Examination of Witnesses (Questions 380
WEDNESDAY 13 DECEMBER 2006
Q380 Jenny Willott: One of the things
that the report said was that the increase in the proportion of
high skilled workers is leading to increased demand for less skilled
workers as well, for example in hospitality and so on. It seems
slightly counterbalanced, but it seems likely that there will
continue to be a demandeven if it is a smaller demandfor
unskilled workers and for those in casual jobs as well. What role
do you see that sort of employment playing in enabling people
with lower levels of skills to leave the benefits system and to
get back into work?
Lord Leitch: I think it is very
important indeed. There will always be a need for jobs at the
low skill level but you need to make sure that they have the right
skills and the right sort of skills to deliver those jobs. But
you will always need jobs, and if you look at care homes and how
care homes have increased dramatically there will always be those
sorts of jobs which are needed in this country today. Can I go
a bit wider at the moment in terms that you talk about high level
Q381 Jenny Willott: I might rein
you back in if you go too wide, but feel free.
Lord Leitch: One of the issues
that we talked about when we were doing this study was what sort
of society do we need or do we want in the UK going forward? If
you look at the spectrum of skills, at the high level is where
you have your innovation, your leadership, your entrepreneurship,
your management, and that is where you get the driver and the
creator of wealth at the high level. So you need those high level
skills to deliver that. You need intermediate skills to deliver
day in day out that sort of output. Low level skills you need
to do the jobs that I have just been talking about. I remember
that there was one discussion we had with a think-tank, and it
said, "Just concentrate on the high skills, just look at
levels 4, 5, 6 and 7 and that would make Britain a great economy
going forward and the country would be much richer. Just leave
the other parts alone." We said that that is completely wrong
because what sort of society do we want? We do not want a society
where the gap between the haves and the have-nots widens. So what
we want is a society where we do concentrateand I said
earlier, there is no panaceawhere it is a priority at every
single level, at the higher level skills where we need more of
those level 4s, 5, 6s and 7s to deliver that economic prosperity,
and we need people at intermediate skills to deliver day in day
out and you need people at low level skills. The benefit there
is the social benefit and there is also a benefit of those people
coming off welfare and moving into work, which is a huge benefit
for our society in costs' terms as well. So, in terms of people's
lives it is important and in terms of the economy it is important.
Q382 Jenny Willott: To go to a slightly
different area now I just want to ask a question or two about
migration. In your report you said, specifically looking at migration
from the accession countries, that it has had little or no impact
on wages or claimant unemployment. Other memoranda that we have
for this inquiry, for example from the LGA, raised concerns about
migration. The LGA has suggested that employers are more likely
to choose healthy, highly skilled people from accession countries
rather than those, for example, who have been on benefits for
a long time and who are furthest from the job market. What impact
do you think that migration has had and what impact do you think
it will have on the number of jobs available specifically to low
skilled workers in the UK as well as more generally to the wider
Lord Leitch: We have examined
this and all the evidence that we have looked at shows that immigration
is good for the economy, it has a positive effect on the economy
and does not have an adverse effect on employment rates. All the
current analysis we have looked at tells us that. Of course, there
is a perception at the individual level that it makes it more
competitive, and I can understand that. I think the best way to
cope with that is through skills. They are the answer, to upskill
people or to give people the skills so they can compete. What
we are seeing from the research is that immigration takes the
domestic jobs which are not being filled and our conclusion was
that immigration is good for economy and it does not affect employment
rates. Where there is a perception, the best thing we can do for
individuals who are competing, because on a one-to-one basis it
might happen that you are competing with somebody who is better
skilled from Poland, is to give people the right skills for the
jobs. It comes back to the priority of skills.
Q383 Justine Greening: In terms of
future prospects for low-skilled British workers, you are suggesting
that the future prospects are not to be trying to compete in the
Lord Leitch: No, no, to have the
right skills. What you are trying to do is to match the skills
you need for the job. What we are saying going forward is the
skill levels required even at the basic level will increase. What
we have got to do is take that community in our society and improve
those skills so they can compete for those jobs at the basic level.
Q384 Justine Greening: How up-to-date
is the evidence that you had on unemployment rates and employment
rates and so on? Is that very up-to-date and does it take into
account the most recent flows in migration to the UK?
Lord Leitch: It does. I will turn
to my colleague Stephen, how recent was that data?
Mr Evans: I think most of the
studies look up until mid-2006, so it is quite recent.
Q385 Justine Greening: There is no
evidence, given that the numbers are increasing, that there is
any change in the situation?
Mr Evans: Not yet.
