Employment - Motion to Take Note

Part of the debate – in the House of Lords at 2:48 pm on 6th June 2019.

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Photo of Lord Leigh of Hurley Lord Leigh of Hurley Conservative 2:48 pm, 6th June 2019

My Lords, why the focus on employment? I have always considered this to be central to our country’s success and quality of life. This fact was brought home to me by my right honourable friend Robert Halfon MP, who, having lost Harlow by 97 votes in 2005, went on to win well in 2010. He is disabled and not mobile. He told me the story that during his campaign he had to have a new tyre for his car. As he was waiting in his car, a large, heavily tattooed tyre-fitter came up to him with the greeting, “Oi! Are you the Tory? I want a word”. Rob admitted, with some temerity, that he was the candidate. “Well,” the fellow said, “I am voting for you lot this time”. “Why is that?” asked Rob. He replied, “Because I’ve got a job”. Jobs are central to our economic success.

This is a time when capitalism itself is being questioned and the siren song of socialism rings out from the party opposite—or, if not exactly from the noble Lords opposite, certainly from some of their colleagues in the other place. Frankly, I was horrified to read John McDonnell’s comments in the weekend press that he wants to replace capitalism with a system of common ownership and businesses run by workers’ votes. He has said publicly that his job is “to overthrow capitalism”. I hope all speakers will distance themselves from this aspiration as, meanwhile, Conservatives continue to believe that the market economy and the jobs it creates provide the best route from poverty to prosperity.

We have today 32.7 million reasons to be cheerful; that is the number of people currently in work, earning a wage, providing for a family and contributing to a community, which is 354,000 more people than a year before and the highest number since records began in 1971. The female employment rate stands at 71.8%, the joint highest on record, and the unemployment rate is currently down to 3.8%, the lowest since 1974—a remarkable achievement and cause for some optimism, as the UK continues to work through this difficult period for its political economy.

I called this debate for two reasons. The first is to celebrate these numbers, and I hope noble Lords will join me in so doing. The other is to probe them, to make sure that we are doing everything we can to future-proof our labour market, drive up the quality of work, create more high-paying jobs and, of course, increase productivity—something I feel sure that the noble Lord, Lord Haskel, will focus on—to improve the UK’s ability to compete globally. And there is more cause for optimism. To those who say these are the wrong sorts of job, either low quality or low wage, I would draw noble Lords’ attention to a recent report from the Resolution Foundation, which found that the proportion of workers on low wages is now at 17%, its lowest level since 1980. When this is combined with the Government’s progressive approach to tax policy, taking low-wage earners out of tax altogether, the picture is a compelling one for social mobility.

The shadow Secretary of State for Business recently described this as a “time of low wages”. I believe she could not be more wrong. That said, there are some underlying issues which we need to address to ensure that we drive up employment numbers and productivity, and that wages continue to grow. To their credit, the Government commissioned a review to look at the changing labour market. The Taylor review was quick to highlight the success of high employment and, as we have seen, that success continues apace. But it also concluded that there were:

“a number of persistent weaknesses in the UK labour market, particularly real wage growth and productivity performance”.

The Government have now responded, and I would be grateful if my noble friend the Minister could provide further updates in her remarks today. Since publishing the Good Work plan, the Government have moved to address wage growth and unfair working practices, to ensure in particular that agency workers receive the same wages as permanent staff doing equivalent jobs and more clarity from agencies on their entitlements. Indeed, the plan offers a comprehensive package to address unfairness, transparency and enforcement to help protect workers, and I commend it accordingly.

However, while the plan works to establish parity between agency workers in both pay and treatment, it says little about how we can drive wages up in the round while boosting productivity. The Chancellor, in his Spring Statement, referred to low wages and low productivity as “the twin demons”, as well he might. We are now seeing progress on low wages but can it be matched by progress in productivity? We now have a £37 billion national productivity investment fund, which I hope will go some way to address this. Investing in road, rail, airports and fibre-optic broadband must surely help with productivity. Upgrading our infrastructure is often overlooked and is overdue. Will the Minister offer a progress update on the deployment of this much-needed capital?

