Economy: Sustainable Jobs

Baroness Brinton Excerpts

Thursday 27th June 2013 Lords Chamber

Moved by

[Baroness Brinton]

To move that this House takes note of the importance of sustainable jobs to the Exchequer and the British economy.

[Baroness Brinton]

My Lords, three years ago when this coalition Government were first formed, both the Liberal Democrats and the Conservatives made it plain that despite our political differences, and there are inevitably many, we had to come together to focus on the economy, moving the country out of recession, and to get spending back into balance. I think that most Governments across the world have found coping with the effects of the global recession challenging, and we are no exception.

Yesterday’s comprehensive spending review announcement showed that we are not through the tough times. However, talking to businesses, I am beginning to hear a different tone. The heads down, “let’s just survive this” approach is beginning to lift, and for some sectors, notably the knowledge economy, there are some signs of early growth. Vince Cable MP, the Secretary of State for Business, Innovation and Skills, has created an effective industrial strategy, investing £5.5 billion in supporting science, high-tech manufacturing and renewable energy to build jobs for the future, many of which will be competing globally.

This focus on the global market is critical to growth. Some 80% of the UK’s small and medium-sized enterprises are not exporting. While for many local businesses exporting is not appropriate, there are some that would really benefit. Statistics show that there is a 34% increase in productivity in the first year of exporting. It also helps with the survival rates of businesses. UK Trade and Investment has a key role in supporting local businesses as they take their first steps in exporting, which will strengthen their chances of survival and help them to grow.

They also need help from banks. I am pleased that the Secretary of State for BIS has launched the regional growth fund—£2.6 billion—to help leverage additional funding from investors, as well as providing clear expectations of the banking sector in its approach to lending to SMEs. To date, the first three rounds of the regional growth fund have leveraged £13 billion of private sector investment, and either created or protected half a million jobs.

I am less pleased to report that the banking sector still seems to be very slow in responding to this challenge. What measures are the Government taking to ensure that banks lend to small businesses? Without that finance, businesses will find it hard to create new, sustainable jobs.

Jobs are absolutely critical to the economy, and for an individual’s life chances. We need a strong economy to be able to compete on the global stage and we need sustainable jobs for a fairer society, helping everyone to get on in life. Yet business organisations continue to report that serious skills shortages are getting in the way of them competing effectively. Worse, many report losing business to international competitors. The UK Commission for Employment and Skills reports that 16% of vacancies are due to skills shortages; that is, there are not enough qualified applicants for specialist roles such as technicians. Nearly half of those businesses say that they struggle to meet their customer service objectives, and that they also have to delay developing new products or services.

Businesses also report that an estimated 1.5 million employees—that is 5% of the UK workforce—do not have the right skills to be able to carry out their job. This is known as skills gaps in the jargon. This often causes friction, with other staff having to help out, and difficulties in meeting quality standards. Nearly a third of businesses report that skills gaps have increased their operating costs and therefore reduced productivity. The UKCES highlights the importance of workforce skills, making it one of the five drivers of productivity; in turn, that increased productivity will help growth.

Skills are absolutely critical to sustainable jobs. Frankly, UK plc has not done well enough in the past. Future Governments must address this. Courses, particularly in science, technology, engineering and maths, at further and higher education levels, must be promoted and supported, particularly for these critical technician jobs. Core skills in literacy, numeracy and ICT must be strengthened, and it should not be possible to drop either literacy or numeracy at 16. Applied short courses should be available for 16 to 18 year-olds—for example, English for engineers, or statistics for humanities students such as my son, who went on to read psychology at university—that will help give them the skills they need.

Full-time study is not always appropriate for young people. For many, the best route into work is through an apprenticeship. This Government have created more than 1.2 million new apprentices. Last year there were 11 applicants for every apprenticeship, which says quite clearly that currently there are not enough employers offering apprenticeships. Those that do offer apprenticeships use them to train staff over a number of years, so that the progression from intermediate level, at which most young people start an apprenticeship at 16, to advanced level and on to higher apprenticeships is becoming more common.

Last year there were 3,700 new starts for higher apprenticeships—a whopping 67% increase on the previous year—specifically responding to the skills shortages to which I referred earlier. Marshall Aerospace in Cambridge is one such employer to offer apprenticeships across the company, not just in technician roles. Young people from all over the country apply, knowing that they will be supported from the age of 16 right the way through degree-level courses and some postgraduate study for a satisfying job, which also helps the economy and exports. In evidence to the Work and Pensions Select Committee in 2010, the CBI presented data showing that 90% of higher-level apprentices found employment or self-employment at the end of their training and that 40% received an upgrade or promotion shortly afterward. Apprenticeships work.

Since Labour left government, across the country there have been 164,000 new apprenticeship starts in business, administration and law alone, showing that it is not just in technical subjects where there is a large growth. Businesses say how important it is for them to be able to train staff in the work that they want them to do, and they are also able to provide remedial help in literacy and numeracy.

Another myth is that apprenticeships are just for men. The majority of new apprenticeship starts are now women. Increasingly, they are starting in non-traditional female work such as construction and engineering. I concede that they are still very much in the minority but it is an encouraging start.

Unemployment is a scourge and youth unemployment particularly devastating. OECD figures just published show that young people aged 16 to 29 in Britain spend about two years and four months out of work, many having given up, more or less. Andreas Schleicher, the OECD’s deputy director of education, says:

“The short-term impact on individuals, families and communities beg for urgent policy responses; the longer-term impact, in terms of skills loss, scarring effects and de-motivation, will affect countries’ potential for recovery”.

