Autumn Statement

Lord Macdonald of Tradeston Excerpts

Thursday 3rd December 2015 Lords Chamber

[Lord Macdonald of Tradeston (Lab)]

My Lords, I, too, thank the noble Lord, Lord Carrington, for his introduction to the debate. As a time-served marine fitter, I identify with his comments on apprenticeships, on which I now hope to build.

In his Autumn Statement, the Chancellor announced an apprenticeship levy of 0.5% to be paid by companies with payrolls of more than £3 million per annum, effective from April 2017. It is estimated that this levy will raise £12 billion during this Parliament and help to fund the training of 3 million apprentices.

The Government say that only 2% of UK companies will pay the levy, getting vouchers to offset the cost of training the apprentices in return. The initial reaction of leading employer organisations was to complain that the levy was just another payroll tax on top of the increased cost of pension provision last year and the national living wage which is to be paid next year. By contrast, the response from the Trades Union Congress was positive. I, too, welcome the creation of an institute of apprenticeships to set rigorous standards and monitor the use of levy moneys. This institute is to be independent of Government, with a publicly appointed board of business leaders. I look forward to this businesslike board challenging the Government’s view that 25% of levy moneys would be spent on administration. This new institute will be crucially important to the success of the new apprenticeship system. In appointing board members, the Government should therefore ensure that the practical workplace experience of millions of trade union members is properly represented.

At a CBI conference this week for leaders of medium-sized businesses, the main concern of 36% of those attending was the difficulty in attracting skilled staff, particularly in the engineering and tech sectors. No doubt this helps to explain why most of the delegates reportedly welcomed the apprenticeship levy. The Minister will be aware that the present policy on apprenticeships is widely criticised for putting quantity before quality of training, as the noble Baroness, Lady Burt, mentioned.

A recent Ofsted investigation, Apprenticeships: Developing Skills for Future Prosperity, reported that increased apprenticeships numbers were not well matched to the skills most needed. One-third of skills providers visited by Ofsted were judged not to provide high-quality training. There was also a lack of collaboration between providers and employers. Too few 16 to 18 year-olds were starting an apprenticeship, with too many places going to those over 25. Ofsted’s chief inspector, Sir Michael Wilshaw, concluded,

“Despite the increase in numbers, very few apprenticeships are delivering the professional, up-to-date skills in the sectors that need them most”.

While welcoming the apprenticeship levy, we now need more detail on how the new arrangements will work. Can the Minister tell the House if key sectors with skills shortages, such as engineering, construction and the digital economy, will be given highest priority? How will the new institute for apprenticeships relate to the Skills Funding Agency, an executive agency with an annual budget of £3.7 billion? Will SMEs have access to levy moneys, as well as to the existing apprenticeship pot of the Skills Funding Agency?

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.

Young People: Alternatives to University

Lord Macdonald of Tradeston Excerpts

Thursday 23rd October 2014 Lords Chamber

[Lord Macdonald of Tradeston (Lab)]

My Lords, I, too, thank my noble friend Lord Monks for securing this excellent debate. The growing support for vocational training and apprenticeships is encouraging. As a time-served engineering apprentice, I hope that it restores some of the esteem that vocational training once had.

Labour Party policy on vocational education and training draws on the work of our skills task force, led by Professor Chris Husbands. Labour’s commitment will also be reinforced by the recent report of my noble friend Lord Adonis, Mending the Fractured Economy, in which he advocates a major expansion of high-quality vocational education and apprenticeships promoted locally to address skills shortages. In addition, Ed Miliband appointed Maggie Philbin, the former presenter of “Tomorrow’s World” to chair another task force on digital skills. Her recent report, Digital Skills for Tomorrow’s World, makes many practical and affordable recommendations, starting with schools, where digital training must begin if those who later choose a vocational route are to succeed.

To put that in context, the digital revolution is gathering pace and that will have a profound effect on the alternatives available to young school leavers. The McKinsey Global Institute recently listed what it described as Disruptive Technologies: Advances that will Transform Life, Business and the Global Economy. The first was the mobile internet. The second was the automation of knowledge work. The third was the growing network of sensors embedded in our lifestyles—the internet of things. At number four was that other arcane advance, cloud technology. Fifthly, there was the more familiar threat to jobs: advanced robotics. Those are the five horsemen of the digital apocalypse, as sketched by the consultants of McKinsey.

The risk to jobs is also highlighted by Oxford University academics Carl Frey and Michael Osborne, who conclude that jobs are at risk of being automated in almost half of all occupational categories over the next two decades, including repetitive functions in management and professions largely untouched until now, such as law, accounting, medicine and academia.

