House of Lords
Introduction: Baroness Chisholm of Owlpen
Introduction: Lord Scriven
Royal Assent
Cycling: Helmets
Baroness Sharples
To ask Her Majesty’s Government whether they have any plans to legislate that cyclists must wear helmets.
Lord Popat (Con)
My Lords, the Government take cycle safety very seriously. We have no plans to legislate to make cyclists wear cycle helmets. However, we encourage their use by all cyclists, especially children. We believe that this should remain a matter of individual choice rather than imposing additional regulations which would be difficult to enforce.
Baroness Sharples (Con)
I thank my noble friend. However, if cyclists wore helmets, would they not be more visible and certainly safer? Can we also persuade them not to ride on pavements? Is my noble friend aware that recently, on a crossing outside the House, I hit a cyclist on the back because he did not stop and his friends behind shouted, “Well done—why didn’t you hit him harder”?
Lord Popat
I think we can all agree that my noble friend is a force of nature inside this Chamber and, based on what I have just heard, outside it as well. There is an important point, however. Although the police have a role to play in enforcing the law, we need everyone to play their part to ensure that all road users and pedestrians respect each other. If we had more people with the courage and decency of my noble friend, the world would be a better place.
Lord Berkeley (Lab)
My Lords, I congratulate the noble Baroness. I would not like to meet her when on my bike on a dark night. However, she is absolutely right and so is the Minister. Does he agree that the answer to both encouraging more cycling and making it safer is to give real, regular investment to cycling over the whole country? A sum of £10 per person per year may be a very small proportion of the road budget but there would be more discipline and space and a much better environment to cycle in.
Lord Popat
The noble Lord makes an important point and I agree with it. We want to make cycling safe, to encourage more cycling. Last week, a cycling delivery plan was released and was discussed and debated in the other House. It is our ideal aspiration to spend £10. We currently spend £5 per person, compared with £2 in the previous Parliament, so we are continuing to spend more money for safety and more cycling.
Lord Walton of Detchant (CB)
My Lords, Dr Hugh Jackson, a Newcastle paediatrician, fronted a major national campaign seeking to persuade the Government of the day that children cycling on public roads should be required by law to wear helmets. He produced some alarming statistics about the incidence of head injuries, many of which could have been prevented—and the children spared the results—by wearing helmets. Is it not time to re-examine this whole issue?
Lord Popat
My Lords, cycling helmets reduce the impact of a collision; they do not prevent collisions. The report mentioned by the noble Lord concluded that cycle helmets would be effective in many accidents but their effectiveness depends on a range of factors such as whether it was a fall or a collision with a vehicle and what object was struck by the road.
Lord Taverne (LD)
My Lords, there are very few cyclists, certainly in London, who do not now wear helmets. However, could the Government publish statistics of the number of serious and fatal injuries caused by people not wearing them? On the other hand, will the Minister also bear in mind that if legislation did make it compulsory there would almost certainly be a considerable reduction in the use of Barclays bikes, particularly by tourists, which would be a disadvantage to the general well-being of London?
Lord Popat
My Lords, the Government do produce figures on people wearing, or not wearing, helmets. About 18% of children do wear helmets. It is therefore important to work to avoid accidents in the first place and make cycling safer through redesigning junctions, increasing awareness, training cyclists and motorists and encouraging cyclists to take simple steps such as wearing high-visibility clothing and helmets.
Lord Davies of Oldham (Lab)
The noble Lord will recognise the importance of cycle safety. If we are to encourage people to use bikes more, particularly for commuting into our cities and towns, we have got to make things safer. Yet when it came to the question of resources, raised by my noble friend Lord Berkeley, the Minister evaded the issue, as did his counterpart in the Commons after a major debate two weeks ago. Do the Government not recognise that to make cycling safe, expenditure is necessary? It does not have to be a great deal, but expenditure is necessary and it would behove the Government to respond to this. On a personal note, cycling down the River Lea for seven miles most mornings I always think that the safety device I need is not a helmet but water wings.
Lord Popat
My Lords, let me take the question of expenditure first. The previous Government spent £2 per person; currently, we are spending £5; in our eight cycling cities we are spending £10. We have our cycling delivery plan and the final report will be published. It is our aspiration to spend £10, or even more, by 2020-21. We want to see more cyclists on our roads.
Lord Blencathra (Con)
My Lords, we must do more to protect the lives of cyclists but there is a serious point about protecting pedestrians as well. Will my noble friend look at the level of penalties and demand that the police take enforcement action against that small minority of arrogant Lycra louts who sail through red traffic lights as if the law does not apply to them, belt down the pavement and scatter pedestrians, and mow down some people on zebra crossings, including some people in wheelchairs—so I declare a personal interest?
Lord Popat
My Lords, the enforcement of cycling offences is an operational matter for individual chief officers of police. Officers can issue verbal warnings or a fixed penalty—which has increased from £30 to £50—and rogue cyclists on the pavement can be prosecuted. We are doing what we can to carry out the necessary training and awareness programmes to make sure that bad cyclists do not give a bad name to the good cyclists.
Lord Hughes of Woodside (Lab)
My Lords, given that winter is approaching quickly, does the Minister agree that, apart from safety helmets, high-visibility jackets and proper lighting are among the most important elements of cycling safety? Having to drive through London in rush hour is a menace for everybody.
Lord Popat
My Lords, we are taking action through redesigning junctions, creating awareness and training cyclists—all of which is taking place with Transport for London and the Mayor of London as well.
Employment
(10 years ago)
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Lord Haskel
To ask Her Majesty’s Government what measures they are taking to tackle under-employment and to help those working part-time who want a full-time job.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud) (Con)
The Government’s long-term economic plan is working. A record number of people are in work and the proportion of part-time workers wanting full-time work has fallen for the last 11 months. Under universal credit we are, for the first time, creating clear incentives and supporting claimants to progress in work and increase their earnings.
Lord Haskel (Lab)
I am not sure where the Minister gets his numbers from but recent figures show that there has been rise in the number of people seeking more hours. Could this be due to the low pay that people who are already in work are getting—that they need to work more hours? This is partly due, I should have thought, to the government policy of subsidising low wages through the welfare system. Instead of incentivising these low wages, would it not be better for the Government to encourage businesses to raise their game, and become more productive and efficient? In this way, people can earn more and employers can get more of a return from people’s work.
Lord Freud
My Lords, the simple fact is that the number of people working part-time who want to work full-time has had the largest but one drop over the last 12 months that we have ever seen—down 1.7%. Clearly, one needs an economy recovering. We have had a terrible shock to this economy—it went down 6%. We are now pulling people back and, as the Bank of England Governor said, what will get everyone working to the extent that they want to work will be improving productivity in this economy.
Baroness Gardner of Parkes (Con)
The Minister will be aware that I have often raised the issue of carers, who are grossly underpaid because they are paid only for the jobs they do—going in for 15 minutes or half an hour—and nothing for travel between jobs. Is he also aware—I have met such cases—that there are people who have worked as carers for all their lives but when their client dies and they go for re-employment, because they have been so loyal to them over many years they are told that they must take voluntary work? What they desperately need is an income to live on and they have to take voluntary work before they will be considered even for a job paid at the very poor rate of something like £2 an hour, which they get because they are considered to be self-employed. Does he not think that that is an abuse of this whole employment system?
Lord Freud
We are most concerned that people should be able to work as much as they want to. We are creating a new system to allow that, supporting people as they progress, in universal credit, into full-time work. We have extensive in-work progression trials right round the country, to find ways in which we can most effectively support people to work the amount that they want to and get the earnings that they need.
Lord McFall of Alcluith (Lab)
My Lords, in a speech in April this year the Chancellor was explicit in committing the Conservatives to the concept of full employment, and in a contradictory echo of a previous Conservative Chancellor said that unemployment was a price not worth paying. Can the Minister inform me what the Chancellor meant by “full employment”? Did he have a particular equilibrium unemployment target in mind, or was it just an empty rhetorical gesture to fit the occasion?
Lord Freud
As the noble Lord knows, that is an extraordinarily complicated economic question. The Chancellor has clarified that the target around full employment is a better employment rate than other countries are seeing. We are currently not far off the full employment rate, at 73%, that we have seen in the past.
Lord German (LD)
My Lords, as the unemployment levels fall, the focus naturally shifts towards in-work progression, with people wanting to earn more money and have more hours. Can my noble friend tell me whether we should in fact incentivise the Work Programme so that after someone being 26 weeks in work, when a company gets paid, there should be further incentives to help people earn more money and get more hours, so we can move people into better work in their lifetime?
Lord Freud
My Lords, we now have the real-time information system working, whereby we know what people are paid every month. That gives us a new opportunity with the Work Programme in its next stages to look not just at sustainment in work, which was the key new feature of the original Work Programme, but at progression in work. It will be entirely possible to devise ways to encourage providers to help people make that important progression.
Baroness Howe of Idlicote (CB)
My Lords, I am sure that the Minister agrees that many women want to work part-time, because it fits in well with their life plans. Can he reassure me that men have equal chances, in their employment, of getting part-time work? As I understand it, many men are felt to be able to work full-time and therefore not given the other option.
Lord Freud
We have one of the most flexible structures of work in Europe. In other countries you see a huge concentration of people working the full number of hours, whereas here there is a much smoother position. We have systems to support people doing partial and full work hours. In fact, in the way in which it is devised, universal credit will make the situation even more flexible in the future.
Lord Kinnock (Lab)
Does the Minister recall this week’s worse than anticipated borrowing figures, attributable in large part to worse than anticipated revenues from income tax? Does he recognise and share the view of many independent economists commentating yesterday, who said that this was because we are having a very low-wage recovery? Does he concede the truth of that and understand that on the present basis the recovery is very fragile and will remain so as long as wages are low in so many sectors of the economy?
Lord Freud
There are major flows going on in this structure. We have had a very large increase in employment, with 1.7 million more people in the workforce. Clearly, some of those coming in for the first time tend to be at the lower level and then work their way up. In 2012-13 the earnings of those who have stayed in work grew by between 3.7% and 3.9%—far more than the average, which was between 0.7% and 0.9%.
Free Trade Agreement: US and EU
(10 years ago)
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Lord Anderson of Swansea
To ask Her Majesty’s Government what assessment they have made of the prospects for the free trade agreement between the United States and the European Union.
The Minister of State, Department for Business, Innovation and Skills & Foreign and Commonwealth Office (Lord Livingston of Parkhead) (Con)
My Lords, we are pushing for a broad agreement that eliminates the vast majority of tariffs and reduces other unnecessary barriers to trade. This will help small businesses in particular and promote growth and jobs. There have been seven rounds of negotiations with good progress, given that it is slightly over a year since the negotiations started. We are aiming for an ambitious agreement in 2015.
Lord Anderson of Swansea (Lab)
My Lords, the Minister will be well aware that at the EU Council meeting in June 2013 the French won a signal victory by using their political veto under the cultural exemption to exclude audio-visual services from the negotiating mandate because they considered them a matter of national interest. I should also mention that the Commission was given leave to produce further changes to the negotiating mandate. Do we consider the National Health Service to be a key national interest? If so, have we tried to exclude our health service from the investment provisions? If not, why not?
Lord Livingston of Parkhead
The difference between the NHS and audio-visual services is that audio-visual services were included originally, whereas the NHS was always exempted. It is probably best if I quote the EU Trade Commissioner on the matter:
“Public services are always exempted—there is no problem about exemption. The argument is abused in your country for political reasons but it has no grounds”.
Baroness Scott of Needham Market (LD)
Is the Minister aware that there are a growing number of anti-TTIP campaigns right across Europe and that a record 150,000 responses to the Commission’s consultation were received? Can he tell the House what the Government’s strategy is for dialogue with interest groups, with business and, above all, with citizens to make sure that concerns and worries are founded on fact?
Lord Livingston of Parkhead
My noble friend is right: there are a number of concerns about TTIP, some of them genuine but some of them ill conceived. We are engaging with a number of interest groups, particularly NGOs, consumer associations and small businesses. In fact, I have a meeting within the next two weeks with some of the people who were protesting outside BIS’s offices quite recently.
Lord Tomlinson (Lab)
Will the Minister now manage to put aside any concerns about the malign influence of UKIP on the Government’s policy in relation to the European Union, particularly in the light of the opinion poll in last night’s Evening Standard? That showed that, were there a referendum tomorrow on withdrawal, it would be defeated by 20 percentage points.
Lord Livingston of Parkhead
The UK is a great champion in the EU of free trade and the single market. As Trade Minister, I take this role very seriously. The UK continues, and will continue, to have a lead position in promoting free trade within the EU and from the EU to other countries around the globe.
The Countess of Mar (CB)
Following on from the question of the noble Baroness opposite, to protect human health will the Minister ensure that the major manufacturing companies do not force on members of the EU American standards relating to food quality and chemical residues in food, which are less stringent than those of the European Union?
Lord Livingston of Parkhead
The EU and the UK have been very clear: standards will not be reduced as a result of TTIP. EU laws will remain EU laws, and the US negotiators have accepted that fact.
Lord Stevenson of Balmacara (Lab)
My Lords, we on this side support TTIP and are reassured by the answer just given by the Minister on public services. However, for many people the proposed preferential arbitration rules for foreign investors represent all that is perceived to be wrong with international trade deals—that they are too secret, too undemocratic and too skewed to the interests of international capital over the interests of our citizens. Indeed, the ISDS clause has become a lightning rod for dissatisfaction with TTIP. Should this issue not be tackled head on by removing the ISDS clause from the deal?
Lord Livingston of Parkhead
As was mentioned earlier, the EU is conducting a consultation on ISDS clauses and has received a large number of responses. I think the appropriate question on ISDS clauses is, “Which ISDS clause?”, rather than whether one should have a clause. Noble Lords should understand that, in the UK, we have 94 ISDS clauses that have in total lasted for 2,000 years. The number of cases that the UK has lost during that time is zero. Many of the claims made about ISDS clauses are based on misconceptions. The UK is pushing for is an ISDS clause that rightly balances the interests of people and organisations with the right that big business—businesses of all sizes—has to a stable investment environment. We will continue to push that, as we have recently with an excellent clause in the agreement with Canada.
Lord Avebury (LD)
My Lords, if by some mischance Britain were to leave the EU at some future date, would we have to renegotiate all the bilateral agreements the EU now has or may have in the future with third parties?
Lord Livingston of Parkhead
That is a hypothetical question. As the Prime Minister has stated very clearly, he will be campaigning to remain in the EU—an EU that will be founded on free trade. Free trade is a very important part of the EU and we will continue to push for that.
Ebola
(10 years ago)
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Baroness Williams of Crosby
To ask Her Majesty’s Government what assessment they have made of the potential to mobilise NATO resources against the Ebola epidemic.
Lord Wallace of Saltaire (LD)
My Lords, NATO has not formally discussed deploying resources against Ebola but is keeping the situation under review. NATO continues to support bilateral contributions by allies and wider international efforts. The UK is focused on working with the UN, the EU and other international partners to mobilise resources against the epidemic in west Africa. The Prime Minister will use this week’s European Council, which begins today, to agree a significant uplift in the efforts of the EU and member states as part of the UN co-ordinated response.
Baroness Williams of Crosby (LD)
I thank my noble friend for that reply. I had the privilege two weeks ago of hearing the Assistant Secretary of Defense of the United States, Mr Andrew Weber, who is also the chief adviser to the President on the Ebola issue, pointing out that the Ebola incidence was now increasing at a rate where it was doubling every quarter. In that case he said that the absolutely essential element was speed. The only organisation with the speed, the resources and the manpower to act as quickly as may be required is NATO. I therefore ask my noble friend whether the Prime Minister will consider speed as all-important and might therefore reach the conclusion that NATO should be more closely involved.
Lord Wallace of Saltaire
Speed is certainly important. That is why the United States has taken the lead in Liberia, the United Kingdom in Sierra Leone and France in Guinea. We have lead countries. We are now working with others—the Norwegians are being particularly helpful, for example, as well as the other Nordic states—and discussing within the EU, last weekend and today, how others will feed their efforts and contributions in terms of money and people into what the lead nations are doing.
Lord Bach (Lab)
My Lords, the noble Baroness, Lady Williams, makes a very powerful point. Clearly what is needed is urgent work on the assets that NATO might bring to this crisis. My question for the Minister is: if not NATO, what other international body do Her Majesty’s Government believe could do the job?
Lord Wallace of Saltaire
My Lords, I have already said twice that the United Kingdom Government raised the question at the Foreign Affairs Council of the European Union last weekend, and that the Prime Minister will be discussing it with our European partners today and tomorrow. There has been an informal arrangement between NATO and the European Union in recent years that NATO is the security organisation which deals with major security issues and that the European Union is the forum through which we work on humanitarian issues, particularly in Africa. For this, I think the European Union is the right framework—and I hope I do not upset too many noble Lords by saying that.
Earl Attlee (Con)
My Lords, is it not a mathematical certainty that insufficient resources are currently being devoted to bringing the outbreak under control?
Lord Wallace of Saltaire
Noble Lords may be aware that Nigeria and Senegal were last weekend declared free of the virus. It is very encouraging news that part of what helped the Nigerians to get the virus under control was an extremely effective Twitter campaign to inform people about the precautions they needed to take. We ourselves are putting in a great deal of money and personnel—mainly military personnel—and we have offers of additional personnel from countries as far apart as Cuba and the Philippines. We are certainly doing our utmost to get up to speed but, of course, it takes a great deal of effort and, unavoidably, time to cope with something so complex.
Baroness Hayman (CB)
My Lords, while endorsing the need for speed in the international response and the direct treatment and ending of transmission of the disease, does the Minister agree that the humanitarian consequences of Ebola go far wider than simply the medical problem? The economy is being disrupted; children are being orphaned; crops are not being gathered in; and normal medical services and immunisation programmes are being disrupted. Will the Minister recognise that international development agencies from this country are on the ground, tackling that whole range of humanitarian needs, and will he pay tribute to their courage and commitment?
Lord Wallace of Saltaire
My Lords, a close relative of mine works for Save the Children, which I note will take over the administration of the hospital that the UK Government are currently building in Sierra Leone. We have to understand just how difficult it is to cope in-country with what is going on. Sierra Leone has fewer than 200 doctors. Communications are not easy; there are several languages. We are upping what we do and encouraging others to raise their level of effort. The Germans have just promised to help with medical evacuation, for example, and we very much hope that they, like the Norwegians, will do a great deal more. We are working with others as fast as we can.
Baroness Armstrong of Hill Top (Lab)
My Lords, I wonder whether the Minister recognises that this is not just a humanitarian crisis. These three countries in west Africa are all fragile states, and Sierra Leone, in particular, is emerging from conflict. It has now had several stable elections, but all of that will be under threat unless we get on top of the health crisis. We must recognise the support that will be needed financially for that country to re-establish the settlement between the population and the Government. Indeed, the last thing we would want is for Sierra Leone, Liberia and Guinea to go back into conflict, civil war, and so on. The Government need to recognise that it is a security as well as a health issue.
Lord Wallace of Saltaire
My Lords, we do recognise that. The last strategic defence and security review in 2010 marked international epidemics as one of the biggest problems that this country faces from elsewhere. We all recognise that the investment that this Government make by providing a large development budget is part of a contribution to our own security as well as the security of those other countries. Perhaps I might say that the pitch that we are currently making to the Germans is that Germany, like Norway, is a country with a fiscal and a trade surplus, so it ought to be able to make a very generous contribution to the broader issue of European security, which is threatened by epidemics spreading from fragile states, particularly in Africa.
NHS: Five Year Forward View
(10 years ago)
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The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con)
My Lords, I shall now repeat in the form of a Statement the Answer given by my right honourable friend the Secretary of State for Health to an Urgent Question earlier this morning in another place. The Statement is as follows.
“NHS England, along with other NHS organisations, has today published its independent Five Year Forward View, which sets out its view of how the health service needs to change over the coming years.
It is a report that recognises the real challenges facing the NHS but is essentially positive and optimistic. It says that continuing with a comprehensive tax-funded NHS is intrinsically doable, and that there are,
‘viable options for sustaining and improving the NHS over the next five years’.
The report says that the challenges of an ageing population can be met by a combination of increased real-terms funding, efficiencies and changing the models of care delivered. It also says that,
‘decisions on these options will need to be taken in the context of how the UK economy overall is performing’.
In other words, a strong NHS needs a strong economy.
The report suggests detailed new models of care, putting out-of-hospital services front and centre of the solution, delivered through greater integration between primary, community and specialised tertiary sectors alongside national urgent and emergency networks. These can help reduce demand significantly for hospital services and give older people in particular the personal care that we would all want for our own parents and grandparents. It talks about continued opportunities for efficiency savings driven by innovation and new technology, and suggests that they could be increased above the long-term run rate of efficiency savings in the NHS. It talks about reducing variation in the quality of care in the wake of the tragedy in Mid Staffs and how the new CQC inspection regime is designed to drive up standards across the system. It says that to do this we will need to move to much greater transparency in outcomes across the health and social care system. Finally, it makes important points about better integrating the public health agenda into broader NHS activity, with a particular focus on continued reductions in smoking and obesity rates.
The Government warmly welcome this report as a good blueprint for the direction of travel needed for the NHS. We will be responding to its contents in detail in due course but we think it is an important contribution to the debate. We are proud of how the NHS has coped with the pressures of financial constraint and an ageing population in the last four years, but we also know that to sustain the levels of service people want it needs to face up to change: not structural change, but a change in culture about the way we care for people.
Given that the report has been welcomed by all sides of the House, I also hope that this can be the start of a more measured and intelligent debate about the future of the NHS, where all sides of the House recognise our shared commitment to its future and focus on the best way to achieve the strong and successful NHS the whole country desires”.
My Lords, that concludes the Statement.
Lord Bradley (Lab)
My Lords, noting my health interests, I am grateful to the Minister for repeating the Statement. We warmly welcome the report, Five Year Forward View, particularly as it endorses key elements of Labour’s plans for the National Health Service. However, there are many questions still to be answered, which will unfold over the coming weeks and months and will form the basis of that measured and intelligent debate in this House. The report endorses Labour’s visions for new models of integrated care, including hospitals evolving into integrated and accountable care organisations, with more salaried GPs. Does the Minister accept these proposals, and does he agree that there should be a greater role for health and well-being boards in helping to deliver this strategy? On public health, does the Minister agree with the report that the time has come for radical action on obesity, and does he accept that the voluntary responsibility deal is clearly inadequate? On GP services, does he agree with the report that primary care has been under-resourced and that people are struggling to get appointments? Will he accept the need to stabilise funding of GP budgets and match our plans to recruit 8,000 more GPs? Finally, does he accept that much more urgent action is needed to deliver the commitment on parity of esteem between mental and physical health and that proper integration of those services is particularly important and will ensure better outcomes for all patients?
Earl Howe
My Lords, I am grateful to the noble Lord for his welcome of the report which I am sure is shared by all noble Lords. It is, as the Statement says, a very useful set of conclusions jointly reached by the leaders of our health service and their partners. The noble Lord is right to say that there are common areas of agreement between the Government’s view of how we should move forward in the NHS and the view of the Official Opposition. I refer in particular to the role of integration, not only integration between health and social care, but also between hospital care and out-of-hospital care and between public health and health services. The report endorses the direction of travel that the Government are already taking in initiatives such as the Better Care Fund.
I turn now to the noble Lord’s specific questions. On GPs, we are not of the same mind as regards making GPs salaried employees of the health service. The independent practitioner model has served the country well and we do not think that there is any appetite in the general practitioner community to move in the direction that the party opposite would like. However, I certainly agree that there is a powerful role for health and well-being boards to play, and in many areas they are already doing so by bringing together the key players in a local area to decide on the health priorities of that area and to work out the right strategies to meet them.
On public health, as the Five Year Forward View emphasises, obesity is one of our major public health challenges and will continue to be so. I do not agree that the responsibility deal has been inadequate. It is only a part of a menu of options which the Government have available. We have seen major advances resulting from the responsibility deal and we should not throw those away. It means bringing business along willingly with us: business with its power and reach which goes far beyond that of the Government to influence consumer behaviour.
On GP services, I agree that many GP practices are under strain, but our vision and, I am pleased to say, the vision in this report, really centres around remodelling primary care in the round so that GPs consider themselves part of a wider primary and community care team. Yes, we need more GPs, and we have undertaken to ensure that the NHS has at least 5,000 more by 2020, but more broadly we should look at the multidisciplinary mix of those teams and expand nurse numbers and allied health professional numbers to supplement the work that GPs do.
On parity of esteem, we shall have a useful Oral Question next week which will give us a short opportunity to debate it. As I am sure the noble Lord is aware, a lot of work is going on to make parity of esteem a reality, including for the very first time defining waiting times for mental health patients and ensuring that mental and physical health are looked at on a par by both commissioners and providers.
Lord Fowler (Con)
My Lords, the strategy seems to be very sensible, but I hope that not only the Government but also all the parties will do what the chief executive of the National Health Service said on the radio this morning and recognise that there is no appetite inside the health service for any further top-down reorganisation. Will they also recognise that we need to put much more emphasis on preventing ill health? Pharmacists, who are highly qualified and well trained, should have a much bigger role to play, which would reduce the present burden on general practitioners.
Earl Howe
My noble friend is absolutely right in what he says. The report lays great emphasis on the prevention agenda, not only through the work done in the public health arena by Public Health England and local authorities, but also through secondary prevention by the NHS itself: preventing the need for people to enter hospital in the first place. I fully agree with my noble friend about the potential role of pharmacists. Actually, that role has been enlarged over the past few years in an encouraging way with such things as medicines use reviews and the Healthy Living Pharmacy agenda. We want to go further and pharmacists are keen that we should do so.
Lord Kakkar (CB)
My Lords, I declare my interest as chairman of University College London Partners. This ambitious programme will require very strong leadership. What arrangements are going to be put in place to develop strong clinical leaders across the different sectors and environments of the health delivery system that will be required to ensure that this become reality?
Earl Howe
One of the great features of the Government’s reforms is to put clinical leaders in charge of designing the way that care is delivered throughout the country. That point is often overlooked. It is, of course, the quality of that leadership that we should focus on. That quality is variable and why NHS England, Health Education England and partners in the system are looking as carefully as they can at how to improve that quality of leadership. I direct the noble Lord’s attention to certain passages in the Forward View, which talk about the need for all the bodies in the system to work together: NHS England, Monitor, the NHS Trust Development Authority, the Care Quality Commission, Health Education England, NICE, Public Health England—all working together to achieve greater alignment and greater common purpose in the way that these proposals are implemented.
Baroness Blackstone (Lab)
My Lords, on the subject of the prevention of obesity, can the Minister say what steps the Government are taking to introduce a tougher regulatory environment for food companies whose products are damaging the health of many thousands of people in this country?
Earl Howe
Many food companies—not all, but many of the larger ones—have already taken steps, for example, to reduce the levels of salt and saturated fat in their products. We need to go further. This has been done by the previous Administration and the current Government on a voluntary basis. We think that that has worked well. Nevertheless, we have never excluded the possibility of regulation, where we think that it is justified. At present, we believe that there is sufficient scope to make progress without regulation, but that is a matter we will keep under review.
Baroness Brinton (LD)
My Lords, from the Liberal Democrat Benches, we also welcome the five-year report, particularly because it accepts that the business-as-usual model needs to move on. In particular, we welcome the public health aspects and the fact that strong democratic accountability with councillors and local authorities is providing substantial change in public health. Does the Minister agree with the report that there should be more enhanced powers for local authorities to develop this further? If so, can he guarantee that there will be cross-departmental discussions to make sure that there are more responsibilities, powers and funding?
