Skills (North-East)

Ian Lavery Excerpts

Wednesday 27th November 2013 Westminster Hall

[Guy Opperman]

With amazing ability, my hon. Friend has touched on the next key point of my speech. It is not just about numbers; it is about the quality of apprenticeships. It is also about the skills pilot that we have managed to secure in the north-east matching the types of apprenticeship starts to the sorts of businesses in the north-east, to ensure that they are specifically focused and provide what business needs. The Adonis report talked about exactly that point.

In preparation for the debate, I blogged, tweeted and invited comments on the matter. Who says that social media do not work? I was deluged with ideas and contributions, and I thank everyone for taking the trouble to get involved. I was contacted by businesses, trade organisations such as the north-east chamber of commerce, health trusts and even the Department for Education, which was keen for me to advance and support some of its ideas. I spoke to three businesses in particular. SCA is the second largest manufacturer in my constituency. It employs some 400 people, and it is a manufacturing success. Richard Sutcliffe, the factory manager at SCA, has said:

“There is a need to acknowledge that the technical skills/engineering skills that are needed in manufacturing are not currently in place; we are continually striving to encourage and develop the young talent of today.

As the number of apprentices over many years has reduced and many employees come towards their retirement we have a challenge in industry as a whole to plug these gaps. By linking with schools and educational establishments we are keen for people to realise and see that an apprentice scheme is a great/equivalent alternative to university and we must remove the stigma that still exists in some areas.

An apprentice at SCA can also move on after their initial training to complete a degree, giving the person a solid footing in a working environment, a keen skill that can take them in many directions and the opportunity to start life without the burden of excessive debt. We need to encourage and help people realise apprentice schemes are key, current and available for all types of people, whatever their ambitions might be.”

I could not have put it better myself.

I want to give examples of two other local businesses. The first is Egger, in my constituency, which is the biggest private sector employer in Northumberland, with more than 550 employees. Recently, £4 million has been invested in an engineering academy for more than 40 apprentices and other engineering staff, which I opened last month with Michael Egger. He clearly sees his employees as the key to the future prosperity of the business, and the academy is the latest phase in more than £100 million of investment in the Hexham plant over the past six years. Egger’s importance cannot be overstated; it is responsible not only for 550 local jobs, but for 1,500 other jobs that are linked in through forestry and other businesses. I was lucky enough to work on the factory floor as part of Children in Need. I was not very good, but it was a great experience. I particularly liked meeting the apprentices, who were, by and large, from Hexham. They had started in Queen Elizabeth high school and been on away days and visits to the factory, after which they followed the apprenticeship path, which enabled them to get a local job with a local firm and live at home. That, surely, is the way forward.

[Ian Lavery (Wansbeck) (Lab)]

I congratulate the hon. Gentleman on bringing this important debate to Westminster Hall. Are the valuable apprenticeships that he has mentioned ones that last for three or four years, in which apprentices work on the shop floor and in college, and are guaranteed a job at the end? In other words, are they indentured apprenticeships as we knew them, or do the apprenticeships last only six months, with only the possibility of the job at the end?

[Guy Opperman]

I thank the hon. Gentleman for his contribution; it is a perfectly fair point, which the Adonis report deals with. The north-east skills pilot is an attempt to achieve that. Some are shorter apprenticeships—no one would deny that—but the majority are exactly what he and I, who are of venerable years, would understand to be a traditional apprenticeship. [Interruption.] The hon. Gentleman is looking at me as though I am ageing him too much. I am sure he is still a stripling.

Yesterday I spoke to Bob Paton, another of my constituents from the Hexham shire, who took time out to come and talk to me on exactly that issue. He described the apprenticeships offered by Accenture, a big multinational of which he is a director. Accenture’s IT apprentices spend three years in the business and complete coursework and college work on a repeated basis, at the end of which they can achieve a university degree. The apprentices are working and learning, and they achieve both an apprenticeship and a degree.

[Guy Opperman]

I thank my right hon. Friend for that point. He was not quite in his place when I said that my key desire arising out of this debate was for a technical college for Northumberland, Gateshead, Tyne and Wear. At the moment, there is the potential for a college linked to Hitachi in Durham, but we need something in the northern part of the north-east to address the skills gap between school and a job, which is central to fulfilling the manufacturing and engineering demands of our businesses.

[Ian Lavery]

I apologise for missing the start of the debate; I was not late, but it started slightly early. I have not heard the hon. Gentleman mention Northumberland college in Wansbeck, which has developed into a really good force for further education, apprenticeships and meeting the skills gap. We really need to encourage Northumberland college and the Kirkley Hall campus in the hon. Gentleman’s constituency, because the college has great potential.

