Government Record on Education, Employment and Welfare

Lord Leigh of Hurley Excerpts

Thursday 16th July 2026 Lords Chamber

[Lord Leigh of Hurley (Con)]

My Lords, I congratulate my noble friend Lady Evans on securing this debate and on her excellent opener. We are at an end-of-term moment, not least because the PM who promised us economic growth in his manifesto has clearly failed and, somewhat extraordinarily, the Labour Party has not found one MP in its ranks who put himself or herself up for the job. The mess we find ourselves in as a nation is due largely to actions and words from the current Government.

The Minister should not underestimate the huge damage done in the early days of this Government, when we were misled about a £22 billion black hole—yes, misled. Not one credible economist supported that contention—

[Noble Lords]

Oh!

[Lord Leigh of Hurley (Con)]

I would welcome an intervention from anyone who can claim that there was such an economist who did support the contention. There is none.

The negativity that ensued was disastrous. I understand the tactics, perhaps emulating George Osborne, but the response was to break a manifesto commitment and increase taxes, which killed any chance of economic recovery and, of course, jobs growth. It was not just the retrospective taxation, such as the IHT on pensions, but the NI increases which sent the economy and youth unemployment into a tailspin. I put down amendments to exempt charities, care homes or even hospices. The CEO of a hospice, no Tory supporter, told me that she would have to cut jobs as a direct result, and consequently people would die in greater pain and agony than need be the case. I am not sure that Labour were proud of that, because it was unnecessary.

Even worse, the increase in NI has failed. We were told that it was going to raise £25 billion a year, but the OBR figures reveal that it will be nearer £16.6 billion. I am happy to be accused of being a siren voice, as the noble Baroness, Lady Lister, referred to, but all the Prime Minister and the Chancellor had to do was to stand up to their own colleagues and bring welfare back to a reasonable level, and that would have been avoided. They will now pay the price.

Unfortunately, as a result, the cost of employing an 18 to 20 year-old rose by £4,095 between 2024 and 2026. As the former Labour Education Secretary Ruth Kelly put it:

“You cannot put up the cost of hiring young people and then wonder why fewer of them are being hired”.


Then the Employment Rights Act, mentioned earlier and dubbed the unemployment rights Act by many, has not just forced employers to reconsider hiring new staff; it is forcing businesses to find ways to lay off staff and automate much faster than they had planned. I have spoken to manufacturers, whose names I can reveal, that have done that. That cannot be what HM Government expected to see.

Unemployment for over-16s is now at 4.9%. Inactivity rates are at 21%, according to the excellent Jobs Foundation’s recent report. This week alone, the Entrepreneurs Network, which runs the APPG for Entrepreneurship, of which I am an officer, published its fourth survey: 79% of founders of businesses feel that the Government do not understand their needs. Only 18% are optimistic about the year ahead for the economy as a whole and, most interestingly, 82% have a negative view of the level of taxation in the UK. That is the point.

It is not surprising when one reads the Policy Exchange study published this month, which points out that the tax burden is at a 70-year high and that the UK’s tax take of 34.4% of GDP in 2024 has risen to 36% this year. That is way higher than for any other successful members of the G7. This situation will not be improved by the incoming PM, a man with very little economic experience, talking about land taxes and wealth taxes increasing. The question I have for the Minister is: does she understand the connection between increasing the tax take, specifically on businesses, and the consequential, inevitable rise in unemployment?