Economic Prosperity and Employment

Baroness Donaghy Excerpts

Thursday 18th July 2013 Lords Chamber

[Baroness Donaghy]

My Lords, I thank my noble friend Lord Haskel for initiating this important debate. I will concentrate on a couple of things that the Government should not be doing and then move on to some large but neglected sectors to which the Government should turn their attentions.

First, the Government should stop messing about on Europe. Of course there is a need to reform its institutions, but the opt-out approach to Europe is counterproductive and isolating. As John Cridland recently wrote,

“we must focus on a positive vision of reform”.

A recent CBI study looked at the relationship between Norway and Switzerland and the EU. Both countries are outside the EU but Norway is part of the single market through the European Economic Area agreement. It pays €600 million a year for the privilege, making it the 10th-highest contributor to the EU, just to be allowed to follow the EU rules as a non-member. A Norwegian conservative, Mr Nikolai Astrup, said:

“If you want to run Europe, you must be in Europe. If you want to be run by Europe, feel free to join Norway in the EEA”.

The Government should also stop trying to kid themselves that they can opt out of the social wage when rights for part-time workers, maternity leave and all the other workers’ rights enshrined in various directives have become part of the fabric of society and the expectation of a new generation of workers. Not just the trade unions will resist the undermining of those rights.

My second “not” is that the Government should not mistake Whitehall reorganisation for progress. Abolishing departments and even non-departmental public bodies is wasteful if the functions have to continue elsewhere. It halts momentum and it is costly. That is not to say that things should never change, but so often the problem is poor interdepartmental co-operation or a Government who want to prove that they are different from the previous one.

The proposal to increase the number of party-political appointees in government departments is another area that will help things grind to a halt. If the proposal is implemented, I doubt that the appointees will be from diverse backgrounds with plenty of management experience—or even engineers, as the noble Lord, Lord Bradshaw, urged us. They are more likely to consolidate the very narrow background of Oxbridge-educated political advisers who have already caused such alienation between the political classes and the population as a whole.

I turn to the areas on which the Government should spend more effort. Two weeks ago the noble Baroness, Lady Shephard of Northwold, initiated a debate on preparing young people for the world of work, and she made a powerful speech about the importance of careers advice in which she said that the Government’s own National Careers Service had estimated that,

“the cost to the economy of young people making wrong choices amounts to some £28 billion”.—[Official Report, 4/7/13; col. 1330.]

In his summary of the debate the Minister acknowledged the importance of careers guidance. However, he preferred to lay emphasis on the role of good schools. Although that is an admirable sentiment for an individual, it does not constitute a national strategy. Without a more systematic reform, it is difficult to see how the reform of vocational qualifications will have the impact that we all desire. The noble Lord, Lord Cormack, and the noble Baroness, Lady Fookes, also took part in that debate and spoke about the “unfortunate attitude” towards those who work with their hands in craft and horticulture. A good vocational system needs to take account of these areas, which have the potential to employ hundreds of thousands of people.

The situation is even worse with engineering, science and technology. The Royal Academy of Engineering has predicted that in the next eight years there will be an average shortfall of 40,000 new graduates in science, engineering and technology every year. In Germany last year, engineering was the most popular choice in higher education, after law. I pay tribute to the university technical colleges, but we need many more of them; we need an initiative on the scale of the Robbins report for HE. As well as meeting the needs of employers, it is clear that an increase in vocational learning leads to lower youth unemployment. Surely there is a clear role for government here.

To conclude, the Government should focus on functions rather than wasteful institutional reform. They should focus on skills, advice and guidance on careers for our young people and do more to promote Cinderella industries, such as tourism, which could lead to quick results on economic growth and youth unemployment.