Keynote at the Employment Related Services Association Annual Conference

Delighted to be here again for my third ERSA conference in a row.

I was pleased to accept the invitation to speak to you all because it gives me a chance to set out our priorities and how we want to work with you in the years ahead to help transform Britain.

But it also gives me the opportunity to say thank you to all of you for the incredible work that you do, day in and day out, to change people’s lives.

I have seen that first hand over the last four years and I am determined that we should build on that. But also that we improve on it too, because…

In the United Kingdom, like most places around the world, when it comes to politics, it’s the economy.

And at the moment, when it comes to the economy, it’s employment. Let me tell you why.

Of course, the inflation that the Tories let in to our economy left many struggling to pay the bills. But thankfully, effective monetary policy from the Bank of England has addressed that challenge for now, and whilst we must always be vigilant, and never imagine inflation is gone for good, as you will all have seen, the Government’s focus is also on the structural challenge that has held back growth: we want to Get Britain Working.

But unlike in past days, we face a new threat to growth. Not unemployment as we experienced it when I was a child, as a consequence of boom and bust, but people out of work even when demand is high. We call it economic inactivity – but it’s really another kind of unemployment. Being out of work and out of sight of those who are supposed to help you.

That’s why, as I said when Keir Starmer appointed me in July, we have to re-invent active labour market policy for today’s labour market. We understand the relationship between unemployment – someone searching for a job and unable to find one, contrary to their wish – and other crucial variables like GDP or interest rates.  We understand how shocks cause unemployment and how to prevent the scarring effects it can cause. We know Keynes was right.

But that analysis isn’t enough for our problems with inactivity now.

What we don’t understand is how to deal with the scars.  The UK economy is not in the throes of a crash.  Our employment problems are not the kind Keynes had in mind.  The condition of our economy is no longer in the acute phase. Rather, what we are dealing with is a chronic illness in our economy, scar tissue left by previous shocks, wounds that have not healed.

In any treatment, the first step is diagnosis.

And therein lies our first problem.

Survey response rates.

It sounds like a little thing – the downward trend in people replying to surveys.

But the number of responses to the Labour Force Survey, which was already steadily falling before the pandemic, fell even more sharply subsequently. 

And without enough survey responses, the ONS have admitted themselves that the results have to be treated with caution –

As the OBR’s Professor David Miles told the Treasury Select Committee a month or so ago, the data is a lot less reliable than it used to be.

And as the Governor of the Bank of England has pointed out, its accuracy is important not just for them – but for a range of public policy - including, of course, what we do at the Department for Work and Pensions.

Our ability to tackle the long-standing scars in the UK labour market depends on accurate diagnosis, and many people are concerned because of the state of the Labour Force Survey, that no-one really knows what’s going on.

At the DWP, it’s a challenge we relish.
 
 We have a wealth of information. Far beyond one survey alone, we have

• PAYE real time information estimates;
• workforce jobs data to give us a sense of local demand, as well as supply;
• and our plethora of data related to the real life action of running the social security and employment support system.

It’s not easy to unpick all of this.  But we have made a start.

So alongside the Get Britain Working White Paper last week, we published for the first time new data showing labour market trends that indicate the direction of travel for us, not just as one of the biggest delivery departments, but also as a home of labour market analysis.

This is why, alongside the Get Britain Working white paper, we published:

1. The into work rate, showing the up to date effectiveness of our current public employment service. I think people might be surprised to know that the current into work rate is just 8% month-on-month for Universal Credit claimants in the “searching for work” group. But what you won’t be surprised to know is that it has fallen not risen since the pandemic. We heard a great deal from the last government about their policies moving people “off benefits and into work” – whilst they sat on the statistics that could have shown that the rate was falling, not rising.

2. We have also published – for the first time – the time that people spend in different work search categories. Again, this will not surprise anyone in this room, but the evidence shows that if you are put in the limited capacity for work related activity group, you usually stay there. We have a system that writes people off.

3. Even if you are working – but on low pay – we have now done the analysis ourselves that shows you are more likely than not to get stuck – with 60% of people failing to escape low pay between 2017 to 2023.

4. And finally, we have published our analysis of the major force in the British Economy that holds people back: geography. Now you might think that we would focus on regional disparities – the so called North/South divide. But actually, we find that there are often more substantial labour market inequalities in regions than between them. So for the first time, we have published a matrix of measures covering every Local Authority area, and finding 14 types of labour market across the UK. We have looked at their features, what they share and what divides them.

This approach to evidence underpins our whole labour market strategy.

It is because we observe that the number of people out of work due to long-term sickness was going up even before the pandemic.

Rising by half a million between 2019 and 2022 and being now the main cause of the rise in inactivity since Covid.

And because we know that for 2.8 million people, ill health is the main answer as to why they are out of work, that we have established eight trailblazer areas to work with us on bringing people back into the labour force that have been written off.

We also know that the increase has been especially sharp amongst women, young people (18 to 34) and those with a long-term mental health condition.

We’ve seen the number of disabled people not in work rise by 580,000 in the past four years, compared to just 20,000 in the six years before that.

Because of those insights, we will work collaboratively across governments, the private sector, the voluntary sector, and, at the heart of our communities, to turn this around.

In this room, you all know that people have been written off for years, with employment support starting from a focus that often means just working with those who are closest to the labour market and the rest left on the scrap heap. It’s a mistake we can no longer afford.

Particularly when it comes to young people –

The shame of 11% of young people in London not in education, work or training. In a city like this, bursting at the seams with opportunity.

The shame of knowing that in the North East, that rises to 15%.

And the shame of knowing that in Blackpool, one in four 18-21-year-olds are on Universal Credit, more than twice the national average and ten times higher than in Oxford.

Prospects for the pandemic generation have not been the top of anyone’s agenda for far too long – whether it’s the lack of opportunities or the barriers in the way of them. And that’s why the Get Britain Working white paper establishes eight trailblazers recruiting partners in pursuit of our nation’s future.

It’s a deal: get good opportunities when you are young, and the responsibility to take them. And with the help of the Premier League, the Royal Shakespeare Company and others, we will make sure they are the best opportunities going.

Finally, our public employment service: a national jobs and careers service that is there for everyone but responsive to who you are and where you live.

I know there will be some scepticism about the reality of moving from a DWP where one size fits all and where employment support means the same thing everywhere. And of course, at its core, our Job Centres wherever they are, need the kind of labour market analysis I have spelled out, and other support structures, in order to succeed.

I want to be clear too that our plan to Get Britain Working will rely on the people in this room too. Whether you are in a small voluntary organisation, social enterprise, larger provider or another part of the public sector – we will need the skills, experience and ideas that you can bring to help more people have the opportunity to get into work and on in work.

But I can only speak personally on this. Every aspect of my constituent’s lives – and my own life – is shaped and has been shaped by the markets we experience day to day – because of where you live, what job you can do and what you can afford for your family, which means the ambitions you are allowed.

When I was young, a Tory Government looked the other way whilst my friends and I struggled. And it is not a mistake I or Liz or Keir are prepared to make.

I have watched for 14 years in this country, the British people be promised their town, their city, their country, would be heard and it never turned out to be the case.

So I say, let’s start with the evidence – we know where the chances are, we know where the skilled jobs are, we know where the people are who need them.

It is time to get on with the job.