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Catherine West (Hornsey and Wood Green) (Lab)
I beg to move,
That this House has considered skills devolution in England.
What a pleasure it is to serve under your chairmanship, Mr Bailey. I hope to have the pleasure of hearing your speech later. I am grateful to the Backbench Business Committee for granting this debate on skills devolution in England. I am especially grateful to the Members here from outside London, as I am keen to hear about the reality in their constituency regarding how we can tackle the national skills gap as flexibly as possible.
Across our country, we face an enormous challenge in ensuring that we have the skills that we need to operate the economy, and that we are doing all we can to enable people to secure such skills, and support them in doing so. The issue is particularly acute in London, where my constituency is, but it also exists in the larger cities throughout the country and, indeed, in the regions, and the situation has worsened since 2010, when further education colleges faced cuts—they now receive 50% less funding. The centralised skills system needs to be looked at again, in London and in all parts of England. I will set out the problems seen by us on the all-party parliamentary group for London—and by the all-party group for Greater Manchester, with which we have done work on this—and the recommendations outlined in our report, “Bridging the Skills Gap”, which I recommend colleagues read.
Significant steps have been taken since the devolution project started in 2000, but there is a pressing case for specific devolution in this area, and a need to explore ways in which such devolution can be achieved in regions that do not have devolved Assemblies or metro mayors. Although recent economic growth has led to substantial reductions in the numbers of people on jobseeker’s allowance, an estimated 628,000 Londoners are not in work but would like to be—enough people to fill the city of Nottingham twice over—and youth unemployment is high. In 2016, 9.4% of 16 to 24-year-olds in London were unemployed, compared with 3.6% of 25 to 64-year-olds. For both adults and young people, that represents a huge waste of human potential.
The problem is very unevenly spread across London, a city of 8 million people; there are constituencies where very high numbers of young people face larger problems from unemployment and a lack of skills. Almost a quarter of all vacancies in London—23%—are due to a lack of applicants with the right skills. In addition, almost half of firms—42%—are not confident they will be able to recruit people with the higher-level skills that their organisation needs over the next five years. In the London borough of Haringey, where my constituency is located, 35% of 19-year-olds do not have a level 3 qualification, yet London is an increasingly highly skilled economy. There is a clear skills mismatch.
My local college, the College of Haringey, Enfield and North East London, now merged with City and Islington College and with Westminster Kingsway—mergers that took a lot of energy and money out of the sector when we could least afford it—tells me that many students were held back following the sharp reduction in funding. That has led to too many Londoners being in low-paid and often insecure employment, and there has been an increase in the number of low-paid jobs in the capital.
Karin Smyth (Bristol South) (Lab)
To highlight my hon. Friend’s point, in my constituency we send the lowest number of young people on to higher education in the country, despite having two universities in the city, and Bath and Exeter nearby. It is critical that the further education sector pick up such youngsters and support them in their skills and education, not just in London but in places like Bristol.
Catherine West
This needs to be looked at specifically in Bristol, where we have seen such a sharp increase in the population of under-30s.
Many people, once in work, fail to get salary and career progression, and 700,000 Londoners are paid less than the London living wage; that has a real impact on families. Recent research by Trust for London shows that people are more likely to be in insecure employment in the capital or in other large cities than elsewhere in the UK.
The population of London continues to grow rapidly—by 1.3 million since 2005—and the demand for basic skills provision grows alongside it. That population growth has increased demand for specific areas of skills provision, such as English for speakers of other languages, or ESOL; the Workers Educational Association has done excellent work in that area. Founded in 1903 and working for a
“A better world—equal, democratic and just”,
the WEA serves people within a two-mile radius and we can see the importance of that local provision throughout the country, not just in cities. However, our cities need to grow their own talent and get businesses to invest more in skills. Levels of business investment are unfortunately at an all-time low and we need a flexible and responsive skills system to respond effectively to the challenges the capital faces. They are urgent challenges and, if ignored, could significantly hamper economic growth, not just in the capital but elsewhere.
There has been criticism from business. Mr Quinn, chief executive of Balfour Beatty, has said that the apprenticeship levy system is very “Yes Minister”, which says something about where we are in thinking through how to enhance the human potential in our economy.
The skills system does not provide the flexibility and responsiveness needed, because providers are often incentivised and rewarded solely on the basis of the quantity of learners achieving a qualification, not according to the quality of the outcomes from getting that qualification, such as higher earnings. The system is market-based and is built on learner choice, but careers advice in London is patchy and inconsistent, which limits learners’ ability to make informed choices and understand the opportunities in the London economy. When I speak to headteachers, they talk about teachers often not being able to put aside valuable time to perform the crucial role of helping students decide which subjects to choose—say, whether to take a foreign language—not just at A-level or when they go on from school, but right back in year 8 or 9, so that they can have ready the skills that we so desperately need in workplaces.
Employers do not engage enough with the skills system to ensure that vocational courses are relevant to their needs. The creation of a Greater Manchester employment and skills board has resulted in the co-designing of apprenticeship courses that can be delivered locally, improving local responsiveness to skills shortages. That was replicated in Sheffield’s city deal and in several other cities, increasing the engagement of small and medium enterprises and delivering on local skills priorities.
It might be too early to tell what impact the apprenticeship levy has had, as it was introduced only in April 2017. I am sure that the Minister has a bit of time to get across that brief—her predecessors had not quite caught up with it. I am sure she will tell us her plans for the levy’s review. April 2017 is not that far back, but I am sure that the Department has plans to review its introduction and effect. Initial statistics from the Department for Education indicate a sharp drop in the number of apprenticeship starts across the UK. Between May and July 2017, they had decreased by 59.3% from the same period in the previous year—in numbers, from 117,800 to just 48,000. I am sure we would all agree, across this Chamber, that that is a crucial area that needs the Government’s attention.
Employers in the public and private sectors report issues with the system’s inflexibility, and it appears that many organisations will fail to spend significant amounts of their levy contributions. It seems highly unlikely that the Government’s aim of 3 million apprenticeship starts by 2020 will be achieved. That is another example of the skills system failing to respond adequately to the current and future needs of our economy.
The skills system in the UK is very centralised, leaving London with few tools at its disposal to cope with London-specific issues, such as the higher demand for English as a second language, historically low levels of apprenticeships and the reliance on incoming labour in key sectors. The picture is potentially worse in other fast-growing cities, such as Coventry and Exeter, which my hon. Friend the Member for Bristol South (Karin Smyth) mentioned; they do not have the same system of devolution that we have in the capital. I am hoping to hear more about those regions of the UK later in the debate.
The system simply does not respond well enough to our growing cities’ needs and priorities. Coventry, for example, is in part of the country that is seeing greater economic growth, although that is coming from a lower base. Our skills system is not matching that growth and is falling behind. The OECD predicts that without significant improvement, the UK will fall to 28th out of 33 OECD countries for intermediate skills by 2020. That would see the UK overtaken by Ireland, Israel and Belgium.
