Select Committee on Work and Pensions Minutes of Evidence

Examination of Witnesses (Questions 360 - 379)



  Q360  Justine Greening: Although what you talked about in terms of compulsion was very interesting, I think one of the problems, having worked in industry myself and being funded by my employer to do an MBA, one of the dilemmas they faced was that in making me more valuable to them in terms of my skill set they also made me more valuable to many other employers out there. I realise obviously that we are talking about a whole range of skill sets, but I would be interested to know your thoughts about how we can encourage employers to see investing in staff as something that is generally a good thing and not something that is going to make their key staff more likely to walk out of the doors? For smaller companies. What is interesting is that large companies can invest and become known as a good employer, but smaller companies, who do not have that recognition across the market, are more likely to be on the receiving end of the bad side of investment, which is that their employees walk perhaps, rather than the positive. How do you think that we can flip the tables around so that small investors, small companies who are great at developing their staff perhaps, can get the recognition that ought to go along with that, which then makes it valuable for them to keep doing it?

  Lord Leitch: I think that large companies do invest in skills, and some of them are absolutely superb, but many of them can do even more. If you look at what we are recommending on brokerage, we are saying to expand brokerage for larger employers, so that their Train to Gain brokers can go into these companies and demonstrate that if you do this on skills then it will have this impact on your productivity, will have this impact on your bottom line. So I think large employers can do more. I come from an employer background myself and of course what the employer is best placed to do is to identify the skills that can deliver performance for their organisation. That will always be an employer's first priority, to deliver those skills and make a difference. What we have to try to do is to get them to increase that even more, so that productivity is good for the nation, it is good for employment, and we want to do that. At the same time, as a by-product we do want to have more portable skills and I think that by having skills approved by Sector Skills Councils, so that they are more economically valuable skills, is a way of getting qualifications much more prevalent. We have 22,500 vocational qualifications in this country, and we have identified that a significant proportion of those qualifications deliver no return to the individual and no return to the employer. If we can get Sector Skills Councils reformed and re-licensed with the influence to improve and to approve those qualifications we can make a step change in what we are trying to do. I agree exactly with what you are saying, that SMEs are the most difficult to reach group. In terms of engagement we have recommended changes, for example on management, on a management grant for SMEs. In terms of calls for evidence, and, again, recently from the CBI, the biggest calls in looking at skills gaps going forward is for management. It is absolutely clear that management skills make a huge difference to the productivity and to the success of employment in this country. What we are recommending is that we take the current grant and apply that down to SMEs of 10 people, and so that we are giving more help and there will be more help to the SMEs in order to improve their management skills. Train to Gain is a great example to involve SMEs. Just to give you an example, I went the other month to a small company in south east London and it was a printing company with five employees and two principals. They had never done any training before. The Train to Gain broker came in, analysed what they needed and then defined courses for these people, and I talked to two young men who, since leaving school, had never received any training and they were now going on training courses and they were inspired, they were motivated, they were working better. The principals were actually delighted. Another thing we are recommending is to have a more unitised, modular approach to qualifications, so that you can do it in chunks, and then they end up with a portable qualification which can be delivered. So the way to SMEs, I think, is through Train to Gain.

  Q361  Chairman: Can I just take you back to the training levy because you were fairly categorical that the training levy has failed, but I would suggest to you that the failure was that the training was provider driven and that we are in a completely different environment today to 20-odd years ago; that governance of providers is vastly different? You have just quoted there a small printing company and the average age for a skilled craftsperson in the printing industry now is 52; in 1980 it was 38. Why? Because the industry, once training levies were abolished, stopped training. When they were paid for it they all wanted to be involved in training, but once the levy went they saw no obligation to, and that has driven—which is very good in the trade union—a wage race for skilled printers to £35, £40 an hour because there is that shortage and a lack of training because nobody was paying the training levy. You might want to reflect on that, that when we had training levies it was a completely different environment, producer driven and pooled governance.

  Lord Leitch: Can I respond on that, Chairman, just quickly? All the international evidence that we looked at on compulsion and training levies demonstrably showed that it did not work effectively in a sustained way. I will give you another example from my own industry with training levies in financial services and insurance. Basically people used to pay the levy and not do the training. So you actually have to have an alignment—and that is what we are recommending here—of what the employer needs; and you are right, we are hoping to change the environment, going forward such that the employers do define the skills that they need. Then we know that less than 10% of employers use FE colleges and this way there is a much greater opportunity for employers to get those economically valuable skills that way.

