(1 day, 13 hours ago)
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Lord Hunt of Wirral
To ask His Majesty’s Government what assessment they have made of the jobs market, and of the implications for the wider economy.
The Minister of State at the Department for Work and Pensions (Baroness Sherlock) (Lab)
My Lords, despite Tuesday’s unemployment figures, there is positive information on the labour market. However, the latest figures show why we are right to focus on supporting people into work with our Get Britain Working plan, which includes modernisation of jobcentres, tackling economic inactivity due to ill health and delivering our youth guarantee.
Lord Hunt of Wirral (Con)
My Lords, there are now nearly 2 million unemployed people on this Government’s watch and the number is rising month by month since the introduction of the penal national insurance job tax and now the threat of first-day unfair dismissal rights under the Employment Rights Bill. Will the Minister listen to business, listen to the Resolution Foundation, listen to Tony Blair and listen to this House when it debates this issue on Monday? Will she undertake to persuade her colleagues that this Budget must have measures that inspire business to give people the dignity of work? Otherwise, the message will be what I said in my maiden speech 50 years ago: “Labour isn’t working”. It was not working then, and it is not working now.
Baroness Sherlock (Lab)
My Lords, I regret that I was not here to hear the noble Lord’s maiden speech 50 years ago, but it is interesting that his message has not changed in the intervening years. Let me give him a few thoughts. First, he should look at what is happening underneath the employment figures and around the world. Let me point a few things out to him. Over the last year, more than 329,000 people have moved into work. In the first half of this year, the UK was the fastest-growing economy in the G7. We have the third-highest employment rate in the G7—it is above the G7 average. Over the most recent quarter, the number of people claiming unemployment benefits fell by 35,000. Those people in work are doing well. Let me give the noble Lord one final stat: since July 2024, real wages have risen more than they did in the first 10 years of the previous Government. I celebrate that.
Lord St John of Bletso (CB)
My Lords, can the Minister outline what assessment has been made of the dual impact of artificial intelligence on the UK job market, in both the potential for job displacement in some sectors and the creation of new roles? What is the Government’s strategy to manage this transition and equip the British workforce with the skills to drive the new AI economy?
Baroness Sherlock (Lab)
This is a really great question that is obsessing most government departments and most employers, as the noble Lord will know. I think the impact depends on the sector and on the individual job, but the evidence is quite clear, which is that, across the piece, it is better for businesses to embrace AI than not to. The biggest risk to our country is in not embracing artificial intelligence—if we do not take the opportunities it offers.
The World Economic Forum has forecast that AI will create 170 million new jobs globally over the next five years and displace 90 million. We will find that there are jobs out there, but they will be different. In our country, we have to make sure that we get those good jobs in the UK. What we are doing as a Government is analysing that very carefully and supporting businesses and individuals to make sure they have the skills they need to move on to the next area. We have reformed skills; we are bringing skills into DWP for many young people; we have a brand-new skills academy; we are looking at developing apprenticeships and we are focusing on supporting education to give young people the skills they need. There will be jobs there in the future; we just want to make sure our people get them.
Lord Palmer of Childs Hill (LD)
My Lords, I thank the Minister for her statistics, but the latest ONS figures show unemployment has risen from 4.8% to 5%—the highest level for four years. On that basis, can the Minister share concern that the UK’s sluggish productivity growth and skills shortages are still holding back economic recovery? What further measures are being considered to invest in adult skills and retraining? We will keep coming back to this. I thank the Minister for what she has said, but I would like a bit more information.
Baroness Sherlock (Lab)
On the unemployment figures, different things are going on under the surface if one digs down into the figures, which I am sure the noble Lord has done. For example, he may be aware that two things are going on. On the quarter increases and on the unemployment level, a chunk of that is driven by young people aged 16 to 24, including those in full-time education. Crucially, falling inactivity has contributed to increase in unemployment. We are tackling people who are economically inactive, but as people return to the labour market, they move from the figures of economic inactivity into the figures for unemployment. One thing that has happened is that the significant rise in economic inactivity down to ill health has been flattened, and that is really significant.
I would love to talk to the noble Lord at a greater length about skills. As he now knows, I have the great joy that my noble friend Lady Smith, who is now a Minister not only in DfE but in DWP, because she is the Minister for Skills, is joining up the two departments.