I would like briefly to return to a theme I have raised in this House before: whether our current measure of productivity has kept pace with the modernisation our economy has undergone. Services, not manufacturing, are now the mainstay of our economy, yet in my opinion they are still not properly accounted for in the metrics. We may be doing better than the headlines suggest. Also, as I have argued here before, full employment is bound to impact negatively on productivity as we employ the least productive people. I still do not like the measures used, particularly that of output per hour; it is misleading and bound to be an estimate, whereas the only hard figures that the Government publish, and which we can totally rely on—namely, tax receipts and employment rates—show a much better, if not rosy picture.

One thing we cannot do is punish and undermine those who do more than anyone to further the cause of employment: namely, businesses and entrepreneurs. Without a policy platform that supports business, we have no hope of sustaining near-full employment and continuing to drive up wages and productivity. Yet, strangely for an organisation that purports to care deeply about the least well off, Labour’s policy towards business would hurt those very people by killing jobs. I am talking about the policy of drastic hikes in corporation tax, a tax ultimately borne by workers through lower wages, and the leader of the Opposition’s pledge to reverse what he calls,

“tax giveaways on capital gains tax”.

It is telling that the Labour Party is often confused by tax, thinking of it as the Government’s money to give away when in fact, of course, it is individuals, entrepreneurs and businesses who create that wealth in the first place. Such tax hikes—that is what they are—would hurt investment and, through that, ultimately impair job creation and punish workers.

Likewise, the proposed hikes in income tax will, I am afraid, drive out employers, as will the reversal of two important measures: first, the changes made to allow employers to hire people knowing that, if it does not work out, they can be released; and, secondly, the changes to employment tribunal fees. I cannot overemphasise the importance of the first measure. As an employer myself, I can say that looking to increase our workforce is more likely to happen if we know that we can release employees in a downturn or if a new employee is not right for the job; this can take over a year. Change the time limit from the current two years, as Labour has indicated, and there will be a sharp fall in new employment; employers simply will not take the risk.

On the second measure, as noble Lords will be aware, the Supreme Court ruling that tribunal fees cannot be charged has led to a 165% increase in the number of single-claim cases in 2018 and a significant lengthening of the time these cases take to be resolved; this is in part because the judges who are specifically trained to sit in those tribunals were themselves let go. Will the Government commit to look again at this issue?

If we want full employment, high wages and high productivity, we have to combine smart labour market reform with comprehensive and consistent support for job creators. Broadly speaking, that is what the Government have done. In my opinion, the prospect of renationalisation—so that politicians of all people, not businessmen, will again run rail, energy and mail services—threatens failure and job losses. Today, we celebrate a record number of people in work and a record few out of it. This shows that, despite the present uncertainty, the fundamentals of the UK economy are strong. We need to ensure that everyone can secure not only a job, but a high-quality, higher-wage job that will bring prosperity to their family, their community and our country.

With noble Lords’ permission, before I sit down, I would like to remind your Lordships that this is the last parliamentary day with the current leader of the Conservative Party. My nomen dignitatis relates to the village of Hurley, which is close to the town of Maidenhead where I have lived for some dozen years, so I am honoured to have known our Prime Minister well, personally, for many years. I hope noble Lords will allow me a brief moment to express my thanks to her for all that she has done and tried to do for our country, and to express my personal view that history will record that she was dealt an impossible deck of cards but no one could have devoted more selfless effort to public service than her. She leaves her post with nine years of continuous growth, with a first quarter of growth greater than France, Germany and Spain and indeed projected growth for the rest of the year likewise. No one loves her country as she does, and very few have given as much. She has of course given us record full employment, and I salute her publicly for that.

I very much look forward to the contributions from all noble Lords today.