Labour Market Activity

I beg to move,

That this House is concerned that the number of people out of work and economically inactive is higher than before the pandemic, that thousands of older people have left the labour market and that there have been significant increases in the number of people out of work due to ill health or mental ill health; notes that recent employment support schemes have underperformed and underspent; condemns the Government for its failure to get more people into work; regrets that this failure is contributing to low economic growth and falling living standards; and therefore calls on the Government to get Britain back to work by reforming disability benefit assessments, devolving employment support to local areas and providing specialist and targeted help for those with long-term ill health or aged over 50 to grow the economy and boost both public finances and household incomes.

I ask the House to endorse this motion for one simple reason: it is time to get Britain back to work, and to extend opportunity to everybody who wants to find a decent, fulfilling job. It has always been the Labour party’s view that unemployment is never a price worth paying.

Let me say at the outset that this debate is not about the technical definition of unemployment. I anticipate that the Secretary of State will refer to the employment figures, and no doubt there will be interventions from Conservative Members telling us that our constituents have never had it so good. I accept that unemployment is at 3.7% of the working-age population, but the cause of low unemployment is not a booming jobs market.

In the last year or so, we have registered some of the lowest growth rates in the G7. The reality is that we are one of the few major economies not to have returned to pre-pandemic employment because of a rising tide of economic inactivity, despite there being around 1 million vacancies in the economy. Across other major economies, labour market participation rates rebounded as restrictions lifted, yet here employment is lower than before the pandemic. Our labour force growth effectively ground to a halt, and we suffered the biggest employment rate fall in the G7—a labour market loss of almost 4%, which is equivalent to 1 million people. Economic inactivity has risen by around 600,000.

Some of that is early retirement among the over-50s, but an increasingly common reason for leaving the labour market is sickness. When we consider both the number who are unemployed and the number who are inactive but who say they want help to work, there are around 3 million workless people in this country who could be in jobs. Indeed, some think-tanks suggest the figure could be as high as 4.7 million. Even though we have a UK unemployment rate of 3.7%, we in fact have a hidden unemployment rate of around 12.1% when we add the people who are inactive and want to work.

This means that 13.4% of the working-age population of Barnsley are involuntarily inactive, according to the Centre for Cities. These are men and women who, with the right help, want to work. It means that 12.9% of the working-age population of Middlesbrough, 12.4% of the working-age population of Doncaster and 12.7% of the working-age population of Mansfield are inactive.

Does my right hon. Friend agree that, since the Government came in and cut English for speakers of other languages courses, women from black, Asian and minority ethnic communities in inner-city areas, in particular, have not been able to get into employment? We see that in the figures.

My hon. Friend makes an important point. I also see that phenomenon every day in my Leicester constituency. There are people who want to work, and who could work if given the right help and support with the English language—particularly women from Bangladeshi and Pakistani-heritage communities—but, because of the cuts that have made ESOL more difficult to access, they are not being given that support and help.

Is my right hon. Friend aware of the study by the Office for National Statistics showing that there could be a significant increase in the overall levels of employment and productivity if there were greater encouragement to work from home, particularly for women who are having to choose between caring and working? They face a cliff edge, but they want to do both. Why are the Government not doing something about that?

My hon. Friend, typically, anticipates a point I will be making later, but it is clear that certain members of the population could be encouraged to return to work if the correct flexible option was in place, along with appropriate help with childcare or indeed social care. Many people are caring for loved ones—parents and so on.

The Institute for Public Policy Research estimates that six out of 10 people who are economically inactive because of illness are economically inactive because of mental health problems. Does the right hon. Gentleman agree that changing the conditions of work, for example, with good childcare, with proper jobs, with proper wages and so on, is the way to deal with this problem?

The hon. Gentleman makes an entirely reasonable point. We are seeing more and more people being forced out of the labour market, or not able even to enter it in the first place, because of depression, stress or anxiety. If we reform the way in which we deliver employment support, we can get many of these people back to work, because being in work will be good for them in terms of managing their mental health. Obviously, that is not necessarily the case for everybody, but it will be for a significant proportion. The problem is that there are many who want to work, yet under the Government’s approach, which focuses just on the unemployed via the jobcentres, only one in 10 out-of-work older people or disabled people are getting any support. We reject that approach.