Baroness Sherlock (Lab)
Yes, I was going to say the less important one, but I will get in trouble any which way I do this.
We are joining up with DfE to invest heavily in skills. We have new qualifications and new apprenticeships coming online and investment in skills strategies. A huge amount is going on—more than I can say at the Dispatch Box—but I would love to talk to the noble Lord more about this.
Lord Woodley (Lab)
My Lords, the Government have given notice that they will stop the employee car ownership scheme, ECOS, in the British car industry. That will reduce production by at least 80,000 units and cost 5,000 jobs. Does the Minister agree that it is time to re-evaluate this proposal?
Baroness Sherlock (Lab)
My Lords, I do not often say it, but I know absolutely nothing about that, so I will take it back to my department and somebody will write to the noble Lord.
Lord Bailey of Paddington (Con)
My Lords, 111,000 fewer young people are employed than at the beginning of the year. With the rise in NI and the rise in minimum wage, many employers say that they cannot afford to employ young people. What work are the Government doing to make sure that our young people have a future in employment and not on welfare?
Baroness Sherlock (Lab)
I am grateful for that question; I know that it is something that the noble Lord cares very much about. We are doing a lot for young people. This is what is so exciting about what is happening. We have a youth guarantee, but my boss as Secretary of State has also made it clear that if an eligible young person has been on universal credit for 18 months, we will create a guaranteed job for them to support them in getting back into a job and transitioning into work. We need to move to a point where every young person out there is either earning, learning or preparing themselves to do one or the other. I am particularly worried about the growing number of young people who are not in education, employment or training, particularly on health grounds or because for some reason they are outside the labour market altogether. The noble Lord may have heard that my Secretary of State has asked Alan Milburn to look specifically at an inquiry to find out what is going on with those young people. We are already doing huge amounts in this area, but we need to address work specifically on that. I am looking forward to finding out what he has to say.
Lord Tyrie (Non-Afl)
Has the Secretary of State commissioned an internal report on the effect of the national insurance change on unemployment, and have they passed that information to the Treasury?
Baroness Sherlock (Lab)
My Lords, the Government did an impact assessment at the time and acknowledged that there might be an impact on labour supply when they made changes to the national insurance regime. Obviously, what happens in the new Budget I know nothing about and it will come forward. What we have done is work very closely with employers. We know that employers are out there and want to take on people, and they want to support particularly people who are not in the labour market. Our job is to help them in doing that, and we are determined to do so.
Lord McNicol of West Kilbride (Lab)
My Lords, I bring to the House my registered interest—I chair the Nuclear Industry Association. We had the recent announcement of the SMR, the small modular reactor, the Rolls-Royce build, going to Wylfa in Wales. Will the Minister join me in welcoming those highly skilled, well-paid and very often trade-unionised jobs being brought to the shores of the UK?
Baroness Sherlock (Lab)
I am delighted to welcome that. It was a really exciting announcement, and the Government are committed to investing in new high-quality, highly skilled jobs. We want to be a country that brings inward investment in, trains people up, gets them into good jobs and keeps them there. That is a good example.
Baroness Stedman-Scott (Con)
My Lords, we are losing around 5,000 people a day from the labour market on to benefits. What is the department’s latest projection for the number of people expected to flow on to out-of-work and health-related benefits over the next 12 to 24 months? What are the main drivers behind that projection? Will the Government publish the underlying assumptions of the quarterly progress data so that your Lordships can track whether the interventions that the noble Baroness refers to are working?
Baroness Sherlock (Lab)
My Lords, we have made clear what our ambitions are with Get Britain Working and that we will have metrics and publish regular data on them. One thing I want to take the opportunity to say at the Dispatch Box is that I have seen headlines this week suggesting that large numbers of people are flowing on to universal credit, as though this was a reason they were flowing out of work. I know the noble Baroness knows this and she is far too smart to raise it at the Dispatch Box, but I remind the House that the key reason for that is that the previous Government decided to close the legacy benefits and move anyone on to universal credit. For example, 800,000 people have left old benefits and made a claim to universal credit. I would encourage noble Lords, if they see those kinds of headlines, to think twice.