Earl Howe
My noble friend has alighted on an area to which the whole Government will have to give very careful thought. It is not simply a matter for my department. This will entail cross-departmental scrutiny and agreement. However, on the strength of the performance of local authorities in grasping the public health agenda, as they have very enthusiastically, I am sure that we should look at that particular proposal very constructively.
Baroness Hanham (Con)
My Lords, as chairman of Monitor, which is one of the signatories and contributors to this document, may I ask the Minister to confirm further that the Government will not see any wholesale managerial reorganisation in the health service, which is not what the document is looking for, but that they will see change coming about in the way that services are developed? Will they ensure that services will not all be developed in the same way, but that there will be local elements? Will they also support initiatives to help the organisations make this a realisable objective within five years?
Earl Howe
I agree with my noble friend. We neither want nor need further structural reorganisation; but we do need cultural reorganisation. I also agree that a one-size-fits-all model will not work: indeed, the Forward View expressly states that. We need to allow local areas to work through the solutions that are best for them. That can be done on a collaborative basis, with the benefit of health and well-being boards, which are now working so well in many areas.
Business of the House
(10 years ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Stowell of Beeston
That the debates on the Motions in the names of Lord O’Neill of Clackmannan and Lord Monks set down for today shall each be limited to two and a half hours.
Construction Industry
Lord O’Neill of Clackmannan
That this House takes note of the contribution of the construction industry to the United Kingdom economy, with particular reference to housing.
Lord O’Neill of Clackmannan (Lab)
My Lords, in opening the debate, I declare my interests as recorded in the register. I am currently the president of the Specialist Engineering Contractors Group, which is an umbrella organisation for trade associations in the mechanical and engineering sector of the construction industry. As its nominee, I served for two years, from 2010 to 2012, as chairman of the Strategic Forum Construction, which the Government established. That organisation represents second-tier contractors and, in the main, they are micro-businesses employing fewer than 10 people. That business model accounts for more than 95% of the construction industry as a whole. The size of those businesses is critical when we consider that most significant contributor to our national economy. The Chartered Institute of Building estimates that total employment in construction exceeds 2.3 million workers—1.3 million employees and just under 1 million self-employed; 2 million men and almost 300,000 women. Its output exceeds £120 billion a year, and there are about 257,000 firms engaged in the industry, which purchase £170 million-worth of goods, services and materials. Together, they add £85.4 billion GVA to the economy, which is 6.3% of national economic output. When you take account of the multiplier effect, the University of Westminster has suggested that construction as a whole contributes more than 15% of our gross domestic product.
When I was first allocated this debate in July—it had to be set aside for other pressing business—there was a mood of some fragile optimism about an economic recovery. Alongside that was the impact of the coalition’s announcement of help to first-time buyers. The link between an economic upturn and improvements in the state of construction is almost always assumed to be a given. The assumption implies that there is a vast army of businesses, workers and suppliers all ready and willing to start building houses as soon as the public are economically self-confident enough and have access to borrowing through cheap enough mortgages either to buy for the first time or to move up the housing scale to find properties better suited to their needs.
While that emphasis on housebuilding is vital to the sustenance of the construction industry, it is not the only element of it. We need the industry to maintain and expand both our rail and road links. We need the transportation not only of goods but of electricity and gas through the pipes and wires from our generating facilities. No longer do we have to think purely about small power stations or very large ones; we now have a vast array of options, including renewable technologies and the like, all of which have to be accommodated into our power systems.
As well as building new homes, we need to refurbish our existing housing stock to make it more energy efficient and more decently habitable for many of the poorest and most vulnerable people in our country. Moreover, we need to build homes to rent and improve the quality in the private rented sector.
These, then, are the challenges facing the industry in an economy that is slowly and uncertainly coming out of recession. One can see from the latest set of figures that there have been hiccups and there have been drops. When we are coming out of a recession, progress will not necessarily be steady. It is not my job today to derive ill considered glee from the embarrassment of a hiccup in the statistics. We know that the general trends are improving. It is how we can take advantage of that and how we can correct some of the errors of the past that I want to dwell on today.
Certainly, it is the fact that in our industry there are a number of challenges. Housing is a significant one. I should like to look at that later in the context of the Lyons report, which my party published last week. In the days running up to this debate, I received a plethora of helpful briefing documents, too numerous to mention, but all stressing the significance of construction for the economy. It is certainly true that when the economy is doing well, construction is also doing well. We tend to forget that in the last economic boom, in the final years of the Conservative Government and under the Labour Government, precious little attention was given to housing. It was assumed that everything was for the best in all possible worlds. This Panglossian approach has resulted in statistics which, from a Labour man’s point of view, I find extremely embarrassing. That last Labour Government achieved low levels of public housing and low levels of construction across the board. What was clear was that prices for houses that were built were far in advance of wages and other indices in the economy. In the last year before the slump in 2007-08, we had the highest construction figures—figures that are yet to be matched in any year by the present Administration.
It could be said that the present Administration has tried. Indeed, there was no financial announcement that did not have a nod in the direction of construction. There was a bit of help here and a bit of help there; somebody was being assisted. More often than not the money was being recycled and more often than not it was old money, but there was always a token gesture made towards the construction industry. Frankly, however, the dribbling of support, which was the hallmark of successive Governments, has to be done in a more concerted, better thought-out way than we have seen recently.
Certainly, as a consequence of our failure to build sufficient houses, we have seen owner-occupation falling. It is now back to the 1993 figure of 68.3%—so much for the property-owning democracy. We also have an increasing number of people living in the private rented sector. There are many good landlords in the private rented sector who are a credit to the work that they undertake. There are others who are a disgrace. We know this from the big cities, where we do not quite have the Rachmanism of the 1960s but we have unacceptable treatment of tenants, disgraceful housing and an indifference towards the condition of these homes in respect of the refurbishment that they dramatically require.
Equally, it has to be said, in the social housing field we now find that there are probably more lower-carbon and more energy-efficient households being built by social housing organisations than by any other part of the construction industry. Certainly, around Westminster, there are many hundreds of houses that, by and large, start at £1.5 million. That seems to be the lowest price at which you can enter the housing market if you want to buy a new flat within spitting distance of this building. We seem to have a distorted sense of priority. If we have a large service industry in which people are paid low wages and a large part of their outgoings are accounted for by transport costs, they need to be near the people whom they are serving in these industries. We have singularly failed across the country to do much about that.
As I said earlier, the Lyons Housing Review appeared last week and it has had a pretty good press. Your Lordships may say, “Not another report in the year of a general election. Is it just a wish list made up by a party fan club?”, but it is rather more than that. For a start, it is rather longer than the usual slick document from a party publications system. It is 180 pages long and has been written by a group of the most distinguished specialists from the construction and related industries in the UK. This took a long time; it is no back-of-the-envelope job, in any sense of the term. The report makes a series of recommendations, which I will not deal with in detail because there are 180 pages in total. That would be stretching the good will of the House a lot further than I have time for.
The report stresses that local communities should be given the power to build homes that are needed in places where people want to live; that councils should provide a plan for housebuilding in their area and allocate land for development to meet this; that first-time buyers from an area should be given priority access to purchase in the area in which they stay; and that, along with this, there should be powers for local authorities to collaborate in forming the kinds of consortia that were formed for the Olympics, whereby a group of local authorities see a problem jointly and can deal with it in that area. On the one hand, this is obviously an urban problem but it is also an issue for the smaller, rural authorities, which do not always have the resources to marshal their efforts in a coherent and effective way.
The report says that there should also be measures to increase the capacity of the small firms, which I mentioned earlier, to build—to give them the guarantee that they will have the resources to do that and, as a consequence, we should see an increase in competition. It says that there should be a help-to-build scheme to underwrite loans for small builders; fast-track planning for small sites, which they can handle and manage quickly; and financial incentives for local authorities to deliver what may be rather more grandiose garden city and suburb concepts. This is increasingly becoming a consensus view: we need to get out of the big housing estates or large blocks and try to get more attractive forms of housing. These are ambitious proposals, which have been drafted by people who know the industry. They seem confident that if an incoming Government next year were to adapt the programme and the priorities that they suggest, 200,000 houses could be built per annum by 2020.
One of the first challenges would obviously be to get a labour force capable of undertaking that work. In the recession of the 1990s, for every two men who left the industry—by and large, they were men—only one returned when things picked up. The gap was filled by immigrant workers. Now when an economy is booming, people do not mind immigrants or see them as a threat. When wage rates are high, they do not see that as a problem. Unfortunately, the Polish plumbers are unlikely to return because many are now in a country whose economy is equally healthy. They have learnt new tricks for their trade and are able to continue them there, so we will not have them.
We will therefore have to be far more dependent on an apprenticeship scheme, but apprenticeships take four years and, for the first two years, the businesses make very little money from them. In year three they make a bit, and in year four the youngsters are probably getting paid less than they should be. It is a four-year investment for small businesses and they need more assistance with the problems of bureaucracy. I know that there is a trailblazing initiative on the part of the Government, which they might announce today. However, the essence of that trailblazing initiative must be assistance for small businesses to get their act together. The problem, as I understand it, is that this scheme, although ambitious, is woefully underfunded. Perhaps the Minister could comment on this because I have already heard people say that their scheme was rejected on the grounds that it would use too much of the department’s resource.
The industry is not all gloom and doom. There are problems with payment systems. We know that the Government would like to see a 30-day rule implemented. Many departments are doing that. Other agencies of government or the recipients of public funds are not in a position to do it. By the same token, we need better quality training and to get away from the very short term.
I realise that time is at a premium here and one always takes up too much time on other matters, but I want to say that there are opportunities for building information modelling. Computing, which is used in engineering across the country is not being used in construction in anything like the way it could be. There are better systems available: this is not a wholly doom-and-gloom industry. There are a lot of opportunities but if we do not learn the lessons of the past, we will repeat mistakes in the future. We cannot afford to do that. Housing, the roads and the construction of the factories we require are dependent on this industry and I urge the Government and the House to give it the attention it deserves and which it has been denied for too long.
Baroness Jolly (LD)
I remind noble Lords that timing for this debate is really tight and when the clock says seven minutes, that means that your time is over.
Lord Selsdon (Con)
My Lords, I am very honoured to be following the noble Lord, Lord O’Neill of Clackmannan. As he knows well, a large part of my family came from Clackmannan before they found that there was more profit to be made internationally, outside the United Kingdom. However, with the noble Lord, Lord Prescott, following me, I feel that I have to be slightly careful.
I have been involved in the construction industry and financing projects for most of my life. When my father died, I found that I did not have enough money to buy a house, so I found an old site and, having worked in the construction industry, I built, or rebuilt, my own house. I have done that throughout my life. When I look at the construction industry in the United Kingdom, having been a director of a quoted company for many years, I find that the biggest problem is finding sites and then helping to finance the owner-occupiers who one hopes will follow.
Construction of houses is, of course, a very difficult and sensitive area and the difficulty of funding is usually considerable. One needs to look at the life cycle of the family—of the couple who borrow money, after they get married, to buy a house, then have children. As the children grow up, they want to have a house themselves. Within the United Kingdom economy the biggest single growth in added value over the last 15 to 20 years has been those who own their own house, which creates a problem. How can those who, in theory, have assets of large value release funds to help their own families and others on the road to owner-occupation?
We can look at the tax situation, but I ask noble Lords to read the very good report prepared by the Library as background to this debate. It strays far beyond this ground, but it is the building of a home for the owner-occupier that becomes important. When you get the problems associated with families, regrettably—the split-up marriages, divorce, all sorts of situations where pressure comes upon people—how can we find a way to release funds, which might be called equity release, for people with property, or to assist them? It is very difficult from the tax point of view. I often felt, historically, that if you took out a mortgage you should take out the biggest mortgage you possibly could and gamble that the value of property would rise. When I bought my first house with a 90% mortgage for £6,300 it started me on that ladder. Is there a way to look at the whole family cycle of father, grandfather, children and others and work out some concessions that Government might make, not least in relation to borrowing? In the early days, historically, if you borrowed money for a particular thing you could often get tax allowances. I wonder whether today, instead of simply looking for increased grants, there might be some formula that would allow some form of tax allowance to take place.
We also have to look at the ageing population. We know that building societies and banks in general are reluctant to extend loans to people once they reach the age of 70 and require them to be repaid, which places a large pressure on the grandfather, as he probably is by then, who is looking to help the family into home ownership over a period of time. One needs to look at the economics and finances—then one finds that these banks often require people at the age of 70 to repay their mortgages, which is a very difficult scenario to solve. People may in general underestimate or overestimate the value of their house just to say how much it has gone up in value. But it is the transfer from the owner-occupier—from the husband and wife to the children and then grandchildren—that needs to be looked at.
These days we also have to look at the whole question, which is raised again and again, of how you release equity from your home if you wish to help to finance your children or grandchildren further down the line. This is something that the Government should look at more closely, and look at what form of benefits and allowances might be made available.
I do not need to say much more on this. I just point out that, in looking at the United Kingdom—and I urge your Lordships to read the report—we find ourselves to be one of the most attractive countries in the world for foreigners to come and work. My Polish plumber has been with me for five or six years and intends to stay. One looks at the immigrant population that comes and works on building sites and elsewhere and one wonders how we can increase the construction of houses for owner-occupation. This is where government can perhaps play a greater role. In a person’s life the highest added value, and their own growth of assets, is almost entirely related not to their savings from work but to the increased value of their property. Then estate duty is brought in later on in life and is payable without allowances according to the number of children or grandchildren who might be able to be accredited.
I suggest that in this area we should look carefully at the financial aspects. I do not disagree with the noble Lord, Lord O’Neill, or with anything else. We are doing extremely well worldwide in contracting, with £500 million of services and contracting, and we have a great team with new technologies in the construction world. It is a simple matter of asking the Government to put forward some proposals.
Lord Prescott (Lab)
My Lords, this is a very important debate and I congratulate my noble friend Lord O’Neill on getting it. There is no doubt that there are many things to be said on this subject and that there is insufficient time to go into them all. I want to concentrate my remarks on what is called the affordable home. It is all right talking about raising money in different ways, but what if people cannot afford the price? That is one of the major difficulties, and we have an obligation in housing policy to produce affordable homes. All Governments have failed—and I must put my hand up as a Minister in charge of housing that I was not able to double the housing stock, because that is what we have to do. Largely, it should be done by local authorities, but all Governments have capital controls on local authorities, whatever is happening in the economy, which restricts the building of social housing by local authorities. That needs to change.
The report on housing out this week is very important. It looks at all the blame reasons—that there is not enough land or that people are slow in planning—and gives a reasonable response to them. The reality is that all Governments must have a housing policy. I think that we have to agree—and this is me, talking about agreeing across the Chambers—to find a common housing policy. We can no longer keep arguing about the ideological case of whether it should be public or private; we just need houses for people, whether they are privately owned or to rent or whether they are affordable homes. That is the challenge for us.
The Labour Party asked the Lyons commission to look at those problems, and its recent report is excellent. It starts to rethink the multitudes of housing policy covering the final result. Sir Michael Lyons lays down something for common discussion and, more importantly, a common policy to achieve those aims.
Everyone is agreed on the need to double housing supply—it is really about how you achieve that, and whether the people who want to buy those houses can afford the product. You can produce the houses today at a price that many people cannot afford, and therefore we need to look at affordable housing; I concentrate my remarks on this, in view of the time.
I want to look at possible deals with the volume builders. If you look at the building sector, there are only about seven or eight of them; 14 is the latest figure. They control more than 75% of the market. How they deal with the affordable house programme is absolutely critical. That has usually been done in the past by Section 106 agreements. Local authorities come to an agreement with a builder to build so many social houses in the large building project for which they have asked for planning permission. Increasingly, we have now seen those Section 106 agreements ignored by the building industry. They say that it is not affordable to have subsidised housing in the affordable sense for which they receive a Section 106 subsidy, so they are now leaving them and that is what is causing me concern.
It is an industry that I know from my experience as a Minister is highly conservative; it does not really want to change. I think it is something that has to change. Let me give a couple of examples. Looking at the price argument, I thought, “Why cannot they produce a cheaper house that people can afford?”. I came up with the idea of a £60,000 house: namely, that the Government own the land in a joint ownership with the purchaser and you build a house for £60,000. The building industry told me that it could not be done; I had two or three dinners with them and I could see that it was a waste of time talking to them. I eventually went to an Irish builder, who built it for me for £60,000 and I produced it in Manchester. I then had the land: the importance of land is one of the conditions. If I then owned the land, as I did, and I was prepared to have joint ownership, I could say to the builders, “I want so many of them to be £60,000 houses”, and they could say, “Okay, you are the owner of the land; you lay out that condition; we want the rest of it to make our profits”.
We came to an agreement and I will talk about one of them: Oxley Woods in Milton Keynes. The agreement was to build a £60,000 house. The Taylor Wimpey company, which is not poor, made a lot of great profits, but has now decided that it no longer wants to continue the contract that involves the £60,000 houses. What has it done with the £60,000 houses? It is now selling them for a quarter of a million pounds. The affordable housing is gone, so now what motivates the company? Is it the desire to provide affordable housing or just the aim to make a lot more bloody money? Put your money on it: it is to make money. It is now selling that £60,000 house, which had a government land condition with it; it has thrown out the Section 106 agreement; I protested strongly about that, but that means that we have fewer affordable homes. It ditched the Section 106 agreement, which worked to a certain extent, and the £60,000 house is gone.
That is one way that a number of the companies are going. Some of them are saying, “We will do a deal—not on the 25% or 30% social housing, which was the normal contract; it has to be 10%”. That means you get fewer affordable houses; you are not getting the houses that you want or at the price that people can afford. Let me give you another example. It is right to say that people want to buy their homes. I bought my home; it is an asset; it is a development and the number of houses for ownership increased under the period of Labour. Now it has gone down considerably. I will not get into the party point except to say, since the noble Lord, Lord Selsdon, raised this problem, which is facing lots of people in this country, how were my sons and daughters helped to get access to a house? To raise the big mortgage, usually under very tight conditions, the Government brought in a scheme rightfully called Help to Buy. That says, “We will reduce the interest payments; we will make the mortgage easier”. It is a higher-priced house and it is available only to those on quite high household income.
There is another scheme about which I have tried to persuade the Government and it is a Genie product produced by Gentoo, a not-for-profit housing association in the north-east. You can buy a house there by renting. You do not pay a deposit; you do not need a mortgage and you are not affected by high interest rates. A joint household income of £18,000 will enable you to buy the house and it becomes yours in 25 to 30 years. Why do the Government not extend that Help to Buy to non-profit associations that have already built 60 of these houses? They want the private sector to bring the money in. The guarantee from the Government is the way you get the private sector money in, so the Government are right, but they should extend it—not to the high-income people paying £600,000: they should bring it down to the people who want to buy a house but do not have the income, cannot afford the mortgage and the interest rates are too high. Let us look at these kinds of schemes.
What is being produced as the policy today—recommending what you have to do to get 240,000 houses, which is the very least recommended—shows the way. It is a step forward to a common-sense, good policy, meeting the various needs of people for housing, whether private, owned or using community land or social housing. Let us put all that together: all Governments can do it; we have to do it otherwise we will continue to fail and let our people down.
Lord Shipley (LD)
My Lords, I thank the noble Lord, Lord O’Neill of Clackmannan, for initiating this very important debate and pay tribute to the widely acknowledged efforts over many years of the noble Lord, Lord Prescott, to build affordable homes.
I welcome the debate. The recession led to at least one benefit, particularly for social housing providers, in that construction-related activity became scarcer and, as a consequence, contractors reduced their costs significantly as tendering became increasingly competitive. However, there were serious downsides to the recession, one being that company workforces were reduced. Many small and medium-sized companies went out of business or became smaller and the industry as a whole lost experienced, skilled workers—some 400,000 according to the Construction Industry Training Board—which led to its ability to increase its capacity when an upturn came being seriously diminished. I suggest to the Minister that it would be beneficial to the sector if the Government would look at whether there are any ways to provide a more stable construction sector which is more resilient to upturns and downturns in the economy.
Despite the construction market recovering right across the UK, many social housing providers in particular have faced capacity problems with both labour and materials—for example, a shortage of bricklayers, bricks and roofing materials. As manufacturers of building materials also cut capacity during the recession, the ability to get production up to meet market demand has proved difficult and prices have risen. The labour shortage has been compounded by the lack of apprentices trained in recent years due to the competitive nature of the industry and the lack of incentives to take them on. I see the labour shortage as a problem for the construction industry itself to sort out, not just the Government. It must invest more in training. I welcome a number of the Government’s actions to help expand construction—for example, their Construction 2025 strategy paper, and not least their creation of the Construction Leadership Council, with its emphasis on training, getting sufficient numbers into the sector, reducing costs and delivering buildings more quickly. These are all commendable actions, as is the drive to higher exports to help reduce our trade gap and the use of advanced technologies, particularly in sustainable, low-carbon and green construction.
I have spoken previously in your Lordships’ House on the subject of procurement. I hope that the Minister will confirm that the Government are keeping under careful review the impact of government policies on the SME construction sector. There is a government pledge to award at least 25% of contracts to SME construction firms and the same figure appears in the Lyons report. There are benefits to using small companies: profits accrue locally, training is provided locally and local labour is recruited—there is a local legacy. However, the pre-qualification questionnaire process is still a very time-and resource-intensive process and can prove a big burden for small companies. There are various PQQ schemes and I wonder whether we could look at greater standardisation of that process. I wonder, too, whether the Government are content with the current operation of framework agreements. I understand that they can offer cost savings. The trouble is that SMEs trying to win public sector work can find these agreements a barrier, not least because public sector organisations tend to prefer big firms when assessing firms’ capacity to deliver a contract. Awarding points in a tick-box exercise for the size of a firm’s turnover will always disadvantage smaller companies. Those smaller companies can, of course, be part of the supply chain to a main contractor but quality second-tier firms which are local or regional, but not national, can easily lose out to firms outside the area which accept poorer terms and conditions, poorer payment practices and may have poorer training opportunities in the locality. I agree entirely with the point made by the noble Lord, Lord O’Neill of Clackmannan, about late payment. That is an endemic problem in the industry and the enforcement of payment within 30 days should be made a government priority.
I will refer briefly to the borrowing cap on local councils. I have wanted to see the cap lifted but I hope, at the very least, that the Government can introduce a greater degree of flexibility, set against some clear targets. For example, for many local authorities, maintaining the existing housing stock can require all of their borrowing capacity. Their ability to build new homes is therefore significantly reduced. If the Government were minded to allow local authorities to exceed the cap in certain circumstances, that would increase the amount of construction activity.
There are also issues around planning: we have heard some of them and some are shown in the Lyons report. I hope the Minister will take a look at what is being said. I am now clear that the planning system is holding back some development. It is very important that local councils do not impose unreasonable conditions, and 18 months to get permission through to start on site is simply too long, particularly for social housing.
Will the Minister also look at regional differences in housing market areas? As a mechanism to deliver affordable housing, Section 106 is effective in areas with high land values but less so in areas with low ones. It would make sense to devolve more policy on housing down to the sub-regions of England where measures can be tailored to meet local housing conditions.
Finally, I am a keen advocate of a housing investment bank, as they have in the Netherlands. This could increase the amount available for investment in housing, particularly from pension funds. Together with the possibility of incentives for brownfield development, that would build more houses. The Lyons report is a very valuable report, with an important set of proposals. There is a lot there that I hope the Government will pay very close attention to.
Lord Rooker (Lab)
My Lords, I am pro-development, pro-quality, pro-sustainability and, indeed, pro-countryside. Politically, housing is so unsexy it is rare for the leader of any political party to devote a major speech to the subject. On housebuilding methods, we are miles behind in the use of modern technology. I recall the Minister taking my then boss, my noble friend Lord Prescott, to the Building Research Establishment to see half a dozen modern methods in action. There are plenty to choose from across the housing price range and it was partly out of that process that the £60,000 house appeared. There can be much better quality control in a factory than on a building site although you do, of course, have to be very careful how the assembly takes place.
In 1984-85, the Duke of Edinburgh chaired an inquiry into British housing and I was present at its launch. A calculation was made that, given the existing housing stock, the rate of new building and the rate of demolition, the average home in Britain would have to last 800 years. When Kate Barker produced her report in 2004, the same calculation produced a figure of 1,200 years. I have seen more recent, unofficial, private calculations showing the figure is way above 1,200 years. It is worth pointing out that in EU member states the figures are around 25% to 50% of the UK figure because they invest more in replacement. It is clear that we are handing massive problems to future generations. We have relied for decades on the investment of the Victorians and we are so selfish that we are handing problems into the future. I feel very uneasy about that, from a moral point of view.
I am not in favour of leaving decisions to local communities. That is high-level political cowardice. The situation is so serious that, although we have to be considerate and listen to communities, the state we are in requires high-level decisions and tough central management across the electoral cycles. Local authorities of course have a key, massive strategic role, but they should never have been allowed to be landlords. In short, adult politics is required.
There are always arguments about land—that we are not making more of it. I am not so sure about that. Taking into account the capacity to build upwards and to build on stilts on the flood plains by design, there is extra capacity. It is quite easy. There are parts of the country where people have built on the flood plain because they know that it will flood. Their houses do not get damaged because the flooding has been planned for. The latest figures for England were given in Hansard on 15 July at col. WA 114. Our 10 national parks take up 9% of the land; we have 33 areas of outstanding natural beauty which take up 15% of the land; the green belt occupies 13% of the land; while urban and developed land, including gardens, occupies 9%. That adds up to 46%, leaving 54% of land as undesignated or farmland, and some of that 54% is much more environmentally significant than the green belt. By definition, there is no green belt in the national parks or areas of outstanding natural beauty.
A lot of green belt land is rubbish land from an environmental point of view as it is on the urban fringe—which is exactly the area where we should build because it already has the infrastructure for communities in place. We can designate more land for green belt: the previous Labour Government left more green belt land than they inherited because they designated more. We can still prevent linear development—which I am opposed to, as most people are. We can use the green belt to stop those areas joining up. However, we need to grow the existing urban areas. I remember saying as much when I was the shadow, and then the real, Housing Minister. It does not go down very well. You are met with the juvenile comment, “Oh, he wants to concrete over the Downs”. There is enough spare land. As I said, if we increased the percentage of urban developed land from 9% to 11% we could solve all the problems at a stroke, without affecting any of the areas we care about.
It is a great pity that Nick Boles—who was repeating some of my speeches—was moved and replaced by someone who speaks before he reads the facts. The new Minister should be required to read the four pages on the green belt in last Sunday’s Observer, and then to think about the issue, and then to speak. He should even be encouraged to think aloud.
I am not sucking up to my noble friend Lord Prescott but I pay a massive tribute to what he did when I worked with him. I still think that the framework in the 2003 Sustainable Communities Plan which he developed contains much of the answer. Designated growth areas should be sustainable but we should also encourage small developments in villages and hamlets. They should not be massive but they would relieve local pressures across the country.
Last month I was privileged to open six new affordable rent dwellings for Shropshire Housing Group at Onibury, a small parish between Ludlow and Craven Arms. It was a first-class location and demonstrated the high quality that the group has repeated elsewhere. The land for the six dwellings had come from a planning obligation resulting from a larger private development somewhere else. That is a provision which the Government are seeking to abolish as part of the Deregulation Bill. I said to the stakeholders that houses like those six should be among not only the 4,000 houses opened in Britain that week but also the new houses which would be opened in the following week and the week following that. That can be done and is vitally needed.