My right hon. Friend is making a good speech. For someone with a disability or a long-term condition, simple adjustments in the workplace, such as having a sit-stand desk, so that an office worker does not have to sit down all day, a vertical mouse, to help somebody who has problems with their wrists, or an ergonomic chair, to help somebody with a bad back, can make all the difference in how they are able to manage their health and how happy they can feel in the workplace. Lots of people do not know that they are entitled to ask for reasonable adjustments and that very often these items are available through the Access to Work programme. Does he agree that the Government need to do far more to publicise the support that is out there, so that not only can people get into work, but those in work can maintain their health and stay in work longer?

My hon. Friend hits the nail on the head. It is not just that lots of people are not aware of the Access to Work scheme, but some people who apply for Access to Work are then faced with the most ridiculous waiting lists. A constituent of mine accepted a job and was told that there was a 26-week waiting list for an assessment. I raised that case with the Department in my capacity as a local constituency MP and I am pleased that the Department has looked at it again, but lots of people will not go to their local MP asking them to intervene, and we want to get people into work. It is no wonder that the disability employment gap is widening.

As a country, we should be aiming for the highest level of employment in the G7. That would mean living standards raised for every household. The reason we want to extend the opportunity of decent work to all is even more fundamental: when one in five people who have left the labour market in the past two years say that they would like to work, we have a responsibility to help them. Behind every statistic is a story of opportunities missed, talents wasted and extraordinary potential left untapped, none more so than for the now 1 million young people not in education or employment. Increasing numbers of young people are out of work for reasons of mental health. We know the long-term scarring effects of worklessness at a young age; it risks a life on the margins. To do nothing for this group of young people, as is, in effect, the case now, means writing them off. Its means tolerating a situation where only about 4% of people in the employment and support allowance support group return to work each year—to me, that is fundamentally unacceptable. It is a massive social cost and it has a massive economic cost as well, as we will see, because the Office for Budget Responsibility is predicting that the health-related benefit bill will increase, costing us £8 billion extra.

Most Conservative Members would agree with much of what the right hon. Gentleman has said, so will he offer a bit of guidance as to how the Government should go about contacting people in these positions who might want to get into work? What kind of offer does he think would be best to make so that we can engage with them?

I am grateful to the right hon. Gentleman for that. I will outline a very detailed plan in my remarks. I hope it finds favour with him, because we want to grow our economy, as he does, and getting people back to work is good for them as individuals, it will make our economy more productive, it will sustainably raise living standards—not by going for growth through inflation—and getting people back to work is surely a good thing. I hope he stays in the Chamber, as I am sure he will, to listen to my speech.

The Government say that they gave us kickstart, but it failed to deliver the 250,000 jobs for young people promised. They say that they gave us restart, but it is expected to help less than half the number of people that Ministers said it would, and it is underspent by around £900 million. However, my argument is not simply that the Minister is doing nothing. It is also that what the Government do do, they do not do very well.

The Local Government Association estimated that the Government—I think that this is last year’s figure—spent £20 billion to deliver 49 different employment and skills-related schemes administered by nine different Government Departments and agencies and, yet, despite all that money, these organisational geniuses have still given us a situation where we have 1 million vacancies, 3 million workless, and the worst employment recovery in the G7. That is surely not good enough for £20 billion-worth of expenditure.

What has been the Government’s answer? It is more of the same. They brief newspapers there will be more daily interviews for the three-month unemployed in the intensive work search group, even though the failure-to-attend rate for weekly appointments is already high. It will no doubt mean more CV writing classes, more applying for jobs online that turn out to be duplications and, of course, more sanctions. Of course there should be conditions applied to unemployment—[Interruption.] We have always been in favour of conditions for unemployment benefit—as many of these hon. Members will find out when they go to the jobcentre after the next general election—but what we need for this country is a plan that widens access to employment support for all who want to work, that brings together health and employment support, that addresses the cost and disincentives of moving into work for parents with childcare needs, for example, and that takes account of the different economic needs of the country.

