and how it relates to public policy. When we had the discussions with Ted Heath and so on at that time—not a lot of people will now say a good word about Ted Heath—in all the discussions there was a pretty targeted analysis of how all this related to productivity, prices and incomes and so on. We have now thrown out the baby with the bath-water by saying, “Well, that didn’t work, did it?” That is a sweeping generalisation. So we are running away from what many people here will remember: in the 1960s and 1970s—much-derided decades—we were actually pretty good in the international league tables. At the moment we are presupposing that we are well up there.

I will make a final remark about Brexit—which, of course, you need a special vaccination permit to speak on these days. Two or three years ago, I attended a meeting with the chief executives of six of the major companies responsible for foreign direct investment into Britain. We met over a meal. They said that, if we left the EU, FDI would collapse. I have to say, it has collapsed; the figure is more or less zero.

In other words, there are no new plants and factories. I do not want to characterise this as only manufacturing, but FDI has collapsed. It has—I will bet £10 that it has, and I will win that bet if the noble Lord thinks I am wrong. FDI has collapsed and this requires us to see a timescale in which we can reopen some conversations with the European Union about the internal market, which is the key to why it has collapsed.

I would like the Minister to make sure that, by the time she replies, she has the latest figures on foreign direct investment in Britain and how it compares with five and 10 years ago—and I will eat my hat if she tells me I have got it wrong.