To ask His Majesty’s Government what assessment they have made of the state of the labour market.

My Lords, the labour market is resilient, with high employment and falling inactivity, but we acknowledge that there is more to be done, particularly for young people and those with health conditions. The Get Britain Working strategy is driving forward reforms and helping create a more inclusive labour market that supports economic growth and opportunity for individuals.

I thank the Minister for her response, although I point out, in the interests of balance, that unemployment is rising while job vacancies are falling fast. In fact, graduate vacancies have now dropped to their lowest level since 2018, with some 40% of our graduates either in low-skilled jobs or unemployed, yet employers report that skills shortages are frustrating job creation and holding back productivity—the two key ingredients of economic growth. Can the Minister tell us how phase 2 or the reset will address this damaging mismatch?

My Lords, I do not want to trade stats with the noble Lord but, hey, why not? If he looks carefully, as I am sure he has, at the most recent set of local labour market data, he will see that employment is up to record levels, economic inactivity is down, wages continue to grow and we have a healthy number of vacancies in the labour market. However, he raises an important point about the skills needed by employers at the moment, and the fact is that the labour market is changing.

The noble Lord mentioned graduates, the most recent data for which show that there is still a strong graduate employment market and that graduate employment is still above average. I do not want to send out any messages that degrees are not worth having. Graduate employment is important. However, there are signs of the beginnings of changes in that market.

What the Government are doing is not just for graduates but for all people, as we risk too many young people being left behind if they do not have the right skills or opportunities. As the noble Lord may know, Skills England recently published a report providing an assessment of the Government’s priority skills to 2030. It gave a detailed analysis of future employment needs across 10 critical sectors, aligned with the industrial strategy and the plan for change. I hope he will appreciate that moving adult skills into the DWP strengthens the Government’s focus on the importance of a highly skilled workforce and accompanying economic growth. The DWP has a lot of experience of helping to retrain and reskill workers; that focus will make the difference in future.

My Lords, the Minister just said that salaries are increasing, but starting salaries are at their weakest in years, according to the KPMG and Recruitment and Employment Confederation report from yesterday. I quote:

“Shrinking demand for staff and concerns around payroll costs dampened rates of starting pay in August”.

Will the Government now finally commit to reforming the provisions in the Employment Rights Bill, so that they genuinely support both businesses and workers, rather than adding to their costs?

My Lords, if ever a Bill was set to be relitigated on a weekly basis, this House is the place to do it. The Government remain committed to our Employment Rights Bill. We believe that having appropriate rights for workers increases productivity and strengthens the labour market. On the broader point, unemployment is dipping down and there is a range of reasons for that. One is that the labour force is growing, and we know that people are moving from inactivity to looking for work. Our challenge, as we face the global headwinds we do, is to make sure that we invest in infrastructure and create jobs across the country. Crucially, when there is any tightening in the labour market, the people who struggle are those farthest from the market. Our job is to make sure that we upskill people and invest in every part of the country, and that the jobs that are there go to the right people. There is a healthy number of vacancies out there. Our job is to make sure that everybody has the chance of a good job, moving on and progressing in work.

My Lords, does my noble friend the Minister agree that introducing digital identity cards could make a real difference to tackling illegal working? This is very often connected with human trafficking and even modern slavery. Can she assure me that the Government are looking seriously at this and that work on it is happening at pace?

My noble friend raises a very important point about illegal working. There are certainly all kinds of difficulties attached to it. She mentioned human trafficking, but there is also the abuse of workers who are not in a position to report abuse or breaches of legislation because of their status. I reassure my noble friend that, when it comes to tackling illegal immigration and illegal working, the Government are already rolling out forms of digital ID through e-visas so that we have a digital record of someone’s ability to work and their ability to enter this country lawfully. We are determined to look at any serious proposals to help strengthen our border security and to benefit society. I can assure my noble friend that this includes digital ID.

My Lords, I thank the Minister for telling us what the Government are doing. When the Chancellor increased employers’ NI in last year’s Budget, she chose to lower the starting point for paying national insurance contributions. In practice, this has meant that employers of part-time workers have been disproportionately affected. Given that part-time and starter jobs are a good way for the unemployed to get a foot in the jobs market, does this decision not undermine the Government’s welfare to work efforts and all the positive points which the Minister has made?

The answer to the noble Lord’s question is no. The Government have had to take tough decisions and we knew that they would have some impact. However, all the signs are going in the right direction—there are real signs of progress out there. When it comes to part-time workers, I assure the noble Lord that one of the good things about the way in which the DWP is now organised is that it is tailoring and personalising the employment support it gives people in two ways: first, to get those who are not in jobs into them; and, secondly, to get those in jobs moving on within them, whether that is through more hours, better work or more skills. For example, through our new jobs and careers service, we bring together people who are not on benefits at the moment—perhaps they are working at the margin only for a few hours and do not need to claim—to be part of that. As a country, if we are to have economic growth, we will need a skilled and motivated labour force. I am confident that we are doing that well.

My Lords, if people are better off not working and being on benefits than they are working at the minimum wage, is the Minister surprised that we have millions of people who should be working and who are not?

My Lords, I presume the noble Lord is referring to the stories about universal credit. The structure of universal credit was created by the last Government. It was designed to operate in and out of work. We have become aware that there were some imbalances in the system. As the noble Lord will be aware, the Universal Credit Bill that we put through just before the recess has rebalanced the rates of universal credit by halving the amounts that will be paid in future to those who are out of work on grounds of illness or disability. It will increase the standard allowance to help raise incentives to work. I think most people want to work and have a fulfilling life. Our job is both to put the incentives in the right place and to make sure that the jobs are there and that people are skilled to do them. We are determined to do all this.

My Lords, thousands of workers who want to go to work today are unable to do so because of the Tube strike. Thousands of Tube drivers who should be at work have stayed at home. Will the Government reverse their policy of giving in to every trade union demand, thereby putting up prices, encouraging inflation and making more people stay at home and not go to work?

My Lords, as I am sure the noble Baroness knows, transport in London is devolved to the Mayor and Transport for London.

Noble Lords:

Oh!

Are you finished? As I was saying, the Government understand that this is very disappointing for passengers, including the noble Baroness, and for businesses. We continue to encourage all sides to work together to resolve the dispute as quickly as possible.

Has the Minister seen the report from Cancer Research UK that shows that smokers are three times more likely to be out of work owing to poor health than non-smokers? Can she encourage her noble colleague alongside her to bring back the very welcome smoking and vaping Bill initiated by Rishi Sunak, so that we can better protect public health and get people back to work?

I am advised that legislation is making its way through Parliament and will come to this House in due course, so we will have plenty of opportunity to debate it.

My Lords, jobs depend on people’s ability to buy goods and services. That ability has been severely eroded. Some 16 million people live in poverty and 1.2 million are on insecure zero-hour contracts. Can the Minister confirm that there will be no rollback of any part of the Employment Rights Bill? What steps will the Government take to increase workers’ share of the gross domestic product?

As I have said before, I can reassure the House that the Government are committed to their Employment Rights Bill and will make sure that the measures in it go ahead. There is a great deal of detail yet to be worked out. A lot of consultation is going on, but our job is clear: we want to make sure that people who go to work and work hard are appropriately protected and not exploited. We think that will make them more productive and the economy healthier.