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I also want to talk about the role of trade unions, for which delivering the 2020 agenda is hugely important. Unionlearn, with which I work closely, and the network of union learning representatives are crucial to the delivery of the sector skills agenda. There are now over 18,000 union learning representatives in UK workplaces and they already play a significant role in ensuring that we reach that goal.

In conclusion, I thank my noble friend Lord Leitch for the debate and for the work that he has done to

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put a much greater focus on the whole sector skills process. His report gives us the freedom to make sure that we can grow from where we are and have the confidence to take it forward. Thank you.

12.44 pm

Baroness Valentine: My Lords, I join others in thanking the noble Lord, Lord Leitch, for placing skills firmly on the public agenda. I welcome Sir Michael Rake’s appointment to the new Commission for Employment and Skills; I am sure that he will bring his leadership from BT and KPMG to bear on an employer’s perspective on that commission. I am chief executive of London First. Our 300 members include London’s leading companies, universities and further education colleges, representing a quarter of London’s GDP and one-sixth of its workforce.

Future UK prosperity and social well-being are critically dependent on improving skills at all levels across the UK. Publicly funded skills provision is complex. The noble Lord, Lord Leitch, and his team spent two years preparing his report; in five minutes, I will restrict myself to two areas for government focus.

First, I will talk about unemployment in our major cities. Successive Governments have spent a lot of money, but publicly funded skills programmes still do not equip the urban unemployed with the skills needed to get jobs. Expectations have been raised among jobless people, but the resulting qualifications are not the promised passports to jobs. There is too little emphasis on understanding employers’ needs or matching training to locally available jobs.

London feels this most sharply. Despite our world-class economy and rising prosperity, unemployment remains at a stubborn 8 per cent, which is the highest in the UK. Some 600,000 people draw jobless benefits, and 150,000 of those are long-term unemployed. That disconnect is not sustainable either financially or socially. Other UK cities have similar problems. Thousands of entry-level jobs are available, but to win and keep one of those jobs the long-term unemployed need the softer skills of communication and—dare I say it?—getting to work on time and well presented. Those are not trivial issues. Communities with endemic long-term unemployment face complex problems ranging from housing to social services issues, as well as the skills gap. If the Government are to dent unemployment in cities, they must adopt a joined-up approach.

Until this morning, at least, the Government’s skills programme was delivered by the Learning and Skills Council under the DfES, whereas job search programmes were run by Jobcentre Plus under the DWP. Those two departments need a shared objective: to give unemployed people the skills that are needed for jobs. They must become genuinely joined up, with joined-up targets providing a seamless service for people looking for work and for employers with vacancies needing particular skills.

My second priority for the Government is the contribution of skills development to productivity. Improving an individual’s job skills once in work provides a double benefit: more efficiency for the employer and better career prospects for the individual.

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Employers know that to compete globally they need the best people operating at maximum competence. They already invest £20 billion a year in training, compared with government spending of £12 billion and individuals’ spending of £2 billion. Nevertheless, there is no room for complacency. The Leitch diagnosis is right, but I beg to disagree with parts of his favoured remedy.

I ask Her Majesty’s new Government to consider the following in their response to Leitch. Having 22,000 different nationally approved skills qualifications is too many. They are too complex and are largely incomprehensible to employers. The Government should not rely on them, nor should they invent new ones. To be credible to business, qualifications should pass two simple tests: are they responsive to employers’ needs and are they simple to understand? Most businesses understand the business case for training their employees. A sound, government-subsidised employee training scheme could encourage more smaller businesses to see the light, but only if the training is right for the business, is not constrained by rigid qualifications targets and is convenient for employer and employees, particularly those who cannot easily get away from the day job. Legislation or taxation to coerce employers into training programmes is doomed to failure if it is designed to deliver arbitrary qualifications targets rather than useful workplace skills specific to each business.

In summary, skills matter for employment, for competitiveness and for social well-being. The Government of our new Prime Minister will need considerable skill and determination to pursue policies that genuinely equip employers, employees and would-be employees for a better future.

