EU: Youth Unemployment (EUC Report)

Earl of Liverpool Excerpts

Tuesday 17th June 2014 Lords Chamber

[The Earl of Liverpool (Con)]

My Lords, as a member of EU Sub-Committee B, I should very much like to associate myself with the remarks of my noble friend Lady O’Cathain and other noble Lords in expressing sincere thanks and gratitude to our clerk Nicole Mason, to our policy adviser Paul Dowling, to Deborah Bonfante for the secretarial help she provided, and lastly, but by no means least, to our specialist adviser John Bell. The committee had 20 oral evidence sessions and 54 written submissions. The period from the first call for evidence to the printing of our report, as my noble friend Lady O’Cathain said, was eight months.

During that time I travelled with others to Liverpool, where we met young unemployed people on the Prince’s Trust Fairbridge project. I then went to Lithuania, where I and our clerk attended a two-day chairpersons conference, which our chairman was unable to attend, on the youth unemployment problems in the EU. It has been quite a journey—one which it would have been impossible to undertake without the advice, guidance and support we received from our staff.

The first and perhaps obvious thing I will say is that there is no one-size-fits-all solution to youth unemployment problems, which all countries in the EU face. As paragraph 3 of the summary on page 5 of our report says:

“We consider that the responsibility for dealing with youth unemployment rests primarily with Member States”.

However, much can be achieved by learning from good practice across Europe. We heard from the Centre for European Studies, which attributed Germany’s economic success to reforms enacted by the Schroeder Government back in 2003-04, which involved working with social partners to enact corporate downsizing and restructuring, and wage reticence on the part of the unions.

The TUC, UNISON and the British Chambers of Commerce said that social partnership was less well developed in the UK, but all expressed a willingness to work together on such issues as career advice in schools and improving representation of the young in their organisations. We welcome this increased co-operation and encourage social partners to work even more closely with the Government and with each other.

There is an urgent need for that to happen, because we heard from a number of people, particularly the young, that careers advice in schools was generally poor. A recent report by McKinsey & Company confirmed there was a problem across Europe. The report found that less than one-third of the 5,300 young people surveyed in eight member states felt that they were getting good careers advice at secondary school level. That means that nearly 70% thought they were not receiving good advice. I find that truly shocking. My noble friend Lord Shipley referred to that problem.

By a happy quirk of fate, I have a young student of 17 doing some research work for me this week. Seeking his views on the committee’s report seemed like too good an opportunity to miss. I asked him what stood out as the issue most relevant to him. His immediate reply was the poor quality of careers advice he had received to date. I believe that there needs to be better dialogue between local businesses, schools and career advisers. We recommend in the report that careers advice should be better co-ordinated and that the National Careers Service should be extended beyond the 12 centres currently in the UK and act as a one-stop shop to refer young people to the different sources of careers advice.

We also received evidence about the skills mismatch, which is more of a problem in the UK than the rest of Europe. This is one of the main causes of particularly high unemployment rates among low-skilled young people. We therefore recommended that the Government integrate the EU Skills Panorama into careers services provided at national level through schools, job centres and online resources.

I was surprised to learn from the evidence given to the committee by Go ON UK that digital literacy—that is, IT skills—was worse in the UK than in some other member states, with 6% of young people in the UK lacking the basic online skills required to send an e-mail. The recommendation made in paragraph 103 that we could use,

“the European Social Fund and European Regional Development Fund to support enhanced provision of both basic and higher level ICT training and skills training in general”,

therefore seems particularly relevant, and I hope that this will be adopted by the Government.

During the education process, not enough emphasis is placed on the need to teach and encourage soft skills and social skills. Indeed, another organisation called WORKing for YOUth said that,

“employers tell us in no uncertain terms that it is the soft skills—the communicative skills, the social skills—that they find most lacking by the time people leave school to come to them”.

Surely this is something that schools should be teaching as a matter of course and I hope that message will be received loud and clear.

We were told by the Prince’s Trust how beneficial mentoring can be in building confidence and achieving positive outcomes. It also said that, for certain young people, becoming entrepreneurs and setting up their own businesses was a good option. We need more entrepreneurs, as other noble Lords have said, and I believe that my noble friend Lord Young of Graffham, with the support of our Prime Minister, is proposing that it should be included in the school curriculum and fostered and encouraged as a skill set.

Going forward, local enterprise partnerships—LEPs—can play a pivotal role in identifying the next generation of entrepreneurs. With the funds that they will have at their disposal, is it too much of a quantum leap to imagine that they could set up local quasi-venture capital funds, where good ideas are supported by funding on favourable terms over a reasonable timescale? Perhaps these could be run in tandem with the Government's excellent start-up loans scheme, which includes mentoring support. In the two years since its formation by BIS in 2012, I understand that the scheme has loaned over £91 million to more than 18,000 new businesses. This bodes well for the future creation of many SMEs and, it is hoped, as time passes, large public companies.

Statistics show that countries with a strong balance of payments surplus have low youth unemployment. This means that we have to invent and make things that people want, and this is where the entrepreneurs of tomorrow can make such a tremendous contribution. Last Tuesday in this Chamber, my noble friend Lord Bamford made his maiden speech. It was an excellent contribution, and I hope that noble Lords will bear with me if I quote just one passage from it, as I think it is very relevant to our debate today. The noble Lord said that,

“we have a duty to identify and nurture young talent. That is why, in 2010, we opened the JCB Academy in Staffordshire. The academy is now giving 500 14 to 19 year-olds a hands-on technical education … not just for the benefit of JCB but for British industry as a whole”.

He went on to say:

“We are creating real opportunities in industry for our young people. In recent years there has been much progress in the field of technical education. We need, however, to do more—much, much more”.—[Official Report, 10/6/14; cols. 267-68.]

University technical colleges can play a major part in producing the entrepreneurs of tomorrow, which in turn will make us rediscover our manufacturing skills, promote exports, reduce our balance of payments deficit and, most important of all, play a major part in bringing down unemployment. It is rare indeed to find an initiative with the potential to offer a quadruple win, and I hope that the 17 or so UTCs which we currently have in the UK will prosper and multiply. Indeed, I believe there are plans for another 30 to be opened by the end of 2016, which is really excellent news.

I was also struck by an idea proposed by the noble Lord, Lord Macdonald of Tradeston, in the same debate last Tuesday. He said:

“Finally, it is surely regrettable that half the UK’s large companies do not offer apprenticeships. We can no doubt change that if we sustain the cross-party consensus and support for vocational training. We should also look again at the proposal that the Government use the leverage of their billions of pounds spent in public procurement of goods and services to boost apprenticeship opportunities by requiring companies bidding for larger contracts to offer apprenticeships”.—[Official Report, 10/6/14; col. 270.]

I do not believe that the Minister who is responding to the debate this evening was able to indicate whether he favoured the noble Lord’s proposal, and so I end by asking him whether he might be able to give the House his views on this when he rises to his feet later this evening. I fear that I have gone slightly off piste on this last one and I hope that my noble friend on the Front Bench will forgive me.