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Skills Base

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. 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.