My constituency of Cynon Valley has some of the highest levels of economic inactivity in Wales and, indeed, the UK. I welcome Labour’s proposals to fix this broken employment support model. Indeed, I am pleased that, in Cynon Valley, we are piloting some innovative economic models under the community wealth building approach. However, turning to the UK Government, is my right hon. Friend at all concerned about the pilot announced in a written statement yesterday, requiring claimants to attend face-to-face interviews daily for a fortnight, with a threat of sanctions for non-attendance? Is that not a model to discourage claims? Is he also concerned that, following the closure of many jobcentres, jobcentre workers, who are themselves accessing food banks, are now being forced to require claimants to undertake these interviews and to make life-impacting decisions based on economic benefit?

The problem is that the Government are one-trick ponies. They think that that is the answer to getting people back to work, but what we need is a plan to deal with the economically inactive, not just to apply conditions for those receiving unemployment-related benefit on universal credit.

Different parts of the country face different economic needs. In broad-brush terms, in coastal and some former industrial areas, we tend to see lower labour market participation rates and relatively fewer vacancies. In many parts of London and the south-east, we tend to see higher labour market participation, but also relatively fewer vacancies. In major cities such as Birmingham, Leicester, Coventry and Liverpool, we tend to see lower labour market participation, but often higher vacancies. The point is that different economies have different economic needs. Different labour markets have different economic needs. Instead of nationally contracting to deliver one-size-fits-all employment schemes designed from behind a desk in Caxton House, and instead of forcing Mayors—in the words of Andy Street—to go with a “begging bowl” to Whitehall, we should shift power and resources to local communities because, as the leader of Nottingham County Council, the hon. Member for Mansfield (Ben Bradley), said in a very good Red Box article a few weeks ago:

“Local leaders are too often hampered by the Whitehall knows best approach…Employment support programmes are commissioned based on national guidelines, not local needs…Fixing economic inactivity needs a radical pro-devolution mindset.”

I absolutely agree with him.

I thank the right hon. Gentleman for his kind words and for giving way. I should mention that I co-wrote that article with Adam Hawksbee of Onward.

The right hon. Gentleman is absolutely right. He mentioned Mansfield’s statistics and the high levels of economic inactivity. These schemes are best built with local employers and training providers so that they can be bespoke for those needs, with the flexibility that was mentioned earlier; I am sure he would agree with that. Will he join me in calling on Ministers to pilot that in the east midlands when we get our combined authority next year?

Absolutely. Of course, a Labour Government will definitely deliver more resources. I hope that we can pilot that in the east midlands combined authority, as well as in the Leicester area—the hon. Gentleman will know what that is a reference to.

My right hon. Friend is making an eloquent point about the devolution of this policy area. I draw his attention to the work that Cheshire West and Chester Council has done with work zones across our borough and in my constituency. That work has been really effective not just in getting people into work, but in enabling those in low-paid work to get up the skills escalator. The sort of short-term rigid national contracting that we are seeing from the Government is actively working against the devolution and skills that local employers and local people need. I would be very pleased if he agreed.

I agree. May I welcome my hon. Friend to her place? This is the first opportunity that I have had to do so. She brings to this House great experience in local government. She knows that local authority leaders, working in partnership with the business community, with those who provide skills, and with civic societies, trade unions and so on, can do a much better job of getting people back to work, which is why we should be shifting resources, be it to the east midlands combined authority, the Cheshire region or elsewhere.

Where that has happened in pockets—such as in Andy Burnham’s Greater Manchester, through the working well initiative—there have been great successes, so we need to shift resources. That is the key to providing a form of universal support, which my friends at the Centre for Social Justice have rightly called for, to help people with complex barriers to return to work. We endorse that approach.

I am grateful to the right hon. Gentleman for giving way—he is being very generous. We have a Labour Government in Wales. Would he support the devolution of the administration of social security to that Labour Government?