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

Part of the debate – in the House of Lords at 1:57 pm on 8 February 2024.

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Photo of Baroness Sherlock Baroness Sherlock Shadow Spokesperson (Work and Pensions) 1:57, 8 February 2024

My Lords, I thank the noble Lord, Lord Bridges of Headley, for introducing this debate and all members of the committee for their hard work. Having heard many of them in action, I think the noble Lord’s chairing skills must be fine indeed. I imagine it was a lively committee, as the noble Lord, Lord Griffiths, described it—I would have liked to have been a fly on the wall at times.

I found the report fascinating. It had that combination of focus and sheer intellectual curiosity that characterises the best of the reports that come from this House. I hope it will prod the Government to take the opportunity to consider some of these things in a way and to a depth that they might not otherwise have done. It is a shame, as the noble Baroness, Lady Noakes, pointed out, it has taken us so long to discuss the report, because there is so much in it and it would have been even more helpful had we discussed it at the time.

“Where have all the workers gone?” is still a great question, and clearly still relevant. After all, employment levels in the UK have still not reached their pre-pandemic rates, unlike those in other countries—a point made by my noble friend Lord Chandos. Vacancies are still above pre-pandemic levels and so is economic inactivity. We will maybe get a better sense of things when the Labour Force Survey’s reweighted data come out, and I take the points made about the difficulties in getting good data. However, the noble Baroness, Lady Kramer, is right that the report is at least pointing us in the right direction. If we look at what the ONS said this week about the likely impact of the reweighting, it is clearly pointing us towards the fact that we have a bigger, sicker workforce, and that our employment rate is even lower than previously thought. It also looks as though there are at least another 100,000 more people out of work due to long-term sickness than previously thought—and previously it was at a record high.

The committee’s report answers its own exam question by pointing to four drivers, each of which I will pick up briefly. First, I will pick up the point made mainly by the noble Baroness, Lady Noakes, about the DWP review into workforce participation. This was announced in the 2022 Autumn Statement and never mentioned again. It simply did not appear in the government response to the committee. I pay tribute to the noble Lord, Lord Bridges, who did his best to track it down, having written to the Secretary of State to ask for an update and a publication date. The response from the Secretary of State, in his letter of May 2023 to the noble Lord, Lord Bridges, was frankly extraordinary. Simply to point to a bunch of measures in the spring budget and declare that that

“represents the conclusion of my review” is just astonishing.

Does the Minister not think it a touch unorthodox for a document such as the Autumn Statement to announce a review but for Ministers to then refuse to give any information about its terms of reference, its work or its findings, even to a committee of this House? When pressed on the matter, they simply pointed to a list of Budget measures and said, “Oh, that’s it”. Really? It ended up making a mockery of the committee’s recommendations, because, not unreasonably, it thought this was an ongoing piece of work. The committee made lots of recommendations pointing to a review, only to find that apparently it had happened and we had not noticed it. Can the Minister please explain to the House what is going on?

Having got that off my chest, I will come back now to the content of the report. On the issues around early retirement, there have been some very interesting comments both here and in the report. As we heard from my noble friend Lord Chandos, the committee seems to have gathered evidence around two broad explanations: that the Covid years gave people a taste for life beyond work, and that our flexible pension access arrangements, turbocharged by the recent pension freedoms, made this possible. In other words, Covid made people think they would like to retire and the pension situation meant that they could—or at least some of them could.

I take the points given for colour by the right reverend Prelate the Bishop of Bristol that Covid had more complex relationships than we yet properly know. I suspect quite a lot of people were traumatised in ways that are only beginning to surface down the line. That may be having effects that we have not properly begun to understand. I also take the point made by the noble Lord, Lord Balfe, that one of the things that defines work and separates it from activities we choose is choice. That is pretty important to making such choices, and there is not a lot that the Government can do about that; nor, as the noble Lord said, can the Government stop people using their savings in general. However, the state has a legitimate interest in savings to which the taxpayer has contributed, by giving tax relief on pension contributions, so I am interested to hear what the Government have to say about that.

The Government response sounded as though they felt that the retirement issue was not that big of a deal. Certainly, the most recent September stats show a drop of 2.5% in those giving “retired” as the reason for leaving the labour market, but that still leaves almost a third of all those who are leaving. It is not insignificant, so I hope that is being thought about in some depth in DWP. I take the point of the noble Baroness, Lady Noakes, that, above anything else, there is an apparent lack of curiosity on the part of the Government as to what is going on, and I find that disappointing. I hope the Minister can tell us where their thinking is on that.

