Institute for Apprenticeships and Technical Education (Transfer of Functions etc) Bill [ Lords ] (Third sitting)

Damian Hinds Excerpts

Committee stage
Thursday 20th March 2025 Public Bill Committees

[Damian Hinds (East Hampshire) (Con)]

It is good to see you in the Chair, Ms Furniss, for these proceedings today. I rise to speak against Government amendment 1 and, by extension, in defence of clause 12 as it came out of the other place.

To be clear, we want Skills England to succeed, and clause 12 as drafted will help Skills England to succeed. It is a breathing space clause, allowing Skills England to operate for a year before it has to absorb IfATE’s functions. The Minister just described it as disappointing that this clause was inserted by the other place. I do not think it is disappointing at all. It is a very good thing. It is not anti-Skills England. It is a pro-Skills England clause to give the new body its best chance of success.

My hon. Friend the Member for Harborough, Oadby and Wigston and I did not confer in preparing our notes for this morning, but I, like him, was very struck by what another former Sheffield MP, the noble Lord Blunkett, said in the other place. He noted that with the transfer of functions, close to 200 people would transfer from IfATE over to Skills England and, in his words,

“there is a real danger that IfATE will swamp Skills England at birth.”—[Official Report, House of Lords, 21 November 2024; Vol. 841, c. GC98.]

Skills England has a really important function to perform. Were it to be hampered in that because of operational complexities and difficulties, that would be deeply regrettable. To understand why this is significant, it is important to note that Skills England and IfATE have different shapes—as an analogy, think about different depths and breadths. Skills England will, at least initially, prioritise 10 sectors: the eight sectors identified as growth-driving sectors in the industrial strategy. Added to those we have construction and health and care, which are also essential to some of the Government’s other missions—so eight plus two makes 10. It will develop skills needs assessments for each of those 10 priority sectors to feed into the industrial strategy planning process.

In the noble Baroness Smith’s very helpful letter to peers on 18 March, she says that work is under way on the eight growth-driving sectors identified in the industrial strategy. That begs the question: what about the other two? They are also identified as being crucial to Government missions. Another question: what about the other volume sectors of employment in the economy? I worked in hospitality for almost 20 years before coming to this place. Hospitality is a fundamental part of our economy; hospitality and retail along with care form the biggest employers in our country. There is sometimes a danger with being mission-led that, if something falls slightly outside the scope of the mission, it gets slightly overlooked. I know that many in those sectors would be keen to hear more about that.

On top of the three big volume sectors of hospitality, retail and care, we could also add admin and support—four sectors that collectively historically have accounted for about a quarter of gross value added in this country, but account for about three quarters of the people in the country who are low paid. For many social justice and equality reasons, those sectors need to have proper focus.

That is what Skills England is currently planning to do. IfATE does something rather different and is on a different scale. That goes back to what I was saying about the difference between depth and breadth. IfATE creates and maintains over 600 occupational standards for apprenticeships, T-levels and higher technical qualifications. It works with employers to develop, approve and review occupational standards. It creates and maintains the occupational maps, which group together occupations into 15 routes. It approves, reviews and ensures the quality of approved technical qualifications and their alignment with the occupational standards, and it develops, reviews and approves apprenticeship standards.

Skills England is initially looking at a narrower set of sectors, but with a much broader remit for those sectors; that is what I mean about the difference between breadth and depth. It does more than IfATE, and each of the additional things will, in its own right, take a lot of work to properly establish. That is why I say that clause 12 as currently drafted is a pro-Skills England clause: it seeks to give Skills England the best opportunity to achieve those ends.

Each of the three elements of Skills England’s remit is big. It will, first, identify where skills gaps exist and, secondly, work with the Industrial Strategy Council and the Migration Advisory Committee to address them. Those are the two bodies that have typically been mentioned in the Government documentation, although recently Ministers have also started mentioning, importantly—it should not be overlooked—the Labour Market Advisory Board, which the noble Baroness Smith spoke about in the House of Lords recently. Thirdly, Skills England is to identify the training that is accessible via the growth and skills levy. Each of those is a very large undertaking that will take time to establish.

