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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kevin Hollinrake)
It is a pleasure to speak with you in the Chair, Sir Graham. I congratulate the hon. Member for North Ayrshire and Arran (Patricia Gibson) on securing this vital debate.
Despite the shocks of the pandemic, the labour market has recovered well, as the hon. Lady pointed out. The employment rate is at a historic high, and unemployment and inactivity are low by historical and global standards. She is right that employment shortages are a drag on the economy. In many ways, the shortages are counter- intuitive: as my right hon. Friend the Member for Chipping Barnet (Theresa Villiers) said, there was net migration of over 500,000 people last year—a huge amount of immigration. Of course, we need to ensure that the immigration that we get meets the needs of employers.
The shadow Minister, the hon. Member for Chesterfield (Mr Perkins), made an interesting point. It is wrong to look at the issue in the context of the UK alone; the issues affect all developed nations. In fact, the World Economic Forum recently said that labour shortages are apparent across all OECD countries. In the UK, there are 1.187 million vacancies and 1.247 million unemployed people. In the US, incredibly, there are 10.5 million vacancies: 1.74 job opportunities for every person who is looking for a job. On that basis, the US has an even greater problem than the UK. Nevertheless, we have to take the issue seriously, and do what we can, competitively and in an international context, to try to resolve the problem and grow the economy for the benefit of all. Ensuring that the right people, with the right skills, are in the right jobs is essential to achieving that.
The hon. Member for Chesterfield may be aware that both skills and labour shortages have been at the centre of much ongoing work and many discussions across Government. The causes of labour shortages are complex; they are not attributable to any single factor. Broadly, some of the major causes of reduced labour supply include long-term sickness, which has been mentioned, and early retirement—two areas that the Government are making a significant effort to address. Indeed, I will meet next week with colleagues in the Treasury, the Exchequer Secretary to the Treasury, the Minister for Employment and key stakeholders—largely employer organisations—to see how we can address the issues.
Late last year, the autumn statement set out the scope of a review that will thoroughly assess workforce participation early in 2023. Numerous Select Committees have also taken an acute interest in labour shortages. Most recently, the Lords Economic Affairs Committee published its findings on labour supply. I appeared before the Committee and hold the members in very high regard, and I welcome its conclusions and the continued attention paid to labour market policy. A resilient labour market is vital if the UK is to retain its position as a world-leading economy. We must ensure that people of all ages are able to climb the ladder of opportunity and develop the skills that they, the country and business need.
I recognise that, as Members have said, businesses are struggling to recruit the right people and face other issues. The Government are committed to helping businesses that are struggling to get through those issues. The hon. Member for Strangford (Jim Shannon) raised an important point about hospitality, which clearly features in most of our constituencies. I am fully aware of the some of the difficulties that hospitality faces. There is no doubt that Brexit has been an issue, and we should not try to ignore the issues of Brexit. The net migration figure has increased, but the profile of the workers is different, as the hon. Member for North Ayrshire and Arran said. We need to ensure that the supply meets the demand—not least for hospitality. I chair the Hospitality Sector Council, which has a sub-group looking at the issue right now. It includes leading people from the world of hospitality and business representative groups. We are keen to resolve these issues.
I will touch on Brexit. Even though I voted to remain in the European Union, it is wrong to look at it as simply a difficulty for the United Kingdom; there are clearly opportunities as well. One particular opportunity in the UK is the opportunity to mine lithium. We have been able to do that more effectively and quickly than some of our international counterparts, as we have managed to change our health and safety rules to cut some of the red tape and make it more viable.
As many Members have concluded, it is clear that the country has a number of skills gaps and, in certain sectors, those gaps are causing labour shortages. The hon. Member for North Ayrshire and Arran raised the issue of nurses. She is right that we have nurse shortages that we need to fill, despite having 40,000 more nurses than were working in the service in 2010.
I will focus on three core things: what the Government are doing to identify skills gaps; where we see skills gaps and how we need to tackle them; and wider action that we are taking to address labour supply shortages. The Department for Education is leading on improving the collection, analysis and dissemination of labour market information to support decision making by actors across the skills system. That important point was raised by the hon. Member for Wirral West. That will ensure that we can improve the skills system. That work includes a regular cycle of employer skills surveys to gather insights on employer needs and engagement with the skills system.
We have established the Unit for Future Skills, a new analytical and research unit working across Government to improve the quality of jobs and skills data, which will be made more available and accessible to policymakers, stakeholders and the general public, and will support a better understanding of skills mismatches and future demand. The hon. Member for North Ayrshire and Arran may be aware that Skills Development Scotland does similar work to the Unit for Future Skills. Officials from DfE and the devolved Administrations have met to discuss how that work can be shared, and will continue to engage on it.
