The SMF hosted a speech and discussion with Alison McGovern MP, Shadow Minister for Employment on the 27 April 2023. This is the speech in full, with Alison sharing her vision for the years ahead and how to ensure opportunities are spread evenly across the country.
Thank you, James, for asking me to share some thoughts on social mobility today. He and others won’t agree with every word I say today, but I have consistently found SMF to be a home for robust and evidence-based debate about the structure of our economy. I hope that this speech will prompt some new thinking about a subject that is crucial to the macro and micro economy.
James pointed out in a recent column, “A few years ago, politicians were falling over themselves to talk about making sure kids grow up to be better off than their parents,” but it seems to have fallen out of favour with the current government.
I will argue that a central mistake in the UK’s labour market policy is low ambition for our people – an anathema to improving life chances.
I think that this low ambition stems from a low opinion of people which, at best, is the consequence of short-sighted policy making, and at worst, is a result of class discrimination about the jobs that people do.
In a recent IFS lecture, Baroness Minouche Shafik claimed that it takes 5 generations for people to move up from lower to middle income.
So when it comes to life chances, there is far more that employment policy can do.
I want to talk about where ambition for everyone – including those already of working age – fits in to Labour’s mission to see the highest sustainable growth in the G7.
We think that, in seeking greater life chances, employers and employment policy have just as much of a role to play in making sure growth benefits everyone, everywhere, as other parts of social policy like education, health and so on.
That’s why we’re targeting the highest employment rate in the G7.
We believe that the best possible outcome for Britain, is one where as many people who can work, do – and that they’re working in good jobs that pay well.
Of course, that’s one where people who have taken time off from work, due to ill health or anything else, have access to the best possible support to get back to work.
It may not be the conventional way of thinking about ‘social mobility’, but I think with such a tight labour market (over a million vacancies) we should ask ourselves whether our economy could be offering people better prospects.
So here is my argument about how we can reform employment policy to improve life chances, and by doing so, improve the health and sustainability of our economy.
Looked at from the macro level, there is a big flaw in our economy – too many people are getting paid too little (in the North East, 8% of jobs are paid at or near the minimum wage, compared to 4% in the South East) and have too little chance to move on and move up in work.
At the micro level, this is because people have choices that are way too narrow: they can’t get on in life because the barriers are too high, whether it’s childcare, public transport, or not being able to work flexibly.
The government has a role in helping people clear these hurdles but, at the moment, it is failing to carry out this role because of the DWP’s low ambition mindset.
This wastes the time and talents of too many of our citizens by failing to get them a decent job.
The right mindset requires change at three levels.
Because whilst we have to fix what goes on inside job centres, it is also true that geography makes such a difference to life chances that towns and cities need more power and influence to change the postcode lottery for good jobs in the UK.
At the UK level we need to use the power of UK legislation to shift public sector culture and practice by bringing into force the legislative duty on public bodies to act against socio‑economic discrimination, so that people aren’t held back because of low ambitions made on their behalf.
So, if our desire is for more people to progress through work, let me describe the changes at those three levels: the job centre, the town or city, and the UK level.
The current policy of the Department for Work and Pensions fails people because too many people end up in low paid work. Inside jobcentres, you get a 10-minute appointment, and it’s impossible to give good quality support and advice in that environment.
What Labour has proposed is better employment support which can get people into the best possible job, in line with their skills and ambitions.
Now, this is not to oppose conditionality, which will always play a role in our system where rights and responsibilities go hand in hand.
But unfortunately, the DWP have made three key mistakes:
Firstly, they’ve mistaken the current state of the UK economy. In a tight labour market, there are jobs available that could help people earn more, and with the right support we could see wages rise, not remain stagnant as they have been for the past 13 years. On average, had the economy continued to grow as it did under Labour, people’s annual real wages would be over £5,000 higher.
Secondly, they’ve mistaken how to help people. They’ve reduced our Job Centres to a service with low ambition for their users. If people going to job centres have already faced significant challenges in life, not providing the best quality support makes matters worse.
Thirdly, and worst of all, they’ve mistaken the consequences of their policies. People aren’t given the opportunity to grow or progress their careers. Baroness Ruby McGregor-Smith, the Government’s In-Work Progression Commissioner, found that only one in six low-paid workers ever truly escape low pay.
This is the central point I want to make today about social mobility. When the Government fails to see the potential of employment support – they are hampering the ability of a well‑functioning labour market to make best use of people’s time and talent.
Next, let’s think about how place shapes ambition. The place you grow up in does a lot to shape life’s experiences. Lots of people in the UK know what it means to grow up somewhere with limited job opportunities. No one can expect every career or role to be open to them wherever they happen to live, but the imbalances in the UK mean that economic clusters in London and the South East have a disproportionate effect on social mobility and potential economic power.
