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Mr. David Ruffley (Bury St. Edmunds) (Con): I welcome the opportunity to speak in this important debate, for two reasons: first, to highlight the critical importance to this country of training, particularly vocational training, and secondly to highlight the pressing need for greater simplicity in the system of benefit and support for our young people.

The Government's March 2004 consultation paper, "Supporting young people to achieve: towards a new deal for skills" has many merits. The Government announced their long-term intention to create a single, simplified system of financial support for young people. The paper also announced short-term measures, which are largely contained in the Bill, including the extension of child benefit and child tax credit to unwaged trainees between the ages of 16 and 19, and changes to benefit and tax credit rules to ensure that young people who reach 19 before they have finished school or college continue to be eligible for benefits and tax credits until they complete their course.

The skills shortage reveals a lack of real attention on the part of successive Governments to the importance of achieving true parity of esteem for vocational training with academic education up to 19. That is an important issue and the Bill does something to deal with the problem.

There is a shortage of skills in this country, and we all see it in our constituencies. The hon. Member for Hartlepool (Iain Wright) eloquently drew attention to the problem in respect of the urban part of Britain. I represent a rural part of Britain where the problem is equally pressing. The two main towns in my constituency, Bury St. Edmunds and Stowmarket, would probably be described as market towns, and they have extremely low unemployment. There are many companies in all sectors that just cannot secure the necessary skilled labour. That is partly connected with the fact that there is a buoyant jobs market, but is also to do with a lack of ambition that has afflicted parts of the county of Suffolk for many years.

I am delighted to report, however, that there have been some sterling efforts made in my constituency in respect of technology status for schools. Stowmarket high school, under the leadership of an exceptional head, Mr. David Oliver, and his dedicated team of governors, pressed hard for technology status. The school understood that in the area of Stowmarket there was a huge and pressing need to skill up our young people from 14 onwards. There has not been a
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particularly marked appetite among GCSE pupils in the area to go on to university, but there is an appetite for getting high-quality vocational training. My sense is that all political parties in this country understand that it takes massive skill to be a first-class electrician, plumber, bricklayer or central heating engineer. Those are good and noble careers that require skill, dexterity and training. I could not do them, as I am clueless in practical matters. Governments of all political persuasions must do more to celebrate, support and talk up vocational training.

That should not be necessary. For example, Germany does not have the same problem. Any vibrant economy must have an appropriate mix of education. People who prefer the academic route need to be catered for, as do those who prefer the vocational route. In that context, I also want to take this opportunity to pay tribute to the other schools in my area—King Edward's, St. Benedict's and County upper in Bury St. Edmunds, and Thurston community college and Stowupland high school.

The battle continues to ensure that our economy has the skilled work force that it needs to preserve its record of economic growth, but some rather worrying statistics have been unearthed by the Learning and Skills Council, which recently published the key findings of its survey of the scale of shortages that obtained in February last year. The survey showed that more than one in 10 of the English work force—that is, 2.4 million workers—lacked the skills that they need to do their jobs as well as they should be done. One third of employers had no training plans to plug that skills gap, and one fifth of job vacancies—about 135,000 posts—remained unfilled because of lack of appropriately skilled applicants. The study also found that poor basic skills cost a typical business employing 50 people about £165,000 a year, and that employers in London were the least likely to offer employees adequate training.

The CBI and the TUC recently estimated the cost of the skills crisis to the British economy at a staggering £10 billion a year—that is, about £170 for every man, woman and child in the country. The Government's skills strategy document of June 2003 conceded that our skills gap had remained stubbornly persistent. The problem did not arise over the past seven years, but it has not been adequately addressed in that time. There is not much point in prating on about what happened in the 1980s and 1990s, because the remorseless demand for a greater competitive edge in this country over the past seven years is there for all to see. Global economic forces mean that we live in a more competitive economy than was the case even 20 years ago. I suggest therefore that it is more urgent for this Government even than for any of their predecessors to get a real grip on closing the skills gap with our competitors.

Mr. Hopkins: I am following the hon. Gentleman's speech with interest. We are all concerned about the skills gap, and he has pointed out that, although companies are desperately keen to employ more skilled workers, they are not prepared to train them. Does not that mean that the state must play a much greater role
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in ensuring that skills are developed, either by offering training itself or by compelling or inducing companies to do that?