  Q362  Chairman: One of the most startling recommendations that you have come up with is this idea of effectively moving the school leaving age to 18. In what timeframe would you see that being implemented?

  Lord Leitch: Our remit has been largely on adult skills. In fact, we have gone outside it a little bit, but our remit has been on adult skills for the reason that 70% of the working age population in 2020 will have already left compulsory education, and also the flow of young people coming in by 2020 will actually reduce, so our remit has been on adult skills. But we have also recognised the importance of education pre-18, and we are very conscious of the problems of those individuals not employed, not in education, not in training and we are very concerned about that. We think a diploma is a good thing to be doing and our staying on rates in this country, at 83%, is significantly below the OECD average. There are some countries up in the 97s, 95s, staying on past 16. So our view is that first of all you should get the framework right to make sure that the mechanisms that we have in place are ones that will work for those people between 16 and 18, who are not staying on at the present time. So, first, get the framework right and then consider changing the law. It is not first put in a change and then compel because it might be the wrong thing to do, you might actually be compelling and forcing people to do things they do not want to do, so that they would refuse to do it and find ways to get round it. So that is what we are saying—put in the framework. Our view is that the staying on rate, we should see a progression of that and when we see a progression—and we are not making a judgment on what the figure would actually be—then you can consider legislation. That is the way round, I think.

  Q363  Chairman: There are great inequalities in employment, different groups of people, differences in basic skills and so on. To what extent do you think that this agenda can reduce and, hopefully, eliminate those inequalities?

  Lord Leitch: I think it has a great opportunity to reduce those inequalities. Our terms of reference were to look, at by 2020, how we could maximise economic prosperity and productivity and at the same time to improve social justice. I think that was a key part of what we have done. Getting people with more basic skills is absolutely vital to do that. There is a direct correlation between skills and employment. In this country we come from a strong position on employment with a 75% employment rate, which is world leading. At the same time we know there is disadvantage in terms of the people who do not have jobs. If you look at it, almost one-half of those unemployed have less than a Level 2 qualification, of whom 300,000 have no qualifications at all. If you look at almost one-third, of those economically inactive have no qualifications at all. Around 50% of those with no qualifications are out of work. Employment rates for disadvantaged groups have actually increased over the last 10 to 15 years except for those with no qualifications, where it has not increased whatsoever. So here we think that there is a huge opportunity. I would just say, first, that to get jobs you first need employment; you still need employers to improve, which is coming back to the point that we have to get employers, we need successful businesses, leadership, management and innovation, and that is why we are recommending very stretching objectives—and I will come back to the basic skills—not just at the basic skill levels, at the higher levels, at the intermediate levels. There is no single panacea here, there have to be skill improvements at every single level in order to improve economic prosperity and improve social justice. So basically we are saying that if we can give more basic skills to those groups I am talking about then they will improve their job chances and their life chances—that is what we are looking for.

  Chairman: Mark Pritchard.

  Q364  Mark Pritchard: Lord Leitch, colleagues have mentioned about a training levy. Of course, some employers would say we already have a training levy and that is corporation tax and other forms of company taxation, and what we have to do is to try and get it right the first time rather than have to catch up and hopefully get it right a second time, which of course means a double bill as well for us. Given that so many people are still leaving school with very few qualifications, and therefore being limited in their life chances and having to be socially excluded from the work place, what is your view on how we can improve basic education in schools?

  Lord Leitch: We have concentrated very much on adult skills, but the effectiveness of the school system is not one on which we have concentrated and we do not make recommendations other than on the staying on rates at schools, so I think I would pass on that question.

  Q365  Mark Pritchard: Despite the fact that we have some fantastic teachers, particularly in my constituency, do you agree that the principle of trying to get it right first time, in whatever one does in life, whether in government or privately, is a principle to which we should perhaps all aspire?

  Lord Leitch: I agree absolutely with that principle. Indeed, I think if my terms of reference had said rather than look at 2020 look at 2050 then I would not have bothered looking at adult skills because the flow should actually do it, and that would have been a lot easier, perhaps, in terms of the review. But it is not and I think we have a situation where the flow is reducing, but I agree entirely with the principle.

  Q366  Mark Pritchard: You mentioned about shifting the focus of Welfare to Work policy from supply side to demand side and I completely agree with those thoughts, but do you think there is a danger, given some of the concerns expressed by the Association of Colleges, that whilst the aim is right an indirect consequence of that might be that we are setting local colleges against employers, when indeed we need local colleges and employers to be working more closely together to deliver the aims and objectives?

