Workers (Economic Affairs Committee Report)

Lord Londesborough Excerpts

Thursday 8th February 2024 Lords Chamber

[Lord Londesborough (CB)]

My Lords, first, I congratulate members of the Economic Affairs Committee on producing such a topical and insightful report on one of the key constraints on our economic growth. I should declare that, although I now sit on this committee, I sadly cannot claim any credit for this report as it came out a month before I joined.

My experience as an entrepreneur, employer and SME adviser tells me that labour supply remains a huge issue—both qualitatively and quantitatively—and continues to depress both our GDP and our productivity. I will focus on just two connected areas today: the health and fitness of our workforce, and its productivity. The committee’s report highlighted back in 2022 that ill health was rising and was one of the key factors contributing to increased inactivity. However, as the noble Lord, Lord Bridges, pointed out, much of the rise in sickness-related inactivity was apparently among those who were already inactive.

The multiple intersecting reasons for inactivity make statistical analysis particularly challenging. On top of that, the new data from the Labour Force Survey carries its own health warning: it is experimental so we have no historical trends based on this new mode of data collection. As we have heard, the latest survey suggests that an already dire situation has got much worse. The 2.5 million figure for long-term sick among working-age people, reported in 2022, has grown by another 300,000. How much of this increase is down to historical underreporting? How much of it is due to a continued deterioration in our health? This distinction is important.

While the long-term sickness figures are shocking, they should not come as a surprise, as NHS waiting lists for treatment have doubled, from 4 million to almost 8 million, in the space of just five years, and this factor alone was bound to impact on our workforce. In addition, employers report that NHS waiting lists are also impacting the productivity of those who are in employment but waiting for treatment. Can I therefore ask the Minister: do we have any reliable updated data on how many economically active have been taken out of the workforce due to ill health in each of the years 2020 to 2023 and how many long-term sick were able to rejoin the workforce in each of those years? Breaking down those numbers by health condition or disability would be very helpful. These numbers are crucial to help the NHS apply its resources in a more targeted way, to help more of the sick to return to work, whether full-time or part-time, but without joined-up health and employment data, such a strategy will misfire.

Let me provide one example—the condition of migraine, which I raised in a Question to the Minister last year. The cost to the economy through working days lost due to migraine is estimated at between £5 billion and £10 billion per annum, yet the NHS spends just £150 million per annum on treating a condition that impacts 10 million people across the UK, the majority of whom are of working age. That is a mismatch—an economic as well as a health own goal.

Numerous studies have also shown that economic inactivity is bad for your health—none more so than for the hundreds of thousands of those who are off work suffering from poor mental health, where inactivity hits them not just financially but in terms of anxiety, self-esteem and general well-being, as the noble Lord, Lord Layard, so eloquently explained. Studies have shown that, for the 64 to 75 age group, working part-time or full-time is better for your health than retirement, in terms of mental and physical health. That is even more relevant to an ageing population such as the UK’s, as we need some of this cohort to return to the workplace. Perhaps I could hold up this House’s workforce, with your Lordships’ average age of 72, as a shining example of the benefits of an extended working life.

I was tempted to amend the report’s title to “Where Has All the Workers’ Productivity Gone?”, because demographic and health trends tell us that it will be very difficult to grow a workforce beyond the current 33 million who are active other than through immigration. The only sustainable way to grow out of economic stagnation is by addressing worker productivity. Output per hour lags Germany and France by 12% to 15% and the US by 18% to 20%. The UK’s productivity has been a long-standing problem ever since the financial crisis of 2008, since which an historic average of 2.3% annual improvement has slowed to a miserly 0.5%. That remains the economy’s qualitative problem. I do not have time to address the so-called productivity puzzle other than to point out that the declining health of our nation is strongly correlated to our poor productivity rates. While it is true that we do not have enough people in work, it is also true that those who are economically active are not active enough.