It’s no accident that the senior levels of government, law, media, and business are dominated by people from the south-east of the UK. Whilst there are plenty of communities within the south-east itself that are held back for reasons having nothing to do with geography, power clusters.
Powerful clusters influence local labour markets. It’s not just your parents that influence your life chances, it’s also your postcode.
That’s why we need a coherent plan for every place in our country that will make it more likely that future generations aren’t limited by geography.
Second point on social mobility then is this: the postcode lottery for work in the UK is holding people back, and to change fortunes individually, we need a better plan for all our places.
Finally, the third tier: the UK, and public sector duty to prevent socio-economic discrimination.
The UK has long-standing problems of poverty and inequality. The consequences of poverty are not short-term problems, low incomes have wide ramifications for life chances.
If you speak with an accent, assumptions will be made. If you come from a certain postcode, assumptions will be made. If your school, your clothes, your experiences or anything else gives you away as being from a ‘lower’ class of society, assumptions will be made.
Yes, it’s complicated. But we all know socio-economic discrimination when we see it. The feeling of being looked down upon comes from a real imbalance of power.
The Equality Act 2010 intended to place a duty on public authorities to try to tackle this form of discrimination. But the incoming Conservative government of that year refused to bring the relevant clause into force.
In the private sector, many are already trying to tackle socio-economic or class prejudice. PWC, for example, do fantastic work to provide apprenticeships as an alternative to graduate entry.
But while public bodies need to have due regard to tackling racism, sexism and discrimination of other kinds, there is no such legal requirement to care about prejudice based on someone’s socio-economic status.
Labour will tackle socio-economic inequality by enacting that duty, forcing the Government and public sector to reform themselves.
We will make narrowing and eliminating inequality a priority.
Within the first 100 days of the next Labour government, we will bring forward our New Deal for Working People, strengthening workers’ rights and putting money in people’s pockets.
So, in summary, to help people move on and move up we will target the highest employment rate in the G7 and, for it to be sustainable, we will change Job Centres and improve the quality of employment support, getting people into the right jobs, breaking the Conservative cycle of low-paid work with little progression.
We will support people looking for work to develop their learning and skills, improving people’s choice of jobs and Britain’s productivity. We will fix Access to Work and recruit thousands more mental health workers, tackling one of the biggest problems in our society today, the health of our nation, and delivering higher employment for people with disabilities and health conditions.
Taking a local approach, we will reform employment support so that local labour markets benefit from local expertise. Where we have devolved institutions already in England, many of these bodies already wish to take more of a leading role in tailoring employment support to local labour markets.
Labour will support them in doing so. Our green investment pledge will bring better paid jobs to places that need them, and job centres will be employed to help people get those new, good jobs – real ambition, not just any old job will do.
We will need full and positive Job Centre engagement with local employers, colleges, charities and trade unions to crowd in expertise, rather than running the whole system from Whitehall. This is exactly the kind of reform the BEIS Select Committee has just called for so I feel sure we will get wide support.
When it comes to the national picture, Clause 1 of the Equality Act will be crucial.
As I’ve said, the government must reform itself, DWP can play a fuller role in developing national data for different regions to make sure we make progress. In understanding life chances across the country better, the UK government can show a lead in taking on the lotteries of life.
There is one final point I want to make about social mobility, work and ambition.
It is reasonable that the public want to know about politicians and who they are, including about our own class background.
Too often, we can put ourselves into boxes, but class stereotypes are never really true or fair.
My own background could be described in classic ‘working-class’ terms: from my great‑grandmother who came from Ireland and was held as an unpaid domestic labourer in what we would now call modern slavery, to four generations of us McCanns and McGoverns that worked on the railway, and the struggles with money I knew as a child.
But that wouldn’t be the whole story. I am proud to have come from a working-class background, as Keir Starmer is.
Even more so given that my great-grandmother’s son became a songwriter as well as a railwayman and went to study at university aged 67.
When I moved to London to study philosophy, he bought books on the reading list so he could talk to me about it. I didn’t think about social mobility much growing up, but through this love, I was always encouraged to be and do whatever I wanted. And that is what we should want for all.
Because we are all – even Labour MPs – more than our stereotypes. This is what class is: a financial reality, but a human nonsense. No one’s creativity or talent should be limited by the financial circumstances in which they grow up.
The right principle for the government is to question every employment policy against how well it will help people move on and move up and achieve their hopes and ambitions. No more jobs that don’t match people’s skills, an end to the anything will do culture. Only the best possible jobs are good enough.
That’s how we will deliver what’s best for people and businesses across the country, and how we’ll ensure the highest sustained economic growth in the G7.