Of course we need to use planning, but changes are needed. I would move planning policy and operations to the Department for Business, Innovation and Skills and get it away from the housing and local government department. In the same way, the Deregulation Bill places a growth duty on non-economic regulators. It is perfectly possible to do that, as I know from my time at the Food Standards Agency. A non-economic regulator can still share the growth duty. I would put a growth duty on the planners to grow the housing stock. It can still be done in a democratic way and will cut through some of the many problems that we now have. We have to break the link between planning and the housing and communities local government mafia, and put it into the area where we really will get some growth.
Baroness Prosser (Lab)
My Lords, I, too, add my thanks to my noble friend Lord O’Neill of Clackmannan for putting this debate on today’s Order Paper. It is both timely and important. I am announcing to the House a small claim to fame. Over 25 years ago, I became the first woman to take a seat on the Construction Industry Training Board. It was a mixed experience, but it gave me a lasting interest in and a respect for the industry, with all its faults and foibles.
My first meeting happened to be the last for the then chairman. To mark his retirement and celebrate his contribution we all repaired to the Connaught Rooms in Holborn for a slap-up lunch. The chairman called order and said, “Welcome, lady and gentlemen”. He then said, “I am happy to say that this is the first and last time I will have to say that”. Needless to say, I did not take the welcome to refer to me. However, I stuck it out and, I hope, went on to make a contribution to the work of the board.
The industry still does not have a good reputation in the equalities arena. While things have moved on since my CITB experience, there remains much room for improvement. In spite of the sterling efforts of Women and Manual Trades and the more recently established Women into Construction Project, women represent only 11% of the construction workforce. Most of them are in office-based jobs, with only 2% working in manual occupations. The Women into Construction Project, entitled Be Onsite, grew out of the work of the Olympics in Stratford and is supported by CITB Construction Skills. Two years of funding will help broker work placements, job opportunities, and training and support for women in the construction and property sectors.
In February this year a cross-party parliamentary inquiry looked into the question of creating construction jobs for young people. It made a number of recommendations, many of which were about better training, but a number of which also addressed the need for improvements in public-sector contracts and procurement arrangements, and improved employment experiences. The preponderance of so-called self-employment is hardly designed to attract the best talent and continues to be a reputational risk for the industry.
There are, however, some very exciting construction projects coming through. The controversial Hinkley Point development, which is likely to go ahead between 2014 and 2023, will provide 25,000 job opportunities over that time, with 5,600 on-site workers at the peak of the construction. The development will involve the investment of over £6 million into West Country training facilities. The nuclear power development in Anglesey will create 6,000 jobs, and in Moorside, adjacent to Sellafield, 5,000 jobs are expected during construction.
To prepare for future nuclear decommissioning in west Cumbria, a new construction skills centre has opened, ready to provide people with the skills needed to deliver a wide variety of construction projects, including public buildings and homes. This is being funded by Nuclear Management Partners to the tune of £4 million. The Nuclear Decommissioning Authority is putting in £2 million and the local college £1 million. By any standards these are significant sums of money that will provide the industry and the economy with much-needed skills for the future, and will enable the industry to move forward.
It is an accepted view that construction acts as a generator at the heart of the economy, and in no sector is this more true than housing, where the knock-on effect from the supply chain sends positive ripples through the furniture industry, white goods, carpeting and flooring, soft furnishing and transportation. The case for increasing the supply of social housing—in other words, by building more homes—has been well made and is well understood. The economic effects, directly and via the supply chain, are pretty clear.
Savings would also be made via the reduction of housing benefit paid directly into the pockets of private landlords—not to speak of the reduction in misery and anxiety brought about by the uncertain and often shoddy nature of private renting. The Government’s apparent aversion to the building and provision of more social housing cannot be excused by economic arguments, because it just is not so. A perceived aversion to all things public is costing us money, not saving it.
The Earl of Listowel (CB)
My Lords, as someone who is something of an outsider to this debate, I hesitate to comment but, having listened to it so far, it seems that what is needed is to find a Minister or a Prime Minister who is prepared to stand up and say, “This is vital to the success of our nation. This is vital to our future. We need to address housing supply. We have let it fall for far too long”.
I am grateful to the noble Lord for tabling this important debate. I declare an interest as the owner of land with potential for development in London and Nottinghamshire. I am also treasurer of the All-Party Parliamentary Group for Children. I rise to speak because, to my mind, this issue has blighted the lives of generations of children and continues to do so. This debate is about the contribution that the construction industry makes to the UK economy, and I should like to highlight how we shoot ourselves in the foot by not meeting the housing needs of our people, particularly our poorest families, pregnant mothers and mothers with infants in the first year or two of their lives.
I draw noble Lords’ attention to a report published just this week. It was commissioned by the Maternity Mental Health Alliance and authored by the LSE, the Centre for Mental Health and one other organisation. It was funded by Comic Relief. The report tells us that we spend about £8 billion each year through failing to meet the needs of, or provide adequate perinatal care for, women who are pregnant or are about to give birth. That is equivalent to about £10,000 for each birth in this country because we do not meet the mental health needs of mothers.
Nearly three-quarters of those costs relate to the adverse impact on children of not meeting those needs. The average cost to society of one case of perinatal depression is around £74,000. Between 10% and 20% of women develop a mental illness during pregnancy or within the first year of having a baby. Suicide is a leading cause of death for women during pregnancy or in the year after birth. Although there are of course many factors in that, one important factor is the poor housing that we allow many of our mothers to live in.
At the launch of the report, Andrea Leadsom MP, Economic Secretary to the Treasury, spoke about her long desire, gained through working with the Oxford Parent Infant Project, to see that pregnant women and mothers with very young infants have a secure attachment to their child. More recently, with Frank Field MP and two other MPs she set up a parliamentary group to look at children’s first 1,001 days, covering the period from conception through the first two years of life. Graham Allen MP has been a huge champion in recognising the vital importance of nurturing that first bond between mother and child. The right honourable Iain Duncan Smith has also shown great support for this area, as has my noble friend Lord Northbourne. It is vital to the later success of our children that a good, strong bond is built between child and mother at the earliest possible time but, if a mother’s mental health is poor, that bond is thrown into question.
Barnardo’s used to run a project—it no longer has the funding to do so—for mothers in temporary accommodation. Visiting mothers living in temporary accommodation in London, I have had an opportunity to talk to them about the challenges of that experience. What has particularly come out in those conversations is the isolation that they experience because of the shortage of housing. In his opening speech, the noble Lord referred to the importance of proximity to labour, but it is also important to have proximity to one’s family, one’s friends, one’s community and one’s faith group.
I am currently in contact with a mother whose daughter is about to give birth early—she is seven months pregnant. The mother is spending all her time with her daughter, as of course is bound to happen. When I speak to mothers who need to take two buses to get to see their family and friends—because in London they are just scattered around wherever the housing is available—it really brings home to me that we need to think much more carefully about supplying housing so that people can be in the community they need to be in. When I visit parents in Sure Start children’s centres I hear from them how important it has been to have coffee regularly with other parents and to build relationships with other parents. They say how important it has been for their own mental health to break down the isolation they have experienced. More and more we need to be sure that there are communities available, with housing available, to make these things happen.
I have had the privilege of visiting with health visitors in Redbridge in east London and Walthamstow in Waltham Forest. There I saw families—often mothers quite possibly on their own—in private accommodation which was overcrowded and unhygienic, with the walls dripping with damp. One family showed me their basement, which had been flooded for a long while but the landlord had been unprepared to do anything about it.
We cannot afford as a nation to keep on shooting ourselves in the foot by not providing the stable base that families need to make a good and successful start. I really am encouraged by what I have heard in this debate about a growing cross-party consensus that something needs to be done. I hope that we may find a Minister or Prime Minister who is prepared to stand up, to put his head above the parapet and say, “This is an issue we need to address as a nation. It concerns us all. It concerns our children and families. We need to provide adequate homes”. That is what we need to do.
Baroness Dean of Thornton-le-Fylde (Lab)
My Lords, I, too, join others in thanking my noble friend Lord O’Neill of Clackmannan for this debate, and particularly for putting in the element about housing. There is no doubt that our construction industry and some of the major engineering and construction projects going on at the moment in the UK are something to be proud of and deserve a debate in their own right. I declare an interest as a former non-executive director of Taylor Wimpey at the time when the £60,000 house was built.
I think my noble friend Lord Prescott was a bit too mea culpa. Those who worked closely with him while he was Secretary of State covering housing know that he achieved an awful lot. He inherited a social housing stock that had been severely diminished by the sell-off of local authority housing without the requirement to replenish it. He doubled the money we had at the Housing Corporation, where I was chairman. However, the issue of shortage of housing in this country is not new. It has been creeping up on us for decades. Certainly, the recent report from the House of Commons says that if current trends continue—it takes into account government policy—in the next six years the gap between supply of housing and demand will be 1.3 million. That is a very scary figure. We all know the impact of that on house prices—although not all over the country.
A number of reports have been mentioned this morning. I agree with what has been said about the Lyons report but there is another report from Alan Milburn’s Social Mobility and Child Poverty Commission, which is interesting to read. It says that home ownership for 25 year-olds has reduced from 45% to 21%. A quarter of adults up to the age of 35 are now having to live with their parents, and in London the average age of a first-time house buyer is over 40. Those are very serious indications for us. It is not good. The social damage to our country’s cohesion, stability, independence and aspiration is enormous.
As I know that a lot of noble Lords will be dealing with those impacts, I will concentrate on the impact on our economy. The Home Builders Federation says that every new house built creates 4.5 jobs—2.3 of them directly. So, for every 100,000 homes we build—and we need 200,000 a year—we create something like 250,000 jobs. National Housing Federation research says that every £1 spent on housing generates £2.40 in the wider economy. The Office for National Statistics says that every job filled creates a gross added value of £44,000 and that building 100,000 houses adds something like £28 billion of growth to our GDP. The facts are absolutely clear. We are losing out not just socially but economically. In September, the CBI in Housing Britain analysed the crisis. It said that businesses were affected by £3.2 billion a year in housing-related costs and £770 million a year in transport-related costs.
I asked myself in preparation for this debate why developments in aviation, transport such as HS2 and Crossrail, and energy are not required to go to local authorities, which are involved in consultation, but are considered part of the national UK infrastructure and have to go to the infrastructure planning committee, yet housing does not. I am not talking about 25 houses here and there. In my humble view, all the proposals that have been made will not solve our housing problem individually. We need a whole panacea of developments. This has to include large housing developments. I know that is unpopular and controversial, but I do not believe that infill housing will respond to the problems we have.
I agreed very much with my noble friend Lord Rooker when he talked about urban expansion. He was absolutely right; we need to look at that. I know the concerns about the design and quality of large infrastructure. I am currently a non-executive director of the regulated board of Places for People, which is a large registered social landlord. We have a development in Milton Keynes that is 10,000 plots. If you went there today, the 10,000 properties have not been built but the roads have, the 10,000 trees are in, a school has been built and another school is due next year. The infrastructure has to be there when the people move in, not after they go and live in those areas.
The Milburn commission also talks about green belt swaps. The Royal Institution of Chartered Surveyors in its September report, Property in Politics, recommends a new description—amberfield. This touches on the point made by my noble friend Lord Rooker. The green belt policy legislation is more than 60 years old. We need to return to it. I know that is controversial. It needs political leadership and we are lacking that at the moment. I have always been amazed that we build on school playing fields and get a hoo-hah, yet down the road can be a shut-down pig farm with dreadful land quality that we leave and protect. There is something wrong somewhere in that. The Wolfson economics prize—the second largest economics prize after the Nobel prize—asked this year:
“How would you deliver a new Garden City which is visionary, economically viable, and popular?”.
There were more than 300 ideas. Two of the five judges came from the housing industry—Tony Pidgley from the private sector and David Cowans from Places for People. They said that you cannot do it in one place; it has to be across the board. As well as a social crisis this is an economic crisis that we will have to pick up, and we will rue the day that we lacked leadership in making sure we changed the situation.
Lord Macdonald of Tradeston (Lab)
My Lords, as my noble friend Lord O’Neill of Clackmannan said in opening this splendid and vigorous debate, construction across the UK has a workforce of around 2 million, and a need for a constant supply of new labour with vocational skills and technical expertise to meet the demands of architecture and infrastructure that can be on the frontiers of radical design.
In the UK we are not short of ambitious projects. We on these Benches also welcome the promise of job creation implied by Labour’s commitment in support of the Lyons report target of increasing housebuilding and new homes. However, the urgent question is: how will the industry recruit enough workers, given the widening skills gap? The forecasts are alarming, as my noble friend Lady Prosser said in her excellent contribution.
Earlier this year, a cross-party group of parliamentarians, co-chaired by the noble Lord, Lord Best, and Nick Raynsford MP, published a report, No More Lost Generations—Creating Construction Jobs for Young People, which concluded that the expansion of construction over the next four years would create 180,000 new jobs. It also warned that about 400,000 building workers would retire over the next four years and would have to be replaced. That potential recruitment of almost 600,000 workers on present trends, across the next Parliament, is a huge challenge but also a great opportunity.
Many noble Lords will, I am sure, share my admiration and appreciation of the contribution made by migrant workers to our construction industry, particularly those from central and eastern Europe who are presently concentrated in London and the south-east. However, the years ahead offer a real opportunity to ensure the increased recruitment of young people from the UK. There is support now, across all parties, for more vocational training and for more apprenticeships, as we will no doubt hear in the debate that follows this one.
The annual apprenticeship starts now total just under 500,000 a year overall in the UK. Regrettably, the construction industry’s contribution to that total last year was just 7,300, which was only half the number for 2009. As my noble friend Lord O’Neill said, these are thorough four-year apprenticeships, and very desirable for young people. The Best-Raynsford report, which has the support of the Chartered Institute of Building and the Construction Industry Training Board, also points out that construction employs a smaller proportion of younger people than the UK economy as a whole—only 10% of those in the industry are aged between 19 and 24. The report suggests that the public sector should make more use of the levers available to it through procurement contracts and through planning processes to require training and employment commitment to apprenticeships from employers—a strategy that I trust a Labour Government would support. This route could also be used to explore a move towards greater diversity in gender and ethnicity in construction—a priority, given the very small proportion of young women being recruited.
Perhaps a positive initiative is the setting up of an apprenticeship commission, again with cross-party leadership, under Robert Halfon MP and my noble friend Lord Glasman, with backing from the Construction Industry Training Board, serviced by the think tank Demos. The chief executive of the training board, Adrian Belton, wants to see 120,000 new apprenticeship starts over the coming five years. That would be an average of 24,000 starts a year, which is certainly an improvement on the current 7,000 a year. The recently published review of innovation and industry strategy by my noble friend Lord Adonis, Mending the Fractured Economy, recommends devolving £6 billion from Whitehall, partly to strengthen local enterprise partnerships and increase investment in local housing, transport and adult skills.
Commitment to the key policies in the Adonis review will no doubt feature in the manifesto of the Labour Party next year, and I hope that it will then be implemented to boost construction of housebuilding and infrastructure, and to offer apprenticeships to the many thousands more young people whom the industry should be aspiring to employ and train. Will the Minister please update the House on what progress the Government believe they are making to address the growing skills gap through recruitment and training and the provision of apprenticeships?
Lord Borwick (Con)
My Lords, I declare an interest in several housebuilding projects: in Bicester, in Scotland and in Sussex. The scheme in Bicester is for 2,600 houses, and because it was not controversial, it took only 10 years to get through planning and cost only £4 million in professional fees.
I welcome this debate, as building more housing will probably do more than anything else to help poor people. Relaxing planning laws is the key to unlocking real growth in housebuilding. When I was a building contractor some time ago, I used to argue that the best thing for expansion is contracting. Some very good work has been done by the Government in this area. The National Planning Policy Framework has simplified planning policy down from 1,500 pages to fewer than 50 pages. I congratulate my noble friend Lord Taylor of Goss Moor, who I know worked extremely hard for many months to get this done. The new practice guidance has consolidated 7,000 pages of guidance into simple guidance available online.
Simplification is always welcome, but at present we still have planning laws that are too restrictive. Of course, the resulting lack of housing supply raises the cost of rents and mortgages. It costs taxpayers dear, too. In 2013, the Government spent around £24 billion on housing benefit—almost double the sum paid out 10 years earlier. By limiting the supply of new homes and subsidising rents through housing benefit, the only people who benefit are landlords and homeowners who are looking to sell—not to mention the civil servants who administer it. It is those on lower incomes who lose out. So if we were to relax the most restrictive planning laws, we would see construction companies build houses where people actually want and need them. This would cut housing costs, which make up a quarter of outgoings for those on the lowest incomes.
There is evidence from overseas that restrictive planning increases poverty as well. The US Census Bureau has produced state-by-state estimates of poverty, which account for various types of benefit programmes and cost of living differences. Once we adjust for a range of variables, states such as Texas, with fewer restrictions on housebuilding, have a lower rate of poverty than those such as California that have restrictive housebuilding laws.
Housing is simply too expensive. A recent report showed that the ratio of median house prices to median incomes is lower in Washington DC and Chicago than it is in Swansea and Stoke-on-Trent. Perhaps we have the previous Government to thank for that. Between 1997 and 2010 the ratio of median house prices to median incomes rose from 3.5 to 7. Since 2010, the ratio has gone down, but by only a little, to 6.72. So relaxing planning and encouraging more housebuilding could therefore lower house prices and rents directly. This, of course, would be a huge boost to the construction industry, too, which is a sector that did not pick up nearly as quickly as others through the recovery.
There are reasons to be positive; 480,000 new homes have been built since April 2010. Equally impressive is the fact that the Government have helped to get construction on sites restarted where it had previously stalled, which has led to more than 80,000 new homes. Lots of work is being done to improve our infrastructure, too, which will be a shot in the arm for the construction industry. The Government have set out plans to improve roads, energy infrastructure and more to provide certainty for investors and businesses in the supply chain. That is to be welcomed. But in the housing sector there are still a few things to improve. The reason for localism is for people to have a say in where houses are built—but it is being misused by people to decide whether houses are built.
For most people, the investment in their house is by far the biggest in their life. They feel, therefore, that the creation of new houses must reduce the price of their biggest investment. If I live next door to an open field, I have a great view that I do not own. If the owner of the field applies for planning permission to fill it with houses, I will object because that proposal will reduce the value of my house and remove my calm and peaceful view. There should be some way in which negotiations can take place between the field owner and his next door neighbour to encourage agreement. Unfortunately, however, the Government’s planning laws take so much benefit for the state that that never gets done.
The planning system is a yes/no structure. One can effectively either object to a planning application, or stay silent. The truth is that change is not a black and white decision. There should be ways in which neighbours could say that they accepted a proposal, provided they had some specific benefit from it. Not a benefit to their local council, which they do not feel part of, but to them personally.
The new homes bonus is an extra payment introduced to encourage local authorities to give planning permission for new houses. Like any bonus, it is supposed to change short-term behaviour; but I am not sure that it has worked well. Perhaps the reason is that it is paid to a council over a period of six years, rather than all at once. The department has a bonus scheme for high-performing civil servants, which is absolutely right. Can the Minister tell me whether any bonus paid to civil servants has been paid in the same way as the new homes bonus—that is, over six years?
Baroness Donaghy (Lab)
My Lords, I congratulate my noble friend Lord O’Neill of Clackmannan on securing this debate. I share his interest in the construction industry and want it to be safer and even more successful. Noble Lords may know that I produced a report for the DWP outlining the underlying causes of fatal accidents in construction, entitled One Death is Too Many. I met 70 organisations in preparation and that gave me an insight into the construction industry as a whole.
The UK construction industry deserves credit for being a world leader for professional services and innovation. The proportion of employees in construction with a degree or equivalent qualification has almost doubled in 10 years, albeit from a very low base. Yet the industry has long-standing issues, such as skill shortages, image and lack of government focus, which stubbornly remain over decades.
I believe that government focus on the construction industry is dissipated and should be improved. I accept that it is not possible to have one government department. Construction covers 10 government departments with a strong policy interest as client, regulator and provider of funding. However, a political overview is essential and has been lacking. At the very least, there should be a full-time Construction Minister in government and firm promises in manifestos, which my party pledges.
When the Government, the industry and trade unions work together—for example, on the Olympic Games—it shows what can be achieved. London 2012 was the first modern Olympic Games without a construction fatality, delivered on time and within budget. That did not just happen: it was the result of years of pre-planning and co-operation, led by the then Labour Government and continued into implementation by the coalition Government. If only housebuilding could be given the same treatment. Regrettably, the subject has not been an election priority for a very long time and that represents staggering public policy failure over decades.
Government grants to Britain’s housing associations were cut by the Chancellor, which was a disgrace. Council house building has ground to a halt and even the phrase “affordable housing” has taken on a new meaning, in that it is not actually affordable to most people. If the next Government were to take housing by the scruff of the neck I am sure that the construction industry would play its part. However, the industry is not a social worker and it will not solve a political crisis. As the Lyons housing review stated:
“House builders’ shareholders’ interests are in whether their firms meet announced targets for sales and return on capital rather than on the number of homes built”.
Therefore the Government must take a lead if we are to make progress.
Lyons pointed to the increased concentration in construction of housebuilding by the larger companies and the dramatic decrease in the number of small companies being involved in it, because of their inability to access funding from banks and their vulnerability to being at the end of the supply chain. While SME builders may never regain their former volume of building, they are important because they will develop sites that the larger companies will not touch. One way of avoiding the inevitable decline of SMEs in construction would be to deal with the issue of cash retention. That is a 19th-century practice that occurs only in the construction industry. It is a bad practice: it is estimated that over £3 billion of cash retention, funded by small business, is outstanding. If I had time I would say more about that.
Lyons called for the Government to provide confidence that in future fluctuations in the economic cycle those involved in volume housebuilding should be given greater certainty. The Labour Party proposes a help-to-build scheme that would allow SME housebuilders to access lower-cost banking, supported by an Exchequer guarantee, subject to careful oversight. That would be a great step forward.
Although the construction industry prides itself on its flexibility, quite rightly, that does not work when it comes to skills training. The majority of the workforce—approximately 55%—has skills below NVQ level 2 or equivalent, and approximately 11% hold low or no qualifications. Countless reports, going back to those of Sir Michael Latham and Sir John Egan, have referred to the industry’s poor image and the reluctance of parents to encourage entry to it for their children. The financial structure of the training industry means that it is easier to poach from other companies than to train people itself. There is a desperate shortage of some skills, including project management and brick-laying. Construction apprenticeships, as my noble friend Lord Macdonald of Tradeston has already said, are now below 8,000, which is a disgrace.
One of the major drawbacks to improving skills training is the extent of self-employment and bogus self-employment in the industry. The self-employed do not take up apprenticeships or go on safety training courses. It is assumed that they are fully fledged in their skills before going on site, which is a nonsense in many areas.
There are some success stories, of course, which we must build on—including those of the university technology colleges, about which I know that the noble Lord, Lord Baker of Dorking, will be speaking in a later debate today. There is the example of the Labour-run London Borough of Haringey’s Building Lives programme, which works in partnership with local builders to launch a new academy. Apprenticeships have been awarded to 50 local people, who will learn their trades working on homes for Haringey’s social housing sites. Mulalley construction company and Keepmoat homes have both promised to take on 25 apprentices each, ensuring that the skills they learn can be transferred to jobs.
Finally, it is an enormous job, but we will be failing our young people if we do not provide them with homes, jobs and proper training. If the political will is there, we can succeed.
Lord Hunt of Chesterton (Lab)
My Lords, this welcome debate, secured by my noble friend Lord O’Neill of Clackmannan, is about the future of the UK construction industry to the economy. I am an honorary fellow of the Institution of Civil Engineers and director of a small—perhaps not micro—consultancy. I have been engaged in research on building construction since the 1960s, when civil engineers realised, following the famous collapse of three cooling towers during a tea break on a construction site in Yorkshire, that new designs were needed. I remember clambering along the edges of a tall skyscraper to study the wobbling of the tubes, because a few months later the Queen was going to open that building.
In fact, UK technology has played a leading role in the construction of many advanced buildings around the world. I would mention some of the bridges in Hong Kong and, whatever one might think of the aesthetics, the skyscrapers of London. These construction projects have certainly contributed to the economy and have created jobs in the capital. Basic research in the UK has made a contribution, a notable example of which was the invention in the 1960s of the float glass process by Pilkington. That glass is now used in every tall building around the world. Much work has also been done to solve problems with turbulence through the creation of complex flow structures to combat wobbling in the wind or being buffeted in the wake created by wind turbines.
Other countries in Europe have also advanced their building technologies and practices, especially in the areas of thermal comfort, noise and damp, all of which have been mentioned in the debate and which I saw when I visited a German public housing project. The noble Lord, Lord Roper, made the comment that local authorities may not be the best landlords, but the Germans were using the housing association model long before it became prevalent here.
An important role for the construction industry is ensuring adequate flood defences in our cities, but much more funding needs to be provided in this area in order to achieve higher standards. Our Dutch colleagues were not impressed by what they saw in the UK this winter. I hope that the Minister can tell us how EU programmes can benefit UK construction and whether they will be expanded under the next EU programme for research and development, known as Horizon 2020. Some UK building companies have made good use of the open and more or less freely available information produced by the German Fraunhofer Institutes. Such information is no longer available from the Building Research Establishment, which in the view of many UK practitioners has become excessively privatised. Indeed, the micro element of construction which has been a feature of many contributions requires free or cheap advice to enable people to use the technologies. A notable piece in this morning’s newspapers is the fact that Homebase is to close many of its stores because fewer and fewer people either know about or can apply these skills.
The purpose of this debate is to look forward. I welcome the Government’s policy document, Construction 2025: Strategy. It points out that there has been a great increase in research and development over the past 10 years, with a deeper commitment on the part of the Engineering and Physical Sciences Research Council to the needs of the construction industry, which is very welcome. But the report also emphasises the need to improve the effectiveness of putting UK research into practice. This requires working with big business and of course it is difficult, given that traditionally this is a rather fragmented industry. The chief scientific adviser in BIS, Professor Brian Collins, has commented on the importance of design and systems engineering. However, a contribution from the continent has come in the form of greater use of more advanced building materials, although the UK is also now moving in this direction.
Some of these new technologies are proving very important in the design and construction of green buildings and green cities, a point which has been made by a number of other speakers. One of the nicest examples of a green environment was the building of the Olympic site. Before work began there was a process of detailed planning of exactly how the green areas, water areas and building areas would look and how they would develop over time. It is interesting to note that how a locality is designed will affect the local temperature and humidity, as well as other aspects of comfort. The UK has made considerable advances in these areas. I should say that other cities around the world have encountered big problems in this regard. Heat waves in New York and Paris have led to high mortality rates in some of the less green areas of those cities. The development of cities is important in terms of maintaining health, and it is something that the chief scientific adviser will be aware of. We can expect to see more of these difficulties in the future as we experience longer periods of extreme weather. That will present a great challenge to the construction industry.
One way in which I hope we are contributing towards a reduction in the rate of climate change over the long term is by having a vigorous nuclear power station programme. The Government are to be congratulated on moving forward in this direction. Noble Lords have pointed out that the programme will be a big boost to the construction industry. Other planners and representatives of the construction industry who are considering the future of cities must realise that probably the most environmentally successful cities will not be megacities; rather, they will be cities that have been broken up so that they can incorporate large green areas. The Germans more or less invented this concept and we should look to the continent to see how we can develop it.
