Education: Contribution to Economic Growth

Baroness Sharp of Guildford Excerpts

Thursday 5th December 2013 Lords Chamber

[Baroness Sharp of Guildford (LD)]

My Lords, I, too, thank the noble Baroness, Lady Morgan, for initiating this important debate. I also thank the noble Lord, Lord Sherbourne, for his extremely interesting maiden speech, in which he attributed to me a particular interest in modern languages. I assure him that, although I chaired the all-party group yesterday, I am not a specialist in modern languages. Rather, I share his interest and the view that we, as a country, are the poorer because we do not put more emphasis on people being able to speak foreign languages. I am very anxious to see that we encourage the study of modern languages in our schools.

I am an economist, not a language specialist, and first came to be interested in the relationship between education and growth when I worked in the National Economic Development Office at the end of the 1970s. I came across the work that an economist called Sig Prais, whose name some noble Lords may remember, was doing at the National Institute of Economic and Social Research. I remember in particular a study that he did of two engineering companies involved in machining, comparing a German and a British company. As it happened, they both used exactly the same type of German machinery, which had been installed at the same time—there was no difference in the capital equipment used by the two companies. Nevertheless, productivity in Germany was twice that of the British firm. He wanted to know why productivity was so much higher in the German firm so he began unpeeling, if you like, the skins of the onion.

He discovered that the main reason why productivity in Britain was so low was that the machinery was down for a lot of the time and not being used. Why was it down? Because the build-up of iron filings in the machinery grew to such an extent that the machines just gave up the ghost. Why did this not happen in Germany? Because every Friday afternoon, the apprentices in Germany stripped down the machines, cleaned them all up and cleaned away all the iron filings. The machines therefore worked practically all the time and were never down. Why did this not happen in Britain? It was because there were no apprentices to do the work. They used to have to call the engineer, just as you do when the Xerox machine breaks down; and, just as when the Xerox machine breaks down, the engineer could not always come the next day. The machine might well be down for two days while they waited for the engineer to come along and fix it.

In Germany, on the whole, the operatives who ran the machines were sufficiently trained to be able to repair the machines on the spot if and when they broke down. Why could we not train British apprentices or operatives in the same way? It was discovered that they had tried to train them but the training programme involved an element of mathematical training. On the whole, the British operatives had not got the basic maths to be able to cope with the fairly elementary training programme that was required. The result was that the British organisation, so to speak, meant that we were the poorer for it.

This led me to have a very considerable interest in this link between education, productivity and economic growth. Quite clearly, these things were very important. That was 30 to 40 years ago and since that time we have taken on board and understood the message mentioned by the noble Lord, Lord Baker. We have seen a series of educational initiatives of one sort or another since then that have tried to address that particular problem, including all the initiatives on apprenticeships of one sort or another, which perhaps are beginning to pay off. However, there is a very real question as to why, 30 to 40 years later, and knowing the importance of it, we are still lagging in these PISA studies.

One answer is that, of course, others have been moving faster than we have. Another answer is that we should not neglect what we have achieved over that period. The noble Baroness, Lady Morgan, spoke about the number of young people achieving five As to Cs at GCSE; but it is not just that. We have quadrupled the number of young people in universities; we are turning out many more graduates than we were at that time. Something like 12% of the age cohort went through to university; it is now 40%. There are many achievements that we can think about.

Secondly, we should realise that it takes time. Within the Sure Start initiatives we have put a lot of emphasis, particularly in terms of trying to cope with the issue of the gap between the advantaged and disadvantaged, on early start and early years education. Your Lordships should remember that those who were in Sure Start when we had the expansion of that in the early 2000s are only just 15 now. We need to be watching the achievement of our 15 year-olds. Back in the 1970s, the Americans had a programme called Head Start that did precisely the same. They wrote it off after 10 years but discovered, 25 years later, that it had had a major influence on the young people who had benefited from it. It takes time for these programmes to work their way through.

Thirdly, we should recognise that it takes two to tango. In my preparation for this debate I was interested to see the work from the UK Commission for Employment and Skills. It pointed out that there is a demand as well as a supply side. It is not just the Government funding apprenticeships and so forth; we have to look at what industry is doing and see that there is a demand. I am conscious of the fact that, in two respects, the UK lags behind here. One is that industry fails fairly considerably in its spending on research and development. The second is that, similarly, although it spends £49 billion a year on what it claims to be education and training, much of that goes to high flyers and a lot of it is concerned with the wages of those concerned.

What do we need? Above all, we need consistency. The noble Baroness, Lady Morgan, mentioned that in London the message is one of success, in some senses; we have managed to turn it round. However, if I look only at vocational education, I see the failure of the number of initiatives we have had over this course of time—TVEI, TOPS, WOPs, academic or vocational GCSEs, vocational A-levels, diplomas—and a failure to pick up, for example, on the Tomlinson report. I congratulate the noble Lord, Lord Baker, on UTCs, which are a very good answer to this. At long last, we have achieved something there. Nevertheless, there has been total inconsistency. On teacher training, the noble Baroness, Lady Donaghy, mentioned how important the quality of teaching is. Yet what have we done? We have turned the whole thing upside down, just when we were beginning to achieve something.

I echo so much the plea made by my noble friend Lord Storey that there should be consistency. As the noble Lord, Lord Nash, mentioned on Tuesday, we should stop throwing stones at each other. There is political consensus on what we want to achieve. We ought also to try to create political consensus on how we achieve this and commit ourselves to pursuing a programme consistently over 10 or 20 years, not chopping and changing.