Skills: Importance for the UK Economy and Quality of Life

Lord Willetts Excerpts

Thursday 9th May 2024 Lords Chamber

[Lord Willetts (Con)]

My Lords, I congratulate my noble friend Lord Marks of Hale on a wonderful maiden speech. He is assured of a very warm welcome to our House. He gave an important and topical reminder of the dangers of anti-Semitism. For many of us, Lord Sacks is an excellent example of how the wisdom of the Jewish tradition can be of value to us all. The athleticism of the noble Lord, Lord Marks of Hale, is also clearly very impressive. We look forward to seeing his running shoes alongside the mobility scooters downstairs. I am sure that he will be an important contributor to our debates in this House.

I also congratulate the noble Lord, Lord Aberdare, on opening and setting the scene for this important debate on skills. I draw the House’s attention to my interests.

I will focus on two issues. The first is the future of BTECs, which are important vocational qualifications, introduced as a skills reform in the 1980s—I am looking across to the former Secretary of State—and which play an important role in providing vocational qualifications today. The Government appear to believe that they can defund BTECs and everyone will instead move on to T-levels, but the figures do not bear that out. In 2021, 5,300 students started T-levels, and one-third dropped out, compared with one-fifth dropping out from other vocational qualifications and one in 10 dropping out from A-levels. The Sixth Form Colleges Association estimates that, in comparison with the low numbers doing T-levels, defunding BTECs could result in 155,000 students not having a level 3 qualification that they otherwise would have secured through the BTEC route. I very much agree with the warnings from the noble Baroness, Lady Garden, on that issue.

BTECs matter. They are a route into degree apprenticeships, to which Ministers rightly attach a lot of importance. They are a route into higher education, with perhaps 60,000 people getting places in higher education as a result of BTECs in important vocational courses, such as nursing.

We have discussed BTECs in this House before, and I informed the Minister that I would raise with her the assurance that she gave us in a debate in this House on 7 April 2022:

“I know that noble Lords are all interested to see the provisional list of qualifications that overlap with waves 1 and 2 T-levels. I want to be absolutely clear to your Lordships today that through this process we expect to remove public funding approval for just a small proportion of the total level 3 offer, including BTECs. This will be significantly less than half”.—[Official Report, 7/4/22; col. 2202.]


That quotation from Hansard was the assurance she gave us approximately two years ago. I would be very grateful if she could update us on how the defunding of BTECs is progressing. It is possible that, in her statement to us two years ago, when she referred to “this process” she was not referring to the full defunding of BTECs but simply to overlap. I would very much like to hear the Government’s estimate of the total number of BTEC and other advanced qualification enrolments, after they have completed the full defunding process. A useful baseline is the 248,000 BTEC/AGQ enrolments in 2022-23. What is the Minister’s latest estimate of how many BTEC courses will be defunded? How many people will be enrolling on BTECs at the end of the full process of defunding BTECs, compared with that baseline of 248,000? As I said, I gave the department advance notice of this question and very much hope that, in the light of our previous debates, we will get those estimates today.

I also ask the Minister—given the slow take-up of T-levels, and given that we now know the Government do not see T-levels as part of a long-term framework—whether they are in turn going to be replaced by this new advanced qualification. Is there not an even stronger case for pausing the defunding of BTECs to reduce the risk that tens of thousands of young people might find themselves without any suitable qualification that they can study and end up not in education, employment or training? It would be a tragedy if the defunding of BTECs have that result. Given the latest information on the uptake of T-levels, I very much hope the Minister will be able to make some concessions on that.

The second issue I want to briefly touch on is degree apprenticeships. I very much welcome degree apprenticeships—they are an important part of the options available. It is just worth, again, putting the figures in context. There are now about 40,000 enrolments in degree apprenticeships, but half those are by people aged over 25. They seem to be particularly taken up by mature learners. We have about 20,000 young people starting degree apprenticeships, about 10% of the total number starting in higher education.

The noble Lord, Lord Aberdare, rightly raised the question of the apprenticeship levy and the pressures on it. Degree apprenticeships are funded out of the apprenticeship levy. They are particularly expensive programs. If they are a significant claim on the apprenticeship levy, their growth is surely part of the answer to the question put by the noble Lord, Lord Aberdare: why are we seeing such a decline in the number of young people doing apprenticeships and apprenticeships at levels two and three? The answer is that this fixed pot of money is being increasingly deployed for degree apprenticeships.