Lord Leitch: That is why we say
Justine Greening: That is why I was asking
the question. Thank you very much.
Q386 John Penrose: I just wanted
to take you back to your previous answers about the mix of skills
that is important. I think you were saying that Level 2 and below
is vital but all the other higher levels of skills are also essential
if we are to get the sort of increases in employment and economic
performance that we are after. As you know, this Committee is
starting with the question about how the Government should get
to the 80% employment target that it has set itself. Most of the
evidence we have seen so far says that people without a qualification
of at least Level 2 are suffering from a very, very major employment
disadvantage. I was intrigued that you were saying that yes that
is a disadvantage but we have also got to have all the other higher
level skills as well. I am concerned that your emphasis, which
is including the higher level skills, is rather different from
the Government's emphasis which is saying if you have not got
a very low level of skills as a starting point you are completely
up the creek, and therefore they are focusing very heavily, based
on that data, on Level 2 and below.
Lord Leitch: I do not think the
Government is focusing exclusively on basic skills. It is very
interested in intermediate skills and higher education at the
same time. What we are recommending in the report is an increase
in the number of apprenticeships to 500,000, for example, by 2020.
We have consulted extensively with Government and they are very
interested in that. They are also very interested in higher education.
At the present time we spend 1.1% of GDP on higher education in
the UK. The United States of America spends 2.9%; South Korea
spends 2.6%; Scandinavia spends 2.5%, so there are issues at the
higher level as well. I am absolutely convinced that we do need
those Levels 4, 5 and 6, and we set out very clearly in the stretching
objectives that we have the good performance on attainment rates
at higher education. It has moved from 21% in 1994 to 29% today.
We are saying it should exceed 40% by 2020. That is a tall order
but we need to go further than that to be really world-class.
This is a major change that is going to need different mechanisms
and more funding than we have at the present time to make the
UK economically prosperous. I think I am saying there should not
be one focus on what we are looking at here. It should be a focus
on prosperity, driven at the top, delivered at the intermediate,
and also the services for lower people and social justice basic
skills should be provided for all. That is a priority for Government.
Q387 John Penrose: That is very clear,
thank you. Just in terms of the distance that has therefore got
to be travelled from where we are today, I would be interested
in your view. I am a governor of my local FE college and we are
extremely worried about this. There is a concernand I think
it is a national one, I just happen to have the local data from
my particular constituencyover the recent cuts in the level
of places at an FE colleges for courses at Level 3 and above for
people over 25, so plum in the middle of the adult skills area
that your report is focusing on and focusing on traditional routes
of people who have always relied on FE colleges to get back into
the job market, so mums returning to work classically after starting
a family, people who have been made redundant in mid-life, people
who are approaching retirement, particularly as the retirement
age rises who will still need to remain in employment into their
early and mid-60s. Those groups have always traditionally turned
to FE colleges and the like in order to reskill and keep their
skills up-to-date for the employment market. If you are saying
that skills at Level 3 and above are going to continue to be important,
at the moment the funding is going the opposite way. Does that
not mean that a huge change in direction is going to be required
because at the moment the momentum is opposite to the one which
you are arguing very persuasively needs to be there?
Lord Leitch: It depends who is
paying. There is a balance of responsibility which we have set
out. You are absolutely right, at the basic levels the Government
has an obligation to provide everyone with a basic platform of
skills. At the intermediate level, where there is a good private
return to individuals, there is also a responsibility on Government
to act as a catalyst. We have said that the expenditure should
be roughly 50-50 and we will come on to say how we are going to
get more expenditure from employers into this. At the top end
at the higher education levelsthis is for the increased
attainment by the wayit should be very much employers and
individuals funding for that increased ambition. That is where
we are looking. Apprenticeships are interesting. If you speak
to employers, they are very keen to have more apprenticeships.
Apprenticeships fell in the 1970s to about 75,000. I think that
was wrong as a strategic move in terms of what the UK needed on
intermediate skills. It then rose again to 175,000 and today it
is 250,000. The completion rate for apprenticeships has improved
enormously in recent years. What do you think the completion rate
Q388 John Penrose: Tell us.
Lord Leitch: 55%, and that is
up from 35% two years ago, so employers would say they want more
apprenticeships but it should be economically valuable skills
and less bureaucratic. The solution to that is through sector
skills councils focusing on the vocational skills at intermediate
level, planning them collectively, identifying where the skills
gaps are, and then there will be much greater incentive (if you
reduce the bureaucracy) for those employers to invest in those
intermediate skills. That is the route that I see for more funding
to come in at the intermediate level.