Sickness as a cause of economic inactivity has been raised by many noble Lords. It is worrying that the number out of work due to long-term sickness is now either at an all-time high of 2.6 million or at an all-time high of 2.8 million, depending on which figure is picked. But it is big, and it is more than twice what it was in 2010-11. We also now have more people who cannot work fully. The Health Foundation reports that 3.7 million people in work have a health condition that limits either what they can do or how much work they can do. That is also up by 1.4 million over the last decade.

As my noble friend Lord Sikka said, we also have a healthcare problem, with waiting lists for hospital appointments spiking since the pandemic. We do not yet have clear data on causal relationships. However, when the ONS figures show that almost a fifth of those aged 50 to 64 who left work since the start of the pandemic reported that they were on a waiting list for NHS medical treatment—which is noticeably higher than the average—we ignore that at our peril.

There is also the question of disability, raised by the right reverend Prelate the Bishop of Bristol. Disabled people are almost twice as likely to be unemployed and three times as likely to be economically inactive as non-disabled people, and yet they are more likely to want a job. What are we doing to make that possible? The Access to Work programme is key to this, but the waiting list quadrupled in two years, and, by last September, over 22,000 people were waiting for their applications to be heard. Can the Minister tell us what is happening with that?

The final driver was changes in the structure of migration. I do not have time to discuss them in any detail, but they were addressed by the noble Lord, Lord Bilimoria, and a number of other noble Lords. The noble Baroness, Lady Kramer, is right: we need a bigger debate on that as a matter by itself. Like others, I have received clear briefings about the impact on particular sectors, such as hospitality and agriculture, and it has been interesting today to listen to noble Lords describe the sectors they know. This issue is not just about the economy: most of us would like to drink the beer of the noble Lord, Lord Bilimoria; many of us will have pets that we would like to be treated by the colleagues of the noble Lord, Lord de Clifford; many people want to buy products from the SMEs described by the noble Lord, Lord Londesborough; and, as a Church of England priest, I certainly want to know that my bishops are properly supported and that the right reverend Prelate can get the staff she needs in her diocese. Although this issue hits certain sectors, it is not just about economic growth but about the quality of life in our country.

This is so complicated; everything is connected to everything else. What you think is wrong depends on where you stand: the macroeconomists will tell us that we are not going macro enough, while people like me, the shadow DWP person, will inevitably focus on what is happening to employment. We have heard some interesting contributions—the noble Lord, Lord Turnbull, made an interesting point on the supply side measures that need drilling down into more—but we need to know more. The noble Lord, Lord Griffiths, made a strong point: this is in essence a debate about economic growth. My noble friend Lord Layard said, interestingly, that when we talk about growth, we talk too often about things and not enough about people. While we are trying to work out what is going on, we should at least try to do what we can about that.

One of the questions is about making sure there are good enough jobs, a theme that has emerged repeatedly during today’s debate. Labour is committed to creating jobs that provide security, treat workers fairly and pay decent wages. I loved the little kick from the noble Lord, Lord Skidelsky, to the economists—which I would not dare to do—in saying that they always view work as a disutility, whereas in fact, for most people, work is much more than that. We are all looking for meaning and we find it in different ways, but we find it very much in connection and relationship with other people, as well as in wanting to be needed and in making a difference to our society—and work is a key part of that. But, as my noble friend Lord Davies, the noble Lord, Lord Balfe, and others have commented, it has to be work that makes us feel valued and fulfilled to want to carry on doing it.

This may all sound a bit bleak, and perhaps it is. I am sure the Minister will have come armed with a list of things that the Government will do—he has a big folder, and I can see that it is full of such ideas—but one of the questions is: is what has been done working? Despite the Government pouring money into their plans, the OBR is forecasting that the employment rate will stay static over the next five years at just over 60%, and that there will be 600,000 more people on health and disability benefits by 2028-29, with costs going up to somewhere around £33 billion.

I accept that it is complicated, but Labour has tried to set out what we would do, and I offer these ideas to the Minister in a spirit of co-operation, because we should be curious and look at everything going on here. We want to overhaul jobcentres so that they focus on tackling barriers to good jobs, to devolve new powers over employment support and to get collaborating with the NHS and other agencies. We want to give full-time employment support in young futures hubs and to change the benefit rules to help more sick and disabled people risk a new job without worrying about losing money or getting reassessed. We will provide money for an extra 2 million operations, scans and appointments a year to try to get people back to work. We will expand mental health support by recruiting 8,500 more staff and providing specialists in schools, because that is crucial, as many noble Lords have pointed out. I could go on for a long time, but I will not.

This important debate has focused attention in a very helpful way on one of the biggest challenges facing not just our economy but our country and who we are as a people. If nothing changes, things will carry on getting worse. But we can choose to try to get to the bottom of it and to take steps to restore hope and opportunity to millions of people who have been written off—and, in the process, give a much-needed injection to our labour market and economy. I urge the Government to seize the day.