12.50 pm

Lord Bilston: My Lords, the Government have shown a greater commitment to further education and skills than any previous Administration. Significant increases in funding have achieved success rates in colleges, which, I am particularly pleased to say, hit the Government’s target of 77 per cent two years early. Colleges have shown that they can manage public funds effectively in a way that helps the Government to deliver what they need. They have an historic public service ethos coupled with a professional, business-like approach, which makes them the perfect partners for government, employers and individuals.

That record of achievement demonstrates that colleges are pivotal to the Government’s skills agenda. Without them, the overall skills base of the nation will not improve, as my noble friend Lord Leitch identified. It was therefore particularly pleasing to hear our new Prime Minister refer to colleges a number of times in his acceptance speech at the special Labour Party conference in Manchester. He spoke of bringing together businesses, universities, colleges and the voluntary sector. He specifically said that every school should be formally linked to a college or university. I hope that these new partnerships will build on the successes already in place as part of the Government’s 14-19 agenda.

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Noble Lords will know that Sir Andrew Foster referred to further education as the “neglected middle child” of the education world, so it is welcome indeed that the Prime Minister has already signalled his commitment to colleges. I am confident that their contribution to his plans to further improve education and skills in this country will be recognised and encouraged. FE will also be crucial to the success of the Prime Minister’s welcome ambition to ensure that all young people stay in education and training until they are 18. I was delighted to hear him say on Sunday that every young person will have access to personal learning relevant to their needs and an offer of an apprenticeship or a place in a college or university. There is no doubt that succeeding in ensuring that all young people remain in education or training until 18 will be an historic legacy of this Labour Government.

Debates around skills focus mainly on the economic challenges that the nation faces from its major competitors. We are often told that the investment by China and India in developing their skills levels means that the UK also needs to step up a level and produce more graduates and more skilled workers than ever before. The Government’s recent decision to allow colleges with the necessary expertise and experience to award foundation degrees will be a great help in ensuring that more people have access to higher-level courses.

There is a lot of emphasis on national skills, but we must not lose sight of the impact on individuals and local areas. For example, my local further education institution in the city of Wolverhampton recently launched a new scheme to improve training and learning opportunities for 2,600 Royal Mail workers at their offices in Sun Street, Wolverhampton. In partnership with the Communication Workers Union, the college has offered, in the workplace, a variety of new courses to employees who want to learn new skills. The courses on offer include IT, skills for life, customer services and British Sign Language.

Within each college, there are many truly magnificent examples of personal achievement. Just last month, adult students from the City of Wolverhampton College were among those commended for their achievements during Adult Learners’ Week. For example, fireman Tony Bucknall gained a teaching qualification from the college while working full time, and has now been promoted to become a crew commander at Wolverhampton fire station. Since completing the course, he has founded a youth inclusion course to support young people outside mainstream education.

Those two examples demonstrate the potential ripple effect of government investment in improving people’s skills levels. The Royal Mail workers who took up courses and achieved new qualifications will become more productive for their employer and gain personal confidence. Tony Bucknall’s achievements were magnificent, not just for himself but for the fire service and the community as a whole.

This puts me in mind of the phrase “two sides of the same coin”, which my right honourable friend the former Deputy Prime Minister uses to describe the Labour Party: social justice on one side and economic

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prosperity on the other. The two sides in this case are exemplified by the achievements of our further education colleges. On the one side, our colleges are succeeding in helping the Government to meet the global economic challenges that we face—for example, by helping to ensure that 2.2 million key skills qualifications were achieved in 2005-06. On the other side is the work undertaken in transforming the lives of individuals by giving them extra confidence and encouraging them to make a contribution to their communities and local economies. In conclusion, I ask the House to remember that “skills” is not just an amorphous name given to the need to address global economic challenges; it is also about individuals’ personal ambitions and achievements.

12.57 pm

Lord Bhattacharyya: My Lords, I thank my noble friend Lord Leitch for securing this important debate. He has produced such a lot of data that it would take a final-year undergraduate to analyse it and come to some conclusions. I declare an interest as director of the Warwick Manufacturing Group and, more importantly, as a former apprentice. I wonder how many Members of your Lordships’ House have served an apprenticeship. I suspect not many. Perhaps we should form an exclusive club.

