Employment Rates

Margaret Greenwood Excerpts

Wednesday 6th June 2018 Westminster Hall

[Margaret Greenwood (Wirral West) (Lab)]

It is a pleasure to serve under your chairmanship, Sir Roger. I begin by congratulating the hon. Member for Mid Dorset and North Poole (Michael Tomlinson) on yet again securing this debate, and on his work on youth employment as chair of the all-party parliamentary group on youth employment. We have heard some very interesting contributions today, including from the hon. Gentleman himself, and I really look forward in particular to the group’s work on care leavers and prison leavers, who are a matter of concern; I am sure he shares that concern.

We heard a good contribution from my hon. Friend the Member for Plymouth, Sutton and Devonport (Luke Pollard), who quite rightly raised the issues of in-work poverty, insecure contracts and food bank use, all of which have risen, as well as discussing how zero-hours contracts devalue the rights of employees. He also spoke about the importance of looking at a broad range of measures and at the lived experience of work; the testimony he received from his constituency, via his Facebook page, was very interesting.

My hon. Friend the Member for Warwick and Leamington (Matt Western) made a useful intervention about the question of the availability of hours for people in insecure work, and said that rather than looking at a “jobs miracle” we are looking at a “jobs mirage,” which I thought was a pertinent way of describing the situation.

I welcome the fact that the hon. Member for Berwickshire, Roxburgh and Selkirk (John Lamont) spoke about the particular issues that rural communities face. He also called for the quality and quantity of work that is available to be a focus for the Government across the board.

The hon. Member for Ayr, Carrick and Cumnock (Bill Grant) said that he did not agree with banning zero-hours contracts. I have to disagree with him on that, and I remind him that the number of people on zero-hours contracts is heading towards a million, so it really is a significant issue and I will touch on it later in my speech.

The hon. Member for Edinburgh North and Leith (Deidre Brock) quite rightly called for fair pay—enough for people to live on—and pointed out that the national living wage is not, of course, an actual living wage.

Increases in employment are welcome, but we also need to look beyond the statistics, as many Members have said, to see what the world of work is really like. Average real pay has still not returned to the level it was at before the financial crisis, and although inflation has started to fall, it has nevertheless outstripped wages for almost all of the period since 2010. Public sector workers have been particularly badly hit; they saw their pay frozen for two years, in 2011 and 2012, and since then any increase has been capped at 1% a year, regardless of the rate of inflation.

Then, of course, there is a generation of people who were in their twenties at the time of the financial crisis, so they have spent almost all of their adult life in this period of austerity. They are now in their thirties—an age when many of them will have young children—yet median pay for people in that group is nearly 9% below the level that it was at in April 2008.

The Resolution Foundation predicts that this decade is likely to be the weakest decade for real pay growth in almost two centuries. Some 20% of Britain’s 33 million workers earn £15,000 a year or less, and a recent report by the Centre for Social Justice forecast that the pay of those workers in particular would be squeezed over the next decade, as a result of trends such as the growth of the gig economy, automation and global competition. So can the Minister tell us what action the Government will take to improve the prospects of low-paid workers and what investment they will make in skills?

Around 8 million people are living in poverty in the UK, even though at least one person in such households is in work, and of course many people move in and out of low-paid work. Universal credit was originally aimed at smoothing the transition into work and at making work pay, but the cuts to work allowances announced in the summer Budget of 2015 severely damaged the work incentives that universal credit offers.

Reports by independent organisations such as the Resolution Foundation and the Equality and Human Rights Commission have made it clear that the increase in the national living wage and personal allowance do not compensate for the cuts to social security since 2010 for people on low income, with disabled people and single parents being hit especially hard.

According to a TUC report, the public sector pay cap, coupled with cuts to in-work support, means that the number of children in working families growing up in poverty will be 3.1 million this year, which is 1 million higher than in 2010. Will the Government listen to the call from the TUC and Labour to reverse the cuts to work allowances in universal credit and abolish the pay cap across the public sector, which Labour has committed to doing?