London faces myriad challenges: a rapidly rising population; an over-reliance on migrant labour; skills gaps in many key sectors; low numbers of apprenticeships and an inflexible apprenticeship system; patchy careers guidance; and poor match-up between skills spending and outcomes. The forthcoming devolution of the adult education budget represents an important first step in creating a more efficient skills system, but the Government must be bolder and go further and faster on skills devolution to have the impact needed. Devolving greater powers on skills to London and the metro mayors would enable cities to create a system that meets employer need, not just learner demand.
What about the impact of Brexit? Businesses have met an increasingly large share of their labour needs through immigration. Nearly one in three of London’s workforce is non-UK born, and 90% of London’s businesses recruit EU citizens. Workers from the EU play a vital role in many of the capital’s key sectors, including construction, financial services, hospitality and health and social care. In London, in construction, hospitality and the tech sector, just under a third of all workers are EU nationals. Any fall in EU immigration following Brexit or during the uncertainty that Brexit is producing has a significant impact on not only London, but the UK. We know that London’s economy is a driver of things and has knock-on effects on other regions. Many agricultural areas are over-dependent on the supply of EU labour. The outcome of the discussions and negotiations over Brexit could have a knock-on effect.
The capital attracts highly skilled graduates from across the UK. A significant drop in EU labour could increase that trend, undermining the Government’s industrial strategy and attempts to rebalance the national economy. There is a genuine desire across the House of Commons for every region to grow and for London not to attract all the high-achieving graduates. That could happen for a period, perhaps, but there is a real need to rebalance our economy.
The drop in EU labour could also have a knock-on effect on other key policy areas, such as the need to build more affordable homes in London. A chronic shortage of skills in construction, for example, will create higher project costs and diminish the ability of the sector to deliver the new homes required to tackle the chronic housing shortage facing the capital and the rest of the country. We can think of best practice in public procurement: in many boroughs and city regions, the local authorities are getting much better at using public procurement to ensure that for every £1 million that is spent, say, we get one or two apprentices back from the providers of that crucial capital work. That is mainly in construction and the renovation and refurbishment of social homes, but also in other areas.
All the factors I have outlined suggest that London government and the metro mayoralties need the ability to take a strategic, all-age, whole systems approach to skills. There should be greater engagement with employers and better access to and use of data. The system should allow a more localised approach that works at two levels. In the capital, for example, we should tackle pan-London issues while also having more targeted activity at a sub-regional level to take into account the variations of skills, needs and demand across cities.
The all-party parliamentary group’s report set out eight key principles that should underpin a future skills system. They were:
“1. It must be labour-market led, and include high quality labour market intelligence that captures the needs of individuals, employers and local economies informing learner choice and the provider offer.
2. It must have strong employer engagement in order to identify skills needs and sector priorities.
3. It must have strong local accountability, with joint governance agreed between the GLA and London boroughs via sub-regional partnerships.”
In that regard, we know that other sub-regional areas function much better than London. With a population of 8 million, it is very hard to match the economic partnerships with the various areas. In other sub-regions, we should be able to do much better on local accountability and buy-in from local authorities. The report continued:
“4. It must be outcome-focused, with strategic coordination across all aspects of post-16 professional and technical education to drive better outcomes. The system should focus on and reward delivery of positive outcomes covering jobs, earnings, progression”—
I emphasise that point; too many people are sitting in entry-level jobs way into their 40s and 50s, unable to get that progression that is so crucial—
“personal development and wellbeing outcomes.
5. It must include stronger incentives to encourage provision that meets London’s economic needs and supports progression.
6. It must be flexible to enable London government to have the ability to commission provision based on analysis of need.
7. It must include effective, impartial information and advice to ensure learners can make informed choices that will lead to future employment opportunities.
8. It must take a whole systems approach to ensure that skills policy and commissioning are effectively aligned.”
What would that mean in practice? The Government need to go further, faster, to give local government and metro mayors the levers to address the considerable skills challenges I have set out. They should consider devolving all 16-to-18 provision to combined authorities in other parts of England. The Government should provide commissioning freedom and the ability to set outcomes and incentives for the whole skills system. That would better serve the progression and economic priorities of different areas in England. The Government should give London government control over all vocational capital investments, such as 14-to-19 capital provision and institutes of technology, alongside existing further education capital responsibilities. That would capitalise on local ambition, expertise and intelligence, and align adult education and 14-to-19 capital investment.
The Government should devolve careers funding streams to London government, so that it can build a seamless, single, integrated careers service. The concept of a careers service is something that many people in local government would love to see return, so that they can match aspirations and assist parents, who are so key to helping young people decide what to do next. It would also allow older people to get back into the workplace—or change what they do, now that we are all meant to be working until we are 70. [Interruption.] You have loads of time, Minister. Through those things, we can have a proper system that we can be proud of.
We would like the devolution of careers funding streams to a local level, to build a seamless, single, integrated careers service. The Government should devolve the capital’s future share of the UK’s shared prosperity fund to London government, and ensure that future skills funding settlements take into account each area’s unique needs. We also need short-term flexibilities around the apprenticeship levy. In the longer term, we need to devolve the levy to London. That will be quite a difficult trick to master for a new system, but we need it to be as flexible as possible, so that we can use the resource quickly and build in the ability to develop that longer-term devolution. We could get longer-term value by getting together with local areas to work out the best way forward.
The other voice that needs to be listened to is that of small and medium-sized enterprises. They provide many of the job starts for young people, and older people entering the labour market who need their skills updated. It is difficult for SMEs to communicate with Government, Members of Parliament and the wider system, so that relationship with SMEs must be developed in a special way. We want more flexibility in the levy; for example, it could allow an increase in the amount of levy funding that employers can pass on to their suppliers. That is currently capped at 10%. Local authority areas increasingly use their contracts to have suppliers generate apprenticeship opportunities, but capping that at 10%, particularly in the short term, might mean we are not getting as much value as we could in our timeframe. In 2016-17, for example, London boroughs created 60% of their apprenticeships through contracts and suppliers, as I mentioned earlier.
The Greater London Authority and the Institute for Public Policy Research, a think-tank, have developed a proposal for a skills and progression pilot project, which I recommend the Department look at. A strand of the proposed pilot is to work with employers to pool the 10% that can be passed on to non-levy-paying employers, and support them in developing good-quality apprenticeships through that. The pilot wants to test out increasing the 10% cap as well. There is a strong push for that proposal. In the longer term, the Government should consider full devolution of the apprenticeship levy, as has happened in Scotland and Wales. Obviously, London and other key areas would need to bid and make the case for that, but the Government should not rule that out.
A recent Chartered Institute of Personnel and Development survey found that 53% of employers who pay the apprenticeship levy would prefer a training levy; just 17% support the apprenticeship levy in its current form. I am keen to hear the Minister’s feedback on that proposal.
In conclusion, the proposals might seem radical and far-reaching, but London, Manchester, Birmingham and other major UK cities are experiencing severe skills challenges that could be exacerbated significantly by Brexit. The Government need to act now and allow the skills system to deliver in flexible, responsive ways that the current centralised system does not. The Mayor of London has already indicated that London government is keen to work with central Government to deliver on this agenda, and there is a clear appetite from many of the elected mayors to do the same, as there is from leaders of local areas. I hope we can all work together to improve skills outcomes for all learners and businesses across England.