My apprenticeship was the foundation of my career. What was amazing was that there were apprenticeships at every level then, from school leavers to graduates and postgraduates. My apprenticeship made me understand the gap between what I had learnt as a student and the reality of industry. There is no point in forcing industry to invest in skills or in leadership. It has to want to do it. All too often, it has not. This is short-sighted because a quality workforce and strong management are vital for sustained increases in productivity.

Although the gap has narrowed, productivity in the US and Germany is around 15 per cent higher than here. That has not happened simply because of a skills shortage; other things contribute to that. But if business is not investing in skills, we have to think very carefully about why society should take up the burden. We do not know what a particular skill will be worth to society in the future. A generation ago, we also had a skills gap, but the skills were utterly different. That teaches us that predicting manpower needs is not likely to produce success. So we need to ask what we should invest in and, most importantly, who should pay.

Government resources have to go on what gives the most benefit for society as a whole, so the first priority is to give those at the bottom of the skills ladder stronger education and training, as the Government have repeatedly articulated. Over the past decade the number of people with no qualifications has fallen by a third, yet 45 per cent of British workers still have low or no skills. That is twice as many as in Germany and three times the number in the United States. We should invest to make sure people leaving education have the skills to find and retain a job. We should invest to make sure people in the job market are able to continue their education. That means stronger basic education

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and more apprenticeships. I believe that the bulk of state funding should go on supplying a decent education and skills base for all, ending the tragedy of wasted potential.

However, transforming our skills is not just about improving the abilities of those at the bottom; it is vital to deepen our intellectual capacity, too. We have to increase investment in the top end of the skills sector to drive growth. We rightly think of skills as a key way to increase productivity, but successful economies have found that the path to increased productivity also requires increased ability to find technical solutions to tough problems. For example, American productivity growth has been driven by firms exploiting advances in technology. The mechanisation and automation of the automotive industry has allowed unskilled and semi-skilled workers to have an increased growth in competitiveness because technical advances allowed them to do that. Technology has automated many industrial processes, so the American economy now needs fewer craft skills, but requires people with intermediate qualifications and post-graduate knowledge.

The fastest growing developing countries now have a tremendous skill shortage because they are going up the value chain. They do not have the skills required at the upper end of that chain, so enormous efforts are being made in China and India to close the skills gap that they are now finding and they are recruiting people from the West.

To achieve success in the UK, investment in mass higher education at postgraduate level is critical. There is a strong case for increased skills funding at graduate level to build our capacity for applied research. At the top end of our skills base, the private sector should contribute a greater share. We must encourage companies to invest in solving the most complex technical problems: one of the reasons our pharmaceutical industry is so competitive is because of that.

Today, we have dozens of business schools but rarely produce strong technical managers. It is a paradox: we have the best business schools in the world and we have problems of productivity and competitiveness. Our economy therefore faces two great challenges. The first is ensuring strong basic skills for all. We can do that by investing in schools, further education and apprenticeships, including academies. In this area, it is an advantage to involve the private sector. We also need to drive forward innovation at the very top. We can deliver high-end skills by using the fiscal system to encourage partnership and give more support to post-graduate apprenticeships. However, thinking that we will improve our skills base by a voluntary code will never work. We must have some regulation.

1.03 pm

Baroness Prosser: My Lords, I, too, thank my noble friend Lord Leitch for calling for this debate. I shall address my remarks to three areas of concern. It will come as no surprise to your Lordships that the first area is how this agenda relates to the needs of women workers. The report of the Women and Work Commission, which I chaired, expressed serious

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concern at the underutilisation of women in the labour market. The commission estimated that between £15 billion and £23 billion could be added to the United Kingdom’s GDP annually if women were able to work to their full capacity or potential.

The argument the commission set out regarding, in particular, women returners getting stuck in employment far below their capacity and the consequent loss of national income fell on fertile ground, and the Chancellor of the Exchequer allocated £40 million in the 2006 Budget to be spent over two years on upskilling or retraining women, in particular those in low-skilled or low-paid employment. That money is being spent as we speak: £20 million is directed to providing NVQ level 3 training in the London area to women returners and women in low-skilled occupations where they are under-represented at level 3 and 21 contracts are in operation to deliver 7,500 level 3 qualifications over two years with funding available for a further 4,000. London’s greatest skill needs, which include engineering, construction and transport and logistics, are all priority areas where women are currently under-represented. The second tranche of the £40 million is being distributed via the sector skills councils.

