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11 Nov 2009 : Column 251

Skills for Growth

3.33 pm

The Minister for Business, Innovation and Skills (Mr. Pat McFadden): With permission, Mr. Speaker, I wish to- [ Interruption. ]

Mr. Speaker: Order. May I just ask right hon. and hon. Members who are leaving the Chamber to do so quickly and quietly? We have an important statement and I know that Members will wish to hear it.

Mr. McFadden: I wish to repeat a statement made by my noble Friend the Secretary of State for Business, Innovation and Skills on our policies for skills and their role in our future economic growth.

An active Government approach to equipping the country for globalisation means ensuring that we have the skills that underwrite the industries and jobs of the future. That means skills for the high-tech, low-carbon, more high-value-added sectors that drive the growth that underwrites everything else that we want to achieve as a society. These skills are becoming more sophisticated and even more vital.

I also start from the position that skills in our society must always be an individual's ladder up. That is why the skills system needs to mesh with our university system. We need schools and colleges to make a strong vocational offer, which will lead to a clear vocational route from apprenticeship to technician to foundation degree and beyond.

Equipping unemployed people with the skills that they need to get jobs in key sectors will be essential to a strong recovery. Let us remember that by equipping more of the domestic population with the right skills to compete for jobs, we help employers to become less reliant on migrant labour. Addressing these skills challenges has been the focus of our skills strategy in recent years, and it remains the foundation on which our new policies build.

We recognise that skills have historically been an area of British competitive weakness. Since 1997, we have made real progress in tackling the economic and social scandal of adult illiteracy and innumeracy. We will not abandon our promise of basic skills for all. We have eradicated much of the poor quality that blighted our further education system. We have transformed work place training through Train to Gain, which has trained more than 1 million employees and helped them to get on in work. We have revived apprenticeships, which were allowed to wither away in the '80s and '90s. The Apprenticeships, Skills, Children and Learning Bill, which is before the House today, will ensure that this progress is sustained.

This skills strategy builds on the progress made. It reflects some important decisions and marks a radical shift in the balance of our skills priorities. It reflects the world we find ourselves in: a world where higher level skills have never been more important to our growth, and where the skills challenge has to be tackled within more constrained resources. So we have made some difficult choices. The crisis help that we targeted to help to counter the effects of the recession will progressively be refocused on the skills that we need for a sustained recovery.

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We have taken three key decisions. First, we will change the focus of our skills system so that a new premium is put on higher skills, especially the technician skills that are the foundation of high-tech, low-carbon industry. Secondly, we will empower learners through more choice and better information to drive up the quality of the system through skills accounts. Thirdly, we will dramatically reduce the number of publicly supported bodies delivering skills policy, working with the UK Commission for Employment and Skills to reduce them by more than 30. These choices will target public investment on the most relevant skills for the future, at the highest possible levels of quality and marketability.

The first of these decisions reflects the need for a new focus on the skills that we need in the laboratory, the high-tech factory and the computer facility. We will create a new, modern class of technicians-something that has long been identified as a gap in our labour market. To build this technician class, we will further expand the apprenticeship system by creating 35,000 new advanced places for those aged 19 to 30 over the next two years.

The aim of creating this technician class will also be aided by the new generation of university technical colleges whose creation we are supporting. To turn these apprenticeships into potential ladders to university, from 2011 all apprenticeship frameworks at levels 3 and 4 will be required to have UCAS tariff points, just as A-levels do, so that holders can apply for, and make their way into, university. We will also commit to the recommendation from the panel on fair access to the professions that we create an apprenticeship scholarship fund that will provide one-off bursaries of up to £1,000 for 1,000 apprentices entering higher education every year.

We will take a more strategic approach to the skills that we fund. That means prioritising strategic skills in key industries such as advanced manufacturing, low-carbon, digital technologies and biosciences, and in important growth sectors such as health care. Our decisions in the next bidding round of the national skills academies programme will reflect these core national priorities.

The second of our decisions is to increase the power of learners to drive up quality in the skills training sector by giving them more choice over where and when they train, and better information on how to exercise that choice. To give effect to that greater choice, we will set up new skills accounts, which will enable students to shop around for training, backed by good information on how well different courses and colleges can meet their needs.

Critically, we are going to more than treble the number of public and private institutions where accounts can be used to over 1,500-not only creating new options for learners, but creating a big incentive for providers to design courses that attract students.

The further education sector has made significant strides in improving the quality of its provision over the last decade. Many of our colleges are performing at world-class levels, and overall success rates have increased by over 40 per cent. in the last 10 years. We will build on this by providing progressively greater autonomy to colleges that demonstrate teaching excellence, but also by cutting funding to low-priority and poorly
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provided courses. We will invest in the courses that employers judge are in line with their needs and requirements.