[Ian Paisley in the Chair]
Priti Patel (Witham) (Con)
It is an honour to serve under your chairmanship this morning, Mr Paisley. I congratulate the hon. Member for Hornsey and Wood Green (Catherine West) on securing this important debate and on her thoughtful speech, which covered the whole gamut of skills policy. She had some good initiatives and suggestions for how we can start to address the ongoing skills shortage across our country and our economy in a wide range of sectors.
I remember often discussing young people here in 2010. We talked about a generation excluded from employment and about the employability barriers facing them. We had a system that was simply not functioning and not getting them the engagement that they needed to help them get the skills necessary to join the workforce. During those years, when we had had a recession too, we found that older workers were finding it difficult to retain their jobs and also to find new employment as the economy changed. There was more part-time employment as demands across the economy fundamentally shifted. One of the things that I feel strongly about, which the country and our Government should focus on, is the agility that is required to sustain the flexible economy. We must ensure that people of all ages, all skills and all backgrounds can still remain active in the labour market. To do that, we need to look at education.
Jack Lopresti (Filton and Bradley Stoke) (Con)
My right hon. Friend is making a strong case on the economic benefits of addressing the skills shortage, but there is also a moral case to do with social mobility, aspiration and allowing people to fulfil their potential in society generally.
Priti Patel
My hon. Friend is absolutely right. I will come on to the ladder of opportunity, the moral obligation and responsibility, and the progression pay that the right hon. Member for Hornsey and Wood Green mentioned earlier. In fact, we have a good economy right now, but we are faced with a shortage of people in the key sectors that cover the health and wellbeing of our economy: construction, nursing, social care, engineering and a whole range of other sectors. Full-time employment and part-time and temporary employment are all incredibly vital to our labour market.
We have record levels of employment, but we should look beyond that to the next generation and ensure that, while they are at school, they are engaged and nurtured to think about the world of work. The Government have the Careers & Enterprise Company and other models of engagement, but that is simply not good enough in terms of overall coverage—engagement with schools and the requirement on our education establishments to open their doors to businesses, so that they may talk to young people about careers, and to bring into schools sectors that reflect the local economy.
I feel strongly about the role and significance of devolution. In my short apprenticeship as the Employment Minister in the Department for Work and Pensions, I oversaw some of the devolution deals around the Work programme. I worked with the combined authority in Manchester and on other devolution deals. Employment programmes and employability were a major factor in giving devolution to local authorities up and down the country. At the heart of that success is working with the private sector, not just the public sector, to ensure that the private sector and the needs of the local economy are fully reflected in devolution deals. Importantly, the combined authority and local authority models require an absolute understanding of what is going on in the local economy, where the skills shortages are and where future demand might come from. There is also a need to look at succession planning and how businesses can work with their workforce.
Jim Shannon (Strangford) (DUP)
In Northern Ireland we have recognised it is important to address the issue of skills shortages and to go into secondary schools. Some people have suggested we should even go into primary schools, although I am not sure that is entirely appropriate. We have also addressed the skills shortage in engineering. We should encourage ladies and girls to look to engineering as a possible job for the future, because they can do it as well as we men.
Ian Paisley (in the Chair)
Order. Interventions should be short and not made into speeches.
Priti Patel
The hon. Member for Strangford (Jim Shannon) is absolutely right. Young girls should be encouraged and should have the opportunity to look at the careers that they might not even consider to be suitable for them. In STEM subjects—science, technology, engineering and maths—engineering is a classic example.
If I may, I will share with the House a little bit about Essex and how we are approaching the skills issue locally. Essex is famously the county of entrepreneurs. Firms based in my constituency have a proud and strong record of creating jobs and local employment. Businesses in my constituency are almost entirely small and medium-sized businesses and they have now created 25% more jobs leading to more than 30,000 people in employment. They are doing well, but they could do even better. They want to see the barriers to recruitment, employability and access to the labour market brought down. They want people with the right kinds of skills. They want change because we have seen that a deficit in skills standards is one of the biggest barriers to growth locally, and to productivity in our wider economy.
On Friday I attended a skills forum organised by the excellent Essex Chambers of Commerce and Industry, which was also attended by my equally brilliant colleague, my right hon. Friend the Member for Harlow (Robert Halfon). In that business-led forum the spotlight was on skills and on the barriers that prevent businesses recruiting people. It particularly looked at the barriers around the skills and training programmes in Essex and the demands and challenges for the future workforce who are being trained. We need highly trained people, but the lack of flexibility within the training and provider landscape was clearly on display in the discussions that we had.
What stood out in the skills forum, and in my previous meetings and engagement with local businesses, was that they want to be at the heart of the decisions that are made on skills policies, and they want to be involved in designing and shaping courses. They want to play their part in offering job training opportunities. However, there are many barriers and restrictions on their doing that. They are best placed to understand the needs of their businesses and the local economy in a way that no Government with a centralised approached and no local authority can fully understand until those businesses are a full part of the discussion. The devolution of skills to local authorities can be successful only if businesses play a leading role in developing that skills agenda, including working with the education establishments and the courses in those areas.
Over the years, I have received endless complaints from businesses about the time it takes for new courses to be approved. They also complain, as I have mentioned, about barriers put up by the public sector to engagement with businesses. It can take years, with hundreds of hours of input from business and trade organisations, for new courses to be signed off. That equally applies to relevant courses. On Friday, I met representatives from a business who said that finding a course that was specific to their business was near-impossible. They just wanted a course, for a young person who wanted to be on an apprenticeship scheme, that covered the basic employability skills.
There is so much more that can be done, and I welcome the many creative suggestions in the all-party parliamentary group report. We need to ensure that there is flexibility, and that businesses are at the heart of the devolution agenda. I strongly support the idea of devolution in skills coming to the county of Essex. I think that we would benefit from that, in some of the ways that have been suggested today. Devolving skills, and focusing on skills in the workforce, is important not just to businesses, but to individual workers. The skills deficit has a drag not only on our economy, but on the life chances of people who want to work. We have so much untapped potential across our workforce, and there is a great opportunity for the Government to lift the lid on the talents of those people who are struggling to access the labour market.
One way that we can do that, as the hon. Member for Hornsey and Wood Green mentioned, is through the apprenticeship levy. We need to look at how we can unlock the potential of the levy and use the funds it raises to support the upskilling of a whole generation who are simply not accessing the levy. I also suggest using the funds to upskill agency and temporary workers. More than 1 million people go to work every day to do agency and temporary work. That model offers a great deal of flexibility, but those workers make an enormous contribution to our economy; their net contribution stands at something like £35 billion. There is growing concern that the funds that agencies put into the apprenticeship levy cannot be used to train and upskill workers on their books. Somewhere in the region of 2,000 to 2,500 businesses are paying the levy, and the rules on the spending of funds raised by the apprenticeship levy are so rigid that it is almost impossible to use that money to invest in agency or temporary workers.