Let us take them in turn. First, Skills England will identify skills gaps. On the face of it, that might sound straightforward, but it is not. The first question is: what constitutes a skills gap, and what level of detail are we talking about? Are these individual job roles, groups of job roles or industries? It is also necessary to distinguish between skills that need to be provided systemically, in our education and training system, and skills that firms themselves should be able to train for.

We all know that filling vacancies can be difficult. In my constituency, which has had very low levels of unemployment over the past 10 years or so, it is the No. 1 thing that businesses talk about. It is obviously related to skills gaps, but it is not necessarily the same thing as skills being absent. The Minister talked about the need to home-grow our labour, but a key question for firms that are importing labour—this is relevant to some of the sectors I mentioned—is whether they can be persuaded to make the investment and take on, in some cases, the risks involved in not bringing in labour from abroad. That is a question for individual firms. It is also a question for some whole sectors or sub-sectors.

A real example is social care. Most people would say that it is perfectly possible to train people up to work in social care, but for a potentially complex set of reasons—I do not intend to go into it today, and we do not have time for it—people do not want to go into social care. When business leaders complain to us about the lack of skills, they are typically not talking about the sorts of things that can be certificated. They do not say, “Not enough people have grade C or above GCSE maths,” and they do not say that not enough people have a BTec in such and such or an apprenticeship in something else. They mostly talk about soft skills, or what are called soft skills—some soft skills really are soft skills, but some of them are what in business terms are more properly called behaviours: self-discipline, turning up to work on time and so on. It is not clear to me how that set of soft skills—in my experience, the No. 1 thing that businesses talk about—relates to the work of Skills England.

To come back to the specific questions about the skills required for particular sectors or individual job roles, there is also the question of how far into the future Skills England is looking. Is it talking about how we fill the skills gaps we have today, or about the future effect of artificial intelligence on the labour market, and what we should be planning for 10 or 15 years hence?

There is also a question about the level of ambition. There is a certain set of skills required—craft skills and so on—to fill the vacancies we have today, as jobs exist today. But it is also true that this country has a productivity gap against the United States, Germany, France and others. By the way, that has been true every year since I have been alive—I think I said that last Thursday as well. I am 55 today—I do not mean it is my birthday today, but I am 55 now—so that is quite a long time. If we were being really ambitious, we would not ask what skills we need to fill the jobs that we have today, but what we need to do to make up that skills gap, and what skills are needed to fulfil that.

In identifying where skills gaps exist, Skills England will also have to deal with localities, because jobs exist in certain places. It will have to work with devolved Administrations and with mayors, and mayors will have their own views about the skills gaps in their areas. Will there be a hierarchy of analysis? At what level is Skills England going to identify gaps, and to what extent will that fall to the local area? I will come back to that later. It is also true—I have experienced this myself when talking about the adult education budget, for example, with mayors and local authorities—that, quite rightly and understandably, local governance structures and leaders often want more power to be devolved to their local area. Skills England will have to find its place in what can be a tense area.

There is also the question of LSIPs—local skills improvement plans and local skills improvement partnerships. In the debate on this subject in the other place, Lord Lucas said:

“The word I hear is that LSIPs have been a real success, as they are effective and flexible. It takes a couple of years for the DfE to evolve a qualification but LSIPs can do it in weeks, because they are so focused on the actual local employer need and work closely with a provider.”—[Official Report, House of Lords, 21 November 2024; Vol. 841, c. GC125.]

The Liberal Democrat, Baroness Garden, said:

“I think it is important that the Secretary of State must set the priorities for LSIPs and review them regularly to ensure that their priorities are reflected in national strategies for the creation of standards”.—[Official Report, House of Lords, 21 November 2024; Vol. 841, c. GC106.]

