Government Record on Education, Employment and Welfare

Lord Sharpe of Epsom Excerpts

Thursday 16th July 2026 Lords Chamber

[Lord Sharpe of Epsom (Con)]

My Lords, I am grateful to my noble friend Lady Evans for securing this debate and it is a pleasure to follow the noble Lord, Lord Frost. The Government’s stewardship of the economy over the past two years has been little short of catastrophic for our labour market. When the Government took office two years ago, they inherited a labour market that had recovered from the pandemic, although it still bore some of its scars, and what did they do? As my noble friend Lady Evans so powerfully explained, they immediately taxed employers for the act of hiring. Unsurprisingly, as we have heard, unemployment has risen rapidly ever since and now stands at just under 2 million, with over 1 million young people unemployed.

If business had not had enough already, the Government then introduced their business-busting Employment Rights Act, which their own impact assessment forecasts will cost employers at least £5 billion a year, with smaller businesses bearing much of the burden of course, further harming the prospects of the very people the Government claim to champion. Noble Lords opposite usually mischaracterise our arguments against the most damaging aspects of this Act as that we are somehow against workers’ rights. This is absolutely not the case. The simple fact is that the most fundamental right is to have access to a job in the first place. The argument we advance is that extending rights to the moment a worker enters the building for the first time, removing the flexibility that suited both employer and worker, and making employment unaffordable leads inexorably to the fact that too many aspirant workers do not even get a day one, never mind the rights that attach.

What has been the Government’s response to the unemployment that they have created? It is a youth jobs guarantee, under which they now propose to pay employers to hire the young people those employers can no longer afford to take on because the Government put up employers’ national insurance in the first place. You genuinely could not make it up. My noble friend Lady Evans rightly called it surreal; I think she was too polite.

Throughout this period, we have had nothing but confirmation of what Pat McFadden admitted in private: that in the Labour Party, every conversation is about who we can tax in order to pay benefits to others. That is precisely what has happened, with the benefits bill rising and rising, and disincentives to work multiplying with it. It became so serious that the Chancellor was forced to concede before the Treasury Committee in March that her jobs tax is responsible for the rise in youth unemployment—perhaps timed with an eye to saving her own job, which looks like another fail.

There was a rare moment of humility last week. The other place passed a Motion regretting the combination of the rise in employers’ national insurance, the impact of the Employment Rights Act 2025 and the regulations that make it harder for young people to get their first job. We now look to Mr Burnham to reverse the failed policies of the past two years, although nothing in his conduct so far gives us confidence that he will. Perhaps the Minister can tell us exactly what Mr Burnham thinks of the Government’s employment-related policies so far.

In the previous century, not a single Labour Government left office with unemployment lower than when they arrived. Every other Labour Government since, including the last two, have left with it higher. Unless the Government radically change course under their new Prime Minister, that unbroken and unenviable record looks set to continue.