Business Hiring Intentions

Tuesday 3rd November 2026 Lords Chamber

Question

14:50

Asked by

[Lord Hunt of Wirral]

To ask His Majesty’s Government what assessment they have made of current business hiring intentions and their impact on the wider economy.

[The Parliamentary Under-Secretary of State, Department for Business and Trade (Lord Leong) (Lab)]

My Lords, the UK labour market and economy remain resilient despite geopolitical uncertainty. The UK had the joint fastest-growing economy in the G7 in the first half of 2026. All the labour market and ONS data show that there are 356,000 more people in work than a year ago, and the Business Insights and Conditions Survey shows that more than 80% of businesses intend to either maintain or increase their staff levels in October 2026.

[Lord Hunt of Wirral (Con)]

My Lords, the Office for Budget Responsibility has just concluded that the Employment Rights Act 2025 will have a negative economic effect—something that we on these Benches and all employers have been warning about for a very long time. Does the Minister agree with the OBR and, if so, what is he going to do about it?

[Lord Leong (Lab)]

My Lords, I say in the nicest possible way to the noble Lord and to noble Lords opposite that supporting business enterprise means combining a hard head with a soft heart. The Employment Rights Act strengthens provisions, protections and security for working people, but legislation can only set minimum standards. The law establishes the floor; good businesses should compete to raise the ceiling. No Act of Parliament can make an employer care about their staff. That comes from leadership, values and culture. In my experience, looking after your people is fundamental to business success. We respect the OBR’s independent judgment. It expects a negative economic impact, as the noble Lord has said, but finds no clear evidence that it would exceed 0.1% of potential output, so it has made no explicit forecast adjustment.

[Lord Fox (LD)]

My Lords, as the Minister is talking about hard edges to business, it is two years since the then Chancellor made a surprise increase in national insurance contributions for UK businesses. Can the Minister tell us how many more jobs there would have been if this had not been brought in? How many SMEs have gone to the wall as a result of this, tipping them over the edge, and how much investment has been deferred because of this measure?

[Lord Leong (Lab)]

My Lords, I recognise the pressures on employers. We took the difficult decision to stabilise the public finances and fund essential services, while increasing employment allowance to £10,500 to protect smaller businesses. We are also supporting recruitment through the youth jobs grant of up to £3,000 and apprenticeship hiring payments of £2,000. Our aim is to help businesses create opportunities and give young people the skills and experience to build lasting careers.

[Baroness Ritchie of Downpatrick (Lab)]

My Lords, does my noble friend agree that it is important to be positive about these matters and that the Employment Rights Act, along with today’s announcement about the potential SPS agreement, will underscore the importance of our food exports, our food industry and the many jobs in it, and the potential for new employment?

[Lord Leong (Lab)]

I totally agree with my noble friend. The labour market is changing, and the provisional ONS figures for the year to September 2026 show that the payroll has increased by 66,000 in administrative and support services, by 20,000 in education and by 19,000 in health and social care. The wholesale and retail sector lost 71,000, accommodation and food services lost 46,000 and manufacturing 32,000. We are backing investment into skills and sector jobs plans to help businesses recruit and people move into secure long-term employment.

[Lord Bilimoria (CB)]

My Lords, as chair of the International Chamber of Commerce in the UK and a former university chancellor, it saddens me that almost a million young people are not in education, employment or training. What are the Government doing to help university graduates get jobs? They are really struggling to find jobs at the moment and they deserve to get them.

[Lord Leong (Lab)]

My Lords, I fully accept that the labour market is failing too many graduates. Repeated rejection wastes talent and damages confidence. We are investing £7.8 million in university AI courses and graduate traineeships and our £20 million early careers jobs alliance helps employers maintain routes into work as technology changes. The digital and technologies jobs plan targets 20,000 entry-level jobs annually. Our responsibility is to turn those commitments into interviews, paid opportunities and lasting careers.

[Lord Leigh of Hurley (Con)]

My Lords, will the Minister take this opportunity to disassociate himself from the remarks of the Chief Secretary to the Treasury, who said that employers are not “working people”? Thousands of small businesses and employers like myself take great exception to this because it goes to the mindset and attitude of the Government.

[Lord Leong (Lab)]

Employers, employees and suppliers are part of the ecosystem, and we need to support the employers and suppliers as well. The way to tackle unemployment is by working with employers and looking at pathways into growing industries. Professional and business services firms have pledged to create 22,400 apprenticeships for young people under the age of 25 over the next five years. Construction aims to create 10,000 job opportunities each year, while digital and technology employers are targeting 20,000 entry-level jobs. These sector jobs plans will link investment to skills and recruitment, and our focus is on turning those commitments into lasting careers.

[Lord Spellar (Lab)]

My Lords, as we have just heard, there are a million youngsters who are not able to get into work. Many are university graduates, who then face the questions: “Have you got a degree? Have you got two years’ experience?”. How are they going to get two years’ experience if employers will not take them on? That is just one example of dysfunctionality in the labour market. What are the Government doing actively to engage with employers to get a rational labour market that will enable our youngsters to get into work at all levels of jobs?

[Lord Leong (Lab)]

My Lords, we are determined to tackle youth unemployment and look forward to receiving Alan Milburn’s recommendations. In addition, we have committed a further £2.5 billion to the youth guarantee and growth and skills levy, helping nearly 1 million young people aged 16 to 24 move into jobs, education and training. This will create 200,000 jobs, provide £3,000 for youth jobs grants and £2,000 in apprenticeship hiring payments and guarantee jobs for young people claiming universal credit who have been unemployed long term.

[Lord Harper (Con)]

My Lords, I am surprised that the Minister could not answer my noble friend Lord Leigh’s question, because the Chancellor slapped down the Chief Secretary for her ridiculous comments, and I am glad that he did. The Minister gave a good answer to the question from the noble Lord, Lord Spellar, about how to deal with the 1 million young people out of work. How does he think importing up to 80,000 young people from the European Union under the youth mobility scheme will help British young people get into work?

[Lord Leong (Lab)]

Settlement is based on contribution, not just on time served, as it was under the last Government. We have cut net migration to 82% below its peak under the last Government. We will not leave young British people behind, which is why we are investing an additional £2.5 billion, as I said in my previous answer, to support almost 1 million young people into education, employment and training.

[Baroness Uddin (Non-Afl)]

My Lords, is the Minister aware that yesterday an industry guide was published by UKAI which finds a distinct lack of progress in the promised advanced technology jobs, particularly for women in many inner-city areas? Will the Minister look at the report and its findings and consider meeting the group?

[Lord Leong (Lab)]

I have not had a chance to look at the report, but I definitely will. AI is automating repetitive tasks, and we take the risk to entry-level jobs seriously. The £20 million for the early careers job alliance that I mentioned earlier is helping employers redesign roles while maintaining routes into work. Through our AI skills boost, we aim to equip 10 million people with practical AI skills by 2030. Our priority is adoption that supports workers, improves productivity and opens opportunities. Technological progress must give young people a better future, not close the door.