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

Part of the debate – in the House of Lords at 2:30 pm on 8 February 2024.

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Photo of Lord Bridges of Headley Lord Bridges of Headley Chair, Economic Affairs Committee, Chair, Economic Affairs Committee 2:30, 8 February 2024

My Lords, I thank all noble Lords who have spoken so eloquently and powerfully in this debate. In particular, I thank past and present members of the Economic Affairs Committee for their contributions. I wish only that we could continue to expand the committee’s membership, so that people did not have to leave and we did not have to ask “Where have all the workers gone?” when they do.

Our report poses the simple question, “Where have all the workers gone?” and tries to answer it. The noble Lord, Lord Davies, thinks that we may not have done that, and I will come on to why in a moment, but the debate has shown that we have provoked even more questions than there are answers. From listening to these speeches, those questions fall into three buckets in my mind.

The first is data. We cannot tackle the problem if we are trying to do so on shoddy data. My noble friend Lady Noakes, in a typically forensic and excellent speech, made this point very powerfully, as did the noble Lord, Lord Londesborough, and the noble Baroness, Lady Kramer. I hear what the Minister is saying, but I still do not feel that we have clear answers to the simple questions. Here are just three. Who is becoming inactive and why? Who among the inactive are suffering from long-term sickness and why? Who is leaving the pool of inactive workers and why? As long as we have this uncertainty, it will be difficult for us to tackle the problem.

Far worse, I still do not understand how the Chancellor and the Monetary Policy Committee are meant to make decisions when drawing up the forthcoming Budget and thinking about what to do about interest rates. They are sitting in the cockpit of the economy, yet the instruments on the dashboard in front of them are all flashing and whirring around. How are they meant to make sense of this? I do not understand it. This is not a peripheral matter that we can leave just to statisticians to think about; it matters to all here and to the entire country, because of the decisions that those institutions are taking. This is mission critical.

We are told that we will get a new Transformed Labour Force Survey in six months. We face some dire problems right now; can we really wait as long as six months? We will have to, but this is not a satisfactory state of affairs. That is my first point.

The second area of questions is about what we will do to stop the flow into inactivity. I thank all those who have spoken. I cannot summarise all their points now, and it would be invidious for me to do so, but I will pick up on what my noble friend Lord Willetts and the noble Lord, Lord Layard, said on this in particular. As the noble Baroness, Lady Sherlock, highlighted, we face a very complex knot of problems; training, childcare and pensions are just three areas. We need a joined-up approach. I pay tribute to the Minister for summarising all this but, as my noble friend Lady Noakes said, it speaks volumes that this is coming from the DWP alone. I do not really like the phrase “joined-up government” but, now more than ever, we need a joined-up government approach to this.

This brings me to my third area—what we are doing to help those who are already inactive. The right reverend Prelate the Bishop of Bristol spoke very movingly and properly about the communities that are being hit, and we again must ask ourselves if we are focusing our attention properly. Just one fact: more than a third of working-age people in Liverpool, Manchester and Nottingham are economically inactive. I hang my head in shame about that; it is an appalling statistic. What are we doing? Is our approach here joined up too?

We have to do this, and urgently. I heard Mel Stride, the Secretary of State for the DWP, say on the radio the other day, “We have a lot of work to do”. He is absolutely right. I pick up on what the noble Baroness, Lady Sherlock, said: we were informed via his letter that he had done this review and set out his programme of action. On Monday, the ONS showed in its statistics what that is doing and the indicators are going in the wrong direction. So he is quite right: there is a lot of work to do here.

We must do this if we want to stop the inactivity levels in this country getting worse. We can debate how best to do that and we should have that debate, but we should not lose sight of the social cost of inactivity, as well as the economic cost. My noble friend Lord Griffiths was quite right to highlight this. It is a driver and determinant of our levels of growth. We can all agree and disagree on what to do, but I end by quoting a written piece of evidence that David Miles of the OBR sent the Economic Affairs Committee just a few days ago:

“Faster growth in the labour supply would boost GDP … A greater supply of labour from the population in the UK, particularly if it reflected fewer people not participating because of health issues and fewer people under-employed (or not employed at all), is fiscally highly advantageous. Not only do these sorts of rising employment generate more incomes and tax revenues, they can also reduce the welfare payments bill”.

He went on to say, and here I refer to what the noble Lord, Lord Bilimoria, and my noble friend Lord Willetts said:

“It is much less clear that persistently high levels of net immigration to boost the labour force can generate sustained fiscal improvements. New immigrants, particularly if they come on work visas”— work visas, not student visas—

“may generate a favourable balance of extra tax revenue relative to extra public spending for some years. But immigrants who stay grow older and have children so the favourable tax to spending balance does not persist”.

This is a very important matter. It merits much more debate. If there is anything we can surely agree on, it is that we have keep the issue of labour force inactivity at the very top of the political agenda in the weeks and months ahead.

Motion agreed.