Lord Jones of Cheltenham (LD)
My Lords, I congratulate the noble Lord, Lord O’Neill, on securing this timely debate and on his wonderful introduction to the topic. The Chartered Institute of Building believes that by 2022 there will be a shortfall of 1 million homes in the UK. The Liberal Democrats believe that the United Kingdom needs to aim for an ambitious 300,000 new homes per year, a figure supported by the Royal Institute of British Architects, the Westminster policy think tank and trade bodies working in and around housing. As we have heard, we also need the infrastructure to support all these new homes. Roads, drainage, telecoms, power and other requirements such as transport links, schools, shops and doctors’ surgeries for a city the size of Nottingham need to be provided every year for the next seven to 10 years if we are to solve this problem.
The recession had a huge effect on UK construction. The industry is one of the truly labour driven sectors, but it lost some 400,000 skilled personnel after the 2008 crash and will lose another 400,000 through retirement over the next four or five years. This is leading to a critical shortage which some are calling a “skills time bomb”. Construction wages were up by an annual rate of 4% in July. We are returning to the age of the “loadsamoney” plumbers, plasterers and painters that plagued the Thatcher era and are symptomatic of a cost-push inflationary spiral affecting housebuilding costs. While a number of government-funded apprenticeship schemes are in place, they are not enough to meet the labour demand required to build 300,000 new homes per year. I had a conversation recently with Cheltenham’s leading building materials supplier. He told me that he doubted whether we could build the number of homes needed because we are not producing enough bricks. As a result, I tabled a Parliamentary Question—HL 254—and received what I thought was a rather complacent reply from the Minister.
Around 600,000 houses were built in 1952-53 under Harold Macmillan’s tenure as Housing Minister. We need to get back to that level to overcome the housing crisis, particularly the acute shortage of affordable or social housing. To achieve that, we should be repeating the garden city model which has proved so successful in the past. According to the Office for National Statistics, construction output figures in August came in at 3.9% lower than in July this year and 0.3% lower than last year. Private housing dropped by 5.5%, with repair and maintenance also down, although all areas seem to have dipped. There were some screaming headlines about this. We are now in late October and frankly the August figures are ancient history. Construction is a volatile industry which has been on a meteoric trajectory over the past 18 months or so, but those of us who can still remember life before the iPhone and have some experience of recessionary cycles know that there needs to be at least another month or two of figures of decline before we start to worry that a downward trend is emerging.
What is more pertinent is the view from the ground. Construction output is most likely to be negatively affected by the lack of contractors available to build or the number of sub-contractors who are still disappearing due to cash flow issues caused by late payment problems. A survey published by StreetwiseSubbie.com, a lobby group that works on behalf of sub-contractors, is alarming. The report claims that over 90% of specialist contractors are being paid after more than 30 days on publicly funded projects and that 4.7% have had to wait longer than 90 days. Of those surveyed, 84% said that government initiatives such as the Prompt Payment Code, the Construction Act and the Construction Supply Chain Charter had made no difference. Again according to ONS, the highest number of company liquidations is still in the construction sector. In the 12 months ending quarter 3, 2013, the number going out of business was 2,819, adding to the 5,000 firms which had already disappeared between 2010 and 2012, according to PricewaterhouseCoopers.
It is not good business practice to starve your suppliers of cash. The contractors cannot operate without the sub-contractors working beneath them. This is no longer the 1970s world, where hoarding cash and starving suppliers was regarded as common business practice. We are now supposed to live in a more enlightened working environment, where you partner with suppliers and build a team working towards a common goal. If you do not pay them, they cannot work; if they cannot work, they walk; and if they walk, their suppliers put them on stop. Everyone suffers. This Government and the next must tackle this serious housing shortage through enough skills, enough materials and prompt payment.
Lord Haskel (Lab)
My Lords, I recently had a significant birthday. At the party, I was asked why I joined the Labour Party 60 years ago. I replied that I joined because I saw it as a crusade for equality. Today, nowhere is inequality more visible than in housing. It was perhaps easier to overlook this inequality in more prosperous times, when credit was easier and prices were lower, but rising inequality tells us that it is time for a change. Without change, inequality in housing will cause yet more hardship, and more people’s lives to become precarious and more threadbare.
Some may dismiss this as sour grapes. Like my noble friend Lady Dean, I see it as saving our social fabric. We have to act before this rankles enough to cause yet more social problems. Danny Dorling, in his recent book, tells us that there were four times as many big demonstrations in 2013 as in 2006, mostly inspired by rising inequality.
My noble friend Lord Prescott told us that we all know the issues. We all know the remedy. We all agree on the need for more housing. I put it to the Minister that the same Labour crusade that attracted me 60 years ago must be applied to housing. Proper housing is one of our freedoms and freedom warrants a crusade, instead of the token gestures mentioned by my noble friend who opened the debate, for which I thank him.
How do we do it? We do not need to go back 60 years. We have to go back only to the report published last week by Sir Michael Lyons and his team, to which many noble Lords have referred. That tells us how to do it; we in politics have to provide the crusade. We must see that houses are for living in, not just for buying and selling. We must see that housing land is for building on, not for hoarding or trading. We must see that local families take priority over speculators. We have to balance the economic interests of existing householders and landowners with those of prospective householders and landowners. The crusade to build 200,000 new houses a year must be clearly championed and given clear priority by the Government, as many noble Lords have said.
All this can be signalled, for a start, by raising the status, for instance, of the Secretary of State for Local Government and the Minister for Housing. They must be given a task force to carry out the mission of seeking the necessary powers to designate areas for housing growth and new homes, if necessary; to get over some of the planning problems mentioned by the noble Lord, Lord Borwick; to update legislation for compulsory purchase orders; and to give local authorities the power to levy council tax from developers on unbuilt plots.
The Chancellor must support this with the consolidation of housing funding streams as part of economic development devolved to local areas. The Chancellor can use government guarantee schemes, including a help-to-build scheme to support not only the large builders but small local builders, and co-ordinate this with the revolving infrastructure funds.
Local councils and planning authorities have to play their part. They must produce five-year targets based on demand. They should empower the Planning Inspectorate to intervene if a plan is not produced. All this is designed to ensure that, once planning has been agreed, housebuilding will proceed, and there could be penalties if developers do not go ahead. In this way, a community can provide for its future and for that of its residents. More houses will be built, making them more affordable. Planning can include garden cities, which will raise our quality of life. Alongside this, we will have to increase our capacity to build homes, as the noble Lord, Lord Shipley, emphasised. I agree with him. Not only do we need more small companies building homes, we need to raise the number of skilled people in the industry. Achieving this must also be the responsibility of the task force. Right to buy will have to be revisited so that there will have to be a genuine one-for-one replacement by social landlords. The existing scheme has barely replaced half the homes sold.
My noble friend Lord Rooker spoke about the green belt. Reviewing the green belt legislation has to be part of this. Much green belt land is used for intensive agriculture with little environmental value. Most of the best bits are protected anyway. A crusading Government will grasp the nettle and review the designations.
Hand in hand with more powers will come more openness. Who owns what land? Which developers have taken out options? Developers will make sure that homes are built within a reasonable timescale, because the council tax will become payable anyway. This may mean more regulation. For instance, regulation of crowdfunding of the buy-to-let industry certainly needs a closer look. Indispensable to all this is an informed understanding of what makes homes environmentally suitable while improving the quality of people’s lives. The recent recommendations by Terry Farrell make powerful proposals.
If we are to build 200,000 homes a year and have the benefits of adequate housing in the right places, at affordable prices, to the benefit of our economy, to society and to our quality of life, it can best be achieved in the form of a crusade—a crusade similar to the one that attracted me to the Labour Party 60 years ago.
Lord Morris of Handsworth (Lab)
My Lords, I start by recognising the efforts of my noble friend Lord O’Neill in securing this important and timely debate. I declare an interest as the recently retired chairman of the Midland Heart housing association.
The three elements of our debate are the construction industry, the UK economy and, of course, housing. Taken together, those elements can build a ladder of opportunity that provides the potential to change people’s lives. However, a robust construction industry and a thriving economy do not automatically transfer to good housing. We need the political will to deliver; in housing, that is what the Government lack. That is why I welcome the Lyons review, which is not only timely but asks the difficult housing questions. The review points to the systemic failure over many years to build the homes that our country needs. It highlights the need to tackle the deep and underlying causes of the crisis. Although it is early days in the debate on the Lyons review, I see it not as a game changer on housing but as a modest start towards change. It will refocus the priority in house construction from the speculative commercial tower blocks in and around our cities to the housing needs of local communities.
I welcome the curbs on development land held as a speculative investment when local people need homes. The message from the next Labour Government must be clear: “You did not make the land, you acquired it. So use it or lose it”. I also welcome the Lyons package in other respects. There is the dimension that I would describe as community involvement: local communities being given the opportunity and power to build homes where people want to live; councils producing a plan for homebuilding; and first-time buyers being given priority rights when new homes are up for sale.
However, today’s debate is also about the contribution of the construction industry. Construction is not just about building houses. The construction industry is literally the burden-bearer of our national infrastructure, including roads, railways, bridges and tunnels, and not forgetting local shops, hospitals and schools.
As we seek to change attitudes and culture in the British economy, we must also examine the methods and behaviour of some of the stakeholders, including employers and, of course, trade unions. The worst example of behaviour that we have experienced in the construction industry is the blacklisting of workers, which was, frankly, not just disgraceful but totally unacceptable—but widespread. That story goes to the core of our political system, involving some of the biggest names in the construction industry, who engaged with and participated in the blacklisting of hundreds of construction workers through the infamous organisation, the Consulting Association. That blacklisting organisation was consulted by some of the biggest names in the industry. The information that it provided to the construction companies resulted individuals being blacklisted and excluded from any chance or opportunity of gainful employment in the industry. Many of the biggest names have since apologised, and some have said that they will compensate the victims, but we all want to know who in those companies felt blacklisting to be an acceptable form of running a business.
Last year, a report on blacklisting in employment was conducted by the Scottish Affairs Committee, who considered how best practice could be taken forward to ensure that blacklisting could not occur in future. It argued that employers who engaged in such corrupt practices should not have the benefit of publicly funded contracts.
In 2010, the blacklisting regulation was introduced by a Labour Government. As a result, a blacklisted person does not have to be an employee of the company, and companies have a responsibility to justify any decision they take not to employ such people. I am sure that construction workers will be mindful of their responsibility to deliver not just for the UK economy but for the thousands seeking homes, the thousands on a waiting list that gets longer, never shorter, a waiting list that ensures that some people at the top of the list have choice; at the bottom of the list, there is no choice. I say that those people will find hope from the Lyons review and will serve the British people by building the homes that people need, because construction workers, by their tradition, are builders, not destroyers. I therefore again congratulate my noble friend on bringing this debate forward.
Lord Young of Norwood Green (Lab)
My Lords, I, too, congratulate my noble friend Lord O’Neill on bringing this debate to the House today. It has been a fascinating debate. I cannot possibly hope to respond to all the various aspects that have been raised. I wish the Minister luck in trying to deal with them.
This debate has exposed an issue that is vital for the economy of the country and the social well-being of our communities. When I listened to my noble friend Lord Prescott talking about what he tried to do, I could not help reflecting that he did not mention refurbishment—if he did, I did not hear him. Of course, we put a lot of capital, time and effort into ensuring that properties that had been neglected for tens of years were brought up to a reasonable standard. It did not solve the problem of ensuring that affordable housing was available not just for those in desperate need but for a wide range of people across the country.
An issue that has been raised that is dear to my heart is the question of skills in the industry. It is one of the key challenges if we are to try to deliver. If we form the next Government, we intend to adopt the recommendations of the Lyons housing review on renewing skills. Once again, we had a good briefing pack from the Library. The comment on people and skills—because of the shortage of time, I shall refer only to a bit of it—states:
“Global and domestic opportunities in construction mean that a skilled and flexible workforce will be vital to the UK construction sector’s future performance and competitiveness. Evidence on qualifications is positive, showing increasing proportions of individuals with higher level qualifications”.
That is the good news.
“However, there has been a substantial fall in apprenticeship completions in construction related industries in the last three years while completions in other sectors have continued to grow”.
That point was made by several contributors to the debate today. My noble friends Lady Dean and Lord Macdonald of Tradeston mentioned the fact that we face not only the low number of completions but the demographic challenge of about 400,000 people retiring. It is a huge challenge to ensure that we get those skills.
There is still a job of work to do in trying to encourage young people to understand that not all of them need to go to university to get a good career and that there is real potential in engineering and construction out there to provide them with valuable careers and a lifetime of valuable work. When I go into schools and speak to 16 year-olds, I see little or no awareness of apprenticeship schemes, and little or no awareness of jobs like engineering and construction. There is a huge job of work to do in convincing not only young people but, I suspect, parents and teachers as well. Teachers are still too focused on thinking that the solution to all our problems is to send all young people to university, regardless of whether it will suit them. That is a key part of solving this problem.
It is perhaps right that there has been such a lot of focus on planning in this debate. I always enjoy hearing my noble friend Lord Rooker remind us in his robust manner about the reality of what we mean by green belt, and about how much of that land probably should not be described as green belt and ought to be available to be built on. Of course we need to set it in the right planning context, but what we have at the moment simply will not enable us to produce the number of houses required.
We face the biggest housing crisis in a generation. Levels of housebuilding have dropped under this Government to the lowest in peacetime since the 1920s. For many years there has been a systematic failure to build the homes that our country needs. We need to tackle the deep and underlying causes of this crisis. We have a housing market that is not working, insufficient land coming forward, a decline in housebuilding capacity and communities feeling that they have no influence over where new homes will go.
Labour has endorsed the comprehensive plans set out today by Sir Michael Lyons’ housing review—an independent review, the first of its kind in a generation. My noble friend Lord Morris called it a modest start. Well, it may be modest, but if we can achieve just some of the recommendations then we will have made real progress. It sets out how Labour will meet its commitment of building 200,000 homes a year by 2020. One noble Lord said that it ought to be 300,000. Well, if we can hit the 200,000 it will be a significant achievement. It sets a course for doubling the number of first time buyers by 2025. We believe that only Labour has a plan to tackle the housing crisis.
Today, Labour is announcing three key policies. These will make sure that local communities have the power to build the homes that are needed in the places that people want to live; that local councils produce a plan for home building in their area and allocate sufficient land for development to meet the needs of people in the area—there are still too many local authorities that have not produced the development plans; and that first-time buyers from the area can get priority access rights when these new homes go on sale. We know that in many cases that just does not happen.
Other major recommendations include powers for groups of local authorities to collaborate and form Olympics-style new homes corporations to build on our designated land at pace. The Olympics was mentioned. It is a good example to quote for a number of reasons. My noble friend Lady Donaghy pointed out how safe a construction site that was, with not even one fatality. One other point about the Olympic site has been mentioned as regards the technology employed, the comprehensive analysis made of the site and the fact that we insisted that apprenticeships ought to be part of that process. Three hundred apprentices were employed. We have been telling the Government again and again, “If you are going to have large public procurement contracts, training and apprenticeships ought to be part of that contract”. I await a positive response on that but I am not holding my breath.
Other recommendations include measures to drive competition in the housebuilding industry and increase capacity, thereby expanding the number of small firms rather than the depletion that we are seeing at the moment. A number of noble Lords mentioned the very real problem of late payment, and I think it was my noble friend Lady Donaghy who reminded us about the unfortunate fact that there are still too many examples of bogus self-employment in the construction industry.
Other recommendations include a help to build scheme to underwrite loans to small builders to get them building again, fast-track planning on small sites and financial incentives to local authorities so that they deliver a programme of new garden cities and garden suburbs to help unlock 500,000 homes.
Those are ambitious targets. My noble friend Lord Haskel talked about a crusade. The word is not a piece of hyperbole—he is right: we need a crusade. We need to do something about the situation where young people are beginning to feel that, no matter how hard they save, no matter how they strive, they will not be able to get a foot on the housing ladder. We have a situation where, as my noble friend Lady Dean reminded us, more and more young people are still living with their parents and their dream of owning a home of their own is fast disappearing.
Building more homes will not simply revive our stagnating construction industry; it will also change the lives of families across the country. At the moment, because of the pressure on housing supply, rents are impossibly high. When you add to this the rising utility bills that households are experiencing, it is easy to see why many across the country are struggling. I shall pick out just one example. The latest figures reveal that the south London borough of Croydon has been worst affected. Croydon has seen the highest increase in working families who are having to claim housing benefit because they cannot afford the higher rents. Before Labour took control of the council in May, the number of claimants had increased from 1,050 to an astonishing 12,500. It is not just a London problem, it is happening across the UK. Take Fareham in the south-east, for example, where the number of working families claiming housing benefit has increased from 113 to 1,111, or Pendle in the north-west, where the number increased from 134 to 1,175. What does the Minister have to say to the 12,500 people in Croydon, and the thousands of other households across the UK, who are being forced to claim housing benefit on top of their wages to pay the rent? Does he really think that this is an economy that is working for everyone?
Lord Popat (Con)
My Lords, I am grateful to the noble Lord, Lord O’Neill, for initiating this very important and timely debate. I say “timely” because the construction industry is very much at a crossroads. It is recovering from the double-dip recession in 2008 and the infrastructure projects we have in the pipeline will result in growth in this industry over the next five to 10 years. The noble Lord, Lord Morris, put it very well: this debate is about the construction industry, the economy and politics.
The construction industry serves very diverse markets. From minor maintenance work on our homes—replacing the washer on a dripping tap, which typically would be covered by a call-out charge of £60 or—to constructing the largest infrastructure project currently under way in Europe. Crossrail is estimated to cost £15 billion. It is not surprising, therefore, that an industry serving such diverse markets should itself be diverse. It is also large. There are 280,000 businesses in the industry, big and small. Construction contracting, services and products contribute more than 6% of GDP and contributed £90 billion in gross value added in 2013. As the noble Lord, Lord O’Neill, said, there are 3.2 million jobs in construction—about 10% of our total workforce. However, the industry’s importance is greater than these figures. It builds and maintains our places of work, our schools, our hospitals, our economic infrastructure and, of course, our homes. That is why construction is one of the sectors covered by industrial strategy. Whatever the particular market, four factors are essential to the longer-term vitality of the industry.
First, the industry needs a favourable regulatory, fiscal and economic environment where government supports sustainable development through creating the right conditions for business to flourish. Secondly, the industry needs a clear and healthy workload. Thirdly, it needs a strong and resilient supply chain. Fourthly, it must adopt emerging technologies and new processes. I will deal with each of these in turn and finish by saying a little more about housing in particular and construction more generally.
First, on having a favourable fiscal and economic environment, the UK now has the lowest headline corporate tax rate in the G7 and the fourth lowest in the G20. The World Bank rates the UK tax system as the fourth least burdensome in the OECD. Excluding EU regulation, the estimated net cost of regulation to UK business has fallen by £1.5 billion since 2011, so we are making real progress.
Secondly, on having a clear and healthy workload, the construction industry was hard hit by the recession but is now benefiting from the economic recovery. More investment will come forward as confidence in the wider economic recovery grows further. The strength of that recovery is key to the construction industry. While the industry is currently 9% below its pre-recession peak in the first quarter of 2008, which was a historic high point, key construction markets are recovering. Construction output was up by 5.6% in the second quarter of 2014, compared with the second quarter of 2013. This was driven by an 18.6% rise in new private housing and an 8.3% rise in non-housing repair and maintenance.
The forecasts are also positive. The Construction Products Association forecasts a rise in construction output of 4.7% in 2014, and a further 4.8% rise in 2015. The Institution of Civil Engineers report The State of the Nation acknowledges that annual investment in our economic infrastructure is higher on average in this Parliament than in the previous one. However, as that report made clear, the job is not yet done. This is why the Government have committed to long-term funding settlements in key sectors such as roads and flood defences. We have committed to spend more than £70 billion up to 2021 on all forms of transport. Councils are receiving £10 billion for local highway maintenance over this Parliament and the next. We have also introduced the biggest reforms to energy markets since privatisation.
Thirdly, on the need for a strong and resilient supply chain, the Government are working in partnership with the construction industry to tackle key supply-side issues. It is now a little over a year since Construction 2025, our industrial strategy for construction, was launched. That strategy is being taken forward by the Construction Leadership Council co-chaired by Sir David Higgins, the chairman of HS2. The right people with the right skills are essential for a healthy supply chain. It is a fact that during the recession the construction industry lost 360,000 skilled workers, with the training and recruitment of graduates and apprentices also significantly reduced. We are now forecasting more than 14,000 construction apprentice starts this year, the highest for four years. Ideally, as the noble Lords, Lord Macdonald and Lord Young said, we should have a lot more—maybe as many as the 100,000 mentioned by the noble Lord, Lord Macdonald. We saw that report on the lost generation; I think that the Government are looking at that report in addressing the issue of having more apprentices.
My noble friend Lord Deighton, the Commercial Secretary to the Treasury, has also recently announced a joint Government, clients and contractors group to work together to produce a skills map for the construction and infrastructure programme.
The noble Lord, Lord Young, also mentioned the huge number of jobs lost during the recession in the construction industry. Our employer ownership pilots are supporting innovative construction skills programmes such as those for high-integrity welding, site supervision and steel erection at Hinkley Point. The noble Baroness, Lady Prosser, spoke about having more women in the construction industry. We recently announced a successor programme, the Employer Ownership Fund. The initial focus here is on engineers, getting more women into the sector and engineering shortages among SMEs. We are supporting employer-led trailblazers to develop and implement new apprenticeship standards. Higher skills are also important so we are setting up national colleges—the high-speed rail college, for instance, which will be established over two sites in Birmingham and Doncaster. The public sector is a significant customer for construction and is giving the industry greater confidence to invest in skills, and new technologies and processes, by setting out a clear view of the forward pipeline of government work.
The fourth item concerns emerging technologies and new processes. The big technology drive for the construction sector is building information modelling, which is about the effective use of modern communication and information technology in construction projects to reduce waste and increase efficiency across the design, construction, commissioning and operation phases of a building or infrastructure asset’s lifetime. As we have seen from Cookham Wood prison, where this BIM drove cost savings of 20%, it is a genuinely transformational approach.
I turn now to the specific question of housing, about which the noble Lord, Lord O’Neill, spoke passionately. We swept aside the old regional housing targets imposed by Whitehall, instead bringing radical reform to the planning system, not least through our National Planning Policy Framework. The noble Lords, Lord Haskel and Lord Rooker, emphasised planning in the green belt. Our planning reforms are making a real difference. Permissions for 230,000 new homes were approved by this June, which is 14% higher than in the same period last year. Relaxing planning is the key to unlocking real growth in the housing market.
Starts on new homes in the past year totalled nearly 140,000, which is up by 22% on the previous year and the highest since 2007. This Government are emphasising the use of brownfield land for development. In our National Planning Policy Framework, we ask local authorities to encourage the re-use of brownfield land unless it is of high environmental value. Our new brownfield package, announced in June, could lead to the provision of around 200,000 new homes. Our aim is that by 2020, more than 90% of brownfield land suitable for housing will have planning permissions in place, either in response to planning applications or when granted by local development orders. We are providing £400 million of recoverable investment funding, which will go towards the creation of around 20 new housing zones. Around £200 million of this investment will go to London to create 10 housing zones, with the GLA investing an additional £200 million to create a further 20 zones.
The noble Baroness, Lady Dean, mentioned garden cities. Alongside our work to support the delivery of large-scale housing developments, we announced the establishment of an Urban Development Corporation to create a garden city of up to 15,000 homes at Ebbsfleet and have made available up to £200 million for infrastructure to support it. In April, we published our prospectus Locally-led Garden Cities, offering a broad support package for which expressions of interest were invited. We recognise that these schemes are complex infrastructure projects which take time to work up. However, positive discussions with a number of localities are ongoing and we expect expressions of interest to be submitted once proposals are fully worked up.
The noble Lord, Lord Jones, and the noble Earl, Lord Listowel, mentioned the importance of more housing in our construction industry. New housing construction orders have more than doubled since 2009. Registrations of new homes across the country are also at their highest since 2007. The noble Lord, Lord O’Neill, asked for more support for small builders. We are supporting builders through a number of programmes, including Get Britain Building, our Large Sites Infrastructure Fund and the Builders Finance Fund. These schemes ensure that sites are developed by large, medium-sized and small developers. Trailblazers will help small developers to get their act together.
Our housing guarantee schemes are now open for business, supporting up to £10 billion of investment in large-scale private rented projects and additional affordable housing. These debt guarantees use the Government’s fiscal credibility to reduce the cost of lending. We know that the private rented sector is currently dominated by small-scale landlords, with larger landlords owning 10 or more properties accounting for only 1% of the market. We know that if we are to realise our ambitions for the sector we need institutional investment and we are taking bold steps to make this happen.
Following Sir Adrian Montague’s review that looked at how we should encourage institutional investment back into the private rented sector, we have set up an innovative Build to Rent Fund, originally worth £200 million but extended to £1 billion due to the strength of demand. This will finance the construction of large-scale, purpose-built, private sector developments and demonstrate that PRS works as a long-term investment proposition.
The noble Lord, Lord Prescott, spoke about affordable housing. We have introduced a new business model for the funding of affordable housing. The affordable rent maximises private investment, so with the current affordable homes programme, £4.5 billion of government grant levered in £15 billion of private investment. This will have delivered 170,000 affordable homes by March 2015. In this spending round we announced a further £3.3 billion of Government money, which, together with receipts from right-to-buy sales, will help lever in up to £20 billion of private finance on top, providing a further 165,000 homes in the three years to 2018. This will be the fastest rate of affordable housebuilding for at least 20 years.
We are starting to see the benefit of these measures through increased economic activity. This is being driven by local communities as well as businesses, including small and medium-sized enterprises. The figures speak for themselves in terms of the increased pace of economic activity in the housing industry. We have seen nearly 480,000 homes built since 2010, including over 200,000 affordable homes. Of course, housing, public and private, accounts for roughly 20% of all construction output and this debate is about the whole construction industry.
The quality of a nation’s economic infrastructure is one of the foundations of its rate of growth and the living standards of its people. That is why we have put long-term investment in roads, railways, energy, telecommunications and flood defences at the heart of our growth plan. We recognise that meeting the UK’s infrastructure ambitions requires a long-term, sustainable plan. That is why we published the first ever national infrastructure plan and have continued to update it. The £380 billion investment in the latest plan includes priority projects and programmes such as the Thames tideway tunnel, the Environment Agency’s flooding and coastal erosion programme, Hinkley Point C and offshore wind, HS2 and Crossrail and—who knows?—HS3.
On roads, we have taken funding decisions that will enable us to build at least 52 major road projects by 2020-21 and add over 750 lane miles of capacity to our busiest motorways and trunk roads. We have extended this approach to social infrastructure. In July 2014 we published a Government construction pipeline of forward work which included £116 billion of opportunities to 2020 and beyond.
We are not complacent. The noble Lord, Lord O’Neill, spoke very patiently on a subject he knows very well. So did the noble Lord, Lord Prescott, who was very much at the forefront of affordable housing in his time as a Minister. Through our comprehensive programme of reforms and investment we are laying the foundations for a sustained improvement in our housing supply and the wider construction market. Of course, we cannot do this alone—we need the support of communities, investors and industry—but together we can build more homes and a better built environment for generations to come. I thank the noble Lord, Lord O’Neill, for initiating this very important debate and I thank all Peers for their contributions. I have not been able to respond to all the issues raised, but I will be happy to write in response to the questions raised.