[Guy Opperman]

It is in no way the hon. Gentleman’s fault that he missed my elaborate description of how wonderful Northumberland college is, because we started early. The Minister and I went to Kirkley Hall and visited parts of the site. As the hon. Gentleman knows, another branch of Northumberland college has opened in Hexham, so quite a small hub has expanded to other parts of the region. That addresses the hon. Gentleman’s point and that made by my right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith).

When Bob Paton came to see me yesterday, he told me that Accenture is not only increasing its job numbers, but recently took on 38 new IT apprentices, working with the local college. He reckoned that he had

“the biggest and best…higher level IT apprenticeships in the country,”

and the programme is expanding. We do not just need manufacturing and engineering apprenticeships, but IT apprenticeships. We need to encourage people to take on such jobs.

I could give other examples, but I do not want all my speech to be about the fact that Nissan is offering enhanced apprenticeship programmes, enabling new recruits to work in manufacturing production; the fact that Sembcorp Utilities UK is recruiting 100 new apprentices aged 16 to 18 to do three-year apprenticeships from 16 onwards; the fact that we need more work like that of the North East Skills Alliance for Advanced Manufacturing, chaired by Nissan and the Engineering Employers Federation; or the fact that the North East Skills group does good work.

I cannot praise enough the campaigns run by The Journal and my constituent, Brian Aitken, who has pushed the excellent “Proud to Back Apprentices” campaign in the past year. Nor can I praise enough events such as the north-east engineering and manufacturing careers conference, which brings teachers from across the region together to hear first hand about opportunities in the sector, or schemes such as the primary engineer scheme, which encourages girls and boys from a very young age, in first and primary schools, to become the engineers of the future, by forging links with local businesses. I welcome the work of the local NHS trust and the Department for Education in boosting schemes such as the apprenticeship bursary scheme for the early-years profession.

I want to turn to the North East local enterprise partnership, because we cannot discuss skills and apprenticeships without addressing the role of the LEP and the Adonis report. I pay tribute to everyone involved in both the organisation and the report—in particular, Ed Twiddy, Paul Woolston, Justin Welby and Andrew Hodgson, the latter of whom specifically addressed the problem area of skills.

We in the north-east welcome the fact that we have been chosen for the skills pilot. That sends a message that the north-east is not only open for business, but a skills hub and a destination for the sorts of jobs we wish to see. I call on the Minister to set out what the skills pilot is doing and what the next steps will be if it is successful. How can key local businesses and stakeholders influence the development of the skills revolution in the north-east? We do not need a route map set in stone by Government, but we do need a clear direction of travel, allied to the Adonis report, setting out the hurdles we need to cross along the way.

No other region has addressed its strengths and weaknesses as the north-east has with the Adonis report. It was business-led, written by experts, apolitical, hard-hitting and realistic. It pulled few punches. It celebrated the region’s assets and successes, but acknowledged that successive Governments have struggled to improve job numbers, the skills deficit and university starts, or to grow the regional economy, which was such a powerhouse in days gone by. At the heart of the report lies a desire for more and better jobs. It identified the crucial lack of private sector employment, but, to quote from the report:

“More jobs alone will not re-balance the economy. The North East needs higher skilled and higher paid jobs to produce an economy which matches others and provide the quality of opportunities its residents and young people need to prosper.”

An alternative way of looking at the problem was provided by the recent debate on how Governments, of any form, can address the cost of living as the election approaches. I was interested by the comments of Ross Smith from the North East chamber of commerce and industry, who tweeted, following an article in the New Statesman:

“My answer to this is ‘it’s skills, stupid’—alas that doesn’t fit with easy election messages or election cycles.”

That builds on the famous Bill Clinton comment—“It’s the economy stupid.” I asked Ross to expand on his comment yesterday, as part of the consultation for my speech, and he said:

“The most important factor in raising living standards in the long term is to increase skill levels, so that people can play a more productive part a stronger economy, and be rewarded accordingly.”

He is right and his tweet was right.

My copy of the Adonis report is well thumbed and much written on. I urge everyone interested in addressing the problem to read the report. We need action from big employers, and I have set out what some have been doing. We need the support of media and key partners; it is welcome and expanding. I will address university technical colleges briefly in a moment.

We also need a north-east schools challenge, based on the successful London challenge, to support local partners to achieve a step change in local education. I support the efforts of the local authority seven, and we will talk in the House on another occasion about how the LA7 should be fully supported by one and all. I will, however, make one particular point now. There is a slight problem for small businesses, which are struggling to get the niche, tailored skill sets for their apprenticeship demands. Given the lack of time, I will write to the Minister on that point to set out the issue in more detail.