It is worth pointing out that we do not do as badly as many of our OECD competitors. For Spain, the figure is 3.6 years, for Italy 3.5 years, and for Ireland 3.3 years. But he is absolutely right that this must continue to be a priority for this Government. That is why the Liberal Democrats pushed for £1 billion to fund the youth contract, aiming to create 410,000 job opportunities for young people, with a wage subsidy of up to £2,275 for employers taking on a young person.

The youth contract is beginning to work. The number of young people deemed to have been unemployed is beginning to reduce. The latest figures show a fall of 185,000—the lowest since the three months to May 2008, before the financial crisis.

There is also evidence to show that employers are unaware of the support available. What are the Government doing to ensure that employers get this information? Then further jobs will be created and we will see more young people who were formerly out of work starting on their careers.

I return briefly to the OECD report. The lower your skills level the more chance there is that you will be out of work. Of young people who are unemployed, a quarter are without five good GCSEs, 14% have good GCSEs but no further qualification, and 8% have a degree. That is stark. Skills are essential for jobs in the 21st century. Young people without qualifications need both education and employment, whether apprenticeships or courses at their local FE college. Last year, further education colleges saw an 83% increase in applications from unemployed young people recognising that they needed to increase their skills level. Over a quarter of these moved quickly into sustainable employment as they left their college.

Liberal Democrats believe that careers information, advice and guidance are absolutely critical for young people. While welcoming careers advice now starting at the age of 13, we regret the removal of face-to-face independent advice to all pupils. We want to see more young people moved into vocational training and education that is right for them. The evidence from colleges shows that inconsistent rules about what type of courses are funded, the availability of local jobs and the difficulty of colleges in tracking student progress are the biggest barriers to working effectively with the unemployed.

Worse than that, the APPG for Further Education, Skills and Lifelong Learning recently heard of Jobcentre Plus staff pulling young people off courses at colleges, as it was—in their advisers’ view—time they went for a job interview. They thus lost their place on a course that would have given them a better chance of a skilled job. This silo working between departments needs to stop. Can the list of DWP-approved courses be agreed with BIS, rather than in isolation, to prevent this happening again? It is, of course, a waste of public money, as well as being demoralising for the young people concerned.

Despite problems like this, the youth contract and apprenticeships are clearly having an impact on youth unemployment, unlike the problems with Labour’s New Deal and the Future Jobs Fund during the previous Government, which did not create new jobs or help people into work, and were very expensive. For example, the Future Jobs Fund cost £6,500 for every job it created, and in Birmingham, only 2% of Future Jobs Fund placements actually led to jobs. Compare that to some of the figures that I have referred to earlier in this speech.

We are on the right track. Even though the road from the economic collapse in 2008 is hard, we are making progress. Sustainable jobs are a key part of the rebalancing needed in the economy. We have helped businesses to create more than 1 million private sector jobs since taking power, which has more than offset the number of public jobs lost—painful as that is. We have created 1.2 million apprenticeships and provided £2,000 worth of support for employers. We have created 110,000 work placements for unemployed young people. Being in work improves your health and well-being; it gives workers’ children a better start in life; and it helps prevent isolation and social breakdown. More than this, jobs created to help companies grow increase productivity and the UK’s ability to export and trade abroad, bringing in much needed extra wealth. It is a virtuous circle which will give us a stronger economy and a fairer society in which everyone has a chance to get on in life.

--- Later in debate ---

[Baroness Brinton]

My Lords, I thank your Lordships’ House for a fascinating debate over the past couple of hours and for the contributions that noble Lords have made. My noble friend Lord Teverson rightly focused on the green economy and its critical role in creating sustainable jobs. The noble Earl, Lord Shrewsbury, highlighted the excellent JCB apprenticeship scheme and raised worries about bureaucracy and red tape in the Environment Agency. My noble friend Lord German rightly brought in the plight of the long-term unemployed and my noble friend Lady Sharp, in her usual insightful way, reminded us of the lost generation of 18 to 24 year-olds in the 1980s and that we must never let it happen again.

The right reverend Prelate the Bishop of Bristol talked about the key role of co-operatives and social enterprises in creating sustainable jobs and contributing to growth. Along with the Minister, I loved the idea of the Portsmouth Cathedral Innovation Centre. My noble friend Lord Kirkwood reminded us about careful use of language—the unemployed are strivers too. My noble friend Lord Cotter once again demonstrated his passion for supporting young people into work and talked about the lack of advice for young people in schools about apprenticeships. This must be remedied. My noble friend Lord Shipley spoke about the importance of the regional growth fund and reminded us that sustainable employment is key to social inclusion.

The noble Lord, Lord Wood of Anfield, rightly echoed the concern of my noble friend Lord Kirkwood about zero-hours contracts and part-time employment. I am grateful for the response from my noble friend the Minister on that. I believe that zero hours is a scourge, an abuse of the power of employment and needs to be addressed.

Finally, I thank my noble friend the Minister for all his responses to the varied questions that we have raised for him today, in particular the response about the level of English and maths in apprenticeships. It is lovely that they will be asked to study up to level 2 but my belief is that level 2 is not enough. I particularly thank him for taking up the issue of jobcentre staff pulling young people off courses and colleges to go for interviews. With that, I thank everyone for their contribution.

Motion agreed.