Finally, we have decided to simplify the organisational clutter of public bodies delivering skills policy. We welcome the recommendation of the UK Commission for Employment and Skills to reduce the number of separate publicly funded agencies by over 30 and will work with it and others to make that happen. Our new model will make the regional development agencies responsible for leading the regional skills strategy in each area, working in partnership with local authorities and others.

This skills strategy shares its fundamental challenge with our recent higher education framework. They must equip our people to prosper in a globalised knowledge economy. They must contribute to our return to sustained and sustainable growth. The goal of this strategy is a skills system defined not simply by targets based on achieved qualifications, but by "real world" outcomes-relevant quality skills with real market value. It will be driven by the realities of a changing global economy-by demand from the British businesses and individuals who have to prosper in that economy. The clearer the demand, the better the system will work.

Our expectations of business will rise. We will strengthen the role of employer-led sector skills councils and business-led regional development agencies in shaping an excellent supply of courses and training, designed in direct response to local and national employer needs, but we will also expect businesses to make a greater contribution to the funding of skills training for their work force. We need a culture in which all employers take the view that the skills of their staff are one of the best investments they can make.

Our ambition is that, thanks in large part to the innovations in this strategy, three quarters of people should participate in higher education or complete an advanced apprenticeship or equivalent technician-level course by the age of 30. This strategy empowers the further education system above all to compete to meet the needs of businesses and learners. That will put further education where it belongs-right at the heart of the knowledge economy, at the heart of our recovery and our future prosperity.

Mr. David Willetts (Havant) (Con): There is much in this statement that the Opposition welcome. We welcome what the Minister has said about ensuring that practical apprenticeships get UCAS points-something that we specifically proposed in our Green Paper last year. We welcome the proposal on scholarships for apprentices to go on to university-something that I proposed in my party conference speech in 2008. We welcome what the Minister has said about shifting back towards advanced apprenticeships at A-level equivalent. We also welcome the praise that the Minister rightly gave to the performance of our further education colleges and hope that he means what he says about simplifying the very complicated burdens that they face at the moment.

I have several questions about the statement. First, can the Minister explain why we should believe what he says about simplifying the system? The Order Paper shows that after this statement the House is to consider
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the Apprenticeships, Skills, Children and Learning Bill, which will give some of the responsibilities of the Learning and Skills Council to local education authorities. Because the Government do not really trust LEAs, there is to be a new Young Person's Learning Agency whose job is to supervise those authorities. Then there is a separate National Apprenticeship Service and also a Skills Funding Agency or SFA. In fact, when it comes to simplification, this Government's policy is SFA-by which, of course, I mean the Skills Funding Agency! So why should we believe the Minister when he says he simplifying? He is actually making life far more complicated. Will he take the opportunity at this late stage to introduce amendments to the Bill to reverse those complexities?

The Minister said that apprenticeships had been revived under this Government. Will he confirm that what has really happened is that level 2 courses that did not previously count as apprenticeships have been redefined, and that training for people at level 3 is actually at a lower level than it was 10 years ago?

The Minister referred to the importance of replacing migrant workers with better-skilled British workers. We were relieved that he avoided crude BNP slogans such as "British jobs for British workers". We understood the point that he was making: that he thought that a measure of the success of his skills strategy would be a reduced dependency on migrant workers. Will he confirm that since the Government came to office, 1.4 million of the 1.7 million new jobs-more than 80 per cent.-have gone to migrant workers? What, according to the very benchmark that he has offered the House today, does that tell us about his skills strategy?

Will the Minister confirm that whatever he may say today, in public, about what he is doing for skills and training, separately-in private, within the Department-a very different policy is unfolding? Will he confirm that he was one of the recipients of the paper dated 12 October entitled "Skills Investment Strategy 2010-11", which shows how the Department is proposing to save up to £350 million on some of the very initiatives that he has been talking about today? Will he confirm the validity of the ready reckoner helpfully contained in the internal document, according to which:

Will he confirm that every £100 million of cuts that he is proposing will mean the loss of an extra 133,000 learner places, and that if he raises the full £350 million of savings, a third of a million learners will lose out?

In his statement, the Minister talked about the rolling out of skills accounts. Will he confirm that the private document that he has received from his advisers in the Department states:

How can we take the Government seriously on skills or any other subject when they say one thing to the House, while privately preparing a completely different strategy?

Mr. McFadden: Let me begin by graciously welcoming the hon. Gentleman's gracious welcome for the parts of the statement with which he agreed, on UCAS points and a greater emphasis on level 3 apprenticeships. He praised our further education sector, so perhaps it would
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be unfair of me to point out that the contrast between the state and quality of our further education sector today and its state and quality when his party was in power could not be greater. It was flat on its back. Not a single penny went into renewing the sector towards the end of that period, whereas we have renewed it substantially.