There are deep inequalities in the labour market, on the basis of where people live, ethnic background, gender, age and disability. The Government have repeatedly failed to address those inequalities, despite the Prime Minister’s fine words outside No. 10 Downing Street on coming to power. More than eight out of 10 companies employing more than 250 staff—such companies were required to report on their gender pay gap in April—paid men more than women and three out of 10 of them had a gender pay gap higher than the national median of 18%—in some cases it was over 50%. So now we know about those companies, but they will not face any action as a result, except perhaps reputational damage. Labour would introduce fines for companies that have a high gender pay gap that they have failed to reduce. Are the Government going to act on the gender pay audit, and if not, why not?

According to the Prime Minister’s race disparity audit, around one in 10 adults from a black, Pakistani, Bangladeshi or mixed background are unemployed, compared with one in 25 white British people. There are also significant differences in the kind of work that people do. For example, more than two in five people from a Pakistani or Bangladeshi background work in low-skilled occupations. Audits are important to tell us what the facts are, but we need action to address the issues they raise. How are the Government going to do that?

I turn to the situation for disabled people. Back in November, the Chancellor disgracefully sought to somehow blame disabled people for the UK’s poor productivity record. That was particularly shocking given the Government’s approach to supporting disabled people into work. The Work and Pensions Committee has highlighted that funding for specialist employment support for disabled people will fall substantially, from around £1 billion under Work Choice and the Work programmes to £554 million over the lifetime of the Work and Health programme.

A study by WPI Economics for the Employment Related Services Association estimates that the number of disabled people receiving specialist employment support will drop from around 300,000—the number it was between 2012 and 2015—to only 160,000 between 2017 and 2020. That would be a cut of around 50%, so I would be grateful if the Minister could comment on that, as it would not only be clearly detrimental to the lives of many disabled people, but would make no economic sense. Research by Scope suggests that a 10% increase in the number of disabled people in work would increase GDP by £45 billion by 2030 and benefit the Exchequer by £12 billion. If the Chancellor really wants to address the UK’s productivity problems, he might like to give those figures some thought.

The majority of employment support for disabled people will be provided through Jobcentre Plus by general work coaches. If the Government are going to take employment support back in-house, will they look again at providing specialist support, rather than adopting a generalist model for work coaches?

With youth employment, the figures are less rosy. One in eight young people aged 16 to 24 are unemployed, which is much higher than the overall unemployment figure. The number of young people who are economically inactive rose over the past year. That is a matter of real concern. Just over 11% of 16 to 24-year-olds, or 808,000 young people, were not in education, employment or training—NEET—in the final quarter of 2017. Only about two fifths of those young people were registered as unemployed. The rest were economically inactive and hidden from the benefits system. The proportion of certain groups that are not in education, employment or training is shockingly high. Some 30% of disabled young people and 40% of care leavers are NEET, as compared with 9% of other young people. The Children’s Society has made a strong case for there to be a specific marker for care leavers in universal credit, as in legacy benefits, so that we can measure their progress. Will the Minister commit to doing that?

Since April 2017, young people aged 18 to 21 claiming universal credit receive employment support through the youth obligation. After six months of what is supposed to be intensive support, they are required to take up an apprenticeship, training or a work placement. However, organisations such as Centrepoint are concerned that young people who face the greatest challenges in finding work—for example, care leavers—might need longer than six months and more personalised support to get to the point where they can do that. The all-party group has also made that point, stressing the importance of young people with greater challenges being given support in the first instance to develop basic skills. Can the Minister tell us what percentage of young people have found work through the youth obligation so far? Will he look at the case for personalised support for young people on universal credit through specialist work coaches?

The European social fund is a vital source of funding for employment support at the local level for disabled people and young people who are NEET, for example. In the present funding round for 2014 to 2020, the UK is receiving around £500 million a year, but ESF funding is important not only for the direct support it provides, but for attracting funding from other sources. The Government have announced that they will create a shared prosperity fund to replace the ESF, but time is running out to have a successor ready in time. They have said that they will publish a consultation some time later in the year, but no timescale has been announced. Can the Minister tell us when the consultation will take place? Can he tell us what he is doing to ensure that there will be no gap in the provision of employment support when ESF funding comes to an end?