We have a very good record in Government when it comes to revitalising apprenticeship schemes, and we should be proud of that. The levy has a critical role to play in providing a great pathway. We know that the current pathways are not suitable for everyone, and we need more flexibility when it comes to the levy and apprenticeship schemes. Many workers need to go on shorter, practical courses to take the next step to move on in their career. Examples include courses in food hygiene and fork-lift truck driving, which are not covered by the apprenticeship levy. The flexibility of the levy could be increased to support some of those courses, so that we can support more people to get back into work and get better pay progression, and give them long-term employment opportunities.
If we are to deliver a fair society that invests in people and provides opportunity for those who want a hand up so that they can reach their full potential, why on earth would we not do this? We have a fantastic opportunity to provide greater training support; existing employment programmes are far too rigid and inflexible to do so. A very good way in which we could do that, I suggest, is that the Minister, working across the Department for Work and Pensions footprint, could give people who are on universal credit, and who are limited in their hours of work, the freedom and flexibility to access the levy, to get on some of these courses, and to get skilled up so that they can progress.
We are on the cusp now. The levy is new, but it represents a fantastic opportunity. Devolution of skills is surely a success for our region, and it deserves to receive more encouragement.
Stephen Timms (East Ham) (Lab)
Welcome to the Chair, Mr Paisley. The Government have said that they want skills devolution, and the right hon. Member for Witham (Priti Patel) has supported that aim. Indeed, I think George Osborne announced that skills would be devolved to a number of mayoral combined authorities, but progress has been woefully slow, so I very much welcome the fact that my hon. Friend the Member for Hornsey and Wood Green (Catherine West) has secured today’s debate.
There are still lots of operational details about how that devolution will be achieved. I very much hope that the Minister will be able to give us some detail about when devolution will happen in London and the other mayoral combined authorities, because the need is now pressing. I welcome the report from the all-party parliamentary group for London, and congratulate my hon. Friend the Member for Croydon North (Mr Reed) and the hon. Member for Bromley and Chislehurst (Robert Neill) on bringing it forward. I welcome the sense of urgency that the report conveys about what it describes, absolutely rightly, as “an enormous skills challenge” in London.
There is a striking degree of agreement in London about what needs to be done. My hon. Friend the Member for Hornsey and Wood Green set out a number of priorities. The London Chamber of Commerce and Industry, in its most recent quarterly survey, for the third quarter of 2017, found that 60% of businesses in London that tried to recruit encountered difficulty finding people with the right skills. That is the highest—that is to say, the worst—proportion since it started collecting those figures four years ago. The right hon. Member for Witham mentioned the Essex Chambers of Commerce and Industry. The London Chamber of Commerce and Industry explicitly endorses the recommendation in the all-party parliamentary group’s report to devolve all 16-to-18 provision to London, and to give the capital greater control over policy and commissioning.
Life is difficult for many in London today. Employment is high, which is a very good thing, but jobs are often insecure and uncertain. Housing costs are high and rising quite fast, and wages are not keeping pace. More and more people are in the position characterised by the Prime Minister as “just about managing.” Some forecasters currently estimate that 3 million jobs could be lost to automation in the next generation. Automation is a huge driver of the need for reskilling. Furthermore, in the background to all of that is the perennial UK challenge on productivity. UK productivity fell from 9% below the OECD average in 2007 to 18% below it in 2015. We have to overcome that long-term challenge. The report is also absolutely right to highlight, as my hon. Friend the Member for Hornsey and Wood Green did in her opening speech, that a drop in European Union migration will have a disproportionate impact on London, because so many workers in London are from other parts of the European Union. Lots of London’s key sectors have big EU-born workforces, and Brexit is bound to make the problems of skills shortages worse and increase the importance of achieving solutions.
Those challenges are particularly acute in east London—the part of London that I represent. In October, the Mayor of London published research showing that east London is the fastest-growing area of the capital. Some 110,000 additional jobs have been created in the six Olympic boroughs since 2012—three times the number predicted in 2013. I very much agree with what the Mayor said in October:
“Businesses, universities and cultural institutions are flocking here and the centre of gravity in London is moving east.”
That trend in our part of London further highlights the importance of the skills challenge.
The report published by the all-party parliamentary group for London highlights a number of issues specific to the capital, such as,
“a much higher demand for English for Speakers of Other Languages”.
My hon. Friend the Member for Hornsey and Wood Green mentioned that as one of the concerns, and I very much agree with her on that. It is widely recognised that the ability to speak English is key to integration and community cohesion, and yet funding for it in London has been dramatically cut. The joint briefing for this debate from London Councils and the Greater London Authority makes the point:
“London’s population has grown from 7.4 million in 2005 to 8.9 million in 2017, but funding for English for Speakers of Other Languages has reduced in real terms by 60% since 2009.”
My hon. Friend the Member for Blackpool South (Gordon Marsden), who will be winding up for the Opposition in this debate, pointed out last October, in a parliamentary briefing on delivering skills for London organised by the Learning Revolution Trust—a charity linked with Newham College in my constituency—that annual ESOL funding had been cut from £203 million in 2010 to £90 million. Refugee Action says that about half of ESOL providers report waiting lists of six months or more.
I hope that we can recognise the importance of ESOL and do something to address the current lack of funding. I pay tribute to the work in my borough, Newham, of ESOL Exchange, which will mark its 10th anniversary next month. It is a network of people and organisations working together to improve ESOL in Newham, managed by the Aston-Mansfield Community Involvement Unit. It provides a web-based directory of formal and informal ESOL provision of all kinds across our borough, in order to make it as accessible as possible. Helping people in east London speak English proficiently is a very important part of the skills challenge.
I pay tribute to the Learning Revolution Trust, a charity that aims to reduce the financial barriers to education faced by many people today in east London. It typically provides modest financial support to people, perhaps midway through a course, for example to help with childcare costs, and has helped more than 300 young people since it was established in 2012. It has made an important contribution.
My hon. Friend the Member for Hornsey and Wood Green and the right hon. Member for Witham both mentioned apprenticeships, which are key. It seems to me, however, that the programme has been botched in the past year or two. The Association of Colleges has reported, based on data from 91 further education colleges last November, that the number of apprentices had fallen 39% compared with the previous year. It suggests that, even though £2.6 billion is being collected through the apprenticeship levy, the Government might actually end up spending less on apprenticeships this year than last year, because the cuts in funding for the apprenticeship programme from taxation have been greater than the extra amount going in through the apprenticeship levy.
The right hon. Member for Witham rightly drew attention, in a very courteous way, to some of the flaws in the design of the levy. Those flaws are serious. As my hon. Friend the Member for Hornsey and Wood Green suggested, it would be great if the Minister would tell us that there will be some sort of review of how the levy is going. I have not heard any suggestion of that yet, but I do think a review is urgently needed. It is now absolutely clear that the target of 3 million apprenticeship starts by 2020 will be missed. FE Week published an informative graph in November, showing that achievements towards that target were behind target up to a year ago, and then, almost a year ago when the levy was introduced, they went massively off-target. There is really no prospect now of the ground being made up. It would be very good to hear from the Minister what plans there are to try to get the apprenticeships programme back on track.