  Lord Leitch: It clearly is going to be a challenge for Further Education Colleges and other providers, but I think it is a fantastic opportunity. It is a fantastic opportunity where performance of the provider will deliver success, and in some of our visits I can tell you that I saw some stunning Further Education Colleges that do it really well. I remember one I saw that was generating 60% of its income from local employers. How was it doing that? By engaging with local employers, identifying what they needed from a demand side and then fulfilling their requirements, and I think that is a great opportunity for providers, whether it is private or public, in order to do that. I think that is the challenge in the opportunity.

  Q367  Mark Pritchard: Two final questions, if I may? With the Lyons Review coming up we are obviously going to see, arguably, some sort of contribution from local businesses, so perhaps a local business tax. We have heard from the Turner Review in the last few weeks and we had the White Paper yesterday, and again employers are being asked to do more; and, again, with your own review employers are being asked to do more, with which, as I say, some aspects I agree. But coming back to Smaller Medium Enterprises, there is an oversight in regard to how flexible small companies can be at providing these services and the skills and the support that we all recognise is needed but, nevertheless, can they be delivered on the ground compared to some of the CBI-type companies who have large budgets and have that flexibility overtly? I note your point about 10 employers earlier, but small businesses drive the business economy, they are going to be asked to do a lot more under Lyons, under Turner and now under your own report. Are we asking them to do too much?

  Lord Leitch: They are one driver of the British economy. Large and medium sized companies are also a huge driver of the British economy. I think we are asking all the stakeholders to do more here. We are asking individuals—and we will maybe come on to talk about individuals—to demand more of themselves; we are asking the Government to demand more of itself; and we are asking employers to demand more of themselves. I think it is right we should ask employers to do things primarily which will benefit them, and SMEs, and this will benefit them. But you are absolutely correct, giving that reach to small employers is difficult, and Train to Gain is a great opportunity for us to do that. The Pledge is a great opportunity to do that, to build up the momentum and to say, "This is useful to you." I will come back to the Pledge. Increasingly we are saying five GCSEs or equivalent is the minimum standard you need to work, and I will come back to the Pledge—it is a compelling proposition for small employers. So if Digby Jones does his job properly and he comes along to use a small employer and says, "This is the proposition," I think many small employers will buy into that; but it is a difficult challenge, I agree with you.

  Q368  Mark Pritchard: We hear a lot about social cohesion at the moment and clearly access to the workplace is a key part of social cohesion, but perhaps an even more important part prior to that is the issue of language, and it appears that those who do not speak the English language, who are perhaps British citizens, or those who seek to become British citizens who do not speak the English language, might find it more difficult to get a job. That is possibly a point of contention. How important is the English language to people living in this country who need to be encouraged to go into the workplace, either for the first time or to go back into the workplace as a result of other factors?

  Lord Leitch: Of course it can be a very significant barrier if you do not have the language; it is very significant for those people. The employment rates for ethnic minorities, as you know, are 15 points lower than for whites. We have increased immigration in this country, and it will be perhaps a more important issue coming forward. What we are saying is that we are recommending the introduction of a universal careers service. One of the things we found here is that if you wanted advice on what you need to get into work—and for some people skills are necessary to get into many jobs but they are not the only thing because you have other situations, such as if you are disabled, and other obstacles in terms of getting a job—for many situations you need skills. What we are saying is that we will create this universal careers service where everyone will be entitled to go for a skills health check. This is something that does not exist in a coherent way in England at the present time; it is fragmented, the services that we have are in silos. It exists in Scotland and it exists in Wales but not in England, so we are going to bring something together, we are going to base it in Job Centres, and in addition it will be in other locations as well, so that people can come in and get that assessment of what they need, and language will be one of those needs.

  Q369  Mark Pritchard: Finally, with rising unemployment, unemployment at a seven-year high, do you think that in relation to your excellent report that there should be countywide employment strategies as a statutory obligation on somebody, probably the local authority, so that all the stakeholders are coming together and each year or every two years they are passing up a strategic employment plan for their county or their region, or whatever it might be, to DWP rather than the other way around, or there is two-way traffic? And whether you feel that that is a skills gap at the moment in local authorities?

