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Skills Base

My Lords, the House is indebted to my noble friend Lord Leitch, not only for opening this debate, but for his invaluable work in leading the review of skills which has now set the frame for national strategy and policy in this area, so crucial to our national prosperity and—a theme much rehearsed in this debate—to the wellbeing of each individual and their family. The ultimate accolade that I can pay to my noble friend is also the simplest: the national skills challenge is now simply dubbed ““Leitch””, in the same way that 10 years ago, the higher education challenge was simply dubbed ““Dearing””. Once you become a single word it is a sign that you have entered the national consciousness in a serious way. After the authoritative exposition by my noble friend today, one can see why. I am also grateful to all the other speakers in what has been an excellent debate. We have ended the debate with two outstanding slogans—““Who trains wins”” and ““The more you learn the more you earn””. We have also had several entries for Sir Alan Sugar's next series of ““The Apprentice””. Indeed, I took the noble Baroness to be volunteering to enter the entire Conservative Party into this process and we look forward to seeing how they do. We have also had excellent speeches that cover the needs of particular skill areas, geographical areas or segments of the population. The noble Lord, Lord Sheikh, referred in particular to the insurance and financial services industry. The noble Lord, Lord Newby, spoke about design and design technology, which is an important area. The noble Baroness, Lady Valentine, spoke about London and the outstanding work that London First is doing. My noble friend Lady Wall mentioned the important work of the trade unions in this area and their engagement with sector skills councils. My noble friend Lady Prosser spoke about the much wider issue of women employees and in particular how women can be trained in non-traditional areas of employment. The noble Lord, Lord Ramsbotham, quite rightly raised the issue of prisons and the aspirations of those in prisons and how we improve education and training therein. He also referred to the careers service and the Connexions service, issues raised in my noble friend's report. My noble friend Lady Lockwood referred to universities and the important work that they do in their wider economies and in access programmes. My noble friend Lord Rowlands spoke about Wales and the important challenges that are faced there. They were all important speeches and I will be able to touch on some of them later. They are of relevance to particular sectors and areas and I hope that the leaders in those areas will take note. Of course, I will draw the various speeches and remarks to the attention of my colleagues in the various parts of the Government that have responsibility for them. This debate could not be more appropriately timed. The formation of the new Government has been taking place while your Lordships have been in session. My noble friend Lady Crawley has been keeping me in touch with who my new boss is and other features of the Government. It has been quite useful to know what has been going on outside your Lordships’ House over the past few hours. One of my right honourable friend the Prime Minister’s chief objectives in the formation of his new Government is the creation of a new department with a special focus on skills, particularly to take up the challenge set by my noble friend Lord Leitch. In the machinery of government changes announced a short while ago, my right honourable friend the Prime Minister announced a new Department for Innovation, Universities and Skills which will drive delivery of the Government's long-term vision to make Britain one of the best places in the world for science, research and innovation. They are critical drivers of sustainable economic growth in the global economy. It will also take on responsibility from the Department for Education and Skills for higher education and further education, including the implementation of the review of my noble friend Lord Leitch of skills, as well as science and innovation policy from the former DTI. Alongside this new Department for Innovation, Universities and Skills, there will be a new Department for Business Enterprise and Regulatory Reform, which will create the conditions for business success. There will also be a new Department for Children, Schools and Families, which will, for the first time, bring together key aspects of policy affecting children and young people. All those departments will have relevance to the skills agenda, but the creation of the new Department for Innovation, Universities and Skills will have a particular focus on this area. So what is the skills challenge that we face? It is summed up very simply at the beginning of the Leitch report: "““The Review recommends that the UK commit to becoming a world leader in skills by 2020, benchmarked against the upper quartile of the OECD. This means doubling attainment at most levels. Stretching objectives for 2020 include: 95 per cent of adults to achieve the basic skills of functional literacy and numeracy … exceeding 90 per cent of adults qualified to at least Level 2 … shifting the balance of intermediate skills from Level 2 to Level 3””," and, "““exceeding 40 per cent of adults qualified to Level 4 and above””." My noble friend's report also sets out two principles of action by which we should proceed in seeking to achieve these goals. First, there must be shared responsibility between employers, individuals and the Government; and secondly, there should be a focus on economically valuable skills, providing real returns for individuals, employers and society. So far as possible, skills should be portable—and of course no skills are more portable than the essentials of literacy, numeracy and ICT competence—to promote mobility in the labour force for individuals and employers. Why is this challenge so pressing? Quite simply, it is because of globalisation. Following demographic shifts, the fall of communism and radical changes in economic policy by China and India, set out so graphically by the noble Lord, Lord Bilimoria, the global marketplace now incorporates more than 6 billion people. There are 1.5 billion new workers in these emerging economies alone—a low cost and, in many instances, educated, enthusiastic and highly ambitious workforce. Across the world, as the noble Lord, Lord Hunt of Wirral, rightly said, technology is empowering individuals, companies and communities to work more productively and at higher skill levels than ever before. Experts predict that, while there are 3.2 million unqualified adults in work today, by 2020 that figure will