I wish to see more expansion—as the noble Lord said—of apprenticeships for younger people and at lower levels. I urge the Government to consider funding degree apprenticeships out of fees and loans, just like the rest of higher education, to liberate funding for more apprenticeships. That would also have the side effect that, instead of trying to drive people on to degree apprenticeships by scares about the fees and costs of higher education, we would have a shared interest in explaining to young people that they do not pay for their higher education courses upfront and they should have the option of a growing number of degree apprenticeships alongside other higher education qualifications.

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[The Parliamentary Under-Secretary of State, Department for Education (Baroness Barran) (Con)]

My Lords, I am grateful to all noble Lords across the Chamber for their contributions. I thank the noble Lord, Lord Aberdare, for securing this very important and well-supported debate. It was an honour to be present to hear the maiden speeches of my noble friends Lord Marks of Hale and Lord Elliott of Mickle Fell. Listening to a maiden speech reminds us all just what a privilege it is to serve in your Lordships’ House.

If I may, I will step back and remind noble Lords what the Government are looking to achieve with our overall programme of skills reform. The noble Lord, Lord Aberdare, started by talking about the need for a strategy. I hope he recognises many, if not all, of the seven points in his speech in the Government’s approach.

The Skills for Jobs White Paper, published in January 2021, is the blueprint for our reforms. It sets out the case for change and the vital need to drive up skills in our country. We know that a third of productivity growth can be attributed to increases in skills levels. I join other noble Lords in thanking my noble friend Lord Baker for his work over many years to bring a focus to the skills agenda. But we still face significant gaps in skills at higher technical levels, with level 4/5 being the highest qualification for 10% of adults, compared to 20% in Germany and 34% in Canada. 

My noble friend Lord Patten was absolutely right to highlight the importance of improving productivity in the public sector as well, and my noble friend Lord Holmes was right to stress the importance of inclusivity and innovation in developing skills programmes.

The gaps in our skills are creating significant challenges in the labour market. As we heard from a number of noble Lords, employers report that they cannot find people with the skills they need, particularly the technical skills that drive innovation and enable adoption of new technologies. I acknowledge the points raised by the noble Baroness, Lady Coussins, regarding foreign languages, but I may need to address some of them in writing.

As it stands, a quarter of job vacancies in the UK are due to skills shortages. Some estimates show that, by 2030, we will face a global skills shortage of 85 million. There are major challenges for the future, as we know from research published by the department’s Unit for Future Skills, which estimates that between 10% and 30% of jobs could be automated through AI. The significance of AI was brought out powerfully by my noble friend Lady Fairhead. That is why we have introduced a series of reforms, with the aim of developing a world-leading skills system that is employer-focused and fit for the future. This is backed by an investment of £3.8 billion over the course of this Parliament to strengthen higher and further education. The noble Baroness, Lady Wolf, spoke about the need for stability in the skills system. Probably the strongest thing we hear from employers is that they want stability so they can plan and invest.

The noble Baroness, Lady Wilcox, asked about opportunities for lifelong learning. I remind her of the important lifelong learning entitlement, which will transform opportunities to upskill, reskill and develop skills throughout one’s lifetime.

I will divide my remaining remarks into three broad categories, focusing on an employer-led skills system, our support for priority growth sectors, and the reform of qualifications. I hope that addresses the spirit of the remarks made by the noble Lord, Lord Birt, about looking at this issue in the round and not in a fragmented way.

As the noble Lord, Lord Aberdare, said more eloquently than I can, employers need to be at the heart of our skills system. The Government have worked hard to bring education and business together so that skills and training provision directly support economic growth and productivity. The Government are proud of their new high-quality apprenticeship programme. Nearly 700 apprenticeship standards are now available, covering around 70% of occupations in this country. The noble Lord, Lord Aberdare, asked about the drop in the number of apprenticeships. I think he knows what I am going to say: we focused very much on quality, so we took out apprenticeships that did not deliver for apprentices. I say to the noble Baroness, Lady Wilcox, that I am not sure what changing the name of the apprenticeship levy achieves, but I think that Labour’s proposals are estimated to halve the number of apprenticeships, which would have a very serious impact on our economy.

I thank my noble friend Lord Harrington for acknowledging the value of the apprenticeship levy. I will address some of his concerns, and those of the noble Baroness, Lady Garden, about reform of the levy. We already pay 100% of the apprenticeship training costs for 16 to 21 year-olds in respect of SMEs. We have also doubled the levy transfer limit from 25% to 50% so that levy payers can maximise the benefit of their levy funds.

The noble Baroness, Lady Wolf, gave us her expert insight into the importance of level 3 apprenticeships. As she is aware, they are the most popular apprenticeships, accounting for 43.3% of starts in the current academic year. We now have 229 apprenticeships standards at level 3 and an active apprenticeships campaign promoting both level 2 and level 3 apprenticeships.

