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Skills Base

My Lords, I, too, congratulate my noble friend on his report. He and other noble Lords call for a focus on economically valuable skills. It seems to me that one skill is central to this—a skill required by perhaps our largest occupational group. I speak of management skills. Surely, it is the skills and capabilities of those leading and running organisations that will determine whether the skills of others are valuable. The CBI, in its recent report, said: "““Leadership, management and supervisory skills are weaker than employers would like””." My noble friend also drew attention to that in his report, as did the noble Lord, Lord Dearing, and the Chartered Management Institute—and I am indebted to it for its briefing. Yet, there is lots of management around. I wonder if my noble friend Apprentice Bhattacharyya was among the 6.2 million people who watched ““The Apprentice”” on television. That is where ruthless trading seems to be the key skill. Of course making money is an important motivator but where that is combined with the desire to create new products and new services, many skills beyond ruthless trading are needed. First, you have to be more competitive, and being more competitive means being more productive. My noble friend told us how, in spite of improvements in recent years, our productivity still lags behind that of other competitor nations. Some of that is due to poor management. My noble friend, in his report, said: "““Differences in management practices between the USA and the UK, for example, explain 10-15 per cent of the productivity gap in manufacturing between the two countries””." Another recent paper shows that in the services sector better organisation combined with earlier and better introduction of information technology by management explains why some services firms have greater productivity than others—management skills again. In the UK, small and medium-sized enterprises account for over half of employment, but the high failure rate of these companies is well known, and the Association of Business Recovery Professionals has shown that poor management is the main reason for this business failure. Innovation is identified by the Government as a key element for growth and creating our knowledge economy. But Professor Michael Porter, in his review which stimulated much of this debate, states that innovation will require ““changes in management behaviour””. My point is simple. In all sectors of our economy, manufacturing and services, small and medium-sized enterprises, encouraging innovation and raising productivity, management skills are pivotal to raising our game. Ruthless trading and a Milton Friedman desire for a ““get rich”” philosophy will not do the job. To borrow a phrase, it may help the few but it will not help the many—and there are many. The Working Futures report indicates that there are 4.6 million managers and senior officials in this country, and the number is growing. Several noble Lords drew attention to qualifications. The Council for Excellence in Management and Leadership concluded in its report that in the longer term, the proportion of managers with management-related qualifications similar to other occupations will not rise much above 20 per cent. In any occupation, that must be unacceptable. How do we achieve better management practices? As ever, the answer is the carrot and the stick. The stick is competition. Many researches have shown that competition helps with the rapid exit of poorly managed firms to be replaced by new firms or by well managed firms expanding. That is the best inducement to both greater management effort and the need to learn better management practices quickly. I am calling for a much greater emphasis on management training skills under the proposed Leitch implementation plan that my noble friend told us about—in the proposed commission, in the reformed sector skills councils, in ““Train to Gain”” and in the awareness programmes of the value of skills. That is how we will raise the competitiveness and the productivity of our economy, and the excellence of our public services, both of which are central to the prosperous economy and society that the Government seek.