Lord O'Neill of Clackmannan
My Lords, I thank all those who have participated in this debate. When I finished speaking, I realised that there were still a lot of things I wanted to say and I was greatly relieved to find that my colleagues filled most of the gaps I had left. I also thank my noble friend Lord Young and I hope that the Minister will get another chance on another day to reply to the debate in a more extensive manner than he was able to do in the 20 minutes he had at his disposal.
Young People: Alternatives to University
(10 years ago)
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Lord Monks
That this House takes note of the case for improved alternatives for young people not attending university.
Lord Monks (Lab)
My Lords, I declare an interest as an honorary Fellow of the City and Guilds of London Institute with a long interest in the subject of apprenticeships that is before us today. With announcements on apprenticeships this week by the Prime Minister and recently by the Leader of the Opposition, apprenticeship is, at least for a brief moment, centre stage. It might even become a sexy political subject; it is well over time that it does so.
I have been involved during my whole career in initiative after initiative. I joined the TUC in 1970 to service the trade union members of industrial training boards and I have watched and been involved with many policy initiatives since to try to improve the position of young people leaving school with few formal educational qualifications and no real future in the academic world. We simply cannot say over that period—I share the sense of failure—that we have been successful. In 1970, 44% of boys leaving school at the minimum age went into apprenticeships. At that time only about 5% of girls went into apprenticeships.
At that time we relied, to some extent, on the levy grant mechanisms of the training boards, with the principle that if an employer trained, he got the money back that he had paid, and some more. If he did not train, he had to contribute to the costs of those who did. That was a Conservative measure, I might add—the Industrial Training Act 1964—but it did not survive. In the 1970s most of the ITBs faded away. Construction, as we have just heard, still survives and there are some sector skills councils trying to carry on the sectoral approach to skills.
The challenge was taken up by the Manpower Services Commission, based on the Swedish Labour Market Board—again, the Conservative Party implemented this idea. But at the same time as the commission was getting going, apprenticeships collapsed. Why that happened is worth a study; my own view is that they collapsed because employers decided that they were too expensive—that four years’ apprenticeship was unrealistic. They were aided by the way in which youth culture developed in the 1960s and the 1970s, with young people thinking, “Why am I having four years of relatively low pay when I could get a semi-skilled or even unskilled job that pays much better? I’d like the money now rather than wait for it”. After that, in the early 1980s, many companies that had been exemplary trainers disappeared or became a lot smaller. Only a few sustained apprenticeships.
Despite many initiatives since and despite recent improvements under this Government and the last one, we still compare poorly on apprenticeship recruitment levels with other comparable advanced countries. Only 10% of UK employers currently take on apprentices, compared to three to four times that in Germany, Austria, Sweden and Australia. The most recent growth in the UK has been among older apprentices—at level 2 rather than the level 3 that is the norm in other countries. They tend to be in service sector occupations, where training has tended to be shorter and less stretching than it would be in manufacturing. Even so, only 5% of 16 to 18 year-olds are on apprenticeship programmes at present.
The institutional framework has something to do with our failure. In the past 30 years, there have been 61 Secretaries of State responsible for skills policy. Each has had their own agenda; each has wanted to make their mark on national life. Between them, they have produced 13 major Acts of Parliament and the policy area has been flipped, and sometimes flopped, between different government departments—and sometimes shared across multiple departments over the same period. There has been a succession of major reviews in this area by very good people, including the Dearing, Beaumont, Cassels, Tomlinson, Leitch, Wolf and, now, the Richard reviews.
Qualifications have been subject to bewildering and frequent change, with NVQs, GNVQs, AVCEs, applied GCSEs, diplomas, and now the current range of qualifications that is emerging. If you are still with me after those acronyms—and this is a wonderful area for acronyms, unintelligible to anybody but the most dedicated, never mind young people, their parents, employers and schools—you will probably agree with the House of Lords Economic Affairs Committee, which reported that,
“the system has suffered poor leadership and a string of initiatives that have not been implemented”,
properly. That is putting it politely.
All this tinkering, well exposed in a recent City & Guilds publication, Sense and Instability, has caused confusion and conflict. The battle rages still between the concepts of training young people to work in specific jobs and ensuring that training is broad enough so that occupational choices are not unduly limited.
This should be an area in which it is possible to build a longer-term national programme. That is what they have managed to do in those other northern European countries such as Germany and Austria, where social partnership agreements are the basis of respected and prestigious training. I was very struck once, on a visit to an engineering and technical school in Vienna, to see the 18 year-olds being taught in English. These were people who left school at the minimum age. Similarly, in a Dutch vocational college for catering, hospitality and so on, the requirement at the end of the course was to pass English at native level. That was an eye-opener to me, when I compared it to many places that I had visited in the UK.
There are initiatives. Labour is committed to boosting the number of apprenticeships to match the numbers going to university by 2025, using the Civil Service to start a fast-track scheme to hire non-graduates, forcing public sector contractors to recruit apprentices under new procurement regulations and giving employers more control over training funds. The Prime Minister this week committed to delivering 3 million more apprenticeships by the end of the next Parliament, by cutting unemployment benefits for 18 to 21 year-olds and introducing a youth allowance limited to six months, after which people will have to do an apprenticeship and a traineeship or community work. Housing benefit will be stopped for people of that age, the money saved going towards apprenticeships.
The latest review—the Richard review—focused on improving the quality of apprenticeships and the concept of industry being given greater responsibility for frameworks and standards, with a new emphasis on level 3 apprenticeships, higher expectations in English and maths, although not foreign languages, and grading as a key element of the level that people can attain. In a sense there is plenty going on, and the subject is receiving more political attention than it has done for some time. Additionally, the Government are consulting on channelling funding to employers rather than providers, although that has its own controversies.
Apprenticeship is an area in which trade unions play an important role. As the OECD noted recently, in countries with a long tradition of apprenticeship training, unions are a key player alongside employers and the institutional actors. In the UK, the TUC unionlearn programme continues to support high-quality apprenticeships that pay a decent wage, encourage equality and diversity in the recruitment process and aim to drive up employer demand and promote that in day to day work. The TUC broadly supports the Richard proposals.
We do have to change. Another OECD report made the following statement and, although I have not had a chance to check whether it is true, I put it before the House today. The OECD said:
“England is the only country in the developed world where the generation approaching retirement is more literate and numerate than the youngest adults”.
Skills shortages still exist in many areas where there is high youth unemployment. This mismatch and dysfunction is a feature that many people have tried to tackle and many people have not succeeded in remedying. There is a need for a wake-up, to which I hope that this debate will contribute. This is a plea to all parties to make a big effort to build up a stable national scheme for apprenticeships involving all the different stakeholders. It is not easy—a lot of good people have tried—but it is necessary to try again. We have had many useful initiatives, but few overall convincing plans. We have good apprenticeship schemes and some excellent companies, but not enough. I also like the university technical colleges. I went to a technical school myself, and a bit of the old-time religion might be useful in this area.
It is worth pausing a moment to look at what some other countries are doing. Germany, worried about the attraction of the academic stream to better-off young people, is now trying to make apprenticeships glamorous. For example, there is a programme to recruit apprentices internationally, offering £700 a month net, with free language lessons, relocation costs and paid visits home. That could threaten our fragile system, too, if young people wake up to this new, perhaps more glamorous alternative to traditional apprenticeships and higher education.
I have one final point. There continues to be much self-congratulation in Britain about our so-called flexible labour market, but flexibility too often means that anything goes in the world of work; it often means cheap and low-skilled work by low-productivity workers. The flexible labour market can undermine good training schemes. Let us remember what the Conservative Government of the 1960s tried to tackle—those employers that did not pay for training but poached people from those employers that did pay. We still have that problem, filled at the moment by a massive state subsidy to everybody to keep the numbers going in an upward trajectory.
The professions do not have a flexible labour market. They have regulated entry and training; you cannot just call yourself a doctor or a lawyer. Why is it so different for car mechanics or skilled catering workers? This is a manifestation of the “two nations” again. You should not be able to practise as a skilled worker in a crucial job without proper qualifications. Obviously, you cannot do this overnight—you would need a long transition period—but that should be the direction of travel. That should be a central feature of the next phase of the development of apprenticeships for young people in the UK. Employers who do not train should pay towards the costs of those who do. Noble Lords should remember that that was a Conservative Party principle of the 1960s.
We should aim to have a more settled institutional framework—not treating training as a Whitehall version of “pass the parcel” between departments, some of whom do not really want it—at some stage in the future. A new Department of Employment would be my proposal to deal with this issue and some other aspects of the labour market, too. In these ways, with clear principles and less jargon and acronyms, we can develop an apprenticeship system of which to be proud. It should be one that widely encompasses girls as well as boys and that reaches out to minority communities; one that is a genuinely attractive alternative to the higher education route; and one that raises the nation’s woeful productivity rates, which cause so much concern to so many of us. It should also give young people—regardless of race, ethnic origin or sex—a decent start in an uncertain world of work, and narrow the skills gaps with our North Sea neighbours. We can do better; we must do better.
Lord Baker of Dorking (Con)
I thank the noble Lord, Lord Monks—a leading member of the trade union movement—for focusing the attention of the House on this grave problem. He highlighted that we are all suffering under the mantra of the education system, and that mantra is three A-levels and a university. That seems to be the only pathway to success. Indeed, the previous Labour Government, as one knows, set that as a target for 50% of young people. I look on this debate as the last funeral rites of that particular policy, because that is not a sensible policy to have.
This policy has led to a great deal of graduate unemployment. If you look at the number of graduates who left in 2012, and ask what they were all doing six months later—how many were working in retail, catering, waiting or bar jobs—you will find that, of those who studied fine arts, 29% were working in those jobs; media studies, 26%; performing arts, 23%; design, 23%; sociology, 22%; law, 19%; and foreign languages, 15%. Only when you come to engineering do you get very low figures of 4% or 5%. There is therefore a huge mismatch between what students are studying and where their jobs are going to be. When you consider that students are going to leave with debts of £40,000, at some stage in the next five or 10 years reality will break in, but it will take a long time to do it.
The biggest problem facing the next Government is going to be filling the skills gap, which in our society is absolutely enormous. The Royal Academy of Engineering has estimated that we will be short of 45,000 STEM graduates a year for the next five or six years. That really is a shatteringly high figure. When it comes to technicians and professionals, the numbers are even larger. British industry is short at the moment of 850,000 of those. At the same time, we have 750,000 youngsters who had 11 years of free education and cannot get a job, so something has to be done. The skills gap can only be filled by a major change in schools, FE colleges and universities. I will deal first with schools.
As a result of recent policy, many schools are now dropping technical subjects below age 16. One of the adverse and painful effects of the Wolf report was to throw out a large number of technical subjects. I agree that some should have been dropped: they were rather casual and not very good; but the baby has gone out with the bath water. A range of students at 16 are now just doing basically academic GCSEs. There is a slight movement towards design and technology, but only a third of GCSE students take that exam, and most of them do the soft options of food and textiles. Only a quarter of that third do resistant materials. These figures there are really very shattering, but when it comes to other technical subjects it is worse: electronic products, only 1.4% of students; and systems and control, 0.6%. We have to give more technical, practical education to pupils below 16. It is a major priority for us.
The reason for that was touched upon by the noble Lord, Lord Monks. If you compare the countries in Europe, in our country, 30% of students below 18 have some experience of technical education. In Germany it is 60%. In Austria it is 80%; Austria has the lowest level of youth unemployment in Europe and the lowest number of NEETs. It does that by stopping the national curriculum at 14 and having a series of specialist colleges. As the main founder and proponent of the national curriculum, I would now argue for the national curriculum to stop at 14 and for having specialist colleges—something to which more educational specialists are coming to agree, including Michael Wilshaw.
It has to start in schools, and this is one of the reasons why, six years ago, with Ron Dearing, I set up the process of establishing university technical colleges. I was very glad to have had the support of the noble Lord, Lord Monks, on those. These are large colleges with 600 to 800 students operating a working day from 8.30 to 5, with shorter school holidays. Crucially, for two days a week, the students make and do things with their hands and design things. I believe that learning by doing is just as important as studying. We are proud that one of the advantages of these colleges—we have 30 open at the moment, and another 30 will open in the next two years—is that, so far, not one of our students leaving at 16 or 18 has joined the ranks of the unemployed. They have got either a job or an apprenticeship, stayed on at the UTC to do A-levels, gone to another college or gone to university. That is a record that any school in England should be very proud of, and we are actually achieving it.
Alongside UTCs, we now have career colleges, which were announced last year. They deal with the non-STEM subjects. Already, within a year, three of those have been established: one in Liverpool doing catering and hospitality for students 14 to 18; one in Bromley doing catering and hospitality; and one in Oldham doing graphic art and digital technology. I ask the House to consider—and this is not really accepted by the education system so far—that we now have an education system that stretches from age four to 18; if you have that, you first have to say to yourself, “Why have exams at 16?”. There is really no need for GCSEs. The only reason for a 16 year-old exam was that was when you left school. I had to have a thing called a school certificate in 1950, and that proudly showed what I achieved. I showed that to any employer whom I went to talk to. You do not need that now, with education going on to 18. This gives us a chance to resurrect the concept and importance of the 14 to 18 stream in our schools, something that Labour almost grasped last time with the Tomlinson report.
Finally, I turn to apprenticeships. I agree very much with several of the things the noble Lord, Lord Monks, said. There are far too many apprentices between the ages of 20 and 30 at the moment. Apprenticeships are about people from 16 to 18. There, the records are, frankly, not very good. The figures on that are that at 16, there are 20,800 apprentices; it sounds like a lot, does it not? The Whips are waving to me, but if they hang on just a moment, I am about to finish. They should not be anxious; I am only the second person to speak in this debate. I will be quick. The 20,800 figure is only 3.2% of the age group. At 17, the figure is 40,000, only 6% of the age group; at age 18, the figure is 55,000, only 8.4% of the age group. Those numbers are going down. The funding system has to be looked at again to ensure that those numbers go up. Certainly, UTCs can take apprenticeships; they are the only schools in the country that do that: 50 are at the JCB Academy and another college next year is Dartford, which is going to have apprenticeships in January.
This is an important debate. The country has to accept the fact that fundamental changes have to be made in all of this area of education. We are finding that some of the senior students at UTCs at 18, having got places at universities, turn them down. They turn them down to become higher apprentices: to go to work at Rolls-Royce or Network Rail or National Grid or Babcock, where they earn £15,000 a year and immediately do foundation for degrees. After 18 months it is up to the company to decide whether, at the cost of the company, to send them to a university for an honours degree. These are the sorts of careers that we must now be establishing in all our schools.
Baroness Morris of Yardley (Lab)
My Lords, I, too, very much welcome this debate and thank the noble Lord, Lord Monks, for introducing it in the way that he did. He gave a history of our ineptness in managing to keep vocational studies and qualifications firmly on the agenda. If noble Lords want a glimpse of what our economy will look like tomorrow, they need to look at what we are investing in skills today. There is no doubt that we are not getting it right at the moment.
The noble Lord, Lord Monks, mentioned institutional failure. I want to look at the structure of the way that we work because I agree with the noble Lord, Lord Baker, that it is not just about changing apprenticeships and vocational studies but about looking right across the piece at 11 to 18 provision and beyond and trying to get a different format for providers and qualifications.
I agreed almost entirely with what the noble Lord, Lord Baker, said, with the exception of one of his comments. I think that we were right to expand higher education and to set the 50% target. We are still behind other nations in the number of people who go on to higher education. We went wrong in giving priority—inadvertently, I think—to the 50% target and thereby sending out a message that the other forms of provision did not matter. That was never intended but it was a consequence of establishing that priority. I learnt that in politics you cannot say that you are giving priority to one thing without sending out the message that you are giving no or less priority to another. That situation desperately needs to be remedied, but in a way we are a victim of our history, which has served us very well. We can all think back to higher education, apprenticeships and further education, and semi-skilled and unskilled work. Some people, especially those of us in a particular age range, look back to the 1950s and 1960s, when apprenticeships were stronger, and say, “We got it right then”. In a way we did, for the economy and the society that existed then. However, the economy has changed and the expectations of society and of individuals have also changed. We have carried forward with us all the prejudice and different statuses and values inherent in that system. Despite the fact that the economy and people’s aspirations have changed, we still live in the past and think that higher education is at the top of the pinnacle and the place worth going to and that apprenticeships are for those who have not got into higher education. However, we still think that they have done better than those who end up in semi-skilled and unskilled work. I am convinced that the necessary first step is to break out of that mindset.
The irony is not that we have not changed our view but that all the institutions have changed. Higher education is not like it was in the 1960s. It is broader, includes vocational work and takes in a wider group of people and helps more people to achieve their aspirations. FE has changed. It offers a far broader range of courses and serves far more people. Workplace and employment routes have also changed. We are in the same position—it is almost as though we do not catch up with life. But if noble Lords look at how higher education has changed and at what further education is doing and at the best of our employment routes, they will find the answer and the way forward. It is in that respect that I most agree with what the noble Lord, Lord Baker, said. If we address only the bits that do not work, we will constantly be trying to glue them on to the bits that we think do work. The truth is that we have never really looked at that whole package from unskilled work to higher education to see what it means. The world is not made up just of those who go to university and those who get apprenticeships; it is also made up of those who could go to university but choose not to do so and want a different route and those who at 18 or 16 do not yet have the qualifications to get them into an apprenticeship or into university.
If we are to get this right, we need to have a structure that meets the needs of all those groups—that is, from those who leave school because they have learning difficulties and gain the minimal academic qualifications to those who gain three A* at A-level, or whatever else we dream up. People have to have a choice and the route they choose must make sense to them. I think the problem is that we are too in love with universities and we do not love the alternatives quite as much. We see that reflected in the advice that we give to our own children and our friends give to their children. At the end of the day, the big test is whether we say to our bright sons and daughters who could get three A grades at A-level, “Don’t go to university. Take one of these other routes”. I shall not ask noble Lords to put their hands up but I suspect that we are not there yet. I suggest a list of component parts that need to be put in place if we are to get this right: easily understood and trusted qualifications; continuity of qualifications for a framework that does not change every 18 months; well qualified teachers, lecturers and instructors; well equipped and high-quality institutions; good progression and career opportunities; recognition by society of the worth of a course of study; and help and support in the transition from school to work. The only problem is that the only bit of the system that ticks every one of those boxes is higher education. That is why it goes from strength to strength and why I would advise my son or daughter to choose it. It is coherent and we know what it means. The challenge now is to make sure that each of those components and bits of the jigsaw are available for those who are able enough to go to university but choose not to do so, those who want to take an apprenticeship and those who at this stage in their development do not have the skills or qualifications to do it but will want to do so in the future.
The noble Lord, Lord Monks, listed the relevant reports. I was the Secretary of State for Education responsible for some parts of those reports. For some reason it is more difficult to be courageous in the skills arena than it is in many other areas of that portfolio. Therefore, I say to anyone who takes forward that agenda, “Be brave, do what you think works. Don’t look back to Tomlinson and say that you wished you had done it 10 years ago. Be consistent and stop changing your mind and link in with schools at the younger end of the age range and with the world of work at the older end”.
Lord Addington (LD)
My Lords, this is one of those odd debates where I suspect that a great deal of agreement is going to break out on the problems that arise and the solutions to them. We shall then take a deep breath and fight savagely over small differences in implementation. However, that seems to be the nature of what we do.
The noble Lord, Lord Monks, spoke about a huge array of subjects. I asked the Library what was available in further education and found that there were eight levels with a variety of qualifications. I noticed that the letter “Q” was used very often in further education courses. It probably meant something different on each occasion it was used. Finding your way through this will always be immensely difficult. As the noble Baroness, Lady Morris of Yardley, pointed out, higher education is easier to understand as a concept but we are in agreement that we must get slightly more coherent about what we are doing.
Whatever else they have done, apprenticeships have given this sector a publicity boost and a way forward. I do not think that most noble Lords present have had to suffer hearing me go on about my next point, but we managed to make a massive mistake when we brought them in as we effectively excluded anybody with dyslexia or a reading problem from taking them. We had decided in our great wisdom that employers needed employees who had studied English. In the university sector you could get assistive technology that allowed you to get through your course if you had a problem with English. It appeared that employers wanted competence in reading English and could not function without it. This issue turned out to be basically about people refusing to move their ground, not understanding the technology and not responding to change. I do not think that we should have to introduce a Bill into Parliament to make such changes. We should be slightly more flexible and open. The Children and Families Act has resulted in greater emphasis being given to those with special educational needs. However, many problems still remain in this regard because traditionally they have not been seen as something that the higher education sector and other education provision deal with. Although they have a legal duty to do so, they are not very good at it. For instance, they are not required to publish, the way schools are, what they will do so that parents and students can look at it and know what support they will get.
I am dyslexic myself and the British Dyslexia Association, of which I am a vice-president, started out getting a little trickle but is now getting quite a stream of people presenting to their helpline with problems in further education. The Government provide voice-from-text technology that helps read stuff back to you but only 30% of colleges have taken it up. It is an appalling situation that so few colleges are taking up something which is given to them free and allows students to access and get through their courses.
JISC TechDis—he says, staring down and wishing he did not need glasses—is a body which has been looking at technology but is about to be wound up. Technology is a great way forward. I am a convert to it myself and use voice recognition all the time. Technology has a huge advantage: it is cheaper than having support tutors all the time; you can take it away with you and it allows you to be independent afterwards. Why are we not embracing and using it in this field? We are not just teaching people how to use their educational skills—acquiring reading, mathematics and writing—we are giving them skills in how to cope in life. If you have one of these disabilities it is with you for life. You will always learn more slowly and have more problems. If a person can find a way round it and embrace it they can function in the modern world. We can help with this but we do not seem to be embracing it.
I hope the Minister will tell us what will actually happen and what pressure we will place on colleges to make sure they do their best and match the achievements of the schools and higher education, which mainly came through the DSA. Let us see if we have as happy a situation after the reforms and changes to the DSA. I trust we will be talking about that in the future. I hope they can do something here because there are two good examples. At the moment, colleges are just becoming aware that we have this problem. If you have the problem at school you have it there too. I hope they can tell us that they are admitting this, getting involved and taking it on. If they do not, they are guaranteed that a large section of this target area—the group we are trying to skill up—is always going to underachieve and, in a large part, fail. We can avoid a lot of that now by taking on practice which is well established in the rest of the education field. Joined-up government should mean something and not just be a slogan that is brought out to fill the last 30 seconds of any set speech.
Lord Bhattacharyya (Lab)
My Lords, I congratulate my noble friend Lord Monks on securing this important debate. Along with many noble Lords speaking today, he deserves great credit for this issue having moved to the top of the political agenda. I declare my interest as chairman of Warwick Manufacturing Group at the University of Warwick. A university chair may seem an unusual interest to declare in this debate, but WMG has a strong focus on those who do not traditionally enter higher education. These young people can achieve extraordinary things. I think of Chris Toumazou, who left school at 16 without enough CSEs for sixth-form college, and has since progressed from City and Guilds to Regius professor. Although exceptional, his career demonstrates the transformative potential of technical education. As many noble Lords have said, we in Britain are, sadly, far behind our global rivals in realising this potential.
This is not a new problem. The Feilden and Finniston reports, and many others, said the same thing. Worse, as the Secretary of State, Vince Cable, has acknowledged, over the last 30 years,
“there has been a hollowing out of our post-secondary provision”,
against even that poor record. Too few young people are getting a good technical education and moving from there into well paid work. Today, businesses fear having to use scarce resources to train young workers in everything from basic literacy to technical skills.
Where then will we find the 830,000 engineers who, as the noble Lord, Lord Baker, just said, we need to replace retiring technicians? I do not want him to blush but one solution is strengthening technical education before 18. Technical schools were the orphan of Butler’s tripartite system. The university technology colleges set up by the noble Lord, Lord Baker, now give us hope and a chance to rectify that mistake. This autumn, we at WMG opened our first UTC, with a curriculum designed by the university and supported by leading engineering firms such as Jaguar Land Rover. Jaguar Land Rover requires another 20,000 technician workers in the next five years and we cannot find them. We have recently received government permission to open another in Solihull. Businesses support the academy because they can see how it will prepare students for a career. Parents are enthused because they see the quality of education their children get from a top university. I believe resources currently dedicated to free schools should be redirected to extending the UTC programme, as a first step in restoring technical schools in the educational pantheon.
Once these students have reached 18, they need a clear path to a widely recognised vocational status, such as the German technical engineer. Today that path is hard to find. We have seen a 40% decline in the number of people studying for HNCs, HNDs or foundation degrees. I would not mind if this was the result of limits being put on these poor-quality courses. Sadly, we have seen falls in fields such as engineering and computing, precisely where we need growth.
Changing this requires a new approach to student funding in further education. What progress has been made since the Secretary of State agreed to reconsider student funding for quality FE courses? Will the Government commit to expand advanced learning loans to under-25s? To be fair, the Government are keen to support apprenticeships, as the Prime Minister’s announcement of 3 million apprenticeships demonstrates. However, increasing the number of apprenticeships while degrading the brand should not be a consequence of a focus on large numbers. We must prioritise extending the number of higher and advanced apprenticeships for under-25s. The key to achieving this is a greater partnership with small and medium-sized businesses. The Holt review showed that only one in 10 SMEs offers apprenticeships. The proportion offering higher and advanced apprenticeships is even lower.
To offer quality apprenticeships, smaller businesses need support to impart quality skills, with a curriculum that they own and help deliver. We therefore need to improve the skills provision of FE colleges and their reputation with local businesses. This is essential if we are to deliver courses that employers will value, pay for and send their young workers from the factory floor to college to complete.
Achieving this shift is a challenge not only for the Government, but for my own sector. If we want to change vocational learning, companies, FE colleges and universities must work together to give technical education a higher status. At WMG we do this by supporting modular degrees designed with employers, so apprentices can learn at their own pace and companies pay their full university salaries for that to happen. This creates broader access to degree and sub-degree courses. There is huge demand for these programmes, and the potential to expand such courses is massively clear, whether through FE colleges, in workplaces or online colleges.
Personally, I prefer the former two options, as they give a greater prospect of quality control and student interaction. In such a model, further education colleges would benefit from closer integration with universities in providing courses that have high status with students. Employers would welcome universities genuinely interested in helping them give greater opportunity to their workforce. Universities would be foolish to miss this opportunity.
Lord Baker of Dorking
Before the noble Lord sits down, may I give the House an opportunity to recognise the enormous contribution he has made to technical education in our country? Through the Warwick Manufacturing Group, he has driven forward the reputation of Warwick University to become one of the best universities in the world. He has also supported, I am glad to say, the university technical college, opened only last month, and he and I will visit it tomorrow. I thank him for his support because Jaguar now wants a second one. His personal contribution in the whole scale of technical education is quite remarkable.
Lord Bhattacharyya
I thank the noble Lord very much. Building a better bridge to career success via technical courses is the only realistic prospect for student expansion. That means thinking in radical ways about the nature of vocational provision, from recruitment to integrating work and study.
I started by mentioning Professor Chris Toumazou. If his story tells us anything, it is that in the forgotten half of our young people we will find the talent, ambition and capability to transform our nation. We must not neglect their potential.
Lord Newby (LD)
My Lords, I remind all noble Lords that this is a time-limited debate. When the clock hits “6”, it means that the speaking limit has been reached. The consequences of speakers going over their time is simply that the Minister will have significantly less time to reply to the points that they have raised and the questions asked of her.
Baroness Taylor of Bolton (Lab)
My Lords, it is a great pleasure to follow my noble friend and I echo and endorse the comments of the noble Lord, Lord Baker, about my noble friend’s contribution. When he was speaking, I agreed with just about everything he said, although I flinched when he mentioned the word “tripartite”. However, we have moved on sufficiently, especially when we are talking about 14 to 18 year-olds, to talk about technical schools without all the horrors of the old tripartite system. We have added something that is increasingly accepted.