My noble friend Lord Harrington noted the importance of manufacturing apprenticeships. The Government are investing £50 million in a two-year pilot to support providers to deliver more high-value apprenticeships, particularly in areas such as engineering, advanced manufacturing, green technologies and life sciences.

My noble friend Lord Lucas talked about the importance of micro-credentials. He will be aware that we have introduced skills bootcamps, which provide flexible training for adults aged 19 and over, which are directly linked to roles in priority sectors. These, again, were courses that were designed and delivered in partnership with employers to respond to their needs. There are now more than 1,000 skills bootcamps available across England.

Turning to the local skills improvement plans, I thank the noble Baroness, Lady Lane-Fox, for her leadership in this area. I was glad to hear how important and innovative that direct link is—if I followed her remarks correctly—between business, higher education and further education, just getting people in the room together to work out what an area needs.

The noble Lord, Lord Aberdare, asked about oversight of the LSIPs. The employer representative bodies are now leading on implementation and review of the plans, and each of those bodies will publish a public annual progress report in June 2024 and June 2025, setting out their progress.

We also think the introduction of institutes of technology is extremely important. They are collaborations between colleges, universities and business, designed to deliver the best technical education and help businesses to get the workforce they need. We will have 21 of these new institutes in place from September.

The noble Lord, Lord Mair, said that—I hope I wrote this down correctly—20% of adults in Germany have higher technical qualifications, and that this is an important gap in our skills landscape. That is why we have introduced HTQs to meet exactly that need at levels 4 and 5. They have a quality mark that is awarded only to those qualifications that deliver the skills employers need. That also speaks to the point about recognition of qualifications that the noble Earl, Lord Clancarty, referred to. To date, 172 qualifications have been approved as HTQs across seven routes. The Government have also sought to prioritise five sectors that are critical to driving our growth in the 21st century: green industries, digital technologies, life sciences, creative industries, and advanced manufacturing.

The noble Baronesses, Lady Hayman and Lady Bennett of Manor Castle, and the noble Lord, Lord Mair, all talked about the importance of green industries. The net-zero growth plan sets out how the Department for Education is empowering people to get skills for green jobs, but this challenge is a very significant one, whether it be in relation to workers in offshore wind or, as the noble Baroness, Lady Hayman, used as an example, in relation to heat pumps. We are funding a range of apprenticeship standards in green occupations, including level 4 electrical power networks engineering and new low-carbon heating technician apprenticeships. We also have T-levels to support this area in construction engineering and land management.

The noble Baroness, Lady Hayman, asked about the nature action plan. On timing, the technical answer is “soon” but not “in due course”—that is the good news. We have made a public commitment that it will be published in the first half of this year, and that public commitment still stands. I think that is “soon”.

Digital technologies are a foundation for our economy, but 18% of the UK labour force do not have the essential digital skills that they need for work. The noble Lord, Lord Griffiths of Burry Port, asked about cross-departmental working. As an example, we are working closely with DSIT to convene the Digital and Computing Skills Education Taskforce, aiming to increase the number of individuals taking digital and computing qualifications and attracting people into digital jobs. We have invested over £100 million in the National Centre for Computing Education, to improve teaching of and participation in computer science GCSE and A-level.

I recognise very much, in my noble friend Lady Fairhead’s comments about AI, the pace of change and the difficulty in government to stay ahead of the curve. I hope the House agrees that my right honourable friend the Prime Minister has given great leadership in the area of ethical AI and safety in AI. My colleagues in the department are also making great progress, and I look forward to being able to update the House on some of those activities in due course.

The third area of focus is on life sciences. The UK life sciences industry is one of the largest in the world, with the potential to create up to 133,000 new roles in 2030. Through the Office for Life Sciences, my department is working with employers and industry bodies to identify and address skills challenges.

The noble Lord, Lord Griffiths of Burry Port, talked about the importance of the creative industries. This is one of the fastest growing sectors of the UK economy, and we have clearly set out the Government’s ambition—shared with industry—to support a million new jobs through education and skills objectives, in our creative industries sector vision. We have developed 57 creative and design occupational standards and we have more flexible training models to support apprenticeships in the creative industries, where short-term contracts or other non-standard employment models are the norm.

Finally, our fifth area of strategic focus is on advanced manufacturing. Manufacturing provides 2.6 million jobs in the economy—7% of total employment—but there are currently 70,000 vacancies. Our plan sets out our ambition to establish an advanced manufacturing skills forum with the National Manufacturing Skills Taskforce. Again, this is supported by skills bootcamps and T-levels, to create a pipeline of skilled workers.