I shall finish on the point about university technical colleges or UTCs. We need to encourage more people to build vocational skills and not to stop doing so at 16. A key solution in the Adonis report is the creation of UTCs in the north-east. The Adonis report demands four UTCs, but frankly I would take two. We have one in Durham, and I would very much like one in Northumberland or Tyne and Weir. As UTCs have been established across the UK, their success has been dramatically transformative. I will make it my mission to see a UTC created in the northern part of the region. I hope that is something for which the Minister can offer his support. Although the south of the region is making progress, the message is obvious: we need far greater links between business and schools. UTCs make a difference, so we need one.

We can be in no doubt that skills, and apprenticeships in their many forms, are the key to the further improvement of every bit of the north-east, job numbers and growth. The north-east is the cradle of manufacturing, engineering and much more. We are powering the country out of recession. We are the only region with a positive balance of payments. Give us the tools to do the job.

[The Minister for Skills and Enterprise (Matthew Hancock)]

It is a pleasure to serve under your chairmanship, Mr Betts. I will respond to as many of the points that my hon. Friend the Member for Hexham (Guy Opperman) made in his excellent speech as I can. He is a passionate supporter of not only Hexham, but the whole north-east. He made a strong case in an important debate. One particular reason why it is good news that we are debating the north-east approach to skills and apprenticeships is that the region is blazing the trail and is at the forefront of some of our policy thinking, which I shall come to later.

I thoroughly enjoyed my visits to Newcastle college and Northumberland college earlier this year with my hon. Friend. We were photographed in an empty shell of a building and I very much look forward to seeing the college now the new building is up, running and, I understand, buzzing with learners. That is just as well, because the number of over-19s in further education in the north-east went up by 6% in the last year for which figures are available. There is clearly an increasing demand for education and skills at that level, among not only employers—we heard a lot of stories that corroborate the evidence I have on the demand from employers—but students as well.

My hon. Friend mentioned the need for university technical colleges in the area. We warmly welcome all applications for UTCs. We approve those proposed by the strongest groups in areas where new schools are needed most and those that have rigorous education and recruitment plans. I am sure he agrees that it is important to ensure that new provision is rigorous and responds to the needs of local employers, not least because UTCs provide the opportunity for employers and universities to work together, and therefore drive up the standard of technical education between 14 and 18. We are considering the south Durham UTC application, with others we have recently received, and we have interviewed the applicant group. Applicants will be notified of the outcome in the new year. Lord Nash and the Secretary of State will make the decision in due course.

My hon. Friend also talked about the need to improve standards and quality in the skills system. I strongly endorse that point. Last month’s report by the OECD, comparing skills levels across the whole developed world, was a stark reminder of how much more we need to do. We—England and Northern Ireland—were the only country in which the skill level in maths and English of our 15 to 25-year-olds was no higher than that of our 55 to 65-year-olds. In the long-running debate about whether more exam passes mean better education, that is extremely strong independent evidence that we have to stop that flatlining and start improving our standards, because every other country in the developed world is doing that. That is hugely motivating in the task of driving up standards, especially when youth unemployment is far too high, although thankfully it is now falling. At the same time, there are increasing skills shortages, some of which my hon. Friend mentioned.

We have introduced faster and more robust intervention processes for failing colleges and we driven up the quality of provision through a new and more rigorous Ofsted inspection framework. We are reforming qualifications so that we fund only those that employers sign off. I do not know whether my hon. Friend has managed to read Nigel Whitehead’s report, but its recommendations are sensible and are about driving rigour and responsiveness through the adult qualifications system.

That brings me to the proposal by the north-east LEP. My hon. Friend mentioned that it is one of three LEPs through which we are piloting a new mechanism to ensure that there is local influence over the use of the skills system. He said that he was thrilled that the north-east LEP was chosen for the pilot. I would go further: the north-east LEP invented the idea and brought it to us. We were impressed by it, and two other LEPs came on board to ensure that the mechanism was piloted in more than one area. The north-east LEP is not only a leader on piloting; it is a thought leader on how we can ensure that the skills system is responsive to local need.

