Queen’s Speech

Lord Macdonald of Tradeston Excerpts

Thursday 4th June 2015 Lords Chamber

[Lord Macdonald of Tradeston (Lab)]

My Lords, I follow the noble Lord, Lord Aberdare, in concentrating on the full employment and welfare benefits Bill, which hopes to achieve full employment by helping to create 2 million new jobs. The gracious Speech gave Ministers new duties to report annually on job creation and apprenticeships and to report progress towards, among other things, the Government’s target of 3 million new apprenticeships by the end of this Parliament in 2020. The duty to report annually to Parliament is particularly welcome in relation to apprenticeships. As the noble Lord, Lord Aberdare, explained, concerns persist about their availability and standards, and about whether apprenticeships are now defined too widely, to the detriment of school leavers.

By outlining some of these concerns, my hope is that, through the discipline of annual reporting, such concerns will be addressed and progress better measured. If so, we can reinforce the achievements of previous Governments, which were significant. Like many noble Lords, I was saddened by the long decline of traditional craft apprenticeships. In 1997, the new Labour Government found apprenticeship starts had fallen to just 65,000 a year. However, by the end of the third Labour Government in 2010, new starts had risen to 280,000 a year. Even so, the demand by young people for places still far outstripped supply.

The growing cross-party consensus and the need to improve and expand vocational training was further strengthened by the coalition Government, which pledged to increase the number of apprenticeships to 2 million across the last Parliament. But it was the way in which the coalition achieved its target which raised questions that the new Government should now address directly through their annual reports to Parliament. For instance, research funded by the Local Government Association, which is to be published by the Institute for Public Policy Research this month, claims that, since 2010, 42% of apprenticeship starts have been by people over the age of 25, rather than by young people starting work. The IPPR also reports that two-thirds of those starting intermediate and advanced-level apprenticeships were already employed by their companies. The concern is that public money is being used by companies to train their existing staff, which is not an apprenticeship as commonly understood. The LGA says that,

“too many new apprenticeships are low skilled and taken by older people already in work with their employer. Too few new apprentices are school-leavers trying to get their first job”.

Can the Minister say whether the Government share this concern? At present, only about 10% of companies offer apprenticeships and about half of large UK companies employ no apprentices. Given the money and responsibility devolved by the coalition Government to companies, which I support, can we expect the first annual report on apprenticeships to show increased corporate involvement?

That greater employer involvement is especially important in key sectors of the economy such as construction and engineering, where the skills gaps are alarming. The construction industry is expected to create 180,000 extra jobs in the next few years, which is good news. The problem is that the number of building workers retiring will be more than 400,000 by the end of this decade. Perhaps even a skills gap of that size can be closed by importing still more building workers from abroad, but little wonder the Local Government Association says that too few school leavers,

“are getting the construction skills to build the homes and roads our local communities need”.

When it says “too few”, that perhaps refers to just 7,300 apprenticeships across the whole construction industry in 2013, despite those potential vacancies numbered in the hundreds of thousands. There is a similar yawning skills gap in engineering. By 2022, to satisfy the estimated need for 1.8 million people with engineering skills, the number of apprentices and graduates entering the industry will have to double. Can the Minister offer evidence of significant progress in boosting apprenticeships in construction and engineering?

As we have heard, another related concern of great importance is the urgent need to develop digital skills. My noble friend Lord Reid cited the UK’s underperformance in cyberspace. My noble friend Lord Haskel and the noble Lord, Lord Aberdare, in discussing productivity, told the House that earlier this year your Lordships’ Select Committee on Digital Skills, of which I was also a member, published its report, entitled Make or Break: The UK’s Digital Future. We heard evidence that the impact of digital technology on the labour market might put 35% of UK jobs at risk of being automated over the next two decades. The committee recommended that the new Government of May 2015 should develop an ambitious digital agenda to enable the UK to compete with the leading digital economies by the end of this Parliament. We also concluded that a better co-ordinated response across government was a high priority for action in schools, colleges, universities—indeed, in almost every sector of our economy—to ensure that the UK adapts rapidly to this unstoppable digital revolution. Specifically on apprenticeships, we suggested that a government objective should be the inclusion of a digital skills element in all apprenticeships.

I look forward to the Government’s response to our report on digital skills and the subsequent debate in your Lordships House on its recommendations. The UK’s pervasive skills shortages and the profound impact of the digital revolution require a strong, co-ordinated response across government. I hope that our make-or-break agenda for action is seen as a constructive contribution to future strategy. If in doubt, the Minister might ask her colleague, the noble Earl, Lord Courtown, who was a member of our committee and who knows a great deal about the subject.