be only 600,000 in this country. Therefore, the imperative for further action is great. One of the first acts of the new Department for Innovation, Universities and Skills, early next month, will be to publish the Government’s full response to the Leitch report. I cannot pre-empt that response today, but let me say something about each of the main issues raised by my noble friend’s report. The first concerns adult literacy and numeracy. In England today, 5.2 million adults with poor literacy skills would be unable to pass an English GCSE and 15 million adults have problems with numbers. More than 6 million adults in the workforce in England do not have a level 2 qualification—that is equivalent to five good GCSEs—which is the basic level we expect for employability. The issue is not just about the skills of school leavers, which are improving thanks to our schools policies, but also about improving the skills of our adult workforce. Some 70 per cent of those who will be in the workforce in 2020 have already completed their compulsory school education, and most of those did so more than a decade ago. It is for that reason that the focus of government adult skills policy since 1997 has been threefold: first; improvement of the literacy and numeracy competence of the lowest skilled; secondly, a reinvigorated and expanded apprenticeship route for young employees to gain systematic work and training opportunities where they are not in further or higher education; and thirdly, the acquisition by young adults in particular of their first level 2 qualification. As my noble friend Lady Morris so rightly said, that may not be in GCSEs but in vocational qualifications or through the future diploma route, which are every bit as important as conventional GCSEs, so that as many adults as possible gain not only basic skills but the confidence, motivation and earning power which come from success in gaining worthwhile qualifications. Let me take these three priorities in turn. To improve adult literacy and numeracy, in 2001 we launched our Skills for Life programme, providing free accredited basic literacy and numeracy qualifications through further education in every community nationwide. The investment in Skills for Life has been huge: £3 billion since 2001, as well as £1 billion over the same period on ESOL provision for native speakers of other languages. I am glad to say that every Skills for Life target has been exceeded; some 1.6 million adults have improved their literacy and numeracy skills as a result, and the numbers on ESOL courses have trebled in the same period. I take the point made by the noble Baroness, Lady Sharp, about the need for flexibility in the provision of basic skills programmes. We need to continue looking at that. But I believe that these are firm foundations on which we can build in our response to Leitch. Secondly, on apprentices, following the welcome remarks of the noble Lord, Lord Cotter, and my noble friends Lord Bhattacharyya and Lord Haskel, I say quite frankly to the House that the Government believe that it was a major error of policy, inflicting serious damage on millions of young people, that the old apprenticeship route was allowed to wither in the previous generation. When I think of those grievous errors of policy in the past, the diminution of apprenticeships was probably one of the most serious in the whole education and skills policy. Our policy since 1997 has been to rebuild the apprenticeship route in a way relevant to modern employment sectors. I am glad to say that thanks to significant public investment of more than £4 billion in the apprenticeship route since 2001, the number of young people participating in apprenticeships has trebled from 75,000 to 250,000. Apprenticeship completion rates, as the noble Lord, Lord Cotter, rightly said, were initially highly unsatisfactory, but they continue to improve and are up from 24 per cent in 2002-03 to 59 per cent today. The noble Lord said that the absence of a bonus at the end was a disincentive for completion. In fact, there is a bonus at the end in respect of employers; providers get 25 per cent of the funding at completion, which gives them a big incentive to keep their apprentices engaged. He also referred to bonuses in respect of individuals, and I take his point there, but in the models that we have tested we have not found that a particularly efficient way in which to do things. I am glad to say that around 130,000 employers are now involved. So the work that we have done on apprenticeships so far provides a firm foundation on which we can build, in response to my noble friend’s recommendation that there should be 500,000 apprentices at any one time. Thirdly, on level 2 qualifications, we have made good progress in this area too, increasing the proportion of the workforce qualified to level 2 from 65 per cent in 1997 to 70 per cent in 2002 and 73 per cent in 2005. Two major new resources in our armoury for increasing the level 2 proportion have been, first, the creation of a right to a first free level 2 qualification for all adults, irrespective of age, to which was also added a new right to a first free level 3 qualification for young adults aged 19 to 25, which was a change that we made recently that relates directly to my noble friend’s recommendation on migrating our skills base from level 2 to level 3—for precisely the reason given by the noble Baroness, Lady Sharp, that this is where the particularly strong gains to individuals in the economy start to come through. The second major new resource has been the new Train to Gain programme, which assists employees to gain qualifications directly in the workplace, including time off for the purpose. The noble Lord, Lord Newby, raised the difficulty of engaging employers in training and said that there should be flexibility around their requirements for that purpose. That is precisely what Train to Gain seeks to do. A bespoke package of training is agreed with each employer who engages in the programme, much of it actually delivered in the workplace of those employers who engage. We are now engaging 40,000 employers in Train to Gain as a result, and there has been a very substantial public investment—not just a requirement on the part of the employers. Train to Gain had a budget of £217 million last year; in this current year it will be £461 million, and we will have more to say about this in our response to the Leitch report. I shall highlight three other significant developments in the context of the Leitch report: first, the new Commission for Employment and Skills; secondly, the new skills pledge; and thirdly, the development of national skills academies. The new Commission for Employment and Skills will be a forum promoting systematic employer and