The call for devolution, which is across the board now, of powers on skills should be not just heeded—the Government have recognised that—but delivered. I hope we shall hear from the Minister what steps will be taken to do that.
Julia Lopez (Hornchurch and Upminster) (Con)
It is an honour to serve under your chairmanship, Mr Paisley. I commend the hon. Member for Hornsey and Wood Green (Catherine West) on securing what is a welcome and increasingly urgent debate.
As we leave the European Union, we will need our domestic workforce to be ever more dynamic, innovative and flexible, not just to maximise the new opportunities to our economy from trade and technology, but to reduce our reliance on a vast overseas workforce. Access to a pool of half a billion EU workers has for too long allowed businesses to obtain cheap, skilled and hard-working employees without having to properly invest in the domestic skills base. It has similarly allowed the Government to duck some of the shortcomings of our own education and skills systems by effectively piggy-backing on the investments of other nations in their people.
Economic migration to the UK will not and should not stop once we have left the EU. London, where I am an MP, is an economic powerhouse that needs to have access to the global talent pool, but if we are to fulfil our own industrial strategy and maximise opportunities for home-grown workers, we need to turbo-charge our approach to skills and get businesses, schools, colleges and Government to work together in a far more interconnected way. The current framework for improving skills is far too centralised and inflexible, unable to deliver workers to fill London’s vacancies as quickly as those vacancies are created, and failing to provide lifelong learning to keep existing workers sufficiently up to date.
Two weeks ago, I visited my local jobcentre, where the team is doing a quite remarkable job in getting people into work. However, one of the groups they find hardest to place is the over-50s, who need to be given time and confidence to adapt to the changing workplace. Meanwhile, one in five London families are stuck in in-work poverty, so attention also needs to be paid to providing clear progression pathways into higher paid work. We require a new spirit of collaboration that leads to increased interaction between our schools, businesses and public services.
I am very excited by what I see in my own constituency. Hon. Members have referred to the critical importance of investment in STEM subjects. On Friday, I visited the Coopers’ Company and Coborn School, which has a dedicated STEM coordinator, Nick, who is doing some amazing work in increasing uptake in science, maths and tech subjects by connecting the school to the academic community and to businesses. Too often such work is reliant on dynamic individuals and organisations, without whom the workstream would not be able to progress.
I am also particularly excited by a five-week, focused course being run by Havering College in my constituency, working with Transport for London. Committed students in the boot-camp style course at this railway academy are guaranteed a job interview with the prospect of employment as railway engineers. Half a million pounds-worth of rail equipment donated by TfL has been installed at the college and students are getting hands-on experience to learn about the rail industry. That is the kind of joined-up skills approach we shall need to see much more of, not least as it helps to provide workers for critical infrastructure projects such as Crossrail. The programme has also helped long-term unemployed and ex-offenders with few or no qualifications to access full-time employment.
It is probably now time to give London the powers that will enable it to prioritise those kinds of skills investments: getting people into work and delivering critical infrastructure in the capital. Devolution of skills provision would also support the capital to develop Londoners’ employability and skillset, targeting and scaling up skills efforts to ensure that everyone who grows up in London can access employment in a changing and increasingly competitive labour market. Compared with international peers and other parts of the UK, London has much lower fiscal and political autonomy, and it is highly dependent on national policies and funding—74% of Greater London Authority and borough expenditure is based on intergovernmental transfers. That makes it very difficult to plan for the long term.
There are two areas where the Government could now look at devolving additional power, since City Hall will soon take control of London’s adult education budget: unspent apprenticeship levy funds and the 16-to-18 further education skills budget. Those issues will be key to meeting the demands of London’s changing labour market. With a wider range of powers, London would be in a strong position to create a system that meets employer need, not just learner demand, and capitalise on local labour market intelligence. It would enable stronger employment engagement to identify skill needs and sector priorities, which can only be done effectively at local level. The provision of higher level professional and technical education could be driven up and clear progression pathways created for learners. I look forward to hearing the Minister’s perspective on those and the other technical and skills issues raised today.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
I say with even greater feeling than normal what a pleasure it is to serve under your chairmanship, Mr Paisley.
I thank my hon. Friend the Member for Hornsey and Wood Green (Catherine West) for securing this debate. Her contribution was thought provoking and adds to an ongoing debate on this serious issue. I describe it as serious because successive Governments have wrestled with the problem of the national provision and accountability of skills funding and the effectiveness of local delivery. Certainly the Government’s own initiative of the apprenticeship levy will not, as far as we can tell at this moment, solve or resolve those historical tensions and problems. We need to look at the issue from a fresh perspective. Now is a good time to do that.
In the Government’s regionalisation agenda—we talk about the northern powerhouse, the midlands engine and so on and so forth—skills is an essential driver of economic growth in a region. To devolve economic power to the regions without devolving the provision of skills in effect leaves a vital part of economic infrastructure out of regional control. I am here to advocate increased devolution of skills, in particular in an area such as mine, which now has a new metro Mayor, Andy Street, who has pledged to enhance economic growth in the area and to see what can be done with local provision of skills funding in order to enhance the initiatives already in place.
Nothing could be more appropriate at this time. Only last week the local chamber of commerce in my constituency warned of acute skills shortages. My area is the historic Black country, which in years gone by was the workhouse of the world, when Britain was an international manufacturing powerhouse. Despite all the reduction in manufacturing as a proportion of our economy, the Black country still enjoys that role—it is a vital part of the engineering and motor manufacturing supply chain, which drives one of the most successful parts of our economic profile, the motor industry, vital to both productivity and our balance of payments.
There are more foundries not only in the Black country but in my constituency than there are in any other constituency in the country, and they are suffering from an acute skills shortage. Those foundries have survived the globalisation drive because they had unique skills and a quality not deliverable in any other part of the world. However, they now have an acute skills shortage. First, they have a problem with the age profile—the average age group in most of those foundries is of people in their 50s—and, secondly, they have survived largely by recruiting from eastern Europe, and if that supply is in any way diminished, the existing skills problem would be enhanced.
In the last quarter of 2017, 82% of businesses in the Black country were reporting recruitment problems. It is estimated that we will need to reduce the number of the workforce with no qualifications by 50,000 over the next 15 years just to bring us in line with the national average, and that the Black country will need a 70% increase in the number of apprentices to meet basic demand. That is a monumental task, but our local area is seeking to address it.
In my constituency, in Tipton, the Elite Centre for Manufacturing Skills is being built. It is a joint venture between Dudley College of further education, the University of Wolverhampton and the historic metal casting company Thomas Dudley. The centre is designed to recruit and attract young people from the area to obtain not only apprenticeship but degree-level qualifications in the range of skills necessary to the local foundry industry. That is an example of a local initiative in which local businesses engage with the academic sector and Government, knowing what is needed locally and delivering the sort of courses and expertise to get the right balance of skills needs in the area.