  Lord Leitch: I think your question is a very good one because skills strategy is done at the national level and it is done at the sectoral level, and skills in employment is delivered at a local level. So I agree with that. I think what we are advocating is very much a market-led approach and we are advocating that we have local employment and skills boards, employer led, which will engage either at a local or a county or a regional level and which can bring together whatever geographic community makes sense; to bring together the supply side and the demand side, and what works together with the local authorities, with JobCentre Plus, with the Learning and Skills Council to deliver employment. I do not think I would advocate that we start with targets, no, at the local level.

  Q370  Harry Cohen: To come back on this point about English, we had an evidence session earlier this week where it was said that there needs to be a very big boost on English as a second language to get people into work and training. What I want to ask you is—because your answer was a little bit equivocal and you put it on a par with other barriers to work—in your opinion should the Government put a big investment in English as a second language?

  Lord Leitch: I am not being equivocal because I think there are big barriers on reading and writing skills and numeracy skills as well. If you look at the figures we have seven million adults—five million adults in this country—who have difficulty with every day basic skills. So I think there is an equivalent priority in those things in addition to English as a second language. So I am not going to prioritise English as a second language compared to the basic skills of reading, writing and adding-up, which I think is a serious problem for many people in this country. Mr Chairman, coming back to one of your earlier questions, people without basic skills are most at risk in the global economy that we are facing. When I started on this review I thought we could do some very clever sophisticated modelling and model skill types through to 2020 and beyond. History tells us that we will get it wrong; to define how many nanotechnology scientists we will need in 2021, you know you will get it wrong. What we need to do is to identify the way that the framework can adapt and respond to the market; that is what we need and that is what we are trying to do going forward.

  Chairman: Natascha Engel.

  Q371  Natascha Engel: I have read a lot of it and it is very, very exciting and although there is loads on it I want to focus a bit more on the process side of it and the way that specifically what you are talking about impacts on Jobcentre Plus and the Learning and Skills Council. Even though you have described the system at present as being quite fragmented you have not actually gone so far as to recommend a merger of Jobcentre Plus and the Learning and Skills Council, but instead you propose setting up a Commission for Employment and Skills, which merges all these different organisations together, like the Sector Skills Development Agency, National Employment Panel and the Skills Alliance. Do I have that right, more or less?

  Lord Leitch: Yes and no. Would it be helpful if I explained?

  Q372  Natascha Engel: Yes.

  Lord Leitch: The Commission for Employment and Skills, what we are trying to do here is to strengthen the employer's voice, and it brings together the National Employment Panel, the Sector Skills Development Agency and the Skills Alliance in England. So it is a rationalisation to bring those together to increase the strength and the influence of employers because we believe that employers are best placed to know the skills that are required to be economically valuable. I come back to we need employers to succeed to get jobs, and that is public and private. Just to make the point as a segway, we want public employers to be exemplars in what we are doing here. Then we were asked by the Chancellor this year in the Budget to look at how better to integrate employment and skills. We have looked very carefully at that and, you are right, we have not recommended radical reorganisation. One of the five principles is, if possible, do not chop and change; and if you look at the history of education and skills, goodness, there have been enormous amounts of change over the years—we chop and change too much. When I did the first piece of the analysis on this I thought that perhaps the best recommendation I could make is to deliver what we started, because we start so many things and we do not go through with them and deliver them well enough. So we looked at this and said, "Shall we reorganise Jobcentre Plus so that perhaps it comes together with the adult part of the Learning and Skills Councils?" We looked at that and, to be perfectly frank, there was a temptation to do that; it was an elegant solution on paper. But after very careful analysis we thought that we have to be much more pragmatic and look for a better solution that will actually not destabilise these organisations, and you wait 10 years for delivery. When you merge in big organisations like this it is a long time to go through that change process. We have just seen Jobcentre Plus merging the Benefits Agency with Job centre, and that has taken five years; it is just getting towards the end of that. So there is a huge price to pay in that radical reorganisation. We have looked at a variety of options. The good thing on what Jobcentre Plus does and its integration with skills at the local level is that everybody we talked to agreed that the status quo was not good enough, and that was a good starting point. Jobcentre Plus does a fantastic job doing what it is told to do—work first—and I think part of the reason for getting that 75% employment rate is a great performance by Jobcentre Plus—work first. What it does not do is get you into sustainable work. Two-thirds of claimants coming through are repeat claimants, and I found that quite an astonishing figure. So they recycle round; they come in, they are a JSA claimant and then they come out of the job again and recycle round. Skills, clearly, are a necessary part; you have to have more skills' assessment and advice at the local level, twinned with Jobcentre Plus. Coming back to your question, we then looked at all these various options and we came up with the option of aligning the objectives of DfES and DWP for Jobcentre Plus and Learning Skills Councils, and we thought that by aligning the objectives and the behaviours we could deliver what we wanted. So the skills advice will sit in the Jobcentre Plus, the Jobcentre Plus adviser will be incentivised and rewarded based on different criteria, not in getting somebody into a job and not sustaining the job—we will change the motivation and the incentives. So we are doing it that way. Another reason why we decided not to have a radical reorganisation is—it is a funny thing on reorganisations, and I have done many in my business life before—because every time you make the change there are consequences for that change, and we looked at this radical reorganisation, for example bringing Jobcentre Plus together with the Adult Path Plan and Skills Council. For every schism you heal you introduce another schism and you would have a schism perhaps between other levels of education and you move it from one place to the other. I suppose ultimately the best solution would be to merge DfES and DWP, but, golly, what a big department that would be, and we did not think about that for more than a minute because it would be so huge and bureaucratic and not deliver what we wanted to do. So that was the rationale as to why we came up with this. One last point on the Commission, the Commission's role will be three-fold. It is executive in managing Sector Skills Councils and the local Employment and Skills Boards, so it has an executive responsibility there. Secondly, it has a responsibility for reporting and monitoring, so the Commission would be an independent voice monitoring the performance of the local Jobcentre Plus. I would also say that the Commission, we recommend, should do a mini Leitch Review every year on our journey towards our vision of being a world leader in skills by 2020. I think there has been a lot of benefit from doing this review of raising the awareness of the issues, and we have to monitor the progress. The third role is that it would have would be policy advice, so that the Commission has a very powerful role in monitoring where we are going, managing Sector Skills and Employment Skills Boards and giving advice.