The hon. Gentleman talked of simplification. It is true that almost everyone who examines this arena agrees that we need a simpler, less cluttered system. He talked of the changes that we propose. Those changes will get rid of nine regional skills bodies, so we are reducing the number of bodies in this territory. The hon. Gentleman talked of events outside the House. I think I am right in saying that he has not been entirely beating the drum with sector skills councils, arguing that their number should be reduced.

Let me now turn to the hon. Gentleman's final point about a story that appeared in the newspapers in recent days. The information contained in the great secret document he waved was actually announced in this House in the Budget some months ago, and in case anyone had not noticed it in the Budget, the then Secretary of State for Innovation, Universities and Skills, my right hon. Friend the Member for Southampton, Itchen (Mr. Denham), wrote to the Learning and Skills Council earlier this year setting out the kind of savings we were looking for. We are not cutting apprenticeship numbers. This is old news; it was announced in this House, and it was communicated to the LSC.

If the hon. Gentleman wants to talk about funding, let me ask him whether he will match our commitment to keep up spending on renewing the FE estate. He has not committed to that. Will he confirm that he will abolish the Train to Gain budget entirely? He talks to us about funding, yet he will not match the funding commitment that we have made because we want to increase opportunity and because we recognise the necessity of a high-quality skills system both for individuals and our economic future.

Stephen Williams (Bristol, West) (LD): I welcome the fact that the Minister of State has come to the House today to make a statement on this announcement, in stark contrast to his colleague, the Minister for Higher Education and Intellectual Property, who on Monday made a written statement on the long-awaited fees review, which has angered thousands of students throughout the country, including about 100 presidents of student unions, who are gathered upstairs in Committee Room 11 at present-and I hope to speak to them shortly.

We thought we had had the Government's vision for skills-the 2020 vision for skills-three years ago in the Leitch report, but the world has, of course, changed completely since then: the United Kingdom economy has experienced six quarters of contraction, and unemployment has increased again today, particularly for young people, among whom unemployment has risen by 15,000. The unemployment rate among 16 to 24-year-olds is 19.8 per cent., which is a far greater proportion than for the population as a whole. Young people have borne the brunt of this recession. Many of them are graduates who had never expected to be in this situation, but the vast bulk are those with skills up to, or including, level 2, thus compounding the long-entrenched problem of those not in education, employment or training.

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We need emergency measures to deal with the recession, as well as a long-term vision for the future of our economy. Does the Minister agree that it is simply ludicrous to expect young unemployed people under 24 to have to wait up to 12 months for what he himself described as "crisis help"? It is a pretty strange crisis if they have to wait 12 months for help. Instead, my party has proposed a 90-day guarantee.

We welcome some of the announcements in the statement. We certainly welcome-I am sure it is a welcome that will be echoed by employers around the country-any proposal to rationalise the quangos that proliferate in the entire skills labyrinth. The most common complaint I hear from all the employers I meet is that they find the skills labyrinth bewildering to negotiate. Does the Minister not agree that sector skills councils ought to be the organisations in the driving seat in respect of saying what are the skills needs of their industry, rather than the RDAs, as seems to be the case under the Government's preferred model?

If any headline comes out of this statement, I guess it will be yet another target: that 75 per cent. of those aged under 30 should attain either a higher education qualification or an advanced apprenticeship. After 12 years of targets, I wonder whether we need another one in the fag-end period of this Government. Perhaps this is intended to obscure the fact that they will fail to meet the 50 per cent. target for participation in higher education by 2010.

The statement referred to new university technical colleges. The Government's further education capital programme has been a complete fiasco, so I imagine this does not mean there will be new build. Will the Minister therefore confirm what these new university technical colleges will actually be? Will they be just a rebadging of existing FE provision? FE colleges will also be quite alarmed by the Minister's comment that there will be cuts in what he calls low-priority courses. Will he define what a low-priority course is, or at least give an example of one, from the Dispatch Box today?

Much of the emphasis in the statement and in the report is on formal provision, but does the Minister agree that there is an important role to be played not only by further education and by government but by social enterprise and charities? I have been impressed by the work done by Fairbridge in my constituency and by the Bristol foyer. Often, that informal provision can lead people, particularly those not in education, employment or training, back into formal learning. We will agree-I am sure that there will be a broad consensus on this-that the future needs of this country will be high-tech and low-carbon, but does he agree that in order to get young people to take the relevant courses, they need good, well resourced and independent advice and guidance from the age of 13 right through their education and their working lives? It is not clear to me that the resources are in place to deliver that. The report is all about long-term vision, but I suspect that the tragedy for the Government is that they are not going to be there to deliver it.

Mr. McFadden: I thank the hon. Gentleman for his comments. He attacks our 50 per cent. target, but his party does not even support a 50 per cent. target. In fact, its document states:

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