Unfortunately, if we look at the national picture, central Government policy engages with the regions only on its terms, seeking insights of the problem but not giving direction, and seeking advice but not giving local agencies the funding to be able to deliver on their unique insight and expertise. A particularly bad example of that came to my notice in December.
The BCTG—Black Country Training Group—executive director Chris Luty got in touch with me and other Members of Parliament in the area because the group had lost its apprenticeship funding from the Education and Skills Funding Agency. BCTG is the largest provider of apprenticeships in the Black country. It had tendered for its Government funding to be renewed and, to the astonishment of Chris Luty, was unsuccessful. That meant that all the contracts with SMEs in the Black country would have to be closed, leaving a huge gap in local skills provision for small companies in the area that are vital to the supply chain for Britain’s motor industry.
In all, BCTG has recruited 4,000 apprentices, 750 since last May alone. That is the sort of scale it operates on and demonstrates the gap that would have been left had it not been able to secure the funding. I wrote to the Minister and so did other Black country MPs. To the Government’s credit, they realised that that was an error and changed their decision.
The reason given for the original decision, however, is illustrative:
“The review was conducted by a member of the Agency’s staff who possesses the appropriate technical expertise in the provision of apprenticeship training but who had not previously evaluated your tender.”
If that is not a classic case of Sir Humphrey-speak, I cannot think of a better one. It is outrageous for an organisation so key to the delivery of a vital driver of economic growth in the regions to make such a mistake. That sentence highlights the need for a change in approach to the devolution of skills to the regions.
I realise that other people wish to speak so I will bring my remarks to a close. Enhanced devolution of skills to the new bodies that are being set up affords the possibility and potential of enabling regional and even sub-regional needs to be correctly identified, backed up by initiatives from local businesses working with whatever partners are available to analyse the needs and to address them with the appropriate training and level of funding.
At the end of the day, if we are to be successful, we have to find another way of doing that. The brutal fact is that at the moment we invest billions of pounds into education and skills training but in so many of our vital industries we still have key shortages. I am sure that what is happening in my area is very similar to what is happening in many other areas. Finding mechanisms to devolve skills funding to local agencies is the key to unleashing the skills potential of so many young people and meeting the needs of local industries in a way that has not been done for many years.
Ian Paisley (in the Chair)
Before I call the next person to speak, I remind hon. Members that Front Bench speeches will begin at 10.40 am. I call Rachael Maskell.
Rachael Maskell (York Central) (Lab/Co-op)
Thank you for calling me to speak in this really important debate, Mr Paisley. I congratulate my hon. Friend the Member for Hornsey and Wood Green (Catherine West) on the excellent, comprehensive way that she set out the challenges ahead. I agree with my hon. Friend the Member for West Bromwich West (Mr Bailey) about the importance of seeing the issue in the wider context of the local economy, and I will touch on that in my speech.
Although in York we do not have a devolution deal yet—I trust that the Minister will progress that with expedience—there is a real skills gap in our local economy. We are conscious that we are falling behind as other economies accelerate, such as those of London and the south-east. There is the north-south divide, but there is now an east-west divide, too, because of the progress being made in Manchester with the devolved settlement. That is why it is so important that we move forward on all devolution issues, not least skills.
York’s economy has changed massively over the years. We had a strong industrial base in the confectionary industry and in rail manufacturing, but that has really reduced. The low-wage, low-skilled economy has taken over. We have a very high cost of living but very low wages—some of the lowest in Yorkshire. There is real disparity, which causes pressure and mismatches in our city, where the tourism, hospitality and retail sectors dominate.
I have talked to the Secretary of State for Business, Energy and Industrial Strategy about the urgent need to address the skills deficit in the city. I have been out talking to businesses across the city; they consistently raise that mismatch—particularly the fact that business and IT skills do not come into the economy, and that schools do not prepare children for the modern world of work. Last Friday, I visited York St John University, which wants to help to address the skills gap. I have also visited York College, an outstanding college in my constituency that understands the challenges of the local economy.
I want to raise the issue of co-ordination, which other hon. Members have raised. Businesses, schools, colleges and local enterprise partnerships need to come to one place to discuss the real needs of the economy and how to address skills gaps. I will give a couple of quick examples of that. Engineering is a really important part of York, which is a rail city, but the university offers courses in electrical engineering only. Although the city council has identified rail engineering as part of the footprint, we are not providing the skills in the city for that. The National Railway Museum is about to embark on a new project for a gallery about the future of engineering, to engage girls and boys across the city and the country, but if we cannot follow through on ensuring the learning, that future cannot be delivered.
The digital creative sector is another part of our footprint where there is not that connectivity. There are fantastic facilities and there is a university course, and there are business start-ups, but after that, people have to move out of the local area. We need to be able to grow those skills right through to development and address the real gaps in the economy. The same goes for the bio and agri-tech sectors, where the gap needs to be bridged between academia and applied research. There are real gaps.
We need to be careful about how we balance skills acquisition. Clearly, we see a national education service as important in allowing people to enter the economy at different points in their learning and drive those skills forward, whether from the workplace or from school. We need to make sure that we strike the fine balance between addressing national and local needs in the economy.
There are real challenges in schools. We are not preparing our kids for the world of work young enough. They learn how to pass exams, but not about the life skills that are needed. Business talks about children being “screen deep” in IT skills, but not having the skills needed for the digital economy. T-level assessments have real problems, particularly for agriculture, because the assessments have to take place at a particular time of year, but the agriculture sector revolves around the seasons. Tree surgery, for instance, needs to be done at the appropriate time, not at a time that kills trees. I put that on the Minister’s desk to address. We have real opportunities to engage schools in acquiring the skills that the economy needs for the future. We desperately need a review of the curriculum to ensure that we are addressing those needs, starting at primary school.
I am conscious that other colleagues want to make contributions. Finally, my local college has made a plea to me, as have other further education institutes. If the adult skills budget is devolved, the procurement activities could seriously disadvantage colleges and prospective students. Lessons must be learned from the recent procurement of the non-levy apprenticeship budget, which other hon. Members have spoken about. I trust that the Minister will take that on board.
Karin Smyth (Bristol South) (Lab)
It is pleasure to serve under your chairmanship, Mr Paisley. I thank my hon. Friend the Member for Hornsey and Wood Green (Catherine West) for bringing this debate forward. There has been a great deal of agreement on this important issue.
I was a member of the Public Accounts Committee in the last Session. Colleagues will be aware that the Committee has done a lot of work on the interplay between devolution in cities, skills growth and the further education sector, and the need for more accountability regarding those decisions. It had a discussion about LEPs yesterday. That whole agenda needs to be much more cohesive, and people need to understand about local accountability for the way that taxpayers’ money is spent.
Further education colleges, such as City of Bristol College, which I visited again on Friday, remain part school, part training provider, part higher education college and part community college. That last function is really important to us in south Bristol. As my hon. Friend the Member for Hornsey and Wood Green said, there is competition between schools. In south Bristol alone, there are more than 500 surplus school places, plus the college. The schools are all in competition with private schools, a university technical college and a sixth-form college. That dilutes not only the pool of youngsters going into those establishments, but the money and the opportunity to link up skills. Ultimately, it must dilute the quality. We need a strategic delivery function that does that much better.