Q389 John Penrose: Can I just push
you on that. Can we take an example of, let us say, a young parent
in their early 30s trying to get back into the workplace having
spent the last five or six years out of a job looking after a
young family. At the moment they sign up for an FE course and
the money will be there for them to do a Level 3 course, let us
say. What is going to happen in future because these people may
not have a lot of money?
Lord Leitch: Are they out of work?
Q390 John Penrose: Yes, they are
out of work, they are just trying to get back into the workplace.
Their skills are five or six years away from the workplace at
the moment so they are trying to reskill into something else.
Where are they going to find the money to do this course in future
compared to last year?
Lord Leitch: They will have an
individual learner account which will take them part of the way.
That probably is a solution and Stephen is writing me an answer
here! Thank you for reminding me. At the moment FE colleges have
loans that can be given to people in these circumstances. However,
it is not transparent and you cannot see what the funding is.
It is not clear before you undertake the course. They are very
much discretionary, and we are saying we want to create a Skills
Development Fund which will be operated by the Careers Service
in Jobcentre Plus, so your couple or as individuals would go along
to Jobcentre Plus and they would have their skills health check,
which I think would be a good thing; by the way, done in a non-threatening
way because many people do not like to be diagnosed in this way.
We travelled extensively and one of the things I saw and I remember
I liked very much was in Sweden where they had these health checks
for mature people and they were done in the most non-threatening,
easy way so you are not frightened and scared of being tested.
This couple would go along, have this skills diagnoses and then
the adviser would tell them what funding is available to them
as individuals to go to a college, and there is money available
for that at the present time. We are going to shift that from
the learning and skills council to be done in the Careers Service
so that would be done there.
Q391 John Penrose: Can I just press
you a bit more on that. So this example of someone trying to re-enter
the workplace; they have got an individual learning account and
they get a loan, so they have got to go into debt in order to
improve their skills?
Lord Leitch: They get an individual
learner account which will take them up to a certain level which
will be Level 2 and then they can have a loan which will allow
them to go further.
Q392 John Penrose: If they have got
Level 2 and they need to refresh their skills because they are
not employable because they have been out of the workplace for
seven years, what you are saying is that they then have to go
into debt in order to get better skills in order to become employable?
Lord Leitch: I think that is the
only way forward. What are you saying, Stephen? There is a grant
and a loan. It is a partial solution.
Q393 John Penrose: I am just concerned
that this does not sound like it is a very easily opened doorway
which is going to encourage people to refresh their skills if
they are over 25 and out of work.
Lord Leitch: Can I say I do not
think we have all the detailed answers. What we have set out in
our report is a very comprehensive analysis, a very clear view
of the vision, the strategy, the objectives, and the principles.
What it is not is a detailed blueprint for implementation, so
we do not have all the answers and I think that is something we
will have to look at.
Q394 Chairman: Can I make a request,
if somebody could send us a note on the interaction between the
learner account, the loan and the grant.
Lord Leitch: Yes certainly, we
can do that.
John Penrose: That is important.
Q395 Mrs Humble: Lord Leitch, the
area that John Penrose has just opened up is an area that I want
to question you on a little later, but I just want to follow up
on one of your answers about employers expressing eagerness for
more apprenticeships. One of the problems that I have in my constituency,
and I am sure must be replicated elsewhere, is where we have very
small employersand a lot of craftsmen fall into this categorya
one-man band who is an electrician and a plumber or there might
be him and somebody else, who are very reluctant to take apprenticeships.
A lot of people in that position are now older as well and they
will be retiring soon and so younger people who want to become
apprentices in that sort of area are finding it very, very difficult
to get the work placements. Is it a specific group of employers
which has approached you and where did these very, very small
microemployers fit into the scenario of apprenticeships that you
Lord Leitch: I think what we are
saying is yes maybe there is something that has to be done on
the design of apprenticeship courses. Maybe some of them are too
long or too complicated and they should be done in a more unitised
way. I think this is where we say the role of the sector skills
council would come in. The sector skills councils represent the
whole industry and will identify collectively the skills gaps
and the needs and will then input to the design of courses. We
are also saying for the sector skills councils their performance
should be judged on maybe harder-edged targets in delivering things
like apprenticeships, and also apprenticeships across a range
of large and small employers. So I think the design of the apprenticeship
course is crucial in what you are saying and maybe what we have
not got is enough demand-led in the position that you are talking
about. It would be the sector skills council which would come
Q396 Mrs Humble: Except I findand
again I am speaking from personal experiencethe learning
and skills council works very well in my area with the local college
to provide the academic side of the training, the theoretical
side of the training, but there is a large demand from individuals
who want to be trained, for example as plumbers, and they cannot
get the work placements in order to complete their course because
the people who they would be placed with are, by and large, very,
very small microemployers who do not want the fuss and bother
of apprentices who they see as an inconvenience to them.