  Q373  Natascha Engel: Thank you for that very full answer. What I was really interested in was to see how this new Commission would, in practice, on a day to day level work alongside the Jobcentre Plus and the Learning and Skills Council and how specifically the Commission would influence that, really the nitty-gritty day to day work of Jobcentre Plus and Learning and Skills Councils. So how senior is it to the functions that exist at the moment and how much does it work alongside?

  Lord Leitch: It does not have executive responsibility for Jobcentre Plus; it is very important that Jobcentre Plus reports to Government and it does not report to the Commission. The Commission, though, has an important role in monitoring and advising Government. The Commission reports to Government and to the devolved administrations—that is how it reports. The Commission has power over those bodies because it reports to Government and it can tell Government, "This is what is happening or should be happening" and then of course Government can apply an executive responsibilities over Jobcentre Plus and the Learning and Skills Council. That is how it should work.

  Q374  Natascha Engel: The new Careers Advice Service you have touched on a little and talked about the skills health checks, which are really, really exciting—I have lots of ideas about that! Specifically on the Careers Advice Service I have a large number of questions really, but what specifically will be its role? How will it be funded, which I think is quite critical? Who is going to be delivering it and, again, how is it going to work alongside the existing structures of Jobcentre Plus and the Connexions Service?

  Lord Leitch: We talked a little earlier about various stakeholders demanding more of themselves. I would like to turn to individuals. We have a chapter in the report which talks about "embedding the culture of learning", and this clearly would be a journey and it is probably a generational journey to embed a greater cultural learning in this country. If you look at other competitor countries and you see the hunger to learn and the hunger to work—and you can see it in China, you can see it in India, you can see it in Finland—it is greater than we have here. What we want to do is to increase the awareness of people across the whole spectrum to the benefits of learning to them and their families, and we believe that we should start with a sustained national awareness programme, and this would be high profile, targeted and would give individuals a thought that they could do something to improve their lives. And we know it can work. I do not know how many of you saw the "gremlin" ad? It was so bad it was good! It was a terrible advert about how you can actually do something better. Do you know that from that one ad there were 300,000 responses and 120,000 people then enrolled to do courses? That is a tiny example of what you can do to increase awareness. So the first step is to improve awareness right across the whole spectrum of society. Then you have to have a situation where people get better access, than at the present time, to information, advice and guidance. What we saw was that there were some very good facilities in England—Learn Direct is excellent, but it is not comprehensive, there is not one centre you can go to get this information, advice and guidance, and we are saying that therefore we should create this. This would come under the auspices of DfES. One part of it would be co-located in Job Centres if you want information, advice and guidance. The reality is that not many of us would dream of going to a Job Centre if you are in work, so you have to have it located elsewhere as well, so that you have more access in other locations too.