Young people are also more likely to be working part time, in temporary employment or on a zero-hours contract than workers who are older. It is little wonder that the chief executive of the Financial Conduct Authority warned last year about levels of debt among young people that are built up in just trying to cover basic bills. Women are especially likely to be in part-time or insecure work. Some 55% of people on a zero-hours contract are women, and 45% are men. Similarly, a high proportion of people from some ethnic minority communities are more likely to be in part-time or insecure work. According to the Government’s race disparity audit, more than one in four Pakistani and Bangladeshi workers were employed in distribution or in hotels and restaurants, and one in five were in transport and communications industries, where low-paid, insecure work is common. Around 900,000 people are on zero-hours contracts.

More than half the zero-hours workers in a TUC survey said that they had shifts cancelled at less than 24 hours’ notice. People with caring responsibilities simply cannot afford to take shifts at such short notice. Having made provision for childcare, to then have a shift cancelled is particularly frustrating and expensive. Three quarters of the people responding to the survey said that they had been offered shifts at less than 24 hours’ notice, and a third said that they had been threatened that they would not be given shifts in future if they turned down work. How are people supposed to manage their finances and their lives when they are on zero-hours contracts—when they do not know how much money will be coming in each week and how much childcare they are likely to need? Will the Government ban exploitative zero-hours contracts, as Labour would?

The hon. Member for Berwickshire, Roxburgh and Selkirk spoke of the importance of the work of self-employed people. In evidence to the Work and Pensions Committee in January, the director of universal credit at the Department for Work and Pensions said clearly:

“Self-employment is a cause of in-work poverty.”

We should all be alarmed by that statement. The number of self-employed people has increased. They now make up about 15% of the workforce, or 4.8 million. That figure is for 2017, and compares with 12%, or 3.3 million, in 2001. The design of universal credit means it can fail to protect self-employed people on low income from poverty. Under the minimum income floor, self-employed people claiming universal credit are assumed to be earning the equivalent of 35 hours at the national living wage after a year, even though in many cases their earnings may be much less. That is exactly why they need to claim universal credit.

In February the Office for Budget Responsibility estimated that by 2022-23 more than two thirds of self-employed people claiming universal credit would lose out from the minimum income floor by an average of £3,000 a year. Someone who is self-employed, but on exactly the same annual income as someone who is an employee, can be entitled to less universal credit because it fails to take account of the fluctuating earnings that are a basic characteristic of self-employment.

In conclusion, high rates of employment should be good for those who are employed. They should mean higher wages and more security, but in reality people can face years as agency staff on temporary contracts, and zero-hours workers can have shifts cancelled at less than a day’s notice, with all the insecurity that that brings. It is little wonder that the TUC has reported parents being penalised by employers for asking for flexibility for family reasons, such as for simply wanting to take annual leave when their child is sick. Work should be a route out of poverty, but recent research by the Living Wage Foundation reveals that more than a third of working parents on low incomes have regularly skipped meals because they are short of money, and almost half have fallen behind on household bills. On coming to power, the Prime Minister promised outside Downing Street to be on the side of families who were just about managing, but it is clear that her Government are failing to do that. High employment rates are welcome, but they do not tell the whole truth about most people’s experience of the world of work.

[The Minister for Employment (Alok Sharma)]

It is an absolute pleasure to serve under your chairmanship, Sir Roger. I congratulate my hon. Friend the Member for Mid Dorset and North Poole (Michael Tomlinson) on securing, for the second time, this important debate on recent trends in employment. He made a fine speech, as did colleagues from all parts of the House. I have time in this debate to respond to a lot of the points that have been raised, and I will aim to do that. I will also come back to some of the points that my hon. Friend raised.

Sir Roger, I think you and I are probably the only Members here who were in the House in 2010, when the Conservative-led Government came into office. One of their first acts was to introduce an emergency Budget. At the time—both during the debate and subsequently—there were many siren voices on the Labour Benches that warned with great conviction that the Government’s policies would lead to a big increase in unemployment. Well, those doom-laden predictions have not come to pass; as Members on both sides have pointed out, we have seen strong jobs growth.

