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However, we must never forget that in this country the gold standard in terms of delivering secure retirement incomes is still defined benefit schemes. We should be spending a bit more time not only on the question of how we deliver personal accounts and all the techie stuff about how they will work, but of what we can do, as a matter of public policy, to encourage sponsoring employers with existing DB schemes to keep them open, not only for existing members but even for new members. We are almost in the last chance saloon as regards DB schemes. Enormous numbers have closed in recent years—certainly since 1997. A mass of existing schemes that are still open could well
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move to closure unless something is done to stop the trend. In due course, the only place where we might find DB schemes is in a museum.

A lot of work has been done by the Association of Consulting Actuaries and the Association of Pension Lawyers on risk sharing—that is, trying to change the balance between who bears the risk. All too often, employees have been moved towards defined contribution schemes where all the risk, in effect, falls on them. The Government seem to have a slight blind spot over risk sharing, which we should be considering much more seriously. Changes in the law may be required—a bit of regulation may even be needed to make it work. Also important is the work done by Fidelity in its design for what it calls DB Lite.

On the question of removing mandatory indexation for future accruals, our position is broadly to support the Government against an unholy alliance of the Trades Union Congress and some of the tabloid newspapers. We are at a desperate point in the history of pensions where we need to take radical action—more radical than some of the suggestions by Chris Lewin and Ed Sweeney in the deregulatory review of private pensions and more radical than the Government seem intent on being in the light of those recommendations.

Another important issue is that of normal pension age. There is no earthly use in encouraging people to work for longer because they will remain fitter for longer, or increasing the state pension age, given that some pension schemes have mechanisms that stop people working longer and not taking their pensions.

There is important work to be done on principles-based legislation, which we broadly support. People in the pensions industry are generally pretty grown-up and responsible, and ideally placed for that approach to legislation.

It is no surprise that the issue of surpluses is beginning to rear up again, and that must be addressed. I am told that the Government’s proposals for the Bill will include simplification of the rules on pension sharing and divorce.

I know that Ministers have a lot on their plate at the moment, but I urge them not to be too obsessed with the mechanics or architecture of introducing personal accounts, important though it is to get that right. We will do what we can, in a constructive and consensual way, to ensure that we end up with the right design, but there are other issues involved. There is a great risk that the introduction of personal accounts could undermine existing provision. In parallel with that, a responsible Government and Opposition must do what they can to encourage DB schemes to continue, with the genuine involvement of a lot of workers and future workers, and there is radical work to be done on how we achieve that. The Bill is an opportunity not only to bring in the personal accounts system but to take some radical, bold steps to try to ensure that the DB schemes that are still open to members can remain so for many years to come.

4.29 pm

Barbara Keeley (Worsley) (Lab): I wish to support the Loyal Address and speak against the amendment because I believe that we have a programme that can enable great advances to be made in skills development.
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The Chancellor of the Exchequer referred earlier to the need for greater skills development for the economy, and he said that while we now have 9 million highly skilled jobs, we will have 14 million by 2020. He also said that while we now have 3 million to 4 million unskilled jobs in the economy, that figure will shrink to only 600,000 such jobs. Clearly, those figures have important implications for policy on employment and skills development.

The Government have made a great deal of progress in the past 10 years in raising achievement and skills development by developing learning opportunities and creating many more apprenticeships. Indeed, while there were only 75,000 apprenticeships in 1997, there are more than 250,000 today. Completion rates of apprenticeships have increased to 63 per cent. from 24 per cent. five years ago. Success rates in further education colleges have increased to 77 per cent. from 59 per cent. five years ago. As the Leitch review told us, apprenticeships are crucial if the UK is to become a world leader in skills.

On that basis, it is right that the Government have adopted targets to increase the number of apprenticeships to 500,000, and to increase the completion rate for apprenticeships to 75 per cent. The principle of making work work is the right one, but it must work for young women as well as it does for young men. We need to take action to break down segregation based on gender, which seems to be rife in apprenticeships. Such segregation leads to a gender pay gap that begins at the age of 16 for young women.

I am indebted to the YWCA and its campaign “More Than One Rung” for drawing my attention to the research and findings in the area of skills, apprenticeships, and low pay for young women. I would also like to pay tribute to my hon. Friend the Member for Northampton, North (Ms Keeble), who has supported the YWCA campaign and highlighted it for many months now.

Years ago, apprenticeships were mainly in traditionally male-dominated trades such as building, plumbing and engineering. However, today, apprenticeships span 90 sectors of the economy, including hospitality, customer services, retail, hairdressing and health and social care, as well as the traditional areas of engineering, construction and the automotive industry. They are central to our vocational education and training system, which is why I believe we should not tolerate it if occupational segregation means that apprenticeships create and sustain patterns of pay and opportunity that discriminate against young women.