  Q375  Natascha Engel: Like where?

  Lord Leitch: This could be in a whole series of places; it could be in shopping centres—it is something we have to look at—somewhere where it is readily accessible; and also on the Internet so that you can see where you can go. But it would be face-to-face advice that you would be coming in to do this. It could be libraries, but that is still to be determined, but in more locations. So that is information, advice and guidance, and then we are saying it reports to the DfES, and in terms of the funding that funding will come from DfES and I hope that will be something that will be tackled in the Comprehensive Spending Review.

  Q376  Natascha Engel: Who will deliver it? Will that come through Jobcentre Plus?

  Lord Leitch: There will be two functions in Jobcentre Plus. Jobcentre Plus gets you into a job, the Careers Service will assess as a diagnostic health check for you, so two functions within a Jobcentre Plus location. Does that answer all your questions?

  Q377  Natascha Engel: Yes, it will do! The other thing was about the procurement of learning. You have spoken a bit about it in the review, but going back to Jobcentre Plus and Learning and Skills Council, what changes would you like to see in the way that they procure learning, specifically given the Welfare to Work and the welfare reform programme that we are delivering at the moment? How do you see that working?

  Lord Leitch: Of course the role of the Learning and Skills Council changes as a result of this. No more block funding based on anticipated demand. The funding will come through two routes, the Learner Account and through Train to Gain, and that is a very significant change for Jobcentre Plus. We have not talked about Learner Accounts. Learner Accounts, I think, were always conceptually a very good development. There was an analysis done last year which said that there were no systemic problems with Learner Accounts in terms of the design; it was an operational failure in terms of fraud in England. So systemically it is a good idea; it is operational performance that you need. We have seen that Learner Accounts have succeeded in Wales and in Scotland, so conceptually they are good and operationally they can work. So we are saying in terms of procurement of training that that would come through a demand-led system through the Learner Accounts and through Train to Gain. That is how we would see this working and going forward.

  Q378  Natascha Engel: Finally, overall do you think that Jobcentre Plus, as it is at the moment, nationally, locally and specifically at personal adviser level, really has the capacity to take on what is a pretty massive new responsibility for them? You can just say yes or no, if you want.

  Lord Leitch: Yes, I do think they have the capacity. They have just come through the merger, which has been a huge change programme. The merger with the Benefits Agency and Jobcentre Plus was something like 100,000 people. It has been a massive change programme and they have done it very successfully; they have just come through it and I do think they have the capacity of doing this. Coming back to your radical reorganisation point, we thought to impose another radical reorganisation also would be a change too far. I think this can be developed. In many ways it will improve the performance of Jobcentre Plus because they have the schools advisers working with them, focused on delivering a part that they do not do so well at the present time.

  Chairman: Jenny Willott.

  Q379  Jenny Willott: I would like to ask you some questions about future trends and skills training. The first issue is about the fact that in your report you seem confident that there is going to be a substantial decrease in the number of low-skilled jobs over the next few years, but, given what you have already said this morning about the difficulty of predicting accurately, how confident are you that that is actually going to be true?

  Lord Leitch: In terms of low-skilled jobs I think we are confident in terms of what we are saying that low-skilled jobs will diminish. I think there are two aspects here—and we say it in the report—that if jobs can be digitised and automated they will move elsewhere if the costs are lower. That is point one, and I feel that very strongly, it will move elsewhere. For those jobs left we believe that the skill levels will increase. If you look at basic jobs, take manufacturing. Manufacturing today is 14% of employment—it has dropped massively. By the way, it is a very important 14% because it has this multiplying effect—you make something, you have to transport it and you have to sell it, so it is a very important 14%. If you look at how manufacturing has changed there is no doubt that we have moved much more towards a service led economy; manufacturing has become more of a high value added industry and it will be going forward, and I think that is where Britain can succeed in manufacturing if it has this high design, high value added facility inside it. If you look at the basic skills, they have changed. For example, the physical skills that you needed in manufacturing, you needed to labour in a certain way, and you can see it in other industries too—you can see it in farming. I remember 20 years ago where the farmer with a modest farm would have six workers on there. The farmer on that modest farm now will have himself and someone very good in terms of coping with all the technicalities of the equipment they have. Those are the skills you need and you see those basic skills changing. I am very confident that the basic skill levels will increase. The other thing on basic skills, basic skills these days include things like IT, which 10 years ago was not there; you actually need some expertise in basic skills.

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