It is not easy to give career advice on how young people might shelter from this gathering storm. When the Economist listed the jobs most likely to survive computerisation, in its inimitable way it led with recreational therapy, then dentists, then personal trainers and then—the right reverend Prelate will be glad to hear—members of the clergy. The serious point is that almost all alternatives for young people not going to university will also be digitised; therefore, the factor that might be of most help to most young people will be to improve their digital skills.

The trend in the jobs market points towards self-employment and the forced flexibility of contract work. An insecure portfolio future of short projects, collaboration, marketing and pitching for work will require good social skills and familiarity with all aspects of social media online. A positive hope is that the popularity of social media among young people, with all its risks and allure, will help close the gender gap, with more young women keen to learn digital skills. As we heard from the noble Lord, Lord Addington, technology and online access may also be a new way into work for people with disabilities and could encourage ethnic groups into wider roles across the economy.

I confine myself to recommendations from our Labour reviews on education and the need to start with smaller steps on the first rungs of the ladder. A promising start has been made in English primary schools with a new computing curriculum. The view of Labour and our commissioned digital skills report is that we should now ensure that each school has the funding to support the ambition. Similarly, teachers must be trained in computing as a matter of urgency through properly resourced continuous professional development. Each school could be encouraged to recruit a governor with expertise in computing and they could network best practice across their local schools. Business and professional bodies should collaborate to create a national online service dedicated to digital career advice. The pressing importance of digital skills must be acted on now at all levels of education. Additionally, schools could have a key role in hosting community access to digital infrastructure and expertise. Beyond the school gates, as the right reverend Prelate the Bishop of Coventry said, further education institutions could play a key role if they are able to adapt quickly to the new priorities.

In conclusion, I do not think that this Government or previous Labour Governments have done too badly compared to global competitors across the developing digital economy. The digital revolution is now global and constantly changing, so a degree of confusion and false starts is inevitable. However, a priority for government in this area must be to reduce the bewildering number of overlapping organisations and initiatives—that blizzard of acronyms referred to by my noble friend Lord Monks. The Government should rationalise, cut duplicated costs and ensure that young people exploring their career options can navigate the digital world with skill and confidence. Can the Minister tell the House what progress they have made in cutting through the clutter?

Welfare Benefits Up-rating Bill

Lord Macdonald of Tradeston Excerpts

Monday 11th February 2013 Lords Chamber

[Lord Macdonald of Tradeston]

My Lords, as previous speakers have emphasised, the impact of the Bill must be seen in the context of the radical reforms taking place across the welfare system—reforms which my noble friend Lady Hollis denounced so comprehensively in her coruscating and, indeed, moving speech following the equally persuasive critique of the right reverend Prelate the Bishop of Leicester.

At this late stage with so many criticisms so well expressed, I say simply that disabled people have suffered particular uncertainty and distress. Unfortunately, the changes proposed to their benefits in the Bill add more uncertainty. Yet, when announcing the Bill last year, the Chancellor said that he would exempt some benefits for disabled people and carers from the 1% cap on uprating. Indeed, the exceptions of disability living allowance and the support component of employment and support allowance are to be welcomed as an acknowledgement that disabled people need additional protection in these difficult economic times.

Regrettably, however, these protections do not go far enough to protect disabled people who have collectively experienced an estimated drop in income of £500 million since the emergency Budget of 2010. The reality is that measures in the Bill mean that many disabled people and their carers will experience cuts in the support that is essential if they are to cope with and overcome the barriers and extra costs that they face as a result of their disabilities. A serious concern relates to the changes around the employment and support allowance. The noble Lord, Lord Low of Dalston, has already explained in detail how the disabled will be left worse off. I will not repeat his excellent analysis, except to remind your Lordships that these cuts could cost disabled claimants between £63 and £88 per year.

On previous occasions, I have spoken in the House about the difficulties faced by those who suffer from dystonia. I declare an interest as patron of the Dystonia Society. Dystonia is a neurological condition which affects 70,000 adults and children in the UK. It causes involuntary and sometimes very painful muscle spasms, and is experienced by approximately 20% of disabled people with cerebral palsy. Many sufferers receive employment and support allowance, and for some that is essential support. Dystonia can be unpredictable, with symptoms varying from day to day, which makes regular employment a challenge. However, with adequate support, many will endure their dystonic spasms to prove that they are ready to work at least as well as they can. It seems unfair for the support that they should receive to be further threatened by this Bill. I therefore ask the Minister to consider amending the Bill to ensure that all aspects of the employment and support allowance are uprated to keep pace with inflation. I look forward to his response.