The hon. Member for Warwick and Leamington (Matt Western) is no longer in his place, but, frankly, to talk about this jobs miracle as a mirage is insulting. It is insulting to the more than 3 million people who now have a job as a result of the jobs created since 2010. It is also insulting to the employers—the hard-working companies and organisations that have created those jobs.

[Margaret Greenwood]

Will the Minister comment on the 900,000 people who are on zero-hours contracts and cannot manage their lives? They do not know how much money they are going to earn. They do not know how much childcare they need. It is a state of real insecurity, creating anxiety for a lot of people, and it is not good for the economy either.

[Alok Sharma]

I will of course come on to discuss precisely those points, because they are important.

The labour market statistics published last month by the independent Office for National Statistics—I point out once again to the hon. Member for Plymouth, Sutton and Devonport (Luke Pollard) that it is independent—show that employment in the United Kingdom reached a record high in the last quarter of 75.6%. That was the 17th new record employment rate since 2010. Employment is up by more than 3 million since 2010. I place on record my thanks, as my hon. Friend the Member for Mid Dorset and North Poole did, to all the businesses and organisations across our constituencies that have created those jobs. The unemployment rate has fallen to 4.2%, which is a 40-year low. As my hon. Friend pointed out, there are now more than 800,000 vacancies across our economy.

Those who cannot quite accept that positive trend will say that all those jobs are low paid and temporary, but that is absolutely not true. Some 70% of the increase in employment has been in higher skilled occupations that pay higher salaries. Three quarters of them are full time and permanent.

A point was made about where those jobs are created and whether they are all in London and the south-east. I can confirm that 60% of the growth in private sector employment since 2010 has been outside London and the south-east.

Various colleagues, including the hon. Member for Wirral West (Margaret Greenwood), made a point about zero-hours contracts. Such contracts represent less than 3% of all people in employment. The hon. Lady is right to say that that is around 900,000 people, but the number is down on the year. On average, someone on a zero-hours contract usually works 25.2 hours a week. Again, of those who stated a preference—to be clear, this is in the ONS’s own labour force survey—only 30% of those on a zero-hours contract stated that they wanted to work more hours. So when the hon. Member for Plymouth, Sutton and Devonport talks about only a small number of people valuing such flexibility, I have to say that that is not what we see from the independent figures—a point well made by my hon. Friend the Member for Ayr, Carrick and Cumnock (Bill Grant).

[Margaret Greenwood]

I thank the Minister for giving way again; he is being very generous. Is he aware of the issue of sexual harassment in the workplace among staff on zero-hours contracts? What advice would he give to a young woman on such a contract who is experiencing that? Where can she go for support? How can she tackle it, and how can she remain employed, but in a safe environment?

[Alok Sharma]

Frankly, any kind of bullying and any such acts are completely unacceptable, whether someone is on a zero-hours contract or a full-time contract. As the hon. Lady knows, there are avenues open to people, but if she has specific cases, she is welcome to come and talk to me about them. It is important that we have flexibility in work patterns, which is what zero-hours contracts allow, but it is also right that the Government have banned exclusive zero-hours contracts.

We have discussed employment outcomes by groups. If we look at some of the groups that have historically been under-represented in the employment market, we have seen a significant improvement in their participation in the workforce. The hon. Member for Edinburgh North and Leith (Deidre Brock) welcomed the record high of 71.2% in the female employment rate, which I of course welcome as well. There are now more than 3.8 million people from ethnic minorities in work—an increase of 1.1 million since 2010. The ethnic minority employment rate currently stands at 65.1 %, which is a record high. However, I completely accept that the employment gap between ethnic minorities and the white population is too high, at 12%, and we are working to address that. If I have time, I will talk about the response to the race disparity audit.

My hon. Friend the Member for Ayr, Carrick and Cumnock talked about disabled people. We have seen a welcome rise in the employment of disabled people—600,000 in the past four years—to around 3.5 million people today. He also talked about the Disability Confident scheme. More than 6,000 employers are involved in that and in Access to Work support. That is really important in encouraging everyone in our country who aspires to work to have an opportunity to do so.

