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On a discordant note, Universities UK believes that in-work training and retraining have actually been made more difficult because of the funding that has been lost from equivalent and lower-level qualifications. I suggest that the Government have a real responsibility in this regard and I ask the Minister to tell the House what they intend to do to address this important issue.

We know that some businesses are already responding very well to the talent challenge and that Business in the Community and others are doing a fine job. However, what we really need is a high-impact campaign to raise awareness of the scope and urgency of the talent challenge facing the United Kingdom. I hope that this debate will help to draw some attention to the issue. The involvement of so many influential noble Lords should indeed help to achieve that objective.

We must also take on board the fact that our economy will be not only leaner and meaner but also greener: it must use less carbon and be more sustainable. This reflects the views of the majority of our population and is to be warmly welcomed. However, to change societal norms we will need people with new, green talents, and not just in the field of carbon capture and storage. All desk-based workers in offices will face terrific changes in their working practices. There might be more teleworking, as well as lower-energy PCs, networks and servers. We will need more skilled people in the fields of science, technology, engineering and maths—the STEM subjects—and we must invest in those subjects now.

Perhaps the most surprising of the many witness statements to our inquiry came from McDonald’s, the restaurants. We do not think of McDonald’s as incredibly intellectual, but it has a good story to tell. It has a scheme for apprenticeships that it plans to roll out nationally. The scheme combines continuous professional development with maths and English GCSEs and key skills. Communication and organisation skills are learnt on the job. Maths and English components are learnt online, in the employees’ own time. As they develop skills, they are awarded stars and get higher pay. Completing the scheme provides them with a qualification equivalent to five GCSEs, and the management development course has a clear path through four stages, from running a shift to managing a restaurant. These qualifications are becoming nationally recognised. There are many examples like this of splendid initiatives. We need to draw them together, publicise them and get more people involved.

The all-party group welcomed the creation of a single National Apprenticeship Service from April 2009, but recommended that clear accountability for apprenticeship provision should rest with one Minister in one department. I hope that the Minister will respond positively to this recommendation.

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We heard powerful evidence about the importance of making the business case for education programmes. Our many examples included BAE Systems, the National Grid and Siemens Industrial Turbomachinery, which have all benefited from such programmes. They organise school visits where children become more aware of STEM-type subjects, because they understand that these subjects will probably lead in future to jobs for them. It was interesting to hear from National Grid, which realised that 40 per cent of its skilled workforce will reach retirement age in the next 10 to 15 years. It is vital for the company to have a reservoir of talent from which to appoint new staff.

We must do something for businesses—in particular small businesses—that set up apprenticeship schemes only to have their apprentices poached. Will the Government consider rewarding firms that train young apprentices who then go off to somebody else, so that in effect they are training for the benefit of the wider community? I hope that the Minister can do something about that.

It is important that we in the UK turn this global slowdown to our advantage. If we invest now in skills and talents, we will be the ones who survive. If we do not, we will face a skills shortage and an uncertain economic future. We have to learn from the companies that are already turning workers with no qualifications into successful managers. We must tackle the lack of investment in vocational training and the related snobbery that we are noted for in this country. Recessions are a time when employers feel most need to make efficiencies and cut costs. However, corporate social responsibility demands that we invest in our workforce now, so that we will be in a position to power our way out of the recession. I beg to move.

4 pm

Baroness Wall of New Barnet: My Lords, I am delighted to be taking part in this debate, which was introduced by the noble Baroness, Lady Greengross. It is always a pleasure to speak in a debate that she is involved in, but following her opening speech is a little nerve-wracking. I thank her for giving us this opportunity to debate this important issue. It is one that is very close to the Government’s heart and one to which the Government are committed. I am delighted to be involved in the first debate that my noble friend Lord Young will be replying to; he is doing a tremendous job in his role as Parliamentary Under-Secretary of State for Skills and Apprenticeships.

There are many initiatives out there to encourage and support individuals to maximise their potential by acquiring or upgrading skills, which not only enhances their employment opportunities but gives them additional confidence and improves their skills for life. Many employers, large and small, are taking advantage of the support that the Government are offering to ensure that their workforce has the opportunity to upgrade their skills, often supported by their trade union, in particular by the union learning reps. In many businesses, they work closely with management to ensure that the skills required by the business are made available to their members.