For England, the Government are also establishing local skills improvement plans; that goes to some of the issues raised by the hon. Member for North Ayrshire and Arran about rural areas and depopulation. The plans will help to forge stronger and more dynamic partnerships between employers and providers, and help to make training more responsive to employer and local market needs.
The hon. Member for Strangford raised the issue of skills in the food production sector. I think he has a Karro facility in his constituency—a pork production facility. That production is key to his constituency and mine. I have visited that organisation and that facility, and I was struck by what it was doing to ensure that it was equipping young people in the local area with the skills that they needed for butchering and the like. Normally, those people would be coming in from eastern Europe, so these things are having specific beneficial effects for young people in our areas. It is key that businesses invest in the skills of their domestic workforce.
Local skills improvement plans in England are already working and making a difference. In the west of England, the local skills improvement plans identified health and social care, aerospace and advanced engineering as the sectors with the greatest skills challenges. We have awarded £2.75 million to colleges in the area to develop new courses and facilities for both sectors, including new apprenticeship routes for allied health professionals.
Margaret Greenwood
The Minister is talking about LSIPs and the areas of skills shortages that they have identified; he has given examples. Will he describe how we will get the investment that we need in adult basic skills? Local employers will not naturally think about people who cannot really read and write very well. My concern is that if they are describing what the offer is, that whole cohort of people who desperately need help to improve themselves may never get any help at all.
Kevin Hollinrake
I think the adult education budget has something to do with that, but the hon. Lady is right to point to the improvements that we need to make in numeracy and literacy. Clearly, that is not directly the responsibility of my Department, but I am very keen to go back to DFE and make sure that it is aware of her views.
On identifying skills gaps, evidence from the Chartered Institute of Personnel and Development shows that 46% of employers reported having hard-to-fill vacancies. The top response from employers with hard-to-fill vacancies has been to upskill staff, which is clearly key. We know which regions have the highest skill-shortage density, and we know about the impact on employers when they lose business. The key areas where we feel that the skills gaps are most acute are workforce sectors with high volumes of vacancies, green jobs, which have been mentioned by many Members, growth sectors, and science and tech. We are committed to tackling these skills gaps through major investment and reforms to skill and further education provision.
I turn to some of the excellent work done by my colleagues in the Department for Education on apprenticeships, which were mentioned by my right hon. Friend the Member for Chipping Barnet and the hon. Member for Chesterfield. There have been over 5.1 million apprenticeship starts since May 2010. In recent years we have transformed apprenticeships, driving up the quality so that they better meet the skills needs of employers. I fully recognise and support businesses’ calls for us to make the levy funds more flexible, but we have to see the issue in context.
Some of the earlier apprenticeship schemes were criticised for not being sufficiently robust and challenging, or of the right quality. It is about striking a balance, but I am very impressed by some of the skills bootcamp-type schemes that perhaps we should focus on in order to give more flexibility. I went to see a new initiative called Trade Up, which seeks to double the number of construction workers. It is a private sector initiative with very short, 10 to 16-week courses, and it involves getting gas fitters and joiners back into the sector.
There are lots of different solutions that we need to look at. The Government have launched T-levels for young people, which will boost access to high-quality technical education. The Government are also committed to ensuring that, at any stage, adults can upskill to reach their potential through skills bootcamps and level 3 free courses for jobs in priority areas. The adult education budget, and giving adults a funding entitlement to get English, maths and digital qualifications, is hugely important, as the hon. Member for North Ayrshire and Arran said.
The Government’s research and development people and culture strategy puts people at the heart of research and development, and sets out our plans to attract enough people with the rights skills across all roles. We are aiming for a full pipeline of research and innovation workers for the future. A huge part of understanding the role that skills play is making sure that we can respond to labour market shortages. The Government are working closely with businesses, and encouraging them to take a stronger role in providing their workforce with skills and training.
Do you want me to conclude, Sir Graham?
Kevin Hollinrake
Okay. I will touch on immigration, because it is hugely important. Clearly, this is a key part of the system. We have the new points-based immigration system, and it is critical to people who voted to leave the European Union that we control migration. Clearly, it is important that we take a pragmatic view. We are monitoring the situation—for instance, we added care staff to the shortage occupation list only this year. I have great sympathy with asylum seekers, and as a Back Bencher I said that we should be more flexible. The issue is one that Members might want to discuss with the Home Office, which has direct responsibility for it.
I thank the hon. Member for North Ayrshire and Arran for securing this very important debate. It has been fascinating and stimulating, and we have had a great discussion on a topic that everyone across these Benches believes is vital.