other stakeholder engagement in the national skills debate and the vital contribution of employers and other stakeholders to upgrading skills in pursuit of the Leitch partnership principle. Through the new commission, we will reform sector skills councils, the importance of whose work was rightly stressed by my noble friend Lady Wall. Their remit will be more sharply focused on raising employer ambition and investment in skills at all levels and seeing that there is more uniformity of practice in terms of ambition and aspiration in areas such as apprenticeships. They will play a key role in articulating the future skill needs of their sectors and ensuring that the supply of skills and qualifications is driven by employers. The Government are delighted that Sir Michael Rake, the former international chair of KPMG and new chairman of BT, has accepted the post of chair of the commission. Sir Michael has been the driving force behind KPMG’s award-winning corporate social responsibility programmes, tackling educational and social disadvantage. These include the Every Child a Reader programme, for remedial work with younger children on reading, on which I have personally worked closely with Sir Michael and KPMG. I can attest to Sir Michael’s commitment and passion, and his new role will be vital. We will set out the full membership of the new commission in due course. Secondly, on the skills pledge, many businesses are fully involved in training their employees, but others are not. The pledge is a simple concept—a statement reinforcing shared responsibility for workforce development between employers, employees and the Government. It will help us to work with businesses that have traditionally been harder to reach and enable both employers and individuals to make their commitment to skills clear. We will provide employers with access to the support of an impartial skills broker, and free training for their staff in literacy, numeracy and a first full level 2 qualification, building on the Train to Gain programme that I have already described. I am glad to tell the House that 150 employers, large, medium and small, including the police, McDonalds and BT, have led the way and signed up to the pledge. Together, these 150 employers employ more than 1.7 million staff, who stand to benefit tremendously from the support on offer. We look forward to working with these employers and many more in the future. Thirdly, national skills academies are new institutional centres of excellence to train young people, focused on particular employment sectors. The governance and mission of these skills academies are employer-led, including a substantial employer contribution to their infrastructure costs. Since launching the programme in 2006, we have established five national skills academies, each with employers of outstanding national reputation, generating £42 million of employer investment alone in addition to the huge non-monetary contribution being made by the employers concerned. The five academies are the Fashion Retail Academy, the Construction Academy, the Manufacturing Academy, the Financial Services Academy and the Food and Drink Academy. Building on the success of these first five national skills academies, we intend to establish eight more, including academies focusing on glass manufacturing, coatings, print and building products, sport and leisure, and the hospitality and entertainment sector. I believe that those developments will be warmly welcomed in the House. On the specific points raised in the debate, the noble Lord, Lord Low of Dalston, rightly raised the issue of the needs of adults with learning difficulties or disabilities and the support on offer for them. I am glad to be able to tell the noble Lord that the amount spent on students in these areas has increased steadily over recent years and in 2004-05 the Learning and Skills Council provided almost £1.5 billion to support 641,000 learners with learning difficulties or other disabilities. In that year, which is the last year for which we have figures, 11 per cent of post-16 learners declared a learning difficulty or disability, which is higher than the generally acknowledged number of people with disabilities in the general population, at around 10 per cent. So clearly the further education and training sectors are making a significant impact in this area. As the noble Lord will know, however, following the Little report recommendations, provision for such students has been included as a priority in the Learning and Skills Council's grant letter and has been listed in the Learning and Skills Council’s annual statement of priorities. He and I have discussed this specific issue and how this work can be taken forward by the council. My noble friend Lady Wall and others including my noble friend Lord Sawyer referred to the work of trade unions and getting much stronger employee engagement in the skills challenge. We very much agree. The new union learning representatives are playing a vital role in this area. They have been a feature of the majority of good practice case studies in the Skills for Life in the Workplace documentation. In our response to Leitch we will say more about the potential for union learning representatives to play an even bigger role in this area. I believe that they can play a very constructive role in taking forward measures to meet the skills challenge. My noble friend Lord Bilston said some valuable words about not only the wider contribution of further education in general but the particular contribution it makes in delivering higher education, including foundation degrees. I endorse everything he said on that. I hope that the situation in careers guidance is not as bleak as the noble Lord, Lord Ramsbotham, painted. The Connexions service has done a great deal of valuable work and is in some ways better than the previously available careers guidance service. However, I accept that more needs to be done. The Leitch implementation plan will set out the new policy direction on information and guidance. That featured strongly in my noble friend's recommendations. The debate on Leitch can too easily be consumed by large numbers, acronyms and dates by which to achieve this or that high-level ambition. Those are necessary features of the discussion, but let us not forget that underlying all of this are the life chances, aspirations and well-being of individuals, each of whom is of equal worth and merits individual respect and support. In the society of tomorrow, respect and support for the individual as a student, employee and citizen must be our cardinal principle so that the terrible waste of talent of previous generations is not repeated. In the words of our new Prime Minister, we must all do our utmost to bring this about.