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The case for maximising talents and skills is being made to a great extent by sector skills councils, whose role is to support employers to increase UK productivity through skills. Critical among these sector skills councils is Semta, the sector skills council for science, engineering and manufacturing technologies. I declare an interest, as I work with a number of SSCs and Semta in particular. Semta’s footprint includes 76,000 companies and a 1.9 million workforce. UK engineering and science turnover was £204 billion in 2006. UK engineering and science exports were £145 billion in 2006, which is some 40 per cent of the total. Business R&D spending is driven by UK manufacturing; more than three-quarters of total business R&D expenditure is carried out by manufacturing businesses. The UK is a world leader in scientific R&D. Semta sector companies provide more than 8 per cent of UK gross value, equalling £67 billion every year.

The importance of these sectors has been highlighted recently by the Government, as Britain looks to industries which will help recovery and ensure that UK plc is up and running as soon as possible when we come out of the downturn. The Government’s manufacturing strategy was launched in 2008, with the majority of the commitments to be delivered by the end of 2009. This strategy contains actions to help businesses to exploit new technologies and innovation, making the most of the opportunities that are available.

However, as the noble Baroness, Lady Greengross, said, even before the current recession, science and engineering industries were struggling to develop the skills needed by them to ensure that their businesses thrive and prosper. Among engineering and manufacturing companies, hard-to-fill vacancies in engineering are costing the UK economy £823 million every year; 17 per cent of engineering companies have hard-to-fill vacancies; 21 per cent have skills gaps in the existing workforce and 70 per cent of these are technical skills. Only 11 per cent employ any apprentices or recognised trainees. Among bioscience and pharmaceutical companies, the situation is even more difficult. Some 39 per cent have hard-to-fill vacancies, 22 per cent have science skills shortages, and 29 per cent have skills gaps in the current workforce.

There is also a demographic issue that is worrying. Some 31 per cent of bioscience and pharmaceutical employees and 42 per cent of the engineering and manufacturing workforce are aged over 45. Forecasts prior to the recession estimated that engineering alone needs 38,000 new skilled employees to be recruited every year for the next five years. Many of us recognise that, unless we maximise talent and skills in line with the needs of these businesses, we will stay in recession longer and fail to take growth opportunities when recovery comes.

There is evidence that companies that do not invest in skills during recession are two and a half times more likely to fail than those that do. That is where Semta, using its sector expertise and credibility, can get involved, working with the employers to identify what their skills needs are, how they can get them and how to ensure that the skilled workforce makes a difference to the bottom line. This is now a one-stop shop, and I am sure that the noble Baroness, Lady

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Greengross, will be pleased to know that a lot of things are happening in the areas she has been expressing concerns about.

Fortunately those that get help to develop a wide and flexible skills base will be well placed to adapt to changing conditions and to respond to future opportunities. Help is at hand, through Train to Gain, and the Compact, which Semta and a couple of other sector skills councils in England now have in their toolkit. They enable employers to access support and funding for a wide range of skills needed by their sector. These include apprenticeships as well as management and leadership for companies with between five and 250 employees.

I ask my noble friend to consider more flexibility around the availability of this qualification, so that it could be extended both to larger companies, so that they have the opportunity to access it, and in terms of the number of employees in any organisation that can take advantage of this valuable and necessary qualification. Businesses are pushing for these two areas. I hope that my noble friend will look at this, particularly in this downturn, when many employers are using downtime in production to support their employees in gaining this qualification. This is a great approach, which has been taken by the unions and management in many, many companies.

Business improvement techniques are also part of the compact, at either level 2 or level 3 NVQ, with the opportunity for funding level 4 currently being negotiated with the Learning and Skills Council, along with, importantly, Skills for Life qualifications such as literacy, numeracy and English as a foreign language—all mentioned by the noble Baroness, Lady Greengross.

Hundreds of companies are already taking up the offer and almost £25 million has been committed to ensure that businesses have the right people with the right skills at the right time. The National Skills Academy for Manufacturing is supporting these initiatives through its network of approved training providers, which are delivering programmes such as business improvement techniques and other key skills to support the businesses.

Last year alone the Skills Academy programmes helped companies to achieve a £12 million benefit for a £2 million investment in skills. That is a 6:1 return on the investment—I would suggest that is real value for money. That is fairly typical of the return on investment from productivity and competitiveness programmes.

Semta-run pilots in the West Midlands showed that for government funding of £18,000, companies got an average of £94,000 in profit in a single year. Just roll this out over 50 companies in each English region, and we could reap a £42 million sustainable improvement and provide 2,400 business improvement qualifications.