Mr. Ruffley: I shall not be tempted down that path. My party is inveterately free-market, which differentiates it from the hon. Gentleman's. We believe in voluntarism and not the heavy hand of the state. Most of the time, when the state gets involved in such matters, it does a pretty lousy job and messes things up. That is especially true when it comes to work force issues.

One of the great successes apparently celebrated by the present Prime Minister and Chancellor of the Exchequer is the supply-side revolution of the 1980s and early 1990s. That success is not in doubt and is not contentious. It has been adopted by the Labour party as part of an economic consensus, although I agree that the social responsibility that employers should display voluntarily is not as evident as it should be.

Mr. Hopkins: Is not it obvious that voluntarism does not work? The most successful economies, even in the capitalist world, are those where the state takes a strong lead in developing skills and investing in them. Taiwan is a good example of what might be called guided capitalism, as opposed to laissez-faire capitalism.

Mr. Ruffley: The hon. Gentleman cites a selective example. The greatest job-creating economy on the planet is the US, which would not adopt a Taiwanese state-interventionist model. The facts support my choice of example, and not his. However, we can agree that some employers are not sufficiently responsible, even though they should understand that giving a work force the proper skills can be to their benefit and economic advantage.

I resolutely stick to a voluntarist model. The results will always be patchy, and we will never attain perfection in this area of human and economic endeavour. I believe that the heavy hand of the state is to be avoided, and that the hon. Gentleman's prescription is not likely to be adopted by Ministers for the time being. The very simple reason for that is that they understand that that approach was tried in the 1960s and 1970s and that it failed, whereas the Tory economic model of the 1980s and 1990s succeeded. That success laid the foundation for the economic growth currently enjoyed by our economy. We call that the golden economic legacy of my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke). The current Chancellor has not tried to unwind or reverse that legacy, which is eloquent testimony to its success. The—

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. The House is enjoying these exchanges, but they are marginal to the content of the Bill. I hope that we can draw a line under them at this point.

Mr. Ruffley: That is not the first time I have been called marginal, Mr. Deputy Speaker. I had no intention of trying your patience, but I was led astray by the interesting—although now apparently irrelevant—interventions by the hon. Member for Luton, North (Mr. Hopkins). Even so, I hope that we have demonstrated that there is some common cause between us.
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Recent figures show that output per hour worked in the US and Germany is about 25 per cent. higher than in this country. In France, the figure is more than 30 per cent. higher. The percentage of the British work force qualified to intermediate skills level—that is, apprenticeship, skilled craft and technician level— is low, at 28 per cent., compared with 51 per cent. in France and 65 per cent. in Germany. That is the measure of the skills gap.

The complexity of the current system was outlined by the Paymaster General and by my hon. Friend the Member for Chichester (Mr. Tyrie). It is the second aspect of training and the labour market addressed in the Bill, which, in fairness, does something to effect sensible reform. In the 2003 Budget, a wider review of support for 16 to 19-year-olds was announced, including financial incentives to participate in education and training. In March 2004, the Government published "Supporting young people to achieve", and no one can fault the ambitions set out by Ministers in that document.

The Government, we were told,

We heard about the Government's

and that the

Those all fall into the category of motherhood and apple pie, but did the Government really do enough in the preceding seven years to deliver those ambitions? I suggest that they did not—for one simple reason. No doubt through high-minded intention, the Chancellor of the Exchequer has introduced many versions of in-work benefit and support, starting with the working families tax credit in 1997. With various tweaks and incarnations, the child tax credit and the working tax credit are now the two main in-work benefits. There are education maintenance allowances and a long catalogue, to which reference has already been made, of new initiatives.

The Bill speaks to the position of unwaged trainees, which is especially worthy of note and, in the panoply of changes, one of the more worth while. One of the key changes will be to the current rules, where for child benefit and child tax credit purposes, anyone under the age of 16 is treated as a child, and a young person aged 16 or over but under 19 is treated as a child if they are in full-time, non-advanced education. The Government believe that the current definition of a child in child benefit and child tax credit for 16 to 19-year-olds distorts choice, especially for those who are more likely to take the vocational route. Under the current system, they may be forced to take a course at a college rather than with a training provider, because of the existing differential—the additional financial support that is available. In the Bill, the Government have committed to extend child benefit and child tax credit to the parents and carers of unwaged trainees.