I, too, congratulate my noble friend Lord Monks on initiating this debate. It is very appropriate that someone with his wealth of experience should be taking a lead on this. However, like him and others who have spoken, I find it somewhat depressing that we have not made more progress on this issue in the past 20 or 30 years. I have been speaking on it, mainly in another place, for a long time and although we think that we are making progress, somehow it does not happen.
It is a long-term and, as we have heard, increasing problem. While, like my noble friend Lady Morris, I am proud of many of the things that the Labour Government achieved, I am sorry that we have not made more headway or had the breakthroughs in these areas that many of us had hoped for. We have seen other countries doing things differently and tried to learn from them and look at what they are doing but have not actually made a breakthrough, despite all the welcome initiatives.
One of the problems, which was touched on earlier, is that we are talking not just about education reforms but cultural problems as well. My noble friend Lord Monks talked about young people in the 1960s thinking that other things were more glamorous than apprenticeships. A lot of people find university life more attractive and grown up, and more of an expression of freedom, than an apprenticeship. I have looked at the proposals that our party has put forward to improve the situation. My noble friend talked about our plans for apprenticeships. We have been talking about the idea of a gold standard, technical baccalaureate for 16 to 19 year-olds and looking at how employers’ accreditation can work, the quality of work placements and how you can build them into a credit system. It is an impressive package.
We have also said—and I am sure that the noble Lord, Lord Baker, would be interested in this—that we would like to transform some of the higher-achieving further education colleges into institutes of technical education to underpin the kind of education that so many people want. We also want to see new technical degrees as a pinnacle of vocational education, not just as something that people talk about as second-rate. I am very happy to support all those proposals, as I am sure my noble friends are. However, I have to say that their delivery will be extremely challenging. It is a problem, as my noble friend pointed out, and cultural factors have undermined past attempts to make progress.
That brings me to the core of the problem, which was touched on earlier—the status of different types of education. In the United Kingdom, this is far more of a problem than it is in many competitor countries, and it costs us dearly. There is a clear and unfortunate distinction, a real division of esteem, between university education at the pinnacle and absolutely everything else. That gives a false assumption about the relative importance of different sectors. This is one of the things that is so difficult to counter if we are to make real improvements. Many problems spill over from the whole issue of status. We have a hierarchy in funding as well as in status. If we are going to give young people more choice, we have to find some way in which to break this down. As I say, it may be the university image or peer-group pressure, but there is a certain snobbishness in education that says that universities are okay and everything else is second-rate. It is really difficult to counter this.
I want to mention one factor that could make a difference and help counter this problem of a lack of parity of esteem. We need a unified qualification structure, including a credit accumulation system based on modular courses, as my noble friend Lord Bhattacharyya mentioned. That could be done using the best practice of existing qualifications, whether they are academically oriented or geared to vocational skills. It could allow for credits from either sector to contribute towards a final qualification. That could help us to break down the barriers, challenge the difficulties that arise, help to meet the skills gap and give real choice for many individuals. We need individuals to have choice, which is not only in their interests but a really important issue for our whole economy.
Lord Rees of Ludlow (CB)
My Lords, I declare an interest as a member of Cambridge University and as an honorary fellow of City and Guilds.
The huge expansion in the university sector is welcome but a downside is that it has not yet led to sufficient differentiation among universities. More relevant to this debate, there is still too sharp a demarcation between universities and other post-18 education. We have become trapped in the mindset that everyone who can get into university should go to one, even though many might do better with some alternative. I would go further and say that there is a fast-diminishing fraction for whom the traditional specialised degree is optimal. That is why some of our brightest young people are being enticed to American universities where disciplinary “stovepipes” are more permeable. More and more jobs require a degree—even an irrelevant degree—as an entry ticket, a fact that suppresses mobility by closing off career options to non-graduates to a greater extent than in the past.
However, despite expanding enrolments, many talented young people who could benefit from universities are still being denied the chance. That is happening to those who have been unlucky in their schooling and do not, by the age of 18, have the attainment level to qualify for the most competitive university courses. Even worse, they generally have no second chance. Options are also foreclosed for those who enter university but drop out before completing three years. They are described as “wastage” and it is hard for them to get back into the system, even if their circumstances change.
How much better it would be if all students could be given credits for what they have achieved, wherever they achieved it. They could then say, as Americans do, that they have had two years of college, and if these credits were recognised by other universities, they could be slotted again into the system. Transferable credits, although advocated for many years, have not caught on. Apart from at the Open University, it is all too rare for students to be admitted into the second or third year of a course on the basis of credits from other universities, HNCs or other FE qualifications that they have obtained earlier.
Our most selective universities should reserve some fraction of their places for those who have earned credits online or from another university, or come via some further education or part-time route. This would enhance fair access, and lead to a more diverse student body at Oxbridge and the rest of the Russell group.
More generally, universities will need to offer more options for students, ranging from part-time courses to intensive ones compressing a degree into two years. Online learning, in which the OU has a world lead, has a growing role. The so-called MOOCs may have been overhyped in the context of traditional undergraduate courses, but they will surely have a role in vocational courses for mature and motivated students. Other UK universities should support the OU by supplying content for such courses on its FutureLearn platform.
Finally, I wish to say a word about pre-18 education. We should keep pushing not only for technical education and apprenticeships, but also for a broader curriculum within the traditional sixth form. Tomlinson was, as we have heard, stymied by the last Labour Government for electoral reasons. Those with long enough memories will recall that the analogous Higginson proposals were killed off by Margaret Thatcher with the mantra about the gold standard of A-levels. The universities, by the way, deserve a lot of blame. They impede attempts to broaden the school curriculum by still favouring applicants who have had a narrow focus when selecting their competitive courses.
When the House of Lords Science and Technology Committee reported on STEM education, we deplored the fact that only 10% study any maths beyond the age of 16. We do not say that they should all do A-level maths, but an appropriate curriculum could be devised for them. There is clearly an urgent need for greater numeracy in almost all occupations and indeed for all citizens.
Of course there will be even more demand for lifelong learning. Books such as The Second Machine Age and Martin Wolf’s FT articles remind us of how the advance of machines and robotic techniques will replace workers in manufacturing. But the jobs most vulnerable to machines are not just blue-collar occupations. For instance, lawyers are vulnerable. It may prove far easier to automate much of their routine work, such as conveyancing, than the work of plumbers or skilled carpenters, teaching assistants and carers. They are the people whom we need keep training.
Be that as it may, the notoriously conservative education sector surely needs greater flexibility if it is to meet the changing pressures that society will place on it. That is why we should welcome this debate.
Lord McFall of Alcluith (Lab)
My Lords, I warmly welcome the debate initiated by my noble friend Lord Monks on the grounds of my being an early school leaver at 15 years of age, who started off in the vocational line, and also subsequently as a deputy head teacher responsible for what we damagingly refer to as “Christmas leavers”. These were young people who were in school but were not going to university, damaging their self-esteem in the process. Compared with their contemporaries in full-time higher education, these young people in the vocational scheme had a lack of structured support and pastoral care. Consequently, the challenges facing them were considerable. They faced these challenges largely alone. The best advice matching their skills and abilities was absent.
Such individuals—and the poorer ones in higher education—are still coming off worst in Scotland. A recent study by Edinburgh University’s Centre for Research in Education, Inclusion and Diversity concluded that only students from relatively high-income homes enjoy consistent, superior benefits from the Scottish education system. It has seen a transfer from low-income to high-income households. It adds that the Scottish system of higher education does not have the egalitarian, progressive effects that are commonly claimed for it.
It is important to debunk these notions. The bias against poorer individuals and those not in higher education is even more skewed. If there is an opportune time to reappraise this bias it is now. Youth unemployment in the country is greater than 17%; there are almost 900,000 young people still not in work.
The age of austerity is giving way to the age of secular stagnation. The characteristics of this are high unemployment, increasing poverty, wage stagnation and debt burdens. As we have seen this week with this Government, debt burdens do not decrease. The buzzword in the markets, the IMF, the World Bank and other global institutions is “investment”. We need an economic system that offers hope, not despair, and one that serves the interests of everyone.
We have cheated our children through lack of public investment and a failure to provide jobs. The policy for young people has failed. My noble friend Lord Monks referred to the document, Sense and Instability, produced by the City and Guilds. That looked at the record for the past 30 years. He quoted a number of points, not least the 61 Secretaries of State. The policy has been flipped between departments or shared with multiple departments 10 times since 1980.
Given this catalogue of failure, we can conclude only that a single youth policy agenda across government departments is necessary. Devolution to local level, where the needs fit the training, is very important, because of the huge gap in skills. That way we could encourage diverse, high-quality routes into work. Is it not time to commit to a youth guarantee to fill that skills gap—a guarantee that gives high-quality training placement or a paid job? My noble friend Lady Taylor said that such a youth guarantee should establish parity of esteem between vocational education and the academic route.
We must recognise that the UK economic has been damaged since the financial crisis in 2008. The Institute for Public Policy Research concluded recently that full economic recovery will not solve the youth unemployment problem. The link between youth unemployment and economic growth, between youth unemployment and GDP, is broken—not least in the striking mismatch between what people are training for and the types of job available.
Without radical change by the Government focusing exclusively on a coherent youth policy and a decentralisation of the responsibility for skills development to local level, where the needs of availability of young people with the required skills coalesce, and without the parity of esteem between vocational and academic education, we shall simply repeat the mistakes of the past. The next generation’s economic, social and life-enhancing prospects are too important to allow such an opportunity to change course. We cannot allow that to happen by default.
This debate has been timely and crucially relevant. I congratulate my noble friend Lord Monks for instigating it.
Lord Layard (Lab)
My Lords, this debate is about the low skills of the non-graduate workforce. For years, we thought that the answer to that was more full-time vocational education, so we introduced, first, the GNVQ, as has been said already, and then the diploma. Both of them failed because that is not the way to get skills to the people in a form that employers want. It was also not the form of training that the young people wanted—they wanted to earn at the same time as learning.
Eventually, by about 2009, the previous Government accepted that the main alternative to university education should be apprenticeships. That was an enormous step forward and it led to the apprenticeships Act. The most important thing in that Act was the guarantee offered that by 2015 every young person with minimum qualifications would be entitled to the offer of an apprenticeship. It was an extraordinarily important step because only a guarantee rather than a numerical target energises a system, and there are people for whom a solution has to be found.
Unfortunately, the coalition Government repealed that part of the Act. As has been said, they switched their main focus of expansion from youth apprenticeships to apprenticeships for those over 25, and we now have fewer youth apprenticeship starts than we did in 2009-10. However, there is a figure that I want to highlight. Among young people aged 18 today, only 8% are in work-based learning, 51% are in full-time education, and 41% are doing neither. That is a shocking fact which I hope will be addressed as a result of this debate. We need a completely new deal for that 41%, and I think that the right deal is to reintroduce by 2020 an apprenticeship guarantee. I will say a word or two about how it might be structured slightly differently from before and how it might be delivered.
As in Germany, the main type of apprenticeship has to be at level 3, as has been said already, but employers are going to accept on to such apprenticeships only those youngsters who already have a decent record of achievement. Therefore, we need a solution for the people who do not at that point have a decent record of achievement. We have to establish a new system of pre-apprenticeship courses in further education colleges which are explicitly aimed at getting somebody qualified for an apprenticeship. These courses, which exist only sporadically at the moment, would of course include work experience, but I think that if they were provided in a framework where young people knew that if they completed them properly they would be entitled to an apprenticeship, they would be overwhelmed with applicants.
Therefore, we need an apprenticeship guarantee with two parts. First, every young person under 21 should be entitled to take a pre-apprenticeship course and, secondly, everybody who successfully completes such a course should be entitled to the offer of a level 3 apprenticeship. Of course, others would also be entitled to the offer of a level 3 apprenticeship, such as those who had five good GCSEs, including maths and English, and those who have completed a level 2 apprenticeship or traineeship, as well as the new tech bacc, proposed by our party. I repeat that we need to think in terms of a guarantee with two parts: a pre-apprenticeship for anybody without qualifications to offer and a level 3 apprenticeship if they complete that successfully. Of course, the whole system of applications has to be integrated with the university application system through UCAS.
The second question is: how can we find places for all these people? Obviously it is in the collective interests of business to provide them, but pressure and exhortation has to be applied to individual employers, and that role has to fall on the National Apprenticeship Service, which was set up by the apprenticeships Act. The service’s record has not been perfect but it is the only national body with local outreach that could possibly be capable of doing the job. Of course, it will also need money to pay for the training subsidy that goes to the employer of each apprentice.
Fortunately, there is now a lot of money in apprenticeships, but it is going to the wrong people—to those over 25. Therefore, we have the scope, without huge extra expenditure, to redirect money to solve the problems of getting our young people off to the right start in life. Surely we ought to accept that our moral obligation is greatest to the people at the very beginning of their careers. Our obligation is especially to those 40% who are completely missing out at the moment. This is the time when we need to give them a new deal.
The Lord Bishop of Coventry
My Lords, I join others in thanking the noble Lord, Lord Monks, for leading this timely debate, in which I have learnt a lot. Perhaps I may speak rather anecdotally, and from where I come—Coventry. It is a city with two universities, both of which have an extraordinarily impressive history in relating to local businesses and developing qualifications, teaching and research that serve the world of work. The local economy of Coventry would have been in great difficulty in recent years without the excellent and genuinely multilayered provision from Coventry University and Warwick University, and I join the noble Lord, Lord Baker, in his congratulations and deep appreciation to the noble Lord, Lord Bhattacharyya, for his work in this area.
Nevertheless, senior businesspeople in the city repeatedly tell me that there is still a serious gap in skills and that their businesses are undernourished without the young people with the skills and capacities that are needed. At the same time—this reflects a reality that the noble Lord, Lord Monks, referred to at the beginning—my diocese, or my patch, has worryingly high numbers of young people not in education, training or employment. The reasons for that are complex but many of the young people I see who are not in work, education or training seem to be themselves undernourished, lacking the sorts of skills and capacities that will help them to find the employment that will raise their dignity and give them the possibility of a fulfilled future.
Perhaps I may share with the House some of my findings on my travels around Coventry and Warwickshire, including visits to schools, conversations with business leaders and interactions with further education colleges and universities. I have four observations.
First, the range of post-16 educational opportunities, even as they are now, need to be made known to young people and their parents at the earliest possible point. Primary education should begin to open up the range of possibilities available to young people so that multiple routes into post-16 education and employment— traineeships, apprenticeships and further education courses—can be appreciated. To repeat a point that has been made, these have equal nobility and value to the route that is more familiar to many of our teachers and certainly to us—that is, GCSEs, A-levels and university.
Secondly, I very much appreciated the passionate comments of the noble Lord, Lord Addington, about further education colleges. However, from my own experience in Coventry and Warwickshire, they seem to be unsung heroes of our education system. I have been deeply impressed by the young people I have met in local FE colleges and by the liberation that their transformative education is giving them. I have heard many stories and they have been very moving.
As I look around, further education colleges seem to be key partners with the wider business community, working with local employers to design curricula, playing a strategic part in their LEPs, integrating work experience into courses and providing—I have seen some evidence of this—the sort of traineeships that the noble Lord, Lord Layard, referred to. They also provide the educational framework and tuition for apprenticeships.
I think it is worth saying that, although the focus in our debate is on young people, FE colleges train a high proportion of adults, giving vital opportunities for reskilling. While essential in its own right, the presence of adults as role models adds value to the formation of young people. It raises the bar of maturity in colleges and helps to breed the personal and social capacities of confidence, self-motivation and respect that the world of work demands and responsible human living requires. FE colleges are multi-generational communities of learning at the heart of their local communities. Hubs of educational activity, they deserve to be acclaimed and supported as vital components in not only the growing of skills but also, in so doing, the development of confident human beings. The potential of FE colleges should be further exploited and the possibilities of relationships with other institutions developed.
My third observation follows closely and reinforces much of what has been said. Apprenticeships need greater support and much more systematic and strategic attention than they are being given even at the moment. As I observe, the larger companies—JLR has already been referred to—have impressive traineeships for young, unemployed people and apprenticeships at GCSE stage. However, I hear from local business leaders that they need more help to incentivise support and to reward them for taking on apprentices, particularly at times of instability in the economy and uncertainty in their own industries.
My fourth observation is simply to say that I have seen the way churches, other faith communities and charities can have a significant role, not least through mentoring young people. To give an example of interventional work, I was with the YMCA recently and a young woman told me that without the accommodation that the YMCA had provided for her she would not have been able to enter her training course with the sort of stability she needed.
Baroness Nye (Lab)
My Lords, I, too, thank my noble friend Lord Monks for instigating this most interesting debate. I remind the House that the previous Labour Government were committed to ensuring that by 2015 there would have been an apprenticeship for every suitably qualified 16 to 17 year-old. There were just 65,000 apprenticeships when Labour came into office but nearly a quarter of a million in 2010. I welcome the fact that the figures for the post-25 age range have gone up since but the statistics, as has been said, for those aged under 19 have fallen and the unemployment rate for 16 to 17 year-olds is far too high.
As my noble friends have said, this is why Labour’s commitments to match the number of school leavers becoming apprentices to the number going to university and for a gold standard vocational tech bacc qualification are so important. Half the UK’s largest companies do not offer apprenticeships, and there is a case for trying to see that every supplier that bids for public contracts over a certain amount is asked to provide apprenticeships and training opportunities. It would mean that companies with good practices would then be on a level playing field with those that did not invest in skills and training.
However, I would like to talk about a group of young people who desperately need attention—those, as the right reverend Prelate has just mentioned, who are not in education, employment or training. It is an issue that has had cross-party consensus, I think possibly due to the fact that it is so difficult. I declare an interest as a trustee of the Young Women’s Trust, which aims to improve the lifelong opportunities for young women by addressing the poverty, inequality and discrimination that many of them face and to give them a forum where their voices can be heard.
In April this year the YWT launched an inquiry focusing on young women who are NEET—I apologise for using the acronym but if I do not use it I will get into trouble with the time limit—because for more than a decade there have been more 18 to 24 year-old women in this bracket than young men. In fact, one in five 18 to 24 year-old women is NEET and that figure is worse in some parts of England. The cause is not motherhood, which is a common perception, because only 24% have children. These young women will be affected for life by this experience but the country is missing out too, as the cost to the Government is more than £1 billion per annum in lower wages, lost taxes and increased benefit bills.
One of the initial results of the inquiry, which is due to finish early next year, has highlighted that these young women feel they have been let down by the career support and advice they have been given. When there are five hair and beauty practitioners chasing a single job, but two jobs for every construction worker, it does not make sense for girls to be three times more likely to be told to become hairdressers when boys are six times more likely to be told to think about IT or plumbing.
One young woman from Birmingham whom the YWT inquiry met said:
“I come from a working class area where it is difficult for girls to get anything but waitressing jobs. Boys get jobs quicker—they can get jobs in building”.
It had never occurred to her that she could get an apprenticeship to work in the building trade herself so that she could get a better paid job too. We need to encourage diversity of aspiration regardless of gender so that all girls can fully contribute to the world they live in.
We should look again at what happened during the building of the Olympic park. The Olympic Delivery Authority started the Women in Construction project to help women access training and employment opportunities on the site, which meant that more than 1,000 women worked on constructing the park and village. It achieved that by adopting an evaluation scorecard which meant that contractors had to address equality and diversity issues if they wanted to win a contract.
I am sure the Minister will say that the number of women starting apprenticeships has doubled but I hope that she will agree with the Business, Innovation and Skills Committee, which said that,
“such inequality, especially in a publically-funded scheme, is not acceptable”.
The Government’s changes to the careers service are under attack from all areas, with even the CBI questioning their laissez-faire approach. Careers England says that eight out of 10 schools have dramatically cut the advice they provide. Currently too many young people—boys and girls—are dropping out of education and training. The consensus from Ofsted, the business community and the Education Select Committee is that the current careers advice and guidance provision is inadequate, lacks independence and is failing the young people that need it most.
Ofsted has also identified that too few schools work well enough with local authorities to target guidance for students at risk of becoming NEET. The new Secretary of State for Education—I think with her women’s inequality hat on—said recently in a speech to the Wealth Management Association that the Government were committed to providing better careers advice to young women at school, and I look forward to the Minister giving us more details about that this afternoon. Knowing the options is so important. Teachers are not always best placed to know about workplace opportunities. Young people need to talk to adults who have been through vocational routes, which is why so many of them say they find out through family and friends.
There are also limited opportunities for second chances for young women who are NEET. For example, 55% of young women who are NEET have not received any training or education since they left school, college or university. That is why Labour’s jobs guarantee will help all young people who have been unemployed for a year. Those aged 18 to 25 who have been out of work for 12 months or more would be offered 25 hours of work, preferably in the private sector, on the minimum wage, and the employer would have to guarantee compulsory training. This will go hand in hand with a new settlement for lifelong learning that does not discriminate between academic or vocational routes and, I hope, by gender.
Lord Liddle (Lab)
My Lords, I thank the noble Lord, Lord Monks, and congratulate him on introducing this debate. This is one of the central challenges facing British society, both economically and socially. Unless we can do something about vocational education we will face an increasing problem of NEETs, of which my noble friend Lady Nye has spoken. Opportunities for young people without qualifications are in secular decline. Unemployment rates for people without skills are rising and this is a huge social challenge. At the same time, we have the economic challenge of the huge skills shortages that we know exist in STEM subjects in technician-level jobs. That is a major barrier to us becoming a more successful industrial country. There is now a bit of an opportunity to reindustrialise ourselves.
There have been many expert speeches today, and I am not an expert in this field, but I have thought about it as someone involved in politics for a very long time. What has always struck me is how we have known about this major problem in our society—certainly for decades, though some would argue for over a century—yet no Government have managed to crack it, despite effort, lots of activity and lots of public money. Something about our politics explains this failure. It is partly a lack of ability to build consensus about how we do things—consensus that can last and survive a change of Government.
I remember that when we came to power in 1997 we had two very big promises on vocational education, both of which are worth reminding ourselves of because they show how Governments can fail as well as succeed. One was that we would establish a university of industry, which sounded wonderful—a kind of Open University for skills. The other promise was to establish an individual learning account which, again, sounded an absolutely wonderful idea where employers, individuals and the taxpayer could contribute to a pot of money with which people could decide for themselves how to improve their qualifications. Both of those great ideas bit the dust. Indeed, the ILA was a bit of a disaster and had to be withdrawn at very short notice.
A bit of my bedtime reading at the moment is the excellent book by Tony King and Ivor Crewe, The Blunders of our Governments. This is an area in which there have been blunders by Governments, with too many interventions from the top down by Ministers who try to change things. In future, we have to learn the lessons of that and try to think longer term on how we tackle these problems.
We should look to one of the great successes of Britain, which is our university system. Why are the universities successful? They are autonomous institutions, have a mixed economy of funding and have the ability to decide their own strategy. In vocational education we do not have that number of strong enough institutions and we must put the effort into remedying that systemic failure. What sorts of things would I look at? I would think about how we expand the excellent idea of university technical colleges. I do not think that they will really expand unless we empower our cities to do more in this area. Cities have a crucial role in deciding what skills are needed to be developed in their area.
Secondly, we have our colleges, as the right reverend Prelate said. At present, too many of them are chasing funding streams rather than thinking about how, as institutions, they play a role in the development of their local economy. I think that somehow we have to liberate the colleges. We need to give professional bodies, such as the engineering bodies, a much bigger role in deciding on technical qualifications which should become the ticket for the job. I believe that we need to correct the overflexibility of our labour market. I have come to the view that we will not make progress in this area unless we incentivise employer co-operation sector by sector, so that money for training is provided in return for controlled entry standards and decent pay for people who are doing apprenticeships. The Government have actively to try to bring employers together and perhaps recreate the kind of partnerships that used to exist in some areas with the industrial training boards. It is the institutions that need to be developed if we are to make this sector as successful as our universities have been.
Lord Sheikh (Con)
My Lords, I, too, would like to thank the noble Lord, Lord Monks, for tabling this debate and to commend him on his excellent speech. This is an important subject. It is essential that we discuss the alternatives for young people who do not attend university, and even more important that young people not attending university are themselves aware of these alternatives.
Our vocational qualifications system has grown too complicated, bureaucratic and hard to understand. I personally am a big supporter of apprenticeships and that is why I want to focus particularly on this subject today. I welcome the fact that this Government have overseen the biggest ever boost to apprenticeships. My party has also committed to delivering 3 million more apprenticeships over the next Parliament. The Government have made huge headway since they came to power in raising the status of apprenticeships so that young people leaving school view an apprenticeship and going to university as having equal merit. That is long overdue.
The role of government should be to provide people with the foundations that they need to better themselves. It should not favour one path over another but provide the equality of opportunity that means that people can go on to do what they want to do and do it well, knowing that as long as they work hard and do the right thing the Government are firmly on their side.
An important step in advancing the standing of apprenticeships has been the move to pay apprentices a national minimum wage. Apprentices are paid from the first day of their apprenticeship. For those for whom university is not suitable, I am sure that the prospect of earning while working and learning is a very inviting one. What is also important to recognise is that when securing an apprenticeship many young people get themselves a job for life. There is a vast number of examples of people who have started working for a company as an apprentice and worked their way up throughout their career. That gives a boost not only to young people, who know that their employer can offer them career progression, but to employers, who can only benefit from having people at the top of their companies who have first-hand experience of all areas of their business.
I am pleased to see that apprenticeships are becoming increasingly popular with 16 to 17 year-olds, with 15% more of them in apprenticeships compared to last year. Schools are legally required to secure independent careers guidance for 12 to 18 year-olds that includes information on the full range of education and training options, including apprenticeships. However, in 2013, Ofsted’s study of the early implementation of that duty found that apprenticeships were rarely promoted effectively, especially in schools with sixth forms. I fear that this may have more to do with finance than it does with education. The fact is that schools get in the region of £5,000 for each pupil that they keep on post 16, so they may not want to lose them. I encourage the Government to look into this and find out what is the best way around it, because without doing so there is concern that apprenticeships, skills and our young people will always be held back.
Apprenticeships are critical to tackling the skills gap that exists in Britain, which has held Britain back in its export and manufacturing capabilities. We need to expand our manufacturing base: manufacturing should be as important as my own business, that of financial services. We are still massively underperforming as a nation, with the UK ranked 23rd in the world for manufacturing output per head and 114th in the world for manufacturing output as a share of GDP. We must put employers in the driving seat to create new apprenticeship standards that will deliver the skills and businesses we need to compete. The Government must do all they can to make apprenticeships more responsive to employers’ needs and help to raise standards. I welcome the fact that measures are being brought forward which will give English apprenticeship funding directly to employers, following a recommendation from the independent Richard review.
Apprenticeships help not only young people; they help the country and the wider economy. The National Audit Office estimates that for every £1 invested by the Government in an apprenticeship, the economy gets between £18 and £28 back. Employers are getting involved in the design of apprenticeships to make sure that people gain the skills they need for a job. Apprenticeships provide young people with much needed experience that often leads to a full-time job, bringing real value to the businesses that take them on and motivating these individuals to gain skills and qualifications. High-quality, rigorous vocational education is essential to our future prosperity and to improving the life chances of millions of young people.