Let me share a couple of examples of real life practice that is going on. Wedge Group Galvanizing, which employs 850 people in the West Midlands, by investing in management and team leader development between 2006 and 2008, increased its output by 18 per cent, increased productivity by 7 per cent and customer satisfaction by 20 per cent. Jackson Keay, which employs 70 people in Nottingham supplying gas cylinders and other pressured containers, as a result of doing B-IT

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and leadership and management NVQs, brought delivery lead time down from three weeks to five days, boosted productivity by 40 per cent and increased its turnover from £2.3 million in 2006 to £3.5 million in 2007.

Two weeks ago I visited automotive suppliers PP Electrical Systems in the Midlands. It employs 154 people and has improved its quality from 93 per cent to 99.8 per cent, with Semta support for its productivity improvement programme and its training schools.

I realise that I am running out of time but I want to make a big plea for what we should be doing with regard to young people. I refer to the apprenticeships that have been designed and had targets set for them following the Leitch review. Those targets have been exceeded by 12 per cent but we must not take our foot off the gas.

In conclusion, the Big Bang Fair, held yesterday and today at the Queen Elizabeth II Conference Centre, was attended by 6,000 enthusiastic and energetic young people looking at 14 to 19 diplomas. They were absolutely inspiring. Let us not forget that, when we come out of this recession, it is today’s young people and businesses with the right skills that will shape the country’s economic future. By maximising the available talent and skills, we will ensure the UK’s future economic prosperity.

4.10 pm

Baroness Verma: My Lords, I, too, congratulate the noble Baroness, Lady Greengross, on what is of course a most timely debate. I dare say that I will repeat some of her remarks. As a nation, we face some serious challenges, as well as the difficulties confronting the global economies. I declare an interest as the employer of a small business in the care sector.

It is paramount, especially in the current climate, that we look seriously at how we nurture existing talents and skills and how we ensure that those who require assistance with retraining and reskilling find the process easy and as free from stress as possible. The Leitch report identified an urgent need to tackle the lack of skills in the United Kingdom in addressing the need to become a knowledge-based and skilled workforce. We all know that by 2020 30 per cent of the working population will be over 50 years old, and so there is an even greater urgency not to detract our attentions from the very important need to revisit learning, training and flexibility in achieving qualifications.

As an employer, it is of course in my interest to see that my staff receive the right tools to equip them to carry out their duties properly and to add self-worth to what they do and that, wherever possible, I assist them in acquiring skills outside their job role so as to help the community at large. I imagine that most good employers seek the same sort of return. However, it is increasingly frustrating when the qualifications demanded as mandatory by the Government add very little value to the work that is carried out but are a simple tick-box exercise so that the Government can announce how many NVQs have been delivered. Can the Minister say how NVQs delivered by providers are monitored and assessed? In my own business, the delivery of level 2 and level 3 NVQs has been inconsistent and poor.

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Knowing that by 2020 30 per cent of our working population will be over 50 and that jobs are currently being lost across all sectors, will the Government now consider not cutting ELQ funding, as this will impact hugely on those desperately trying to reskill? In fact, 1.44 million adult-learner places have been lost in the past three years. Turning to those who will be our future workforce, surely it is unacceptable that more than 350,000 children did not achieve five GCSEs at A to C grades, including English and maths, and that 128,000 did not even achieve a single GCSE at grade C. We are failing these young people. We also need to look at why 40 per cent of our children still leave primary education having failed to meet the accepted minimum standards in literacy and maths.

To be a knowledge-based and well skilled population, it is essential that we look closely at the quality and depth of the subjects that we teach. It is crucial that, whether young people are taking on vocational education and training or preparing for higher education in FE colleges and universities, our educational systems are rigorous and challenging. STEM subjects will play an increasing part in the development of research and new industries, and in building on our strengths as leaders in the fields of engineering and the development of new technologies. A declining number of pupils have been taking A-level science subjects. Can the Minister say what measures the Government are taking to ensure that more pupils take science at A-level?

If we are to ensure that we retain a leading edge in the world in developing new technologies, the Government must ensure that universities do not have to spend valuable resources providing remedial support to students who arrive poorly equipped in the standards expected of those entering higher education. The Government have trumpeted the benefit of apprenticeships. Apprenticeships are an extremely useful way of providing young people with the tools to enter the world of employment supported by employers and local educational institutions. However, the Government have fallen short of the target they set. I am sure the Minister is aware that employers are keen to support apprenticeship programmes, but they find the process complicated. What are the Government doing to support employers, particularly small employers, to offer apprenticeships? Does the Minister accept that in this difficult economic time some employers may struggle to do so? Is he aware that just 7 per cent of employers are aware of the national apprenticeship scheme? Can he say what measures the Government are taking to ensure that employers and industry are aware of training initiatives?