We support the proposals that I have just outlined; we also support the proposals on the age-19 cut-off. I shall not detain the House on those, but the regulations published on 10 January reveal that the Government
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have decided to use the age of 20 as the initial cut-off point, leaving open the option for a change in future if it is deemed necessary.

I close with some criticisms, which are, I hope, well judged, of the wider welfare and training policy that the Government are offering the country, in the light of the sensible changes in the Bill that I have conceded. In 1997, Labour promised to reform welfare and spend less on wasteful social security while maintaining spending on the sensible parts of what was then the social security budget but is now the budget of the DWP, such as pensions. One would have to be a complete idiot to say that cuts in social security should include the basic state pension and other pension benefits. However, the Opposition believe that, as the James review will make clear in the coming weeks, there is much useless, irrelevant and redundant expenditure in the DWP budget.

Welfare spending has increased by nearly a fifth in real terms since 1997, in clear defiance of the Prime Minister's promise that that would not happen. While spending on welfare and education has risen, recent research from the Library shows that the number of young people aged 16 to 24 who are not in employment or education has risen by 36,000 since May 1997. That may not be a huge increase, but it is not an impressive statistic. The figure would have been going down since 1997 if Labour's promises had been delivered. More than half the young people who are not in education or work—about 670,000—are defined as economically inactive: they are not actively seeking work. Despite the Labour party's rhetoric about prioritising education and skills—we remember that great slogan, "Education, education, education"—the CBI has reported that one in three companies has to provide remedial training for school leavers who have not sufficiently mastered reading, writing and arithmetic. That shames us all, and the Government would be well advised, while making sensible changes in Bills such as the one that we are debating today, to look at the basic skills of reading, writing and arithmetic in primary, middle and upper schools, as those skills precede vocational training. The statistics, however, are worrying.

My hon. Friend the Member for Havant (Mr. Willetts), the shadow Secretary of State for Work and Pensions, has rightly taken every opportunity to criticise the Government for reneging on their promises to reduce benefit payments. We will say something about that, as I have suggested, in the James review. Forensically and with great numerical distinction, the Conservatives have highlighted the failings of the Government's new deal programme, particularly for young people. My hon. Friend recently commented:

I do not dispute the Government's good intentions, and we are not suggesting that Ministers are acting in bad faith. However, they are failing to deliver on the new deal, as on many other things.

It is the policy of Her Majesty's Opposition to tackle the crisis in basic skills initially, although not exclusively, in schools. Pupils should be able to
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specialise in meaningful skills education as early as 13 if they so wish. Also, they must achieve higher standards of reading and writing at a very early age. Our policy of entrusting school heads and governors with more freedom to improve their schools will deliver genuine improvements, giving schools more freedom over their financial management. In the 1990s, we saw the benefits of that policy in grant-maintained schools, which achieved better results because teachers in local schools knew how the money could best be spent to lever up standards. We will introduce other measures to improve the quality of teaching, including, for example, axing unnecessary paperwork. Since 1997, the average school head has received 12 pages of bumf from the Department for Education and Skills every working day. We would cut that material, and we would also reduce interference from appeals panels if a head wished to exclude an unruly pupil. There is therefore a package of measures at the heart of our efforts to improve training.

We will also reform welfare to give more practical help to unemployed young people. We will scrap the new deal, which has been an expensive failure. Only about a third of people who complete the programme find a sustained job and most of them end up back on benefits, according to the new deal summary statistics issued by the Department for Work and Pensions in December 2004. Statistics show that most people who find work while on the new deal would have found jobs regardless of that Government project. We will replace it with "Work First", a policy that allows private, voluntary and charitable providers to deliver employment advice more effectively. There is clear evidence from home and abroad that contracting out employment services to independent providers—but not in the lily-livered way espoused by members of the new Labour hierarchy—achieves much greater success at lower cost.

In conclusion, the Opposition welcome the sensible parts of the Bill, but we do not welcome the Government's record over the past seven years, as it has let down children and young people. More can be done to help them achieve their ambitions. It is vital to create a highly skilled work force that can adapt to the challenges ahead, including a viciously competitive global economic environment. It is not an option to say, "Stop the world we want to get off." It behoves politicians from all parties to have much greater ambitions for our young people. They are our future.

3.49 pm

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