Baroness Turner of Camden (Lab)
My Lords, I too would like to thank my noble friend for introducing this debate. As every noble Lord has said, it is on a very important subject that is not often discussed this fully. It is a great pity that while many young people would like to go university, they often fail to get there. For poorer families, the cost is far too great. An article published recently in the Times alleged that a child would have to start saving from birth to have enough money to meet the costs of a university education. Of course, those in power over us—Prime Ministers, Chancellors and leading Ministers—have virtually all been to university, a point that is not lost on the young people who want to go. We are an advanced society so we really must arrange for people to have access to training in order to participate and to be able to obtain the sort of jobs they need. A number of speakers in the debate have indicated that there is a shortage of skilled people and we have to do something about that.
Many references have been made during the course of the debate to apprenticeship schemes. I am very glad that these have now been accorded a great deal of eminence and I hope that they will be improved upon. Of course, most of those who talked about them did not feel that they are as effective as they ought to be and that they should be developed. Improvements are being made through the introduction of technical colleges, but obviously a great deal more needs to be done in that direction. I am particularly concerned about the effect on women, a point that has also been made. Many years ago, when I was a member of the Equal Opportunities Commission, I remember that we introduced the WISE campaign, which stood for Women Into Science and Engineering. We had some success with it. We went to talk to schools and parents and we tried to persuade them that the study of engineering and of science generally was an appropriate way to ensure that girls would be trained. We now have women scientists and engineers, and that used not to be the case in the old days. That is the result of the successful campaigns we ran then, and there is no reason why we should not build upon what we achieved.
Many speakers have referred to the trade union movement, which has a long record of assisting people so far as education is concerned. Certainly a number of my parliamentary colleagues owe the fact that they have had a good education to their having won trade union scholarships, in many cases to Ruskin College. But it is not only a question of awarding scholarships; the unions have also been assisting in providing training in other ways. The TUC’s Unionlearn team has already found some success in providing training for those who missed out earlier in life. Many employers respect what the unions have done in this regard and have been willing to assist in ensuring that union members receive proper training. That is an important issue so far as trade union membership is concerned. My own union, Unite, has been deeply involved in pushing for better arrangements for people to be trained in the more advanced industries, in which there is alleged to be a shortage of suitable employees.
I hope that, as a result of our debates today and some of the recommendations that have been made by noble Lords, we are making some progress in a difficult area. We need to involve ourselves in helping young people, who need our help and assistance if they are to participate in training. Our two debates interlock: the first spent a lot of time, quite legitimately, on the whole issue of housing and housing poverty. We have young people who do not have proper housing and live in very crowded circumstances. It is not easy for them to study and to try to get into training schemes. That is all part of the problem that we have been discussing today.
I hope that the Government take seriously some of the suggestions that have been made. We need a framework in which young people can be assisted and trained for the future. It matters to all of us, not only to the young people themselves—it is important to the rest of society. I thank my noble friend for introducing the debate and I hope that the suggestions that have been made by a number of people are seriously considered by the Government.
Lord Jones of Cheltenham (LD)
My Lords, I, too, congratulate the noble Lord, Lord Monks—I was going to say my noble friend; he is a friend, really—on securing this debate. It dovetails nicely into the one that we had earlier.
I look forward to the day when a completed apprenticeship is regarded as being just as valuable as a completed degree course. The two need the same status so that individuals feel equally valued by society. I particularly want to talk about the opportunities for apprenticeships in construction available to those who decide not to attend university.
When having work done recently on my house, I wanted a properly trained architect, bricklayer, plasterer, carpenter and electrician to make sure that the job was done properly. These skills are becoming more difficult to find. The latest figures, which show rising employment and falling benefit claims in the UK, have shed light on a skills timebomb. Official data showed that the number of bricklayers claiming jobseeker’s allowance dropped to 1,775 in August from a peak of 15,425 in March 2009. It also showed construction wages up by an annual 4% in July. That makes construction at the artisan level one of the strongest performing sectors for pay growth, while in the wider economy wages are failing to match inflation.
The numbers reflect the rise in work for an industry that shed many skilled workers during the recession. When projects were cancelled and new work dried up, many either left or chose not to join the industry. The sector lost almost 400,000 people. Another 400,000 are due to retire over the next five years, according to the Construction Industry Training Board. Now, as builders take on new work, the shortage of skilled tradespeople has allowed bricklayers and other subcontractors to ramp up their hourly rates. We are returning to the age of the “Loadsamoney” plumbers, plasterers and painters that plagued the Thatcher era and are symptomatic of a cost-push inflationary spiral affecting housebuilding costs. A number of government-funded apprenticeship schemes are in place, but they need to attract many more young people to construction if we are to solve the appalling housing shortage.
Some time ago I tabled a Written Question about the shortage of skills in the construction industry. The noble Viscount, Lord Younger of Leckie, replied:
“There has been no specific assessment of the availability of skilled personnel for the home building sector.”
That was a surprise. He went on:
“The Construction Industry Training Board’s latest Construction Skills Network Report forecasts an annual recruitment requirement for the construction sector, including home building, of 36,400 a year for the 2013-2018 period.”
We are nowhere near that. He added:
“Under the auspices of the Construction Leadership Council, the house building industry is developing an action plan to address two immediate priorities: improving the image of house building and attracting back experienced workers who left during the recession, and other workers with relevant skills.”—[Official Report, 11/6/14; col. WA 253.]
To attract young people to construction, we need fewer screaming headlines in our media predicting a construction slump, which happened after the August figures for construction were released. We are now in late October, and the August figures are ancient history. Let us face it: there is no news value in the fact that construction can go up as well as down in its output, so it will be ignored by most people working at the sharp end. Construction has been on a meteoric trajectory over the past 18 months. With all parties now writing their manifestos for the next election, it is clear that building more homes will be a common theme. The view from the ground is that construction will be a good place to be for many years to come. If we want to attract young men and women into construction, they will not be assisted by foolish national headlines based on limited data that imply that construction is still a rollercoaster industry. I am not sure that we can do much about the reporting of the Office for National Statistics figures, but the Government have a role in ensuring that the construction sector has a stable future with a sufficient number of properly trained personnel to build our future.
I heard about a young woman who decided not to go to university. Her teachers and parents were horrified and tried to change her mind, but she wanted to be an electrician and was very determined. She took an apprenticeship and was successful. Now, four years later, she is earning more than her older brother who went to university. Unlike him, she has no student debt; nor does she have a drink habit. More importantly, she is happy, and her parents are not horrified any more.
Lord Macdonald of Tradeston (Lab)
My Lords, I, too, thank my noble friend Lord Monks for securing this excellent debate. The growing support for vocational training and apprenticeships is encouraging. As a time-served engineering apprentice, I hope that it restores some of the esteem that vocational training once had.
Labour Party policy on vocational education and training draws on the work of our skills task force, led by Professor Chris Husbands. Labour’s commitment will also be reinforced by the recent report of my noble friend Lord Adonis, Mending the Fractured Economy, in which he advocates a major expansion of high-quality vocational education and apprenticeships promoted locally to address skills shortages. In addition, Ed Miliband appointed Maggie Philbin, the former presenter of “Tomorrow’s World” to chair another task force on digital skills. Her recent report, Digital Skills for Tomorrow’s World, makes many practical and affordable recommendations, starting with schools, where digital training must begin if those who later choose a vocational route are to succeed.
To put that in context, the digital revolution is gathering pace and that will have a profound effect on the alternatives available to young school leavers. The McKinsey Global Institute recently listed what it described as Disruptive Technologies: Advances that will Transform Life, Business and the Global Economy. The first was the mobile internet. The second was the automation of knowledge work. The third was the growing network of sensors embedded in our lifestyles—the internet of things. At number four was that other arcane advance, cloud technology. Fifthly, there was the more familiar threat to jobs: advanced robotics. Those are the five horsemen of the digital apocalypse, as sketched by the consultants of McKinsey.
The risk to jobs is also highlighted by Oxford University academics Carl Frey and Michael Osborne, who conclude that jobs are at risk of being automated in almost half of all occupational categories over the next two decades, including repetitive functions in management and professions largely untouched until now, such as law, accounting, medicine and academia.
It is not easy to give career advice on how young people might shelter from this gathering storm. When the Economist listed the jobs most likely to survive computerisation, in its inimitable way it led with recreational therapy, then dentists, then personal trainers and then—the right reverend Prelate will be glad to hear—members of the clergy. The serious point is that almost all alternatives for young people not going to university will also be digitised; therefore, the factor that might be of most help to most young people will be to improve their digital skills.
The trend in the jobs market points towards self-employment and the forced flexibility of contract work. An insecure portfolio future of short projects, collaboration, marketing and pitching for work will require good social skills and familiarity with all aspects of social media online. A positive hope is that the popularity of social media among young people, with all its risks and allure, will help close the gender gap, with more young women keen to learn digital skills. As we heard from the noble Lord, Lord Addington, technology and online access may also be a new way into work for people with disabilities and could encourage ethnic groups into wider roles across the economy.
I confine myself to recommendations from our Labour reviews on education and the need to start with smaller steps on the first rungs of the ladder. A promising start has been made in English primary schools with a new computing curriculum. The view of Labour and our commissioned digital skills report is that we should now ensure that each school has the funding to support the ambition. Similarly, teachers must be trained in computing as a matter of urgency through properly resourced continuous professional development. Each school could be encouraged to recruit a governor with expertise in computing and they could network best practice across their local schools. Business and professional bodies should collaborate to create a national online service dedicated to digital career advice. The pressing importance of digital skills must be acted on now at all levels of education. Additionally, schools could have a key role in hosting community access to digital infrastructure and expertise. Beyond the school gates, as the right reverend Prelate the Bishop of Coventry said, further education institutions could play a key role if they are able to adapt quickly to the new priorities.
In conclusion, I do not think that this Government or previous Labour Governments have done too badly compared to global competitors across the developing digital economy. The digital revolution is now global and constantly changing, so a degree of confusion and false starts is inevitable. However, a priority for government in this area must be to reduce the bewildering number of overlapping organisations and initiatives—that blizzard of acronyms referred to by my noble friend Lord Monks. The Government should rationalise, cut duplicated costs and ensure that young people exploring their career options can navigate the digital world with skill and confidence. Can the Minister tell the House what progress they have made in cutting through the clutter?
Baroness Prosser (Lab)
My Lords, I too wish to add my thanks to my noble friend Lord Monks for putting this debate on the agenda today. Yesterday, quite opportunely, a gas engineer came to my house bringing with him a young apprentice whom I managed to quiz about his training experience. I asked him what role his school played in guiding him into his current position: it turned out to be zero. An annual visit from the careers service to address the school assembly seemed to be the sum total of it. He decided himself to apply for an apprenticeship with British Gas and registered on its website. His period of learning lasts for three years, with some time with a qualified engineer and with some college-based work; and then he is on his own, but with a buddy system in operation for help and guidance.
I have deduced three things from this. First, it demonstrates a yawning gap between the education service and the world of work. A lack of understanding, knowledge, interest, concern—call it what you will—there is far too much evidence that schools cannot and largely do not handle this work. Given this situation, which we have known about for some time, can the Minister explain why it was decided to devolve delivery of the careers service to individual schools and what plans the Government have to improve matters?
Secondly, I concluded that this was a good training model—partly on the job, partly college-based learning, and with access, as time went on, to the buddy system. Thirdly, and very importantly, I concluded that this young man had shown initiative. He wanted to be a gas engineer and had sought out the website to find out how to go about it and make himself available. Nothing comes for nothing in this life and putting one’s best foot forward is an essential ingredient of progress.
Earlier this year, a piece of work was done jointly by the Industry and Parliament Trust—I declare an interest as deputy chair of its trustee board—and the UK Commission for Employment and Skills, which identified many good examples of traineeships and apprenticeships that are equipping people to gain qualifications and experience in a variety of fields. We met the trainees from British Sugar, who are studying for a level 3 diploma in process engineering. We also met trainees working with Whitbread’s Premier Inns. Hospitality is, of course, a large and growing part of our economy and the company has pledged to provide 50% of its training opportunities to 16 to 24 year-old NEETs. We also met with the car builders Nissan, QinetiQ, the providers of high-tech services, Rolls-Royce, M&S, HSBC, Nestlé and others.
One theme which came through loud and clear was the shortage of school leavers who have studied the STEM subjects. Can the Minister advise the House of any actions taken—or intended to be taken—to address this issue, which, it has to be said, has been with us for a long time? In her reply, I hope that the Minister will also address the need to encourage more girls and young women to study the STEM subjects. I hope that she may be able to tell us that there is a plan in action to achieve this.
In his opening remarks, my noble friend Lord Monks mentioned the City & Guilds report Sense & Instability, in which it expressed regret at the constant churn and change, over a long period, of government policies, priorities and practices. It calls for better long-term planning for skills policy, which would be linked to long-term economic needs, greater coherence between central and local government, greater scrutiny and better checks and balances. Currently, skills and learning are divided between two government departments, making a difficult situation even more difficult. If we are to be fit and able to compete properly on the world stage then we need to up our game and ensure that every young person receives proper advice and guidance, enabling them to contribute in the most suitable way possible.
The industrialists of the 19th century, who made vast sums of money from the manufacture of textiles, armaments and shipbuilding, et cetera, did not encourage their sons to continue in trade—there were no daughters involved here, of course—but sent them off to the professions to be doctors and lawyers, and so on. That industrial snobbery remains with us today and it is up to us all to do what we can to chase it away. It is long past its sell-by date.
Lord Young of Norwood Green (Lab)
My Lords, I, too, congratulate my noble friend Lord Monks on what has been an absolutely fascinating debate. I do not envy the Minister having to try to sum up and respond to all the suggestions she has received.
I want to make a few points. If there is one thing that we all share—there are some common objectives—it is that we all want to enhance the quality of apprenticeships as well as increase their numbers. It is sometimes difficult to achieve the quality as well as the quantity. I acknowledge this Government’s commitment to apprenticeships but they are building on the achievements of the previous Labour Government, who, as my noble friend Lady Nye reminded us, rescued a dying apprenticeship scheme. There were just 65,000 apprenticeships, with a 27% completion rate; as my noble friend reminded us, when we left office there were nearly 280,000, with a 72% completion rate.
We did something else that tends to be forgotten: we said that careers advice in schools should span the whole range of careers and we built that into an education Act. As we constantly hear, that is honoured more in the breach than in the commission. We also raised the participation age—not the school leaving age, as people constantly say, but the participation age. We tried to ensure that every young person was either in work, education or training, and if they were in work, that they were receiving some training.
We did not get everything right. I do not go as far as the noble Lord, Lord Baker, who said that we should not have gone for the target of sending 50% of young people to university. We did not get it all right, but we did raise the aspirations of a lot of young people who would not even have thought about going to university. It worked for some and not for others, but it was not the wrong thing to do. I accept that it had the unintended consequence that my noble friend Lady Morris identified. Towards the end we started to rescue the situation when we recognised the importance of apprenticeship and commissioned the Leitch report on skills. This is not an easy thing to get right.
I thank my noble friend Lord Monks for his history lesson on qualifications. It is absolutely baffling and we need to try to rationalise it. My noble friend Lord Macdonald and I are the only ex-apprentices in the Chamber at the moment. There may be others but they have not revealed it. It gives you an advantage in that we went through the scheme and it provided us with great careers in the end.
There is one thing that I criticise the Government for in relation to apprenticeships and that is that they made a fetish of the numbers when, as the noble Lord, Lord Baker, said, we ought to have a narrower focus. I would not be quite so narrow as to say focus on 16 to 18 year-olds, although I regard those as vital. Even if we go as far as 24, if we look at the increase in 25-plus since 2009-10, for under-19s we have seen a minus 4% change in apprenticeships, while for 25-plus we have seen a 352% increase in apprenticeships. It does not matter what figures you look at—I am looking at figures provided by government sources. If you look at the number of starts in apprenticeships in the 2013 academic year, there were 117,800 at under-19, 156,900 in the 19 to 24 age range and 157,000 by those aged 25 and over. Of course, there is a role for reskilling, but whether these should be badged apprenticeships is a question that the Richard review commented on. When we get these huge figures reported by the Government it is, unfortunately, misleading.
The other problem that the Government had to resolve was the emergence of the six-month apprenticeship. The Government have come some way, not enough, in saying that for an apprenticeship to be an apprenticeship, it has to be at least a year. We do not think that that is enough; we think that it should be two years. Worse still, we had employers who were not even paying the minimum wage: that is another problem. If we are talking about enhancing the status of apprenticeships we have got to make sure that we are serious about that so that boys and girls, and their parents, can feel confident about the quality of the career they are going to embark on.
As part of the House of Lords outreach programme I was at a secondary school near me and at the end of the question and answer session I asked how many of them were going to university. All the hands shot up. This is a very diverse but not particularly affluent area. I said that I was glad to see they were not deterred by fees, and then I asked about the alternatives. After about a minute or so, one young girl mentioned apprenticeships, although she did not really know much about them. I said that it was a bit unfortunate that the school was not giving those young people the full range of career options. We know that some of them will regret that university choice, because it will not be for them, and it will cost them a significant amount of money. So if we are talking about getting the status of apprenticeships enhanced, we have to do something about this conflict of interests that seems to infect most schools in the country. They are rewarded if they keep pupils on in the sixth form, and that seems to be their goal. Therefore, advice about alternative career options is just not good enough.
I am glad that the noble Lord, Lord Baker, paid tribute to the late Lord Dearing as regards establishing university technical colleges, which do their bit to enhance vocational qualifications. That is still going to be a challenge for us. So many people have given us such interesting information as we have gone through this debate. My noble friend Lord Bhattacharyya has shown what can be done. But if we are serious about ensuring that there is a viable alternative, we should not pose this as an either/or choice for young people, because it is not a matter of either taking up a vocational choice or going to university. As we know, one can lead to the other, so we should not present it in that way. We want young people to realise that they are both valid and important career choices, and we want to get them both having the same amount of esteem, if they go down that route.
I could not help smiling when my noble friend Lady Nye talked about telling young women that there are alternatives to hair and beauty. I agree, but as a man you have to be careful how you say that. I do not want to demean hair and beauty—and there is an apprenticeship scheme for that choice. There is a danger of an apprenticeship snobbery developing, whereby people think that it is only a real apprenticeship if it is in engineering. There is a whole range of good-quality apprenticeships. That is what we have to ensure.
If we gain power after the next election, we have said that we want to safeguard the trusted and historic apprenticeship brand, which we think has become a bit tarnished under this Government. We have announced that under Labour we would ensure that all apprenticeships are quality apprenticeships, are at level 3 and last a minimum of two years.
I end with a question for the Minister. Why do this Government continue to resist the point that significant public sector procurement contracts should carry with them the requirement of training and apprenticeships? We did it in the Olympics and it was successful, and we did it with Crossrail; something approaching 400 apprenticeships were achieved from that—and not only that, but practically everyone in the supply chain awarded apprenticeships. I am absolutely puzzled about this matter. If the Government have a serious commitment to enhancing the number of apprenticeships, they should ensure that procurement contracts require that guarantee.
Baroness Williams of Trafford (Con)
My Lords, this debate is an incredibly important one, certainly given the progress made in this area by this Government over the last four years, and I thank the noble Lord, Lord Monks, for raising it, as well as all of your Lordships who have contributed with a wide breadth of experience. It is also interesting to hear about the various backgrounds that people speak from. Given that it has not been mentioned today, I thought that I should declare that I availed myself of a polytechnic education—I will just put in a plug for that.
I shall try, in the course of my responses, to address as many of noble Lords’ points as possible, although I have a raft of papers here with notes on. If I do not address everything, I promise to write to noble Lords whom I have neglected to respond to.
Just how much education and training can do to improve the prospects of young people and, indeed, the well-being of our society as a whole, is something that those of us on this side of the House are always eager to discuss. It is worth noting—and I also get these figures from government sources—that there are 91,000 fewer people not in employment, education or training at age 16 to 18 than there were in 2009, so this is at its lowest recorded level. Across the age group of 16 to 24, there is a significant improvement in those young people in employment, education and training, showing just how much progress is being made in this area.
Recognising the importance of education and training was one of the founding principles of the coalition Government. Since 2010, it has been one of the cornerstones of our programme for government. This is a principle based neither on accident of birth or parentage, nor on some whim of the state about who should and who should not get a chance in life, but on how individual effort and achievement must be encouraged and recognised. I sense that this is a point on which the noble Lord, Lords Monks, and I are likely to agree.
More than 50 years ago, the late Lord Robbins enunciated the great and good principle that higher education should go to those with the wish and ability to benefit from it. Of course, the noble Lord, Lord Layard, was closely involved in that work and is entitled to some of the credit for a principle by which successive Governments stood until after the turn of the century. This was also an era of targets and clutter—as the noble Lord, Lord Macdonald, called it—in the public sector. I point to one of those targets today—and many noble Lords have actually spoken about this. The target of 50% of young people going into higher education was a target that was never reached, as my noble friend Lord Baker pointed out. Even after the benefits that the successful introduction of tuition fees have brought to our universities and the highest-ever numbers of 18 year-olds applying, the latest provisional figures for 2012-13 show that still only 43% per cent of 17 to 30 year-olds are going to university, which is roughly the same proportion as under the previous Government.
The noble Lord, Lord Monks, and other noble Lords asked us today the highly pertinent question of what happens to all the others. At the time, this was a rather forgotten issue, although it would be unfair if I failed to acknowledge those enlightened individuals—and I speak now particularly of the noble Lord, Lord Adonis, who is not in the Chamber today—who pressed for the creation of more vocational opportunities for those young people who do not go to university, alongside more places for higher study.
The economic crisis and the UK’s declining position in world skills indices made such calls even harder to ignore. Therefore, when they came to power, the present Government did not advocate further deepening the ancient division between our two societies of educational haves and have-nots, but instead pledged that there would be a place in work or high-quality training for every young person who does not go to university.
Despite all the pressures on public spending in recent years—and this has again been alluded to today—we have gone far towards delivering on that pledge. Notably, we have increased to their highest-ever level the number of people participating in an apprenticeship, set shortly to reach 2 million. We introduced a completely new programme of traineeships for those 16 to 24 year-olds who need to further develop the skills and experience needed to compete for an apprenticeship or other job. We introduced a new and better approach to vocational training in schools in the form of technical awards for 14 to 16 year-olds and tech levels for 16 to19 year-olds.
What we have today is not a forgotten 50% but a whole generation at last given cause to hope for the future, to look forward with confidence to succeed in the world and in life, just as apprenticeships have for literally centuries offered the skills that this will require. Of course, they continue to do so and with over 1.9 million delivered since the beginning of this Parliament, and nearly 850,000 people currently participating in an apprenticeship, we are well on course to meet the ambition of 2 million places by the end of the year, to which the Prime Minister has committed us.
Part of the reason for this is the Government’s willingness to invest even in difficult times. I say to the noble Lord, Lord Bhattacharyya, that this year’s Budget made available £170 million in additional funding over 2014 to 2016 to extend the apprenticeship grant for employers. This will fund more than 100,000 additional incentive payments for employers to take on young apprentices aged 16 to 24, providing a major boost to their job prospects. I confirm the point made by the noble Lord, Lord Sheikh, about the minimum wage being paid, although I take on board the issue raised in that regard by the noble Lord, Lord Young. I hope that he will write to me giving further details on the possibility that this may not be the case, and I will be very happy to reply to him.
From January 2015, the scheme will focus on companies with fewer than 50 employees as opposed to fewer than 1,000 employees, as is currently the case. Employers can receive £1,500 per apprentice for up to 10 new 16 to 24 year-old apprentices. This is already proving a powerful incentive, with 95,200 apprenticeship starts made using the grant since February 2012.
The Budget also made available £20 million in funding over the same period for new support for employer investment in apprenticeships that include an element of higher education up to postgraduate level, which will provide apprentices with the high-level technical skills that employers increasingly need, and to which many noble Lords alluded. This applies also to new starts for apprenticeships from the 2014-15 financial year. This will complement the £40 million funding over 2014 to 2016 for 20,000 more higher apprenticeships announced in the last Autumn Statement, more than doubling previous volumes.
However, an equally large reason for success lies in our willingness to engage with employers co-operatively and constructively. Many noble Lords have spoken of employers needing to engage, co-operate and take the driving seat in delivering future skills, but quality has to be the key here also. Quality is whatever commands the confidence of a potential employer in an individual’s ability to do the job. It makes sense, therefore, for employers themselves to be given the buying power needed to determine the skills content of an apprenticeship, from the traditional manual trades to the newer areas in which we find apprenticeships—areas such as IT and law. This is precisely what the funding changes we have introduced over the last couple of years are designed to do.
Without employers, meaningful vocational training just cannot happen. Learning on the job presupposes that there is a job on which to learn. There is absolutely no point in just telling employers to get on with it. A large number have already recognised the value of apprenticeships in meeting their businesses’ present and future skills needs. I am very pleased that the armed services, in which the noble Lord, Lord Monks, among other noble Lords, served his apprenticeship, remain a shining example of this.
That is a nettle no previous Administration have dared to grasp. But with about 1 million young people not in education, employment or training, we saw no realistic alternative. That is why the substantial extra investment in their prospects that I have mentioned, coupled with measures to increase their employers’ confidence in the programme, have been absolutely necessary. With that, too, young people themselves can be reassured that the qualifications for which they study have already been validated by those who will eventually judge what they are worth. How different from the days not long ago, before Professor Wolf’s timely review, when literally thousands of often meaningless qualifications and a plethora of competing acronyms, to which noble Lords referred, vied for the attention of students and employers alike.
Following my introduction, I should like to try to address every single point that noble Lords have made. I will start with the noble Lord, Lord Monks, who talked about us comparing badly to other countries in certain sectors and said that some apprenticeships were very much skewed towards the service sector. The national colleges and UTCs are responding to sectoral demand for the hard, STEM subjects. He also talked about the change in qualifications being confusing. The change is simple to understand: to give them a chance in life, students need to have maths and English GCSE by the age of 19. It is also simple to understand that young people can choose between doing a work-based training programme or a vocational, technical or university qualification.
The noble Lord, Lord Monks, talked about the Richard review and about employers being given more autonomy in terms of money going straight to them. He also talked about the types of skills they will require. The trailblazer scheme, the UTCs and the national colleges have all gone some distance to address this. He also spoke about skill shortages. The UTCs, the trailblazers, the tech levels and tech awards should also start to address some of these problems. He also made a point about Germany making apprenticeships more glamorous. In this country, demand for apprenticeships is so high that we are not having to glamorise them. Germany suffers from the different problem of demographic change, which means it has fewer people to fill jobs, and it will have to address this in the future. By the same token, I have experience of companies in this country which have had to import skills from Germany. We must get better at providing the skills to meet the demands of employers.
My noble friend Lord Baker touched on the issue of the huge shortage in engineering. To hear his words has been music to my ears because for the last 10 to 15 years in local government it has been woeful. At the last count, there were 48,000 engineering vacancies for 24 people available to do them. He also talked about skills and put out the slightly controversial case for no exams at 16. I am not sure that I agree with him on that as I would not like to shock a young person into their first exam at 18 or 19. However, I thank him for his long-standing commitment to and hard work in improving technical education for 14 to 18 year-olds. Our investment in UTCs so far has led to 56 either open or preparing to open, providing 35,000 students a year with a high-quality technical education, driven by employers. I make the point again about employers being in the driving seat.