The Government are obsessed with concentrating all their efforts on one end of the age scale. We are an ageing population. I do not detract from the importance of ensuring that our children and young people receive the best possible start in life, complete with a good education and the opportunity to achieve their best in employment and civic life. However, people lose their job at all ages, and we need to respond to the different challenges that people face in middle age and when approaching retirement. What are the Government doing to help individuals who are not at the start of their working life but more towards its end? Does the

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Minister agree that an all-age careers service is crucial and that learning new skills must not be limited to young people?

My final remarks will be on the retraining of women. After the Women and Work Commission produced its report, the then Chancellor, now the Prime Minister, Gordon Brown, in his March 2006 Budget allocated £40 million for retraining and upskilling programmes for women. There are more than 500,000 fewer women in further education or skills training now than in 2005, and an estimated 500,000 women across the UK who want to return to work cannot find part-time jobs. Women returners are not identified as a specific group in the Government’s unemployment figures. How many women have applied for retraining since March 2006 and how many have received it? Where has the £40 million been spent? How are the Government monitoring the success of their investment?

This debate is extremely important, particularly in these difficult times. There are many talented and skilled people in our country; if we are to be world leaders, not just average, and to compete with the emerging economies of China, India and other countries and to strengthen our systems at every level, the Government have a lot more to do.

4.18 pm

Baroness Walmsley: My Lords, this is a timely debate, and I congratulate the noble Baroness, Lady Greengross, on initiating it. Since my brief is children, schools and families, I intend to concentrate my remarks on business and enterprise education in schools because if the noble Baroness’s objectives are to be fulfilled, we must start at the bottom with young people.

One might ask why children should be taught this subject. There are two main reasons. First, employers tell us so. They complain that school leavers are not “job ready”. I do not think they mean just that young people's basic skills—important though they are—or even subject knowledge, are inadequate. I think they are also referring to the soft skills: being able to work in a team; being self-motivated; having an open attitude to learning from experienced people; being able to keep accurate records; being able to relate well to other workers; and even such basic things as attending regularly, being on time, reliable and conscientious. They also complain that young people have no idea of the realities of the world of work: the fact that nothing happens unless you do it; that you have to take responsibility; and that a company has to make a profit or everybody loses his job, a matter which we have all come to realise very clearly recently. Good business and enterprise programmes can teach all these things, engage young people and help them to have fun and enjoy school. The second reason is that we have a responsibility to children to prepare them for life in the real world, which they will enter when they leave.

There are many ways in which young people can learn basic skills and subject knowledge, and schools are addressing the soft skills in a number of ways. Personal, social, health and economic education is now a statutory part of the curriculum, which is right because it is really education for life. There is also the

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SEAL programme: social and emotional aspects of learning. This develops emotional literacy: how to negotiate in conflict situations, cope with stress and understand other people’s feelings. All those are useful every day in the world of work.

However, without these soft skills and some understanding of business, young people leaving education will find life in the workplace very hard and employers will not be happy. So the Government ordered in 2003 a review by Howard Davies of business education in schools, and, as a result of its findings, allocated £60 million to secondary schools every year. That means roughly £17,000 per school, depending on size.

The schools can spend the money in many different ways but, before they start, there are certain basics to consider. Ofsted recommends they develop enterprise learning as part of a coherent programme of vocational and work-related learning, establish a clear definition of “enterprise learning” and ensure that it is understood by staff and pupils alike, identify the learning outcomes that they are seeking, recognise that enterprise learning has implications for teaching and learning styles, and develop effective methods of assessment.

Pathfinder projects show that the most effective schools take an inclusive approach: providing in-school training for staff, who then include enterprise learning through changes to lessons in other curriculum subjects, as well as through specific enterprise activity. At key stage 4, students now have to do five days of enterprise activity. It is a pity if schools feel that the only thing to do is find work experience placements for them. Apart from the fact that this can be very difficult for schools, some of the placements are pretty meaningless. I have had a number of students working with me during their work experience week, so I know that it can take up a lot of one’s time finding suitable and useful experiences for them.

However, schools can do other things, such as business or community projects, mini-enterprises or attending enterprise days and events. A good example comes from a school in Hertfordshire and was targeted at year 10 vocational education students. The aims were to develop entrepreneurial skills, create links with community partners, open up vocational routes into FE, produce resources to share with other schools and publicise their success. An outside training provider delivered a three-day inset course to the staff called “Nurturing the Entrepreneurial Spirit”, which helped staff plan and develop a number of small-scale vocational enterprise projects and create a choice of learning opportunities.

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