The system is complex for youngsters, and for parents. I have spoken to the Minister about that and her Department is working on it. Parents are crucial—as partners, in supporting young people through a complicated system, in giving them opportunities, and in ensuring quality of provision, so that when we support our youngsters into their very different pathways, we are sure about the quality and the reliability of the courses.
I want to mention the collapse of Carillion last week. City of Bristol College stepped in, via the training board, to provide last-minute places. That highlights the importance of sustainability in further education, so that institutions can pick up that work. I will write to the Minister to make sure that the college gets the money to follow those young people, whom the college has done great work in supporting. We cannot allow that quality to be diluted any further.
Gordon Marsden (Blackpool South) (Lab)
It is a great pleasure to serve under your chairmanship, Mr Paisley. I congratulate my hon. Friend the Member for Hornsey and Wood Green (Catherine West) on securing the debate. It has been excellent, thoughtful, positive and full of ideas, and she has led the field.
I am afraid that I do not have time to do full justice to the multifaceted points that my hon. Friend made. She mentioned the co-design of courses and the role of local authorities and their contractors and suppliers. She put forward ambitious and interesting ideas about how we might devolve all 16-to-18 provision, and she mentioned careers funding. I am conscious from my links and discussions with various groups in London—my right hon. Friend the Member for East Ham (Stephen Timms) referred to this, too—that there is huge appetite in London for devolution, for all the reasons that she explained.
I also praise the right hon. Member for Witham (Priti Patel), who drew on local experience to inform her thoughtful comments. I was particularly interested in what she said about careers. I think she used the words “not good enough in their spread”. I do not want to criticise what the Careers & Enterprise Company is trying to do, but one of the central issues in this debate is resources—resources in the centre, and how those resources are distributed. I think that there is some common ground in the Chamber on that issue. Interestingly, she also drew on her DWP experience. In my experience, having spent a long time holding this portfolio and others, if we do not get the mix right between the Department for Education and the DWP, we will not make the progress in this area that we all want to make. That is particularly true in areas such as traineeships.
My right hon. Friend the Member for East Ham mentioned the need for urgency from the Government. He rightly drew attention to productivity issues and to ESOL, which is key. The hon. Member for Filton and Bradley Stoke (Jack Lopresti), in an interesting intervention, made the point that this debate is about not just an economic issue but a moral responsibility. On ESOL, we have a moral responsibility to refugees, people who have settled here and given their work to this country, and many other disadvantaged groups in this area.
The hon. Member for Hornchurch and Upminster (Julia Lopez) made some thoughtful comments about initiatives in her constituency and devolution for London. My hon. Friend the Member for West Bromwich West (Mr Bailey), the extremely experienced former Chair of the Business, Innovation and Skills Committee, mentioned skills shortages; the incident that he raised with respect to a lack of proper supervision points to what we have been saying for the past two years about the capacity of the Education and Skills Funding Agency and the Department to handle such things. The fallout from the machinery of government changes is still causing problems.
My hon. Friend the Member for York Central (Rachael Maskell) rightly drew attention to the skills gaps in her local economy and the importance of issues in the service sector, which I will touch on. My hon. Friend the Member for Bristol South (Karin Smyth) used her experience on the Public Accounts Committee to make some telling points, including one that she has made to me on several occasions about parents being crucial.
We are entering a period of extreme uncertainty regarding our skills base because of the challenges of Brexit, automation, cuts to the adult skills budget, and so on. If we do not have a progressive integrated policy, those things will soon make it impossible for us to build highly skilled local economies or address our productivity crisis. Research commissioned by the Local Government Association reveals that the skills gap is worsening. The LGA says that by 2024 we will lack 4 million high-skilled people to take up available jobs, and will have 2 million too many people with intermediate skills and more than 6 million too many low-skilled people. The Open University has said similar things, and the recent British Chambers of Commerce quarterly economic survey also touched on this issue.
As I said when I hosted the launch of the Learning Revolution Trust’s “Delivering skills for London” report in November, we have to accept and embrace the fact that, for many adults, working models and expectations will continue to change radically. That means that there will be more self-employment, more juggling of multiple part-time jobs, more engagement with small businesses, and more demands on individuals with more complex family structures and needs. I pay tribute to the Learning Revolution Trust for that report, which brought together colleges, council leaders and local players in just the way that they need to be brought together.
We must not forget the people who are often missed out. That report referred to the issue of employing people with disabilities—particularly learners with learning difficulties or disabilities, and people with special educational needs and disabilities. The Maynard review made really important proposals in that area. Will the Minister say specifically what collaboration and co-operation is happening in that respect, particularly with DWP and BEIS? Without their involvement, it will be difficult to take this forward. Add to that the public policy challenges for generations and our exit from the European Union—a lot has been said today about Brexit—and it is clear that the skills system needs to be one of our highest priorities if we are going to escape a shortage of labour when we leave the EU, and when people from the EU who are currently here leave. In that context, we must look at devolving skills budgets.
The Minister will know that in November, England’s seven metro mayors—four Conservative and three Labour mayors—called on the Government to devolve that power much faster. The Minister’s colleague, the West Midlands Mayor, Andy Street—I quote from the Local Government Chronicle—said:
“I believe now is the time for government to go a step further and provide us with the tools to tackle the challenges and seize the opportunities we each face.”
Such requests are piling up across the board.
The all-party parliamentary group for London’s report has been dealt with in great detail. I was privileged to speak at its launch last July. I congratulate my hon. Friend the Member for Croydon North (Mr Reed) and the hon. Member for Bromley and Chislehurst (Robert Neill) on the way that they chair the APPG. My hon. Friend the Member for Hornsey and Wood Green talked about its recommendations, so I will not repeat those, but I will say that, although the report focuses on one city, this discussion can be applied to regions across the country.
While we look at how apprenticeships are funded and how they might be part of the mix, we should explore traineeship funding at local level, too. Later today, I will meet the Association of Employment and Learning Providers and around 40 training providers to discuss a way forward for a programme that they believe the Government have neglected. We need to find ways to use traineeships as a contact point for getting on to apprenticeships and meeting local needs and demands. Another area that my hon. Friend the Member for Hornsey and Wood Green and my right hon. Friend the Member for East Ham touched on is ESOL.
We must remember when we look at local funding that European structural funds have traditionally supported the expansion of apprenticeships and small businesses in areas of the country with strong local enterprise partnerships. The Government have guaranteed funding in this area for the moment, but they have given no guarantee about what will happen when we come out of the EU. Can the Minister tell us what she and her officials are doing to make that clear to No. 10 and her colleagues in the Brexit team? The sum that is potentially available, £725 million, simply cannot be lost from the process.
This call for devolution is not new, and neither are the benefits that would come from it. Back in 2013, my hon. Friend the Member for City of Durham (Dr Blackman-Woods) and I wrote a Smith Institute pamphlet about how the Government and Whitehall had been far too slow to grasp the nexus between skills and sectoral delivery, as well as place delivery. I wrote:
“Put bluntly the age of relying on Government micromanagement and mandarins to deliver what we need in this area has reached a bit of a dead-end.”