In terms of supporting 14 to 16 year-olds to develop practical and technical skills and knowledge alongside their GCSE study, the key stage 4 qualifications known as technical awards, which I have already spoken about, will be taught from September 2015. These will encourage an interest in technical subjects such as engineering and technology and others will develop practical skills such as woodwork or dressmaking. My noble friend Lord Baker made the point that apprenticeships should be for young people. The funding system prioritises apprentices up to 19 years old but we need more employers to offer young people a chance to show what they can do, assuming the best of them not the worst. This may be a bit of a gap in the system but the links between businesses, schools and colleges are absolutely key for the future.
My noble friend Lord Addington talked about apprenticeships requiring an English qualification, which is a specific challenge for those with dyslexia. Apprenticeships give young people the opportunity to develop a range of skills, and experts such as Professor Wolf have stressed how a good level of English and maths is essential to support career progression. As the noble Lord, Lord Monks, pointed out, other apprenticeship schemes considered to be world leaders include maths and language skills because they are so important. However, my noble friend is absolutely correct to say that we need to ensure that reasonable adjustments are available. The current skills funding rules include a statement making this absolutely clear, and we continue to seek other ways in which to promote adjustments to support learners. My noble friend also talked about support for dyslexia and the JISC. It is not being wound up; it is in a strong financial position and has secure funding for the short term at the very least. It is, however, restructuring and some regional centres may close. He also made the point about employers being more engaged and willing to play their part in assisting apprentices with dyslexia.
The noble Lord, Lord Bhattacharyya, talked about money shortages for employers. I have already gone some way in talking about that, but for every pound that an employer spends the Government will spend £2, up to a cap. He also said that the Government should fund courses that employers value. I wholeheartedly agree and that is why we are reforming apprenticeships to put employers again in the driving seat of design and delivery. This is why we have introduced the tech levels that I have spoken about for 16 to 19 year-olds, and all tech levels are backed by at least five employers or a relevant industry body. That is important in terms of giving confidence in the workplace and providing parity of esteem, which so many noble Lords talked about. Examples of the firms that are backing the tech levels include John Deare, Lovell, Proctor & Gamble and the Royal College of Veterinary Surgeons.
The noble Baroness, Lady Taylor of Bolton, talked about the cultural problem for women of apprenticeships, which seem to be skewed towards boys or men. I have looked at some of the figures and there is actually a challenge there in terms of engaging girls better. She also talked about some sort of technical baccalaureate. It was, in fact, introduced in September of this year. It is an alternative to A-level; I am not sure whether it is on the same basis as the Labour Party is suggesting but, for noble Lords’ information, the performance tables will be produced in 2016.
The noble Lord, Lord Rees, said that not everyone should have to go to university. That is the way in which this country needs to culturally change. Not everyone has to go to university. I went to a polytechnic and it is no shame to do an apprenticeship. In fact, some of the most successful people I know have done apprenticeships.
I am aware that time has run out and I am barely half way through answering noble Lords’ points. If I can, I will write to them in due course because I am aware that there are about 10 noble Lords left to respond to. I thank all noble Lords who have taken part in this debate.
Lord Monks
I thank the Minister for her conscientious reply. Those who await her follow-up points in a letter do so with bated breath. I thank my noble friend Lord Young for his remarks. I am not sure that he got apprenticeship to be sexy, but he keeps trying and is always very interesting on this subject.
I thank everybody who contributed to this important debate. We must raise the attention, interest and dynamism behind the area of vocational education and training for these young people, and I hope that this is the first point in a lot of attention that this House gives to the subject.
Malawi
(10 years ago)
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Lord McConnell of Glenscorrodale
To ask Her Majesty’s Government what action they are taking to support economic and social development in Malawi.
Lord McConnell of Glenscorrodale (Lab)
My Lords, Malawi is a nation of about 15 million people. It is a peaceful, democratic nation and a proud member of the Commonwealth. It is a landlocked country, but Lake Malawi is one of the most stunning lakes, and the ninth largest, in the world, with more species than any other. On 6 July this year, Malawi celebrated the 50th anniversary of its independence, on 6 July 1964. I thank those responsible for my opportunity to secure this Question for Short Debate. I am also delighted that observing the debate this evening are His Excellency the High Commissioner Bernard Sande and colleagues, who have joined us for our deliberations.
Since 1964, Malawi has seen many ups and downs. In 1994 it celebrated the introduction of multiparty democracy and in that time it has seen development in many ways. Malawians are a proud and good people, and good friends to the UK, and to Scotland and Scots in particular. Scotland’s relationship with Malawi goes back 150 years to the time of Dr David Livingstone, that pioneer who was described by Kenneth Kaunda as Africa’s first freedom fighter. Livingstone’s successors, such as Dr Robert Laws, who ran the Livingstonia Mission for decades, and Mamie Martin, who pioneered girls’ education in that part of Africa, were all committed to helping Africans develop Africa themselves. This was not the traditional colonial relationship but one that was much more about mutual respect.
In the 1950s it was the Scots who stood strongest with the Malawians, first to oppose their movement into the Central African Federation, which was a disastrous step by the then British Government that pulled together southern and northern Rhodesia with Nyasaland, as Malawi was then called. Secondly, the Scots supported the Malawians during the state of emergency that followed; in 1959 this included the General Assembly of the Church of Scotland leading the international voice that said that it was time for a daring and creative transfer of power to the people of Malawi. The transfer happened just five years later.
In the first independence Cabinet in 1964, a Scottish lawyer, Colin Cameron, one of the few non-Africans to serve in a Cabinet in post-independence Africa, served as Minister for Works and Transport. Forty years later, in 2004, he was to become one of the inspirations behind the Scotland Malawi Partnership, when Strathclyde University, which had been home to Dr Livingstone almost two centuries before, established with the two Lord Provosts of Glasgow and Edinburgh the partnership. This was reinforced and strengthened in November 2005 by a co-operation agreement between myself as First Minister of Scotland and the then President Bingu wa Mutharika.
The co-operation agreement was based, as all the work over those 150 years had been, on mutual respect, development and working together. Today, the Scotland Malawi Partnership has hundreds of members. It is a non-governmental organisation that has in its membership all of Scotland’s universities, half of Scotland’s local authorities and hundreds of schools. There are health projects and active health partnerships operating in everything from epilepsy to midwifery and from prosthetics to rural GP advice.
A recent survey showed that 94,000 Scots and almost 200,000 Malawians are now actively engaged in these links, and that 200,000 Scots and more than 1 million Malawians benefit from this activity, which contributes mostly in kind about £40 million to Malawian development every year. It also showed that there is widespread support: that 46% of Scots personally know somebody who is involved in people-to-people links with Malawi, and that 74% of Scots have been in favour of those links overall. It is a unique and special model. My first question to the Government is: will they encourage others around the world to look at similar opportunities to link either parts of nation states or small nation states with smaller areas in the developing world in a way that develops mutual respect and mutual benefit but, ultimately, development as well?
The second matter that I wish to address damages that respect and good will, and it is the issue of UK visas. The good will and respect that have been developed are regularly threatened by the shambles surrounding the UK visa system for those in Malawi and other poor countries trying to get to this country. The system is dysfunctional, it is certainly disproportionate and it is, in my view, deeply damaging. From the 15-page application form that people have to fill in to the posting of passports to countries far away, which then have to be returned on time but regularly are not, to the proof of wealth that is required as evidence to secure a visa to come to this country, to the cashless system that encourages sharks to charge a fee to use their credit cards, as people pay them cash—all these measures have led to a whole series of people month after month being denied the opportunity to come to this country from poor communities in Malawi, and indeed elsewhere, in order to contribute to debates and discussions here, even when their host is a highly reputable UK or Scottish organisation or even a government body.
This is an issue that the Government need to take more seriously than they have done in the past. What steps will they take to clear up this chaos and improve the system in the short term? In the longer term, will they initiate a proper investigation to see how the system can be made more likely to contribute to the good relations between this great friend of Scotland and the UK, rather than damaging the relations that are being developed today?
As the 50th anniversary celebrations got under way this year, Professor Peter Mutharika, the new President of Malawi, said very clearly that,
“we need to transform our country from being a predominantly importing and consuming country to a predominantly producing and exporting country … we must strive for economic and development independence”.
I am sure that all of us wholeheartedly endorse and support that vision. However, today in Malawi 60% of the population still live on less than £1 a day. For every 1,000 children born, 68 will die before the age of five, and one in 200 women will die in childbirth. Although 24% of children will have had diarrhoea in the last two weeks, only 16% will have gone to secondary school. Malawi today is still only 170th out of 187 in the Human Development Index.
While there has been progress towards the MDGs on HIV and child mortality, Malawi is unlikely to meet the MDG targets on poverty, primary education and maternal health. Growth and development has been damaged in recent years by political instability, by economic ups and downs and by some more serious problems, as well as by the recent “cashgate” scandal that the new Government are trying so hard to deal with. As a result, UK aid has been partly suspended and direct support to the Government has been suspended indefinitely.
My final questions to the Government are about that UK aid, which is so critical, along with that of other donors, in the short term at least, to securing Malawian development towards the vision of economic independence. First, can the Minister outline for us what plans the Government have in the medium term to move back to a system of general budget support and sectoral budget support that would reinforce the capacity of the central Government of Malawi to deliver for its citizens?
Secondly, what support is the UK providing to build the capacity of central government and national institutions in Malawi to help ensure that scandals such as “cashgate” do not happen again? Thirdly, I have to tell the Minister that I found it very difficult to secure these figures from the DfID website, which I found to be a little bit out of date in places, including referring to the future elections in 2014 rather than the ones that had just happened.
I ask the Minister, if she can tonight, to outline exactly where UK aid is going at the moment. What is the expenditure targeted towards and what is the impact of that expenditure this year? I think that is important information that reinforces the friendship between our two countries and also allows us to hold the Government accountable for that expenditure.
In conclusion, Malawi is for very good reasons regarded as the warm heart of Africa. The friendship between our two nations, not just Scotland but the whole United Kingdom and Malawi, will be there for a very long time. I hope that, in addressing these questions this afternoon, we will be able to contribute to that friendship and move forward together to development and proper independence in the future.
Lord Steel of Aikwood (LD)
My Lords, the House should be very grateful to the noble Lord, Lord McConnell, for initiating this short debate on a small, faraway country of which many people know little but which he and I know extremely well. I join him in congratulating the Scotland Malawi Partnership. I was on the preparatory committee that set up that partnership and he was the First Minister who saw it implemented. It has gone from strength to strength. The Scottish Parliament and the Scottish Government have continued to support it very strongly, and I endorse what the noble Lord said. When the noble Lord referred to the history of Malawi, I remembered on one occasion sleeping on the bed of Dr Laws in Livingstonia—not an experience I would recommend to anybody. It was simply a bed constructed out of rope.
In a very short speech I want simply to raise two issues. The first is the question, to which he alluded, of “cashgate” and our aid programme. The figures may not be on the DfID website but sources in Malawi suggest that some $500 million went missing over eight years during the period of the previous Government in Malawi. That is, according to Malawi sources, something like 30% of Malawi’s total budget. When you think that it is a very small country with a population of 16 million and an economy smaller than the London Borough of Hackney, you realise that the damage done by the “cashgate” scandal is enormous. Therefore, it is understandable that not just Her Majesty’s Government but the new Malawi Government are doing their best to see that those who were responsible for this are brought to book.
The former President, Joyce Banda, in a lecture at the LSE this month, said that she was alerted to this scandal at the tail end of her regime by Alexander Baum, who was the European Union representative in Malawi. That enables me to say that I do not share the general view that has been put about that the European diplomatic community is somehow less effective than our own. In my many visits to Malawi, I have found that the small diplomatic community there worked together more cohesively than I have seen in any other country. I pay tribute to the European representative as well as to our own.
In the lead-up to the referendum after Dr Hastings Banda’s period, I was involved in the struggle to bring better democracy and transparency to Malawi. It must be frustrating for the population of Malawi to realise that they have suffered under kleptomaniac rulers who have made a mockery of democracy. I know that our Government and the German Government have financed the external audit that is trying to track down what exactly happened. The United Kingdom has to be tough on this issue. It cannot resume the full aid programme until it is resolved. It should also warn even the new Government that extravagance will not help. There have been press reports from Malawi that the current President took 68 people with him to the General Assembly of the United Nations in New York—not a good example to set when he is doing his best to track down the blatant corruption of the previous Government.
Although we have suspended budgetary aid to the Government, I hope that it will still be possible for DfID and other organisations to continue to give direct programme support to various factors in Malawi. In the areas of health, education, agriculture and support for the judiciary, it is important that, even though we cannot give government budgetary aid, we continue to give direct assistance.
To give an example from my own experience, the last time I was there, which was a couple of years ago, I visited a hospital which was very well organised. It had rural outreach clinics and took drugs out to the villages on motorbikes. Somebody had given about a dozen motorbikes to the hospital. I am not a motorbike expert but I think they were probably Chinese—they were quite cheap—and a lot of them had broken down. In fact, there was only one left that worked; the others were all in a shed. Here is an example of when a little ingenuity and a little money, to get a mechanic out there to cannibalise the motorbikes so they could work again, would greatly increase the efficiency of that service. Not a large sum of money was involved. That is the kind of imaginative thinking that our hard-pressed DfID staff in Malawi should be looking at. The Government should be willing to finance such individual projects even if they cannot give direct help to the Malawi Government.
The second issue I want to touch on is the visa regime, ably mentioned by the noble Lord, Lord McConnell. As it affects Malawi, it is particularly bad because visa applications have to go to Pretoria in South Africa. Under the Malawi rules, one cannot pay in rand without clearance from the banks. The whole thing is a bureaucratic nightmare. We had a debate on this issue, which is totally unsatisfactory, in the Moses Room a few months ago. We have lost accountability for the visa service. It has been farmed out to an agency, which in turn has farmed it out to subcontractors, presumably on a cheap contract basis. The result is that the service is extremely expensive for Malawi citizens and it is very time-consuming. Mr Tom Greatrex the MP who represents Blantyre, David Livingstone’s birthplace, feels very strongly about this. He has raised it several times and is about to have an Adjournment debate in the Commons on the issue.
In the mean time, I want to make two suggestions, which my noble friend might pass on to the Home Office. First, I do not understand why, when people are coming for short contributions to public seminars of a kind that I complained about before, and will be here for only a few days with firm sponsorship, those issuing the visas cannot telephone the sponsors to make sure that the application is genuine. The idea that visa applications are rejected because people might overstay or give up their careers, families and everything else in Malawi to stay in Britain is simply ludicrous. Another suggestion is that we might change the visa system to insist that sponsors for short-term visits should themselves sign declarations accepting responsibility for the person returning and being liable to a fine if the person does not return. That might cut through a lot of the bureaucracy and establish a visa regime that is fit for purpose.
Better still, I would like to be rid of the agency and go back to the system we used to have. I can remember as an MP on several occasions having to phone a high commissioner or an ambassador and say, “I hear that so-and-so has made an application for a visa and has been turned down. Can you have a look at this?”. They would look at it and say, “This is why it has been turned down. It is perfectly reasonable. It is good policy not to let this person come here”—or, alternatively, they would say, “We have looked at this. It is bureaucratic nonsense and we are issuing the visa”. There is no accountability any more. It has gone. If we cannot get it back, at least steps should be taken, as the noble Lord said, to ensure that the system is improved. I hope that the Home Office will respond in the debate which Mr Greatrex is having shortly in the other place and will come forward with positive ideas on how to improve the system for the benefit of good relations between Malawi and ourselves.
Lord Collins of Highbury (Lab)
My Lords, I, too, want to thank my noble friend for initiating this debate tonight. As we have heard, Malawi is one of the poorest and least developed nations in the world, ranking 170 out of 187 in the Human Development Index and with rural poverty increasing in the last decade to 57% of the rural population.
Although fragile and despite many challenges, DfID’s latest annual report—which, I accept, is a little out of date—shows that Malawi’s macroeconomy is displaying some signs of improvement. There is no doubt that progress has been achieved through DfID’s focusing on the key priorities of attacking poverty and inequality, and through investment in education, health, agriculture, water and sanitation, with an emphasis on the rights of girls and women—that is absolutely right. DfID has promoted wealth creation and economic growth by expanding its private sector development portfolio to improve growth in the agricultural sector.
More women are being helped to access finance through village savings and loan schemes. Of the 26,000 additional people supported to access credit through DfID in 2013-14, 21,000 were women. DfID’s work in resilience is helping to improve rural incomes and reduce the vulnerability of farmers to external shocks. An additional 74,000 people were supported to cope with natural disasters in the 2013-14 period. In the same period it helped 140,000 people to have access to clean water and improved sanitation, and by 2015 it will have supported 750,000 people in that way.
Despite DfID’s work supporting accountability reforms and preparing for the 2014 general elections, poor governance and corruption continue to prevent Malawi from achieving its full potential. As we heard from noble Lords tonight, DfID has frozen its direct budget support to Malawi as a result of the so-called “cashgate” scandal, which saw substantial sums of aid funds going missing, with the Government of the then President, President Banda, being heavily implicated in the diversion of funds. This is the second suspension of direct aid arising from corruption in the past three years. As we have heard, the suspension is ongoing despite the May 2014 elections, which saw the removal of President Banda and her replacement with Peter Mutharika.
Clearly, we support the move to suspend aid if there is strong cause to believe that misappropriation is happening. However, for a country so dependent on aid, this is a huge hit, especially when other donor nations have also frozen budget support. I am of course aware that DfID believes that sufficient action has not been taken to address financial and management issues under the new Administration. However, in these circumstances there is a need for DfID to engage closely with the new Malawi Government to ensure that there is a clear road map of steps that can be taken that will lead to the reinstatement of budget support.
In that respect there are a number of questions that I would like to ask the Minister, which have been reflected already by noble Lords, particularly my noble friend. First, have DfID Ministers met with Malawi Government representatives to discuss progress on tackling corruption and steps towards the resumption of budget support? Secondly, what assessment has been made of the willingness of the new Government to take serious steps to improve financial management? Thirdly, what was the outcome of the DfID-funded forensic audit team operating in Lilongwe to attempt to identify misappropriated funds?
Despite the progress I have referred to, Malawi still faces huge challenges in health and education, where just 66% of young people complete their secondary school education. Can the Minister highlight for noble Lords what impact the suspension of budget support is having on public services? Is the department happy that the continuing funding for NGO-based programmes in Malawi is proving effective at limiting that impact? Moreover, as and when budget support recommences, is there the potential for back payments to be made that will help to reverse the negative impact of funding shortages on public services?
Sustained youth unemployment, underemployment and low pay are a severe drag on the nation’s ability to tackle poverty levels, a situation that is set to be exacerbated in a nation where almost 47% of the population is under the age of 14. As I have indicated, the UK’s development programme for Malawi rightly includes a substantial private sector development programme, but it is not clear that it is adequately focused on the particular issues of youth unemployment or on moving people from precarious work into more secure and properly remunerated jobs. The private sector development programme concentrates particularly on the oil seed sector and on reforms that would help to grow it as an export sector, but as with much agricultural work in Malawi, wage levels and working conditions are extremely poor. Is there enough focus on encouraging sustainable, properly remunerated employment in this sector, and how is DfID ensuring that its funding and support for agricultural regulatory reform strikes the right balance in enabling private sector led employment growth while protecting the small-scale farmers who make up the bulk of Malawi’s rural population from land grabs and unfair practices?
Some 20,000 farmers in Malawi currently benefit from fair trade schemes, particularly in the tea, coffee and groundnut sectors, with premiums being reinvested in rural schools, healthcare and infrastructure. However, with 90% of the population working in agriculture, there is clearly enormous scope for further expansion. Yesterday, along with my noble friend, I met with members of the team from the CDC Group who highlighted the direct investment being made in a company in the DRC to develop palm oil—in a very difficult situation for arable operations. This has already resulted in improved wages. I discovered that the negotiations with the trade unions were carried out on television, so they were there for everyone to see; it is a practice that we could perhaps adopt here because it might improve things. A major ingredient of the success which the CDC highlighted was the level of co-operation between DfID officials locally and the CDC in assessing the resilience and sustainability of what is clearly going to be a long-term investment. Does DfID’s private sector development programme in Malawi provide a specific focus on and assistance to the fair trade sector? Also, in encouraging British investment in Malawi, does the department, along with the high commissioner, actively seek to promote fair and ethical trade opportunities?
The noble Lord, Lord Steel, and my noble friend have raised the issue of visas, and I want to repeat their questions. In the end I would ask the Minister to ensure that there is a review of the current operation to assess its effectiveness, proportionality and impact on the current system of civic and community links. As my noble friend so ably put it, we must recognise the essential role that civic society can and should play in Malawi and among its partners in the United Kingdom—particularly, as we have heard in the debate, in Scotland. We must strengthen both economic growth and good governance.
Baroness Northover (LD)
My Lords, I thank the noble Lord, Lord McConnell, for initiating today’s debate and for his passionate and well informed introduction. I also welcome His Excellency the High Commissioner and others from the high commission who are interested in the debate today. The noble Lord, Lord McConnell, has a deep and long-standing interest in Malawi. He points out that there are particularly close links between Scotland and Malawi from David Livingstone onwards. He outlined very effectively how close those links are today. We have, of course, close links in the United Kingdom with other developing countries, often developed from a shared history, as in the case of a number of other African countries, and from diaspora links, as with Pakistan and Bangladesh.
The noble Lord, Lord McConnell, notes that Malawi celebrates 50 years of independence this year. In that time, it has achieved a significant reduction in child mortality, an increase in food production, free primary education for all and the establishment of a multi-party democracy, with a vibrant free press and civil society and a series of peaceful elections. Development assistance, including from the United Kingdom, has been critical but that is quite a series of achievements.
Yet, compared to some of its neighbours, Malawi’s progress has been slow. Average life expectancy at birth remains 55 years, 90% of people live without electricity, and only 28% of girls finish primary school. Landlocked and resource-constrained with a high population growth, Malawi continues to face the problem of lifting its people out of deeply entrenched poverty. Development assistance that addresses the underlying barriers to progress remains essential.
The recent multi-million “cashgate” corruption scandal, to which noble Lords have referred, in which it was discovered that significant amounts of public money had been stolen through systematic manipulation of the Government of Malawi’s public financial management system, was, and continues to be, of great concern to the UK. This money was stolen from the Malawian people, setting back much-needed poverty reduction. My noble friend Lord Steel and the noble Lord, Lord Collins, make extremely clear how significant this has been.
At the request of the Malawian Government, the UK funded—reference has been made to this—a forensic audit of government accounts to establish the extent of “cashgate” losses, the methodology used and those involved. Now the final report has been handed over, Malawi’s law enforcement agencies must continue to work methodically to bring the perpetrators of “cashgate” to account through the courts and deliver justice for the Malawian people. I assure the noble Lord, Lord Collins, that we are monitoring this very closely. The United Kingdom is committed to ensuring that every pound of UK aid money achieves its intended results and maintains a zero-tolerance approach to corruption. This is why, in concert with other donors, we took the decision to stop providing all financial aid to the Malawian Government in November 2013. There can be no consideration of putting UK funding through government financial systems in Malawi until the necessary actions to strengthen these systems have been taken and independently verified. We will keep this situation under review.
While we cannot work through government systems, the UK continues to work with Government and others for change in Malawi. The noble Lord, Lord McConnell, asked about capacity building to avoid future “cashgates”. The new Government of Malawi have committed to a greater degree of transparency and we will be working with them to take broader and sustainable action to tackle corruption and foster a culture of integrity in public life. As I have said, we are monitoring this very closely.
The noble Lord, Lord Collins, asked about meetings with Malawian Ministers. A Minister in the Foreign Office, my honourable friend James Duddridge, whom the noble Lord will know, met the Malawian Minister of Foreign Affairs at the United Nations General Assembly recently.
The United Kingdom remains one of Malawi’s major development partners but, as I said, is not routing that support through the Government. We continue to provide a large programme of support to reduce poverty and assist poor people across Malawi through other channels. I assure the noble Lord, Lord Collins, that we work hard to ensure that the poorest people do not suffer further as a result of “cashgate”.
I also note the projects that my noble friend Lord Steel mentioned. I hope that noble Lords will be reassured to know that in the financial year to March 2015, the United Kingdom is providing £61 million of bilateral support to the people of Malawi, representing 2% of its national income. That is complemented by the UK’s considerable contribution to Malawi through other channels, including the World Bank, the European Union—to which my noble friend Lord Steel paid tribute—the Global Fund to Fight AIDS, Tuberculosis and Malaria, UK-based NGOs, and regional programmes. United Kingdom support creates educational opportunities for girls and boys, supplies life-saving drugs to the health sector, tackles undernutrition in young children and in people living with HIV, and provides vital inputs to farmers. The noble Lord, Lord Collins, mentioned several of those areas.
We are delivering significant demonstrable results for poor people. Since 2011, the United Kingdom has helped more than 350,000 women to access family planning services. By 2015, more than 400,000 women will have improved access to security and justice. By 2016, we will have ensured that 750,000 more people have access to safe, clean water. Our support enabled 5.2 million people to vote in recent general and local elections.
Those results are underpinned by important transformational changes: governance reforms, health systems improvement, transparency and accountability for citizens, and girls’ and women’s empowerment. We enable households and communities across Malawi to build resilience to climate change and chronic food insecurity. However, we are well aware of the need, as the noble Lord, Lord Collins, outlined, for people to have jobs. That is vital.
However, Malawi’s future needs to move beyond a heavy reliance on aid. Malawi must stimulate the creation of growth, markets, jobs and incomes for all its citizens, as the noble Lord pointed out. To that end, the UK is supporting Malawi’s economic development. We are working to improve the business-enabling environment, and the diversification and development of Malawi’s export market. We support smallholder farmers to diversify their production. We are helping to connect these farmers at local markets in Malawi to regional markets.
The new Government now have an opportunity to address the issues which have long held Malawi back from the most sustained growth and progress. They have an opportunity to set a strong vision for poverty reduction and to implement essential reforms to public financial management and the civil service, necessary to restore the confidence of the Malawian people and investors. I welcome those who are attending the debate today. They have an opportunity to rebalance the Malawian economy from one heavily supported by donors and reliant on the state to one more driven by private-sector investment and entrepreneurship.
The people of Malawi have seen past Governments promise much but fail to deliver. The new Government will want to show that they are different by working hard to deliver real change for all their citizens. This is what we want to see.
We welcome the first signs from the Government that they are serious. We welcome the civil service and public service reform commission, the President’s stated commitment to zero tolerance on corruption and the fiscal discipline prioritised in the recent budget.
The noble Lord, Lord McConnell—indeed all three noble Lords—flagged up the issue of visas. We are very keen for Malawians to be able to travel to the United Kingdom. We have alternative payment methods for those who do not have credit cards. This was an issue that was mentioned. Poorly paid people from Malawi are not discriminated against in applying for visas. There is no income threshold. I hope that it reassures noble Lords that 84% of applicants processed in Pretoria are successful. About 1,400 visas were issued last year.
The noble Lord, Lord McConnell, was critical of our online system. A recent IT upgrade has improved this capacity by about 33%. I will of course pass on to my colleagues in the Home Office the comments made in this debate. I note that there will be a future debate in the other place. I hope that I can also reassure noble Lords that these are areas that of course we will keep under review to balance the costs of our process and its purpose, and at the same time encourage visits.
We value our relationship with Malawi and Malawians. It is a country with such a bright future. We are closely engaged in trying to ensure that it can deliver that bright future for the people of Malawi, whose level of poverty has been made extremely clear in this debate.
The United Kingdom, which I am extremely glad also includes Scotland, has been a long-standing supporter of the people and communities in Malawi. While working hard to protect all UK taxpayers’ money, we will continue to provide much-needed continued assistance for sustained improvements in poor people’s lives.