Lord Leitch: It is back to the
issue we talked about earlier of portable skills and what does
the employer need. I think there are two dimensions. I mentioned
the sector skills councils. The other one is the Train to Gain
broker. The Train to Gain brokers are engaging with those smaller
employers. They are engaging with the harder to reach employers.
We have seen real traction. The small example I gave you is a
good example of how you can engage with the smaller employer and
identify what they need and to increase their awareness. Can I
just mention something by way of clarification. It is right that
we focus on small employers but if you look at the composition
of employers in this country, 50% are larger employers, and then
you have got the public sector and SMEs, which are a vital part
of our economy but we must keep it in proportion. That is the
point I am making.
Q397 Mark Pritchard: Going back to
Jobcentre Plus, I think all of us will have some representation
of Jobcentre Plus in our constituencies and the staff do an excellent
job and are very committed public servants. Given that many of
your answers have involved, it appears, an increasing role for
Jobcentre Plus staff, how does that marry with the current proposals
to cut quite severely the number of Jobcentre Plus staff around
the country; one in two? There is always room for efficiency savings
but do you agree with my view that there should be some thought
for keeping Jobcentre Plus in post where unemployment is greater?
Lord Leitch: Just repeat that
Q398 Mark Pritchard: To keep Jobcentre
Plus open where unemployment is rising or significant?
Lord Leitch: In terms of an increasing
role for Jobcentre Plus, yes Jobcentre Plus have been reducing
staff and they have been driving efficiencies. The merger is finished.
You first do the merger and then say what is the next stage of
driving efficiency. I think they are doing it really, really well.
There have been changes also in Jobcentre Plus in terms of more
on-line interventions, more telephone interventions, so the workload
is moving a bit as well. What we are not looking for here is more
work for Jobcentre Plus; it is better performance and better achievement
of Jobcentre Plus. What we are seeing is that in those two-thirds
of claimants who recycle we should be doing things that reduce
that rate. We are saying that everybody coming in should have
a skills health check at the beginning, a diagnosis, and that
would be done by the Careers Service and Jobcentre Plus. Then
at the six-month point there would be a check to see where you
are and, if there is a skills problem, your back-to-work programme
would include many more skills than at the present time. The figure
at the present time is, if my memory serves me right, 11% of claimants
are referred to skills programmes and I think we think that figure
should be much higher, so what you are looking at is better. This
might reduce the number of claimants because you are getting people
into sustainable jobs. So we have had extensive discussions with
the executive management of Jobcentre Plus and DWP and they are
very confident they can cope with this.
Q399 John Penrose: Just to come back
round to the discussion we were having about targeted skills just
now. You were very helpful in your responses to my earlier questions.
Can we look at some other groups that may be suffering from disadvantage.
We were talking about people with skills below Level 2 to start
with. We have been trying to understand the interaction between
multiple disadvantages and there are some groups who have these
multiple disadvantages and you can see them very, very clearly
in the figures. Have you given any thought to the way that skills
may need to be delivered for specific groups that are suffering
from multiple disadvantage, whether or not there are specific
ways you need to change the delivery of skill for disabled people,
for people of different ethnic backgrounds, for women as opposed
to men, and for people who are therefore suffering from some combination
of disadvantages which means that they are highly unemployable
at the moment but need to get those skills to cut that particular
knot of problems?
Lord Leitch: I feel very strongly
about this area. I am the Chairman of the National Employment
Panel and I think they have made representations to you. I think
you had a discussion with Cay Stratton here. I feel very strongly
about helping disadvantaged people into work and particularly
the hardest to help. What we are advocating on careers advice,
awareness, all those things, will help this community and particularly
the development of employment and skills boards. There we want
to build on some of the successes. I know you have talked about
Fair Cities. That is something I felt very strongly aboutgetting
more ethnic minority people into work. We have got a 15% gap.
Because we know that many employers do have a social conscience
and by bringing these employers together in this collective way
at a local level, by identifying the needs of a particular geographic
unit, bringing the supply side and the demand side together with
this extra help that we are giving on basic skills, with the better
assessment we are giving on basic skills, we can get employers
to define what they need, to look at the local problems, to co-ordinate
better the help that is given, and to improve those harder to
help groups. I am confident of that. In terms of have we done
the detailed work below, no.