I turn to our qualification reform, which was a subject of interest for my noble friends Lord Willetts and Lord Lingfield and the noble Baroness, Lady Garden. As the House knows from our debates on this subject during the passage of the skills Bill, we aim to fund only qualifications that are of the highest quality and lead to good progression outcomes. T-levels are delivering fantastic results for those 16 to 19 year-olds across the country. I encourage my noble friend Lord Lingfield to perhaps meet some of those students with me, because they are delighted by their courses. Over 30,000 young people have now enrolled on a T-level since their launch four years ago, with roughly 16,000 enrolling in the last year.

My noble friend Lord Willetts asked some very specific questions about the precise number of qualifications that will have funding removed and the number of students taking them. I will cover some of those points now, but I will also write to him and put a copy of my letter in the Library, because this is a slightly complex area. We have not yet finished all our decision-making on the funding of qualifications, but we have published the number of courses and enrolments, rather than students, where either funding is being removed or we are considering it, and I will put the links to that information in my letter.

As the House knows, we are removing public funding from qualifications in phases. The first phase was for 5,500 qualifications, which had either no or very low enrolments. The second phase is for the removal of funding from qualifications that overlap with T-levels. The final phase relates to our approval process through which alternative academic qualifications must go to be funded from September 2025.

On the second phase—the removal of funding from qualifications that overlap with T-levels—waves 1 and 2 covered about 130 qualifications and about 39,000 enrolments. Within that, there were 10 qualifications that had more than 1,000 enrolments. Wave 3 covered 85 qualifications with 17,000 enrolments, and there were five qualifications with more than 1,000 enrolments. Wave 4 is expected to cover around 70 qualifications and 32,000 enrolments, of which nine qualifications had more than 1,000 enrolments. I raise the point about the relatively small number of qualifications with large numbers of enrolments because my noble friend Lord Lingfield talked about T-levels being too complicated, but the existing system is extremely complicated. We want to bring simplicity and clarity to the quality of the qualifications that young people are undertaking.

The final reason why I would like to write to my noble friend, rather than try to explain this in any more detail at the Dispatch Box, is that T-levels are very large courses covering a variety of occupational specialisms and lasting two years. The qualifications being defunded are of different sizes; some can be very small, and one person could take several enrolments. The enrolment data for older-style qualifications cannot be directly compared with T-levels, which are much larger. I assure my noble friend and the House that students will continue to have a range of options available to them at level 3, in addition to A-levels and T-levels, including new technical occupational qualifications and alternative academic qualifications, helping to ensure that all students have a range of options. Each one of those will have employer standards and occupational standards at its heart.

[Lord Willetts (Con)]

I am very grateful to the Minister for the full answer she has already given. Can she give her assurance that the measure of enrolments, which I understand is not the same as the number of students, going back to the baseline that I referred to, will be in her letter to me?

[Baroness Barran (Con)]

It will.

I turn to the wider points raised about the curriculum by my noble friends Lady Sater and Lord Effingham, the noble Lord, Lord Hampton, and the noble Earl, Lord Clancarty. To critics of the curriculum, I say as a starting point that we work very closely with the Education Endowment Foundation, which gives a robust, highly respected and independent evidence base about all the reforms that we have undertaken, so there is nothing ideological in what we are doing in our schools. It is based on the best available evidence, including randomised control trials and other similarly robust approaches.

I absolutely agree with the noble Earl, Lord Clancarty, that it is a bit artificial to separate knowledge and skills; it is the combination of the two that is powerful. I agree with my noble friend Lady Sater about the importance of confidence and agility, but we believe those are based in a knowledge-rich curriculum that fosters competence and mastery in a subject. I may have to include my response about storming the barricades with the noble Lord, Lord Hampton, in my letter. All I can say at this point is that it sounds an interesting option.

In relation to my noble friend Lord Effingham’s question regarding prohibition of phones, if additional evidence emerges that they are a problem—we know that most schools already prohibit phones in some way—we will seek to make our guidance statutory. The noble Baroness, Lady Valentine, emphasised the importance of careers. I remind the House that in the financial year 2024-25 we are investing more than £90 million in high-quality careers provision for all.

I am running out of time. My last point is to acknowledge the point made by my noble friend Lord Lilley that the Government cannot make a success of these skills reforms on their own. Employers must also do more to support the development of workforce skills. We have seen employer investment in training fall by 7.8% in real terms between 2017 and 2022. As my noble friend said, we must move away from reliance on migration to fill skills gaps and towards investment in the skills of our domestic workforce.