My hon. Friend the Member for Mid Dorset and North Poole made a powerful opening speech and highlighted the excellent work of the all-party group on youth employment, which he chairs. He has shared with various ministerial colleagues reports from inquiries that the APPG has conducted. Of course, I would be delighted to come to the APPG to discuss its work and to meet the youth ambassadors, who I am sure will ask challenging questions. As my hon. Friend highlighted, we have made progress on youth employment. The employment rate for those not in full-time education stands at 74.9%, and youth unemployment is down by 40% since 2010.

My hon. Friend made international comparisons, some of which I will repeat. The UK youth employment rate is 18.3 percentage points above that of the euro area and more than 16% above the EU average, but of course I agree with him that we need to do more. We therefore have a skills agenda, with a focus on apprenticeships and technical education. Colleagues have talked about the youth obligation support programme, which started in April last year, and about the ability to get work experience. We have also been encouraging work-based academies, which I think have been very successful.

My hon. Friend talked about whether there should be better working across Government on these issues. Of course, many are joined up. I can confirm that we have a number of taskforce initiatives where Ministers work together. He will be pleased to know that straight after this debate I will be having a meeting with the Minister for Apprenticeships and Skills to discuss precisely these issues.

The Government are funding lifelong learning pilots, investing in a national retraining scheme, and delivering basic digital skills and careers advice for older workers who need them. We are also ensuring there is support to assist those with a health condition or disability, to make sure they are able to access the support they need to move into work.

On the cost of living, I know that all Members will welcome the fact that the ONS reported last month that salaries are starting to outpace inflation. I certainly want to see that very welcome trend continue. We absolutely recognise that people need additional support with living costs, and we have been providing that support. We have recognised that high childcare costs can affect parents’ decisions to take up paid work or increase their working hours. That is why, by 2019-20, we will be spending around £6 billion a year on childcare support. That includes 30 hours’ free childcare for working parents of three and four-year-olds. Within universal credit, claimants are eligible to claim up to 85% of their childcare costs. The outcome from independent evaluation in areas of early introduction shows that, with increased childcare support, parents are able to work more flexibly and increase their hours. We are championing shared parental leave and have introduced a right to request flexible working.

My hon. Friend the Member for Berwickshire, Roxburgh and Selkirk (John Lamont) welcomed the increase in personal allowances, which means that a typical basic rate taxpayer now pays more than £1,000 less in income tax than in 2010. We also introduced the national living wage in 2016, which increased by 4.4% this April. Thanks to the national living wage, full-time minimum wage workers have had a boost of £2,000 since 2016.

Numerous colleagues, including the hon. Members for Edinburgh North and Leith and for Plymouth, Sutton and Devonport and my hon. Friend the Member for Berwickshire, Roxburgh and Selkirk, talked about job quality and the Matthew Taylor review. Although we need to continue to work to maintain high levels of employment, I absolutely agree that we must also address the important issue of job quality. Among its recommendations, last year’s Taylor review asked the Government to focus on the quality of work and to identify a set of measures to evaluate job quality.

A strand of the Government’s industrial strategy has a focus on the creation of good jobs and greater earnings power for all, so the Government have outlined five foundational aspects of good work: overall satisfaction; good pay, which includes perceptions of fairness relative to one’s peers; participation and progression in the workforce, which includes the ability to work flexibly and acquire new skills; wellbeing, safety and security at work; and voice and autonomy in the workplace. It is self-evident that if people feel a sense of control over how they carry out their job, they will generally feel much more positive about it. The Government are working with experts to identify a set of measures against which we can evaluate quality of work, and I certainly look forward to the outcome of that work.

I have time to go through a number of points that colleagues have raised. My hon. Friend the Member for Mid Dorset and North Poole talked about the hospitality industry, and we absolutely want to see a strong and vibrant hospitality sector. I recently met Brigid Simmonds, chief executive officer of the British Beer & Pub Association, to talk about the hospitality sector. In February this year, the Department for Work and Pensions ran the annual Hospitality Works campaign, which aims to raise awareness of the thousands of great career options that exist in the sector and to showcase some of the key employers we work with.