Brexit and the Labour Market (Economic Affairs Committee Report)

Lord Shipley Excerpts

Thursday 8th February 2018 Lords Chamber

[Lord Shipley (LD)]

My Lords, we should be grateful to the Economic Affairs Committee for undertaking this work. As the noble Lord, Lord Forsyth, said, it has taken a while for the report to be debated in the Chamber, but there is an advantage in that, in that we can review the progress made by government and review Brexit as a whole in terms of the labour market. Yesterday’s revelations about lower forecast growth are deeply worrying, not least for my region, the north-east of England, which is very dependent on exporting to the European Union. The evidence of yesterday’s official report suggests that it might be helpful if the Economic Affairs Committee would consider doing some further work. This report began its life, I think, largely on the subject of migration. It has covered other things but actually, as the noble Lord, Lord Darling, pointed out, a much broader impact on the labour market now needs to be considered.

There are two specific recommendations in the report that I thought were particularly important. The first has been mentioned: it is the recognition that any new system for controlling immigration from the European Union must avoid the blunt definition of high-skilled work that the current system for non-EU migration employs. That is very important, because job skills matter, not just degrees.

Secondly, I was struck by the reference in paragraph 8 of the summary of conclusions and recommendations of the committee’s 2008 report on immigration which said that the employment of migrant workers could lead to businesses neglecting skills and training for British workers. This report says that the committee was prescient, and indeed it was. As the example of nursing highlights—there are many other examples—and as this report says, training for the domestic workforce needs urgently to be given a higher priority.

The aim of the British Government should be to employ more UK residents in better-paid jobs; that is our primary duty. Therefore, the Government are right to say in their reply to the committee in November that there needs to be,

“a genuine partnership between business and the government to unlock the potential of our young people and adults and deliver the skilled workforce that employers and the economy need”.

Indeed.

We would all agree with that, but I noticed a recent survey by the Lloyds Banking Group which says that more than two-thirds of construction companies are investing in staff development and just over half are setting up apprenticeship schemes. That begs an important question: what are the rest doing, given the labour shortage in the construction industry? I do not understand why apprenticeship starts have fallen by 25% in the third quarter of 2017 compared to the same period a year before. That skills gap must be plugged if we are to hit the construction target of 300,000 homes—which, I remind the House, is a net not a gross figure. We have an ageing workforce in construction as fewer young people are trained; a third of British-born construction workers are now over the age of 50.

I heard on the radio this morning a discussion of the importance to tourism of inward migration from the EU. Our major areas of tourism in the UK are hugely dependent on EU nationals. It is the Government’s objective to expand and grow tourism. When the Government produce their proposals on immigration, they must be clear how they will meet the labour needs of tourist areas, given that unemployment is very low in most of our major tourist areas and the higher rates of unemployment are far from those areas.

The report talks a lot about the problems faced by the health service, which I shall not repeat. Suffice it to say that we are hugely dependent on EU workers, and when the BMA tells us that nearly half of EEA doctors surveyed are considering leaving the UK we should be concerned.

I return briefly to construction. I was impressed by a report by the Federation of Master Builders which says that more than two-thirds of construction SMEs are struggling to hire bricklayers and 63% are struggling to hire carpenters and joiners, and that those are the highest figures since records began in 2008. It also says that the number of firms reporting difficulty hiring plumbers and electricians is very high at 48%, 46% have problems hiring plasterers and 30% have problems hiring floorers. Those are all at record highs. Noble Lords may visit the exhibition by the construction industry on the Committee Corridor. On one board, it says that the construction industry plans to expand by 1.7% every year for the next five years, which begs the question of where the labour force will come from.

I accept the logic of the submission of the Federation of Master Builders to the Government that, without skilled labour from the EU, the skills shortages that we will face will be considerably worse. Having said that, of course we need to encourage more young British people to train as construction workers. I think that the current apprenticeship system for construction is intrinsically flawed. It seems to favour 16 to 18 year-olds and to have a strong gender bias. That statement came from a report written after a conference held in Wales. There is an issue with the current apprenticeship system. Could we get the construction industry to work more closely with schools to encourage younger children to be attracted into an apprenticeship in construction? Would the Government also look at a further incentive for colleges to offer construction courses? Not all courses run by further education colleges cost the same to run, and construction is notoriously expensive.

Very briefly, I will make two points on immigration. I will not repeat what has been said about immigration and foreign students. The noble Lord, Lord Forsyth, said himself that we had to count such students separately, and indeed we do. There was mention earlier of regional immigration. In the absence of an immigration Bill, the Government have said that they will not introduce a regional immigration system for Scotland and London but that there will be a UK-wide immigration system taking account of the different parts of the UK. I hope that the Government will look a little further at that because the needs of London and Scotland may prove more complex. However, different parts of England, Wales and Northern Ireland may have very specific needs. I hope that the Government will give greater clarity on this issue because it could matter, particularly in areas such as tourism, which I addressed a moment ago.

Finally, because we are debating Brexit and the labour market, there are issues around employment rights post Brexit. We need to protect the European working time directive, and I hope that the Government will confirm that not only EU-derived equality, employment, and health and safety standards will remain in place and will not be diluted in the future. Issues around health and safety standards, rights for parents and carers, and pay all matter profoundly and I hope Ministers will be able to confirm that those protections will stay in place.