Employment - Motion to Take Note

Part of the debate – in the House of Lords at 4:09 pm on 6th June 2019.

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Photo of Lord Northbrook Lord Northbrook Conservative 4:09 pm, 6th June 2019

My Lords, in 2010, when Labour left office, unemployment stood at 2.5 million. As my noble friend Lord Lupton has already noted, remarkably, every Labour Government have left office with unemployment higher than when they came into power. So I am very pleased today, a decade on from the worst recession since the 1930s, to welcome the latest employment figures.

It is clearly excellent news that at 76%, the employment rate is the joint highest on record, UK unemployment is at its lowest level since 1974 at 3.8%, and wages are rising higher than inflation, at their fastest rate for nearly a decade. Thanks to successive Conservative-led Governments, 3 million more people now enjoy the security of a job. According to the Office for National Statistics, the number of people in work is at the highest level since records began in 1971. By giving workers a pay rise through our national living wage, successive Conservative led-Governments have helped the UK economy recover.

Of course, there will be those who say that the increase in employment is down to the creation of part-time, unskilled work—but this is simply not borne out by the figures. More than 75% of the jobs created are in full-time work; only 3% of jobs are on zero-hours contracts, the exclusive terms of which the Government outlawed in 2015.

A year later, the Government commissioned the Taylor review into the changing labour market. The June 2017 report stated that the UK was “good at creating jobs”, but that there were a number of,

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

The report proposed a seven-point plan which recommended that a British national strategy for work should be explicitly directed towards the goal of good work for all.

While applauding the Government’s positive reaction to the Taylor review, I shall focus on an area that the report does not cover so well. The Migration Advisory Committee produced a recent report pointing out major skills shortages in the UK economy which it believes cannot be filled by the UK workforce. It states that migration rules should be relaxed. It believes that the shortage occupation list, whereby jobs are effectively allowed to jump the queue for workers from outside the European Economic Area, needs a big expansion. The suggested MAC list would cover 9% of jobs in the labour market, compared to approximately 1% currently. Alan Manning, chairman of the MAC, said:

“Today’s labour market is very different to the one we reviewed when the last SOL was published in 2013 … That is why we have recommended expanding the SOL to cover a range of occupations in health, information and engineering fields”.

The SOL is a useful reminder—an alarm bell, even—to government, industry and the education sector about the areas where the UK has a skills deficit. Some of the labour market shortages, particularly in engineering and health, have existed for decades and are clearly getting worse. It begs serious questions about the quantity and quality of technical and vocational training in the country, and whether enough thought has been given to planning for the long-term needs of the economy.

My noble friend Lord Bamford put the issue succinctly in his 2014 maiden speech. He compared the UK economy to that of Germany. Germany’s success, he said, was achieved,

“by having a coherent, long-term industrial strategy and by focusing on high value-added products. They did it by spending more on R&D than we do—70% more … Germany did it by supporting family businesses under its Mittelstand model”.

We should do likewise in Britain, where family businesses provide more than 9 million jobs—far more than public companies. Finally, and crucially, Germany did it by showing a real commitment to technical education. My noble friend said:

“Technical education is … especially dear to my heart. I believe that we have a duty to identify and nurture young talent”.—[Official Report, 10/6/14; col. 267.]

There is no better example of a successful family business in the UK than my noble friend Lord Bamford’s company, JCB, so he speaks with great authority.

Let us look at the current rules for non-EU citizens who wish to work or study in the UK. They need to apply for one of a number of visas. In my view, there are two main problems with the system. First, people now need to be paid at least £30,000 to apply for a tier 2 visa as an experienced, skilled worker; that figure is up almost £10,000 since 2011. This threshold appears senseless as it excludes skilled workers needed in quite a few job areas. Secondly, I understand that no tier 3 visas for unskilled workers are being given out at present. Will the Minister confirm this? Should there not be a shake-up in the tier 2 visa regime to allow shortages, for instance in the NHS, to be dealt with, and in the tier 3 visa regime to retain the seasonal workforce required by the agricultural industry, especially in the fruit and vegetable sectors?

In summary, I praise the Conservative-led Governments since 2010 for reducing the unemployment rate so successfully. I also compliment them on the Taylor review and their sensible reaction to it, while noting the CBI’s concerns. I am cautious about job losses in the motor industry and in large companies such as BT, and about how much worse matters will get if there is a no-deal Brexit. Finally, the Government need to look at the shortage of skilled and unskilled workers, as well as at the hugely important issue of technical training.