After 14 years out of power, Labour have lost no time on signalling their intentions for ‘change’ in their first days in power.

Over the past week, a series of Labour Ministers have lined up to tell the public that the situation they have inherited is worse than they expected with challenges facing public services – like prisons – hitting the headlines. And, on Wednesday, King Charles will announce the Government’s priorities for its first year in power. The Government have promised to put ‘growth at the heart of legislative agenda’ and focus on improving the living standards of people across the country.

It will provide a first opportunity for the new Government to set out how it intends to improve the UK labour market, which faces a range of serious challenges that are impacting the daily lives of workers, restricting employers and hampering economic growth.

In this context, the Work Foundation has set out three key tests for the King’s Speech to help judge whether the policies and measures announced are likely make working lives better.

1. Are the Government’s plans likely to support the 6.8 million people in severely insecure work into more secure and better quality jobs?

Approximately one in five workers in the UK are in severely insecure work, and our research has found this rose by 600,000 people alone since 2022 to 6.8 million. Those in severely insecure work are, on average, over £3k per year worse off than those in secure work, and often lack access to core employment rights and protections.

At the heart of Labour’s plans to tackle this issue is its New Deal for Working People. It includes a raft of legislative reforms to ban exploitative zero-hour contracts, end hire and refire, extend and improve statutory sick pay, deliver a ‘genuine’ living wage and introduce family friendly rights such as a day one right to flexible working.

The Government has promised to introduce legislation within 100 days of entering government so it is a safe bet that we will see Bills relating to these measures feature in the King’s Speech. Taken together, the proposed reforms do offer the opportunity to significantly improve the working lives of those in insecure and low-paid work, and many others too. But is there a risk that Labour might still fail to deliver on its promises to tackle insecure and poor quality work?

We may get a sense of this in the unlikely event that crucial elements of the New Deal for Working People appear to be missing from the Government’s legislative agenda. But it’s more likely that we will need to wait to see the detail of proposed reforms, and the outcome of what is likely to be deep engagement with businesses, civil society and workers before any legislation is finalised.

In recent months polls have shown both employer and public support for more workers’ rights but some friction remains between Labour, the unions and the business lobby on how far new labour market regulation should go.

Ultimately, a ‘lite’ version of these reforms will significantly dilute the impact they’re likely to have for workers, employers and the wider issues facing the UK labour market. This is especially true as elements of the New Deal intersect and depend upon one another – the day one right to flexible working requires a guaranteed contract which zero-hour contracts do not currently provide, and stepping back on one reform will impact the other.

Another key area to look for is a renewed commitment to properly resource and fund a new Single Enforcement Body for labour market regulation to ensure new rights and protections are not only introduced, but that all employers adhere to new laws in the future.

2. Are the Government’s plans likely to support the 2.8 million people who are economically inactive due to long-term health issues back into sustainable employment?

Since the pandemic, the UK has faced higher levels of economic inactivity, with ill-health emerging as a primary driver of people falling out of the labour market. Without intervention, evidence from the Health Foundation predicts a significant rise in working-age adults with major illnesses by 2040 – further intensifying labour shortages and increasing the welfare bill.

The previous Government’s Back to Work Plan included measures to support long-term unemployed people back into work through extending the Restart scheme, and commitments to reform welfare to make it less risky to enter work. These changes may be retained by the new Government, but they are likely to be accompanied by more wide ranging reform.

Liz Kendall, the new Secretary for Department of Work and Pensions, has already signalled her intention to overhaul Jobcentres, devolve more power to local areas relating to employment support, and support a renewed focus on the root causes of worklessness, including poor physical and mental health.

But the key test for these measures is the extent to which they are properly resourced for the long-term, ensuring work coaches, the third sector and Local Government each have the capacity and funding to deliver more intensive and tailored employment support.

Given how constrained the public finances are, a further test will be the extent to which Government strategically focuses its resources on supporting those most likely to return to the labour market to secure sustained employment.

And finally, to be impactful, any Government intervention will also need to reduce the flow of additional people exiting the labour market into inactivity. That means there is a key role for employers, who must be supported to provide flexible, safe and secure employment for those managing mental and physical health conditions into the future.

3. Are the Government’s plans likely to spur higher growth, wages and living standards across the UK?

Most workers are feeling poorer than five years ago after sustained consumer price rises, with the last Parliament being the first since 1955 where living standards have declined. This is against a backdrop of stagnating wages, with recent research from the Resolution Foundation has shown that average weekly wages have grown by just £16 since 2010.

Although average wage growth has recovered slightly in the last year, Work Foundation research has found that only 30% of employers plan to award pay rises above inflation this year.

And while inflation has hit the Bank of England’s target of 2% for the first time in nearly three years, the cost of living crisis is not over yet, with interest rates remaining at their highest level for 16 years at 5.25%. This is creating a cost of housing squeeze for many private renters and mortgage holders.

The Prime Minister has been clear that restoring economic stability and growth to the UK is one of the new Government’s central missions. But doing so will require bold, long-term investment, including in the construction of new homes, renewable energy, social care and in other sectors of the economy most likely to provide new jobs in the future. A key test of the Government’s first King’s Speech is whether it provides some of the foundation stones for this long-term action – such as a new UK industrial strategy as well as a greater focus on skills.

In addition, short-term decisions are needed on the future of the Household Support Fund – which has been a vital lifeline for those struggling to make ends meet. It is due to expire at the end of September, which provides a reminder that alongside longer term interventions, the new Government must also ensure those most in need today continue to receive support to deal with higher prices.

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  Work Foundation sets out key tests ahead of the King’s Speech

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