The Minister herself, Baroness Smith, said:

“LSIPs and the employer representative bodies that develop them will also provide important intelligence to Skills England to inform its assessment of national and regional skills, both now and in future. They will work with Skills England to resolve skills gaps.”—[Official Report, House of Lords, 21 November 2024; Vol. 841, c. GC128.]

However, in her letter to peers two days ago, she wrote that Skills England is now—already—responsible for oversight of LSIPs and relationship management for all 38 of the designated employer representative bodies, but also that LSIPs will be a joint responsibility between mayoral authorities and those employer representative bodies.

Devolution is increasing, so the other part of the background is the English Devolution White Paper. At the same time as we are creating Skills England to be the uber skills authority in the land, the foreword to the White Paper, in the hand of none other than the Deputy Prime Minister herself, says:

“We will give Mayors strong new powers over...skills, employment support and more”.

The White Paper states:

“The majority of the Adult Skills Fund is devolved…but we need to go further”,

continuing:

“Strategic Authorities will take on joint ownership of the Local Skills Improvement Plan model, alongside Employer Representative Bodies, which set out the strategic direction for skills provision in an area.”

The question for Skills England, therefore, is how that will work in practice. Clearly, it will take a lot of time and work to make the new structures operational, at a time when the structures themselves are changing in so many areas, with the devolution White Paper being implemented. This is complicated architecture anyway, but potentially something is still missing: ultimately, how we match up demand and supply.

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[The Chair]

Order. The right hon. Gentleman is slightly out of scope. I would be very grateful if he would just stick to the different clauses that we are debating today.

[Damian Hinds]

I am very grateful for your guidance, Ms Furniss, and of course I will ensure I do. In my defence —obviously I am not arguing with your judgment— I am trying to illustrate the large number of things that this new body will have to figure out. As Lord Blunkett said, if, at the same time, it is taking on the enormous existing role of the Institute for Apprenticeships and Technical Education, with 200 people coming on board, that makes it harder to figure all these things out, with which I think we all wish the new body and its leadership the very best. But of course I take your judgment.

[The Chair]

Order. I am sure the right hon. Member wishes to hear the Minister fairly soon in response to his comments.

[Damian Hinds]

Of course I do, Ms Furniss. The different parts of Government that the new body will deal with include the Migration Advisory Committee, which is a well-established part of the machinery of Government but takes its commissions from the Home Secretary. This is a quote from gov.uk:

“The MAC bases all recommendations on what it sees as being in the interests of the resident population, taking account that migration has different effects on different groups.”

There will be conflicts between that aim and the aims of Skills England, and who will resolve those conflicts?

The new body will also work with the Industrial Strategy Advisory Council, which is an expert committee reporting to the Business Secretary and the Chancellor of the Exchequer; it is made up of experts, as the name suggests. Interestingly—we will perhaps come on to this in relation to some of the new clauses—the Government will legislate to establish that body

“in statute when Parliamentary time allows”,

which raises the question of why they will do so for that one and not Skills England. It suggests that there is perhaps a hierarchy of these bodies.

There is also the Labour Market Advisory Board. It reports to the DWP’s Secretary of State and its aim is to support the DWP

“to better understand the current state of the labour market, to help design policies and strategies to address key challenges”.

I will not go through all the things that it is supposed to do—[Interruption.] The Government Whip encourages me, but I would not risk your wrath, Ms Furniss, despite her best efforts.

Suffice it to say that there is again a cut-across, because of course, in terms of getting people back into work, which the DWP is focused on, there is some tension. Will Skills England be able to ask, for example, for changes in the conditionality regime operated by the DWP and the jobcentre network, to improve skill matching? Will there be better join-up between DWP work coaches and the National Careers Service?

Finally, the third thing the new body is to be responsible for is potentially the biggest and most controversial of all. In the rubric that the Government put forward, they said the new body would “identify the training” that is accessible via the growth and skills levy. I do not think they actually mean “identify”; I think they mean it will specify what is available to be paid for through the growth and skills levy. I will not go through all the arguments about the levy, but the new body will have to, and the 12 months envisaged under clause 12 would be a good time to do that. It will have to think about the levy’s real purpose and the distinction between firm-specific skills and training, sector-specific skills and training, and generic transferable skills and training. The levy’s purpose was to increase the total amount of investment in human capital in this country, to help our productivity gap and fill job vacancies, and the new body will need carry on with that purpose.