While the number of young men and women on apprenticeships is more or less equal, the distribution across the sectors is not. Young men are much more likely to be doing advanced apprenticeships that result in them gaining higher level qualifications. Females comprise 92 per cent. and 97 per cent. of apprenticeships respectively in sectors such as hairdressing and early years care and education, while engineering, construction and automotive apprenticeships are only 3 per cent., 1 per cent. and 1 per cent. female respectively. Perhaps the best example is the electro-technical sector; it is the highest paid sector of apprenticeships, but young women make up less than 1 per cent. of its apprentices. Such segregation leads to a situation where the average female
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apprentice earns 26 per cent. less than a male apprentice, which translates to a £40 a week difference in pay.

The placement of young people in specific sectors is important because 62 per cent. of apprentices continue to work for the same employer after their apprenticeship and a further 19 per cent. stay within the same sector but with a different employer. A survey of apprenticeship pay completed in 2005 showed that the lowest paid trainees were in hairdressing—92 per cent. of these apprentices are female—where the average take home pay was only £90 a week. As I mentioned earlier, the highest paid apprenticeships were in the electro-technical sector where take-home pay was £183 a week. However, even in sectors with a more even split of gender, young women can still be paid 15 per cent. less than young men.

A further problem is that young women apprentices are less likely to be paid for overtime. According to a survey, only 52 per cent. of young women were paid for overtime compared with 83 per cent. of male apprentices. Additionally, the type of apprenticeships that young women take are less likely to lead to a higher level national vocational qualification. As the higher level NVQ is necessary to access higher education and professional programmes, which will be really needed in future, a significant difference in training is received by young men and young women.

Taken together, the differentials in pay and the lower level of training are putting young women in a weaker economic position right at the start of their adult lives. They also have fewer opportunities to progress to jobs and careers with improved pay and prospects.

In the sectors dominated by female apprenticeships, apprentices are more likely not to have employed status but to be on a programme-led apprenticeship. They can receive the education maintenance allowance, and that has clearly made a difference. Their parents can also claim benefits for them. However, in principle, such benefits should be paid to the apprentices, and the YWCA campaign recommends that. If payments are low during an apprenticeship, it is more tempting for the young woman to sign on as unemployed instead. We are all worried about the young people who are not in education, employment or training.

The Government have carried out work on reducing the gender pay gap with a great deal of support from Labour Members. Indeed, in recent weeks, Conservative Members have expressed new concerns about the gender pay gap and it is gratifying to Labour Members that, after many decades, decreasing the gender pay gap has all-party support. However, the size of the gender pay gap for apprentices is so worrying that it clearly needs to be tackled urgently.

Health and social care, and early years education and care are essential work in our communities and important sectors of work for the Government. However, in the context of apprenticeships, they are sectors in which the work is not properly valued. As I said earlier, the Government plan to increase the number of young people who complete an apprenticeship. That will be more difficult for young women on the low-paid apprenticeships that I described.

Surveys by the National Foundation for Education Research showed that dissatisfaction with pay is highest among trainees, with a quarter dropping out of
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training, citing not earning enough money as their main reason for giving up. We must ensure that young women have better information on career choices and pay. The Equal Opportunities Commission found that two thirds of young women were not aware of differences in pay rates. It is unbelievable that people make career and job choices without understanding the pay rates that they could get in other jobs or in their current job, but it happens. Almost seven out of 10 young women would have considered a different job if they knew about different pay rates.

The YWCA would like a duty to be placed on local authorities and other key local players such as Jobcentre Plus, Connexions and learning and skills councils to assess and fulfil the skills training and apprenticeship needs of young women. Apprenticeship employers have a key role to play. The EOC found that only half such employers had links to secondary schools and that far too little work experience was being offered to schools. That must change to give young women access to better paid apprenticeships, which mean better paid jobs when they complete them.

The EOC also found that many young women were prepared to break out of traditional roles. Indeed, eight out of 10 young women said that they would try non-traditional work. In my early career, I worked in the IT industry with IBM, which, at that time, was a non-traditional career for a woman. Initiatives such as running computer clubs for girls in school can help them get interested in different careers. Some learning and skills councils work with employers, asking them to offer interviews to atypical applicants. It is important that careers and Connexions services ensure that their advice material to young people has no gender bias.

Children’s trusts have a role to play to ensure that disadvantaged young women in particular get the chance to meet and get support from inspirational women—for example, women who are achieving in their careers, women in business and women in engineering—in their community. That could help increase their confidence and broaden their horizons. Teachers also need help and support so that they can play a role in discussing gender issues that affect work and career choices.

The debate about women and work needs to focus not only on the glass ceilings that prevent high flying women from progressing. It should also focus on people at or near the bottom rung of employment and ensure that young women can climb the ladder to more skilled and better paid work.

The YWCA campaign has been great in showing us that the problems of young women being trapped in low skilled jobs with no training or prospects for progression start with apprenticeships, career choices and the choice of subjects in schools, made when the young women have too little information. It is time to ensure that young women can break out of that and get proper access to skilled and better paid work.