I added that
“to encompass new low carbon and hi-tech industries…Such initiatives cannot any longer simply come out of Whitehall”.
The Minister will of course remember what Lord Heseltine said about that issue in his famous 2013 report, “No stone unturned: in pursuit of growth”.
I am hugely conscious of what we need to do for councils, such as mine in Blackpool and that of my hon. Friend the Member for York Central, that were able to create their own apprenticeships in the early 2010s but now, because of funding cuts, are not able to do so. The LGA has put forward an important vision in Work Local, which the Minister should look at as well as IPPR North’s recommendations.
Our national education service talks about how important accountability is:
“the appropriate democratic authority will set, monitor and allocate resources”.
Skills devolution is not just the smart thing to do in the community but the way forward. If local authorities, mayors and combined authorities have the capacity, competence and aptitude to take it forward, the Government need to take a far stronger and more thoughtful look at that.
The Minister for Apprenticeships and Skills (Anne Milton)
It is a pleasure to serve under your chairmanship, Mr Paisley. I congratulate the hon. Member for Hornsey and Wood Green (Catherine West) on securing the debate. We do not have enough time to cover everything. It has been a fantastic debate, and it is useful for me to hear from individual Members. As the shadow Minister said, there is a lot of cross-party agreement on the subject. It is not terribly party political.
The hon. Lady talked about the significant skills gap. I was recently at the WorldSkills competition and conference, and of particular note was that Ministers from about 55 countries all around the world were saying the same thing. This is not a uniquely British problem. There is a skills gap around the world. If we look ahead 10 or 20 years, we cannot think of the jobs that will be available. This is a fast-changing climate.
To give some background on how serious the situation is, the skills for life survey in 2011 reported that 43% of people were found to have literacy skills below level 2 —a good pass at GCSE—and 78% had numeracy skills below that level. Of the respondents, 15% were found to have the literacy skills of an 11-year-old or lower—an estimated 5 million people—and 49% were at that level for numeracy. Therefore, it is estimated that 17 million people have the numeracy skills of an 11-year-old or lower.
According to a 2017 Lloyds bank report, 11.5 million people in the UK are classified as not having basic digital skills. However, increasing numbers of young people are now leaving compulsory education with good standards of English and maths. In 2016, just over 71% of 19-year-olds held a level 2 qualification in both English and maths—the highest figure on record. However, we have a cohort of adults who lack those basic skills.
The hon. Lady was quite right that historically employers’ investment in skills has been poor. Employers and businesses have been bad at investing in the skills of their workforce, and the levy is one way of making sure that that is no longer the case. They pay into an account that must be used for training and assessment.
The hon. Lady also mentioned careers. I hope she has time to read the careers strategy I launched late last year—I spent a lot of time on it. Careers advice has been delivered poorly—I say that not least from my own experiences at school—and the strategy specifically mentions some of the issues she raised. She talked about patchy careers advice. What is the point of education if not to give young people the right start in life? Education is not an end in itself but a launch pad for life. We therefore need careers to become integral to what happens in schools. The largest word on the cover of the careers strategy is skills, because that is what it is about. I am not terribly fond of the word “careers”, because it invokes images that no longer apply. It is about jobs and skills.
It was a pleasure to see my right hon. Friend the Member for Witham (Priti Patel) contribute to the debate. I know how passionately she feels about this subject. As an aside, my hon. Friend the Member for Filton and Bradley Stoke (Jack Lopresti) mentioned the moral case, as did the shadow Minister. I could not feel more strongly that we have a moral imperative to get this right. It is not just about business and the skills needed; it is about making sure that people have a job path and manage to reach their potential in life. It should not matter where they come from, who they are or who they know. Everybody should have the same opportunity.
I urge Members to go into schools and talk about their careers advice, and to look at the careers strategy. There are a lot of requirements—there needs to be a lead on the governing body—and the spine that runs through the strategy is the Gatsby benchmarks.
My right hon. Friend mentioned two examples in Essex. I met a fantastic company in Essex, with 1,000 employees and 54 apprentices at any one time. That company is doing what we need employers to do. If it has a skills shortage, it recruits locally and takes apprentices from level 2 up to level 7, catering in some areas specifically for people with special needs and people on the autism spectrum. It is brilliant.
All the changes brought in have put the Institute for Apprenticeships and employers centre stage. Someone mentioned how the work is led by employers, and in a way it has been devolved to them. They, along with the IFA, can set up the new standards and fill those gaps. My right hon. Friend mentioned the training programmes needed, and that is one way of dealing with that.
Flexibility on the levy came up in the debate. Yes, I am open to extending the levy’s use, but it has been in place for less than a year. We will allow transfers. For me, the levy is something I will review constantly and see how it is spent—it will not be about having a review. What matters is not that we just get apprentices. I want high-quality apprenticeships and the money from the levy to go to where it is needed. There is a lot of money sloshing around in the system, and what matters is that it is not gamed or misspent but spent on the purpose for which it is intended.
On small and medium-sized enterprises, the Government will pay 90% of their training costs, and I believe for SMEs with fewer than 50 employees we pay 100%, so there is nothing to stop them taking on apprentices. The opportunity is there.
Gordon Marsden
I have personal experience of this. The Minister says that the Government pay 90% of SMEs’ costs, but that is only for 16 to 18-year-olds. It would be useful if they were to look at the market for 19 to 24-year-olds as well.
Anne Milton
The shadow Minister raises an important point. There are so many issues I would like to raise—I have all these lovely notes about all the things we are doing. The best response I can give to hon. Members is that it might be useful to set up, along with officials from the Department, a session to let them know what is going on and to get their feedback. That would be a useful way of moving forward, particularly on where we support SMEs, because they are an important part of every local economy.
Although I have lots of things to talk about, I have to conclude. The national retraining scheme, which we have launched, is one of them. We have put £64 million of new funding into early initiatives. I could talk about the skills advisory panels, which will be important in looking at the regional skills issues mentioned by the hon. Member for West Bromwich West (Mr Bailey). I commend what is going on at Dudley College and the local initiatives there. That is exactly the sort of scheme we want to see, and which I am seeing.
T-levels are not in place yet. I wish they were, but they are coming down the road soon. They are part of a consultation. We are also changing completely the approach to careers, and—I am skimming through my notes now—there is the devolution of 25% of the adult education budget. The areas where it is being devolved to have asked for more time, but it will be devolved in 2019-20.[Official Report, 30 January 2018, Vol. 635, c. 4MC.]
None of the skills improvements we want to see will happen through Government action alone. Schools need to see students’ future, not just a set of exam results, as mainstream to their work. Employers need to play their part in building a skilled workforce, and we need a really strong FE sector and those important, independent training providers. That is critical. Parents also need to see that what their children need is a set of skills, not only—and not always—a university degree.
Question put and agreed to.
Resolved,
That this House has considered skills devolution in England.