I hope I have given us a flavour—there is more—of the enormous strategic challenges and the enormous job of work for these very good people. There are some very encouraging signs in the appointments the Secretary of State has made, but what these people have to take on is enormous, and we want and need them to succeed in this endeavour. It would be far better to stage the approach, so that Skills England is established first, then takes on the great strategic roles working across Government and throughout the economy, and then, 12 months later, subsumes IfATE.

[Janet Daby]

The right hon. Member speaks of the enormous challenges; might I point out that the enormous challenges were left by the previous Government, which he was part of? The right hon. Gentleman and the hon. Member for Harborough, Oadby and Wigston were both previously in the Government, so it is only right that I set the context of the failings of the previous Government before I attempt to respond to the many, many points, views, opinions and ideas that were offered.

To put it into context, the previous Government had 14 years to deal with the skills problems and the crisis we are facing today. UK employers reported that more than a third of UK vacancies in 2022 were due to skills shortages. Would Members from the previous Government like to respond?

[Damian Hinds]

That is not really the way we do it in Parliament. You respond for the Government.

[Neil O’Brien]

We ask you a bunch of questions. I do not know whether you have noticed, but you are the Minister.

[Janet Daby]

I did not expect the Members opposite to respond anyway.

[Damian Hinds]

I am very happy to—

[The Chair]

Order. Calm down. Sit down, please.

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[Janet Daby]

This mission-driven Government have a plan for change. The need to boost Britain’s skill is crucial. We need skills to drive growth, to build homes, to deliver energy security and to build an NHS fit for the future. We want to move forward and make sure—

[Damian Hinds]

The question is how.

[Janet Daby]

Oh, there is how.

[Damian Hinds]

Go on then.

[The Chair]

Order. Please do not have a conversation across the room.

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[Janet Daby]

I ask the hon. Gentleman to allow me to proceed further, because there is so much to say.

We have announced £300 million of additional revenue for further education, with £50 million available to sixth-form and further education colleges from April, to help to respond to priorities including workforce, recruitment and retention. We are offering up to £6,000 annually through the targeted retention incentive to attract and retain new teachers in critical subjects. We continue to support recruitment and retention through teacher training bursaries worth up to £31,000, tax free, in certain key subject areas. We are providing support for industry professionals to enter the FE teaching workforce through our Taking Teaching Further programme.

On Skills England’s relationship with the devolved Governments in the UK, its territorial scope is England only. The devolved authorities will be essential partners for it to ensure that our skill systems meet the skills needs of the whole UK labour market. It will be vital for us to work together openly and collaboratively. The Department for Education and shadow Skills England have engaged with the devolved Governments and the territorial offices, and there will be regular meetings.

In devolved areas, strategic authorities will play a stronger role in local skills improvement plans, working with a designated employer representative body. We are currently in the process of reviewing the geographies of LSIPs to ensure that, where possible, they align with the boundaries of devolved areas.

[Damian Hinds]

The Minister may be about to come to this, but what will be the relationship between LSIPs, and whatever strategies they draw up, and Skills England?

[Janet Daby]

As I have already said, the devolved areas will work on LSIPs with ERBs and maintain a close and strong relationship with Skills England.

LSIPs provide ongoing mechanisms through which local employers, strategic authorities, providers and other stakeholders come together to identify and address skills needs and issues. This supports Skills England’s aim to have the skilled workforce the economy needs at a national, regional and local level.

In response to the question about the impact of national insurance costs on skills and education, the Government have agreed that public sector employers will receive support in recognition of the increase in their national insurance contributions from April 2025. We are also providing £155 million for post-16 schools, academies and further education colleges. That is an increase of over £1 billion in the financial year 2025-26 for the education sector.