Workers (Economic Affairs Committee Report) - Motion to Take Note

Part of the debate – in the House of Lords at 1:18 pm on 8 February 2024.

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Photo of Lord Bilimoria Lord Bilimoria Crossbench 1:18, 8 February 2024

My Lords, my first public appointment was 25 years ago, when I joined the New Deal taskforce in what was then the Department of Employment. It then became the national employment panel in the Department for Work and Pensions. Our sole purpose was getting people from welfare to work. Right up front, I ask the Minister: is there such an initiative now in government, with the pure objective of helping people get from welfare to work? Work is good not only in enabling people to earn money, but for well-being, health and mental health, which the noble Lord, Lord Layard, spoke about.

I thank the noble Lord, Lord Bridges, and his Economic Affairs Committee for its report, Where Have All the Workers Gone?, published in December 2022, as the noble Baroness, Lady Noakes, said. As the noble Lord said in his excellent opening speech, the answer is that the UK’s workforce has been squeezed by four factors: retirement among those aged 50 to 64, increasing sickness, changes in the structure of migration, and the impact of an ageing UK population.

We have had the latest labour market statistics, hot off the press on 5 February, and we know that unemployment is now at 3.9%. That is fantastic; it is a really low rate—it is back to where it was before the pandemic. However, we have this figure of 9.25 million aged 16 to 64 who are economically inactive, revised up from 8.68 million. The report says that the Learning and Work Institute said that

“since the pandemic if the UK had matched the economic activity rate growth of Australia, France or Netherlands, there would be an additional one million people in the UK workforce”.

The noble Lord, Lord Skidelsky, in his excellent speech, pointed to page 13 of the report, which has graph after graph of country after country showing that other countries have recovered, while we are still up there, with our graph very high, showing economically inactive people. So we have not done as well as other countries have done.

My friend Andy Haldane, the chief executive of the Royal Society of Arts, of which I am a fellow, has said:

“Having been a strong tailwind for two centuries, health is now a strengthening headwind to UK economic growth, for perhaps the first time since the Industrial Revolution”.

The noble Lord, Lord Skidelsky, said in his speech that Britain is the sickest country in Europe.

Every day now in the press we hear about the crisis in dentistry. The UK spends barely £3 billion of the NHS budget on dentistry. That is shocking. In real terms, it has fallen by 33%, because it is at the same level as it was in 2010, when the current Government came to power. The overall national health budget is £170 billion. Why are teeth less important, given the agony that every one of us has experienced with teeth? Dentistry is not free at the point of delivery; you have to pay for it, and it is expensive to go privately. The NHS is meant to provide a service for everyone on demand, but the reality is different. The latest is that nine out of 10 practices are not accepting new adult patients.

As the chancellor of the University of Birmingham, one of the proudest moments of my tenure was when we opened our brand-new dentistry school on the old Pebble Mill BBC site, and Her Majesty Queen Elizabeth and Prince Philip, the then Duke of Edinburgh, came to open that school. Do you know that we have now only 1,000 dentistry school places available each year? If we do not put health first, we will be the sickest nation in Europe.

The report refers to the furlough scheme and the effect of lockdown on early retirement. As president of the CBI—the Confederation of British Industry—I was one of the first people during the pandemic, as early as August 2020, to ask the Government to provide free lateral flow tests to everyone, at home and in the workforce, therefore preventing lockdowns. I am convinced that we could have avoided the second and third lockdowns if we had used those lateral flow tests earlier. Noble Lords may remember that, by the time we started to use them, in December 2021 and January 2022, we ran out of them, because we were using them so much. Oxford University conducted a test with schools in the summer of 2021—it was published in July—proving very clearly that effective use of lateral flow tests could control the spread of the disease. We did not do it early enough—and, to my knowledge, the Covid inquiry, which is costing so much money and taking so much time, is not even looking into that aspect. So many operations could have taken place, and so many children could have not missed out on school and university, and we would not have a 30 million waiting list at the moment.

On immigration, the committee noted that the end of EU free movement and the introduction of the UK’s points-based visa scheme changed the structure of UK immigration. The committee said that many lower-paid roles in the economy, such as in agriculture, hospitality and care, had previously been filled by EU workers, while the new immigration system prioritises skilled workers. The report said that this had

“contributed to a mismatch within the labour force, accentuating labour shortages in these sectors”.

In my own business of Cobra Beer, in the hospitality industry, we supply 7,000 restaurants—a £54 billion industry in terms of tax receipts alone, employing 3.5 million. The changes to the immigration system, set to be implemented in April, mean that the minimum salary needed to get a skilled worker visa will rise from £26,200 to £38,700. That will further shrink the talent of good people that the hospitality business needs. The reality is that 75% of hospitality jobs are domestic, but we still need to recruit from abroad. How is our economy meant to grow without access to labour?

The noble Lord, Lord Bridges, spoke about the record 740,000 net migration figure. However, as chancellor of Birmingham University, president of UKCISA and co-chair of the All-Party Parliamentary Group for International Students, I ask why the Government keep including international students in the net migration figure. Other countries treat them as temporary migrants; we should exclude international students from the net migration figure.

We have a low-growth economy, high debt at 100% of GDP, high government spending and low productivity, as the noble Lord, Lord Londesborough, said, and what nobody else has mentioned is that we have the highest tax burden in 70 years. High taxes and freezing the thresholds affects everybody: it is a disincentive to work. We need to reduce our taxes, which will help people to get back to work as well. I hope that I have now answered the mystery posed by the noble Lord, Lord Skidelsky, of where all the workers have gone.