During this debate on the Queen’s Speech, the Secretary of State for Children, Schools and Families pledged that the education and skills Bill would deliver world class skills for all. Clearly, our economy needs a more skilled work force and I hope that, in this Session,
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Ministers and hon. Members can work on that and make the legislative and other changes that will help with the problems that I have outlined.

4.39 pm

Mr. Brian Binley (Northampton, South) (Con): It is a pleasure to follow the hon. Member for Worsley (Barbara Keeley). I found her remarks very meaningful and her speech well constructed and I pay tribute to her for that. I should like to comment on the work done by the YWCA and, if I might be presumptuous, say that it was good of her to congratulate my colleague, the hon. Member for Northampton, North (Ms Keeble), who works hard in support of the cause that the hon. Member for Worsley mentioned and is particularly committed to the YWCA’s “More Than One Rung” project.

My role today is to speak on behalf of the millions of people who run small businesses in this country. That is a pretty big job and I will do my best by them. They are vital to the country’s future well-being, but they face some sizeable problems. I know from my own experience that they work many hours. Indeed, if they counted the cost of those hours in terms of an hourly rate, they would perhaps decide not to proceed, but they do. They are people who are struggling to maintain a healthy cash flow in the face of a sizeable credit squeeze by the banks. We need to recognise that, too. Those who run small businesses have some uncertainties about their future. Finally, they feel undervalued.

Starting and developing one’s own business is a tough place to be. I know that because I have been there on two occasions, both with successful companies, I am delighted to say. It takes a great step of courage to do the job. Most of us start out without really knowing what we are going to face and we deal with problems as they come along. We have often not planned the process anywhere near as well as many people think we have. Starting a business is a difficult challenge and I pay tribute to all those people who embark upon that journey.

I also want to speak on behalf of the many thousands of would-be entrepreneurs who want to start up a business. They are finding it difficult to cut through the confusing messages that they are receiving from the Government. For instance, there are about 3,000 start-up schemes run by the Government to help would-be entrepreneurs. The Government are trying to rationalise that process and I welcome that rationalisation, but it is a confusing world to find one’s way through. I hope that the Government can hasten that rationalisation, because some difficult and complicated messages are being sent out. Finally, because of the credit squeeze to which I have referred, would-be entrepreneurs are finding it much harder to get start-up money from banks. That needs to be recognised, too. Some would-be entrepreneurs are bewildered and frustrated—I know that, too, because I meet them every week.

I want the Government to consider the messages that they are sending that sector of our wealth-producing world. I want to challenge them on some of the actions that they have taken in sending out those messages, specifically with regard to tax. I do not need to tell the Minister of the import of small and medium-sized enterprises. She will know that UK plc has been shedding about 1.5 million jobs over a 10-year period,
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at the same time as SMEs have been creating 2 million jobs. That underlines their importance. What is less well known is that SMEs are also the dynamo of creativity for British business. Much of our innovation and many of our new practices and ideas are emerging from the sector and feeding through into the well-being of our nation. My final point about SMEs concerns their role in the supply chain for big companies and plcs. Airbus employs 13,000 people directly, but 135,000 people are employed in some 400 companies in its supply chain. We therefore appreciate the import of the sector, but we need to talk that up more.

I do not need to tell the Minister about the massive challenges facing the sector, with the prospect of India and China being responsible for 60 per cent. of world trade by 2050, or about the ever-growing regulatory burdens that it faces. The British Chamber of Commerce’s burdens barometer shows an increase of £55.6 billion in the cost of those burdens between 1998 and 2007. That is a lot of extra costs being placed on the SMEs in our small business sector, and we need to recognise that that makes it more difficult to compete in an ever more competitive world.

Mr. Charles Walker (Broxbourne) (Con): Does my hon. Friend agree that, given this country’s historical links with India, the emergence of India as a global economy offers our SMEs huge opportunities to increase their presence in the European and global marketplaces?

Mr. Binley: I am delighted that my hon. Friend has made that point. I have the privilege to be a member of what used to be called the Trade and Industry Committee. It is now the Business, Enterprise and Regulatory Reform Committee, affectionately known as DBERR. The Committee has looked into the opportunities in India, and argued strongly for British business to get out there and share them, because India has a very pro-British culture that welcomes British involvement. I know that Lord Bilimoria echoes those thoughts and has also made those points to the Government. I am delighted to support them.

I shall return to the difficulties that SMEs face. I have already mentioned the growing regulatory burdens. They also face a shortage of skills, which has been talked about at length today. I pay tribute to the hon. Member for Coventry, North-West (Mr. Robinson), who made a thoughtful contribution to the debate, and one which was very meaningful in the present situation. We should be immensely concerned about our skills base. The fact that only 14 per cent. of our work force have qualifications at national vocational qualification level 3 or above, while the figure in Germany is 46 per cent., illustrates the difficulties that we face in regard to our skills base. This is a matter of vital importance.

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