My hon. Friend asked for details on how the proposal will work. The proposal is that 5% of funding for all adult provision outside apprenticeships will be allocated if, and only if, the provision is in line with LEP priorities. The LEP will have sign-off. Rather than giving 5% of the funding to the LEP, we have instead said that the LEP will have the final say over what is essentially a quality payment—the final 5% of all adult skills funding outside apprenticeships. That will ensure that the whole provision is targeted at LEPs’ needs. There is good collaboration in the north-east between the LEP and colleges, and the proposal will help to incentivise education providers to look to the strategic needs of business—not only directly but through the LEP—and ensure that the LEP focuses on that. Our job is to ensure that there is enough flexibility in the funding system to allow providers to switch provision according to the needs of local private or public sector employers. That will ensure that the system is filling skills shortages.

In the past, when there have been shortages of training in one area, people have come to the Minister and said, “There is a shortage in this area. Can you fix it?” There is one thing I know for sure, and that is that I do not and cannot know, through a central bureaucracy, the skills needs of every area. It is far better to try to make the system responsive to local need, instead of trying to direct solutions to skills shortages from Whitehall. The proposal is about making it easier for colleges to respond to the needs of employers.

The proposal is also about providing capital for skills provision. Capital funding will follow LEP priorities from 2015-16. Very recently, the Secretary of State for Business, Innovation and Skills announced that we would be financing a further £330 million of skills capital in 2016-17, which provides the long planning horizons that many crave. Those horizons have been too short term in the past.

I pay tribute to the work of all those involved in getting the pilot with the north-east LEP up and running as a policy. It will hit the ground running from September 2014. That policy is part of a broader attempt at making the skills system more responsive to employers. I mentioned that it does not cover apprenticeship funding, which is because we have a broader set of reforms on how apprenticeships are funded to ensure that funding is directly responsive to employers’ needs. We will be working through employers. The taxpayer rightly pays a subsidy towards apprenticeships, because if someone is in an apprenticeship, they are not only doing the job but learning. Apprenticeships benefit the employer, the apprentice and wider society. Recognising that, the taxpayer subsidises apprenticeships. We are changing how they are delivered so that the employer has more of a say over what training happens within an apprenticeship. That will ensure that the training fits the needs of the apprentices and the employer, which will drive up standards.

My hon. Friend quoted the views of a local site manager and talked about spreading the word on the benefits of apprenticeships. As the Minister responsible, I could not agree more. It is just as competitive to secure an apprenticeship at a top employer, such as Rolls-Royce or BT, as it is to get into Oxford or Harvard.

[Ian Lavery]

Does the Minister, like me, welcome the announcement by Northumberland county council earlier this week that it has an ambition to double the number of apprentices linked to the council? It is looking to employ 360 apprentices directly with the council. Some 23 apprenticeships will be immediately created, adding to the total of 134 already on the council’s books already.

[Matthew Hancock]

I had not heard that, but at face value that sounds absolutely terrific. We have a goal of making it a norm in this country that every young person who leaves school goes to university or into an apprenticeship. Rather than trying to push them one way or the other, we want to ensure that there are good choices available on either side. Increasingly, employers, whether private or public sector—including Northumberland county council—are introducing an apprenticeship stream in addition to a graduate scheme. The civil service has just brought in an apprenticeship fast stream to match its graduate fast stream. This week, MI5 and MI6 announced that they are introducing an apprenticeship scheme in addition to their more traditional graduate recruitment. That is happening across different businesses and different parts of government. Someone can now become an apprentice spy, which is interesting, although MI5 and MI6 have not yet told me all the details that someone would learn.

We have an ambition, but we will only be able to persuade people that it is the right ambition so long as we continue to drive up the quality of apprenticeships. The very best apprenticeships are world class, but we have to ensure that quality goes up across the board. We have brought in some tough measures to increase quality by ensuring that all apprenticeships last a minimum of a year, that the English and maths requirements are stronger and that there is actually a job. In the past, some apprenticeships happened without a job attached. Those measures have meant that we have had to remove some low-quality provision. In the medium to long term, that is undoubtedly worth it and will ensure that the apprenticeship brand remains strong.

I agree strongly with the point that several hon. Members have made, including my hon. Friend the Member for Stockton South (James Wharton), that apprenticeships need to reflect the whole economy. The old industries in which apprenticeships were strong, such as engineering and manufacturing, are important, but it is also important that apprenticeships cover the whole economy as it is today. They should include professional services and computing, for instance, in a way that they did not in the past.

The north-east LEP is one of our thought leaders, and we listen carefully to its suggestions. I am watching the pilot’s progress closely to see whether it should be spread more broadly. There is no stronger advocate for the passion with which the north-east is coming together to deliver on skills training and ensure that everyone reaches their potential than my hon. Friend the Member for Hexham, although my hon. Friend the Member for Stockton South and all the other hon. Members who have spoken in this debate are strong advocates, too.