The women and work sector skills initiative, working with employers, will develop a range of projects designed to upskill women in male-dominated occupations. Sectors include food and drink manufacture and process, logistics, the retail motor industry and science and engineering. That Chancellor of the Exchequer is now the Prime Minister, and I shall be calling on him in that capacity to explain that momentum must be maintained until the number of women in non-traditional areas of employment reaches critical mass and we no longer raise an eyebrow at the sight of a female electrician, plumber or motor mechanic. The women of whom I speak are women with ability who have found themselves at the bottom of the employment ladder.

There is equally a problem in finding employment in some sectors for women who have good qualifications. Research published this week by the UK Resource Centre for Women in Science, Engineering and Technology considers whether recruitment practices have a role in bringing more women into IT and related fields. We have a general shortage of skills in these areas, and losing women through poor or inappropriate recruitment practices should not be tolerated. Areas of concern highlighted by the research include the need to attend to the training requirements of hiring managers, the look and feel of websites, highlighting family-friendly policies and culture and having women on recruitment stalls. The research also found that few organisations are doing much to recruit experienced women who want to return to work after a break or career shift. Despite these problems, there was found to be a strong belief that the greater presence of women would strengthen productivity and effectiveness.

My second area of concern was mentioned by the noble Lord, Lord Low of Dalston, and is the waste of the talents of those with disabilities. In response to the Leitch report, the Disability Rights Commission pointed out the far greater propensity of people with a disability to be without skills and, indeed, without employment. More than one-third of people in

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Britain without any qualifications have a disability or a long-term health condition. Every quarter, around 600,000 become sick or acquire an impairment, and within one year 13 per cent of them have left employment. There are strong moral reasons why access to training and upskilling should not operate in a discriminatory way. Economic arguments also hold sway, and it is high time that the world of work woke up to the value of a diverse workforce.

Finally, I shall say a few words about social mobility, a debate that has been in the news this week. I promise noble Lords that I wrote my speech on Wednesday, before the debate on the “Today” programme this morning. I firmly believe that social mobility over the past 100 years or so has been achieved partly by access to better education but also, importantly, via the world of work. Fifty years ago, poorly educated people could find employment and work their way up, either in an environment more suited to the practical than the academic or by attending night school or via day release. Working one's way up provided role models and extended a work ethic, which in turn influenced the aspirations of a younger generation.

The changed nature of the labour market calls for a new settlement, which values vocational as well as academic skill and which recognises the importance of second-chance education or training opportunities. I urge government and employers to work together to build stronger links between schools and employment. We cannot continue to import the skills we require while allowing late-flowering citizens and others who are currently disadvantaged to fall by the wayside.

1.10 pm

Lord Bilimoria: My Lords, I commend the noble Lord, Lord Leitch, for the huge amount of work he has done in this area of skills and for the very important report he has published, and I congratulate him on his excellent speech.

In my role as the UK chairman of the Indo British Partnership, I am constantly having to look ahead to see how Britain can deal with the challenge of the rising giant of India, where millions of people are hungry for learning and skills. We are in a hugely wealthy nation with a welfare state that looks after our citizens to the extent of a roof over our heads, subsistence, free health and mostly free education. Despite that, huge amounts have been poured into education by this Government. The former Prime Minister, Tony Blair, said, “Education, education, education”, and the current Prime Minister just the other day said:

So the fundamentals are education. Yet, as the Leitch report pointed out, the shocking truth is that one in six young people leave school unable to read, write and add up properly.

In a recent Question to the Government, I asked how many children in England and Wales leave primary school education without the ability to read and write to a proficient standard. The figure given was 122,800 students. Twenty-one per cent did not reach target level 4. Is that good enough to enable Britain to

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compete in the future? Is that good enough when in a country such as South Africa, where I am a member of the advisory board of CIDA University, I have seen at first-hand an institution where disadvantaged students—who just a few years ago would never have had the opportunity to go near the door of a university, let alone attend one—run the university. They are so hungry for learning, but so humble and so grateful. They are so articulate and confident and are taking the world on. Tremendous success stories are coming out of this new and unique institution.

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