Adult Learning

Liam Byrne Excerpts

Wednesday 3rd September 2014 Westminster Hall

[Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)]

It is a privilege to serve under your chairmanship, Mr Robertson. I congratulate my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier) on securing the debate. She has always been a fighter for her constituency and for Hackney college, and she reminded us this afternoon of why we need to spend more time debating this subject, for which we are grateful.

I want to draw out a couple of remarks from today’s debate and to sharpen the points of some of the questions that my colleagues have asked the Minister, but I will start by discussing the skills crisis that so many businesses up and down the country are now confronting. Report after report has been put before us over the past two or three years, all basically saying the same thing: there is a skills crisis in Britain that is holding back growth, destroying productivity and keeping people trapped in the cost of living crisis that has bedevilled this Parliament. KPMG reports that a third of manufacturers would like to reshore work back to this country, but cannot do so due to a lack of skills. The Migration Advisory Committee, which was set up when my hon. Friend and I were at the Home Office, has now added 100 different roles to the shortage occupation list. As a result, under this Government, we have imported 282,000 workers because their skills could not be found at home. In a recent report, Mike Wright, the chief executive of Jaguar Land Rover, said:

“We must double the number of engineering apprentices qualifying at advanced level…by 2020.”

Lord Adonis has said that skills are

“the single biggest impediment to economic growth.”

Report after report says the same thing: we have a skills crisis in Britain that is holding the country back.

The impact on productivity in this country has been devastating. We used to have a phrase for that in public debate—the British disease. A crisis of productivity means that we do not produce as much in this country as the rest of the world produces. Today, the productivity gap is 21% against the G7, meaning that what the rest of the G7 finishes producing on a Thursday night takes us until the end of Friday to complete. There will be no escape from an economy of low wages unless we increase productivity. As the Royal Society puts it:

“Unless we get smarter, we will get poorer.”

As we have heard this afternoon, the problem is not just one of productivity, but one of poverty. Before the summer, we published a big report in Birmingham about child poverty, which has led to a 40% spike in the number of children presenting in A and E units having tried to take their own lives. The majority of children in poverty in Birmingham are in families where people are working. How do we raise family living standards in a great city such as Birmingham? There is only one way: raising productivity and therefore raising skill levels. We have heard this afternoon about a £958 million cut in the adult skills budget. Overall, taking into account other cuts in capital, but also the injection of money in from 24-plus loans, nearly £900 million has been taken out of adult skills over this Parliament. The impact is that fewer adults are enrolling in skills courses.

[Kelvin Hopkins]

My right hon. Friend is making an excellent speech about the importance and lack of skills and opportunities. The reality is that we are still importing some 15,000 graduate engineers every year to work in an industry that even now is too small. Manufacturing in this country is half the size as a proportion of GDP than that of Germany, and yet we still cannot find enough engineers from among our own people. Something is wrong and I hope he addresses it.

[Mr Byrne]

I certainly will.

Money is tight, and I noticed that the former Member for Clacton—I am not sure whether he is still the Minister’s hon. Friend—wrote on his blog earlier this week that public sector net debt has increased and is now £400 billion higher than the debt that the Labour Government left. He said that this Government have now put on more debt in five years than the Labour Government did in 13 years.

We all know that money is tight, but there are three things which the Government could turn their mind to quickly. The first thing must be integration with the Department for Work and Pensions, which means bringing together ESOL budgets in a completely new way. As my hon. Friend the Member for Birmingham, Perry Barr (Mr Mahmood) made clear, the Skills Funding Agency has taken away well over £1 million in ESOL provision that the DWP has had to put back in. It is heartbreaking for us to meet mums who are desperate to go back to work but do not have a strong enough grasp of English. They want to do well by their families, but they cannot. Proposals from Lord Heseltine and Lord Adonis radically to devolve skills funding are on the table and would allow us to put together the Work programme and skills budgets in a new way, so that we can skill people up to do the jobs that are available. I represent a constituency a mile away from the expanding Jaguar Land Rover plant in Castle Bromwich, but it has the highest youth unemployment in the country, which is prima facie evidence that the skills system is not working. We should listen to Lord Heseltine and Lord Adonis and think radically about how to devolve skills funding so that the DWP and skills budgets can be joined up in a new way.

The second point, as made eloquently in a forensic speech by my hon. Friend the Member for North West Durham (Pat Glass), and underlined by my hon. Friend the Member for Birmingham, Perry Barr, is that we must raise our game on skills and radically increase the number of higher apprenticeships. If we want to tilt our economy decisively towards those high-value engineering and science-based industries that are the key to the bigger-knowledge economy, we must increase the number of higher apprenticeships. Just 2% of apprentices go on to study higher level skills, which is appalling and needs to increase. Across the country, however, there is a profound lack of clarity about how the Government’s new proposed money will actually be distributed. That lack of clarity is unacceptable and the Minister will want to work that out quickly.

There is wide support to increase employer ownership of skills as one way of increasing the number of apprenticeships and higher level apprenticeships, but in an economy in which small and medium-sized enterprises are creating jobs three or four times faster than big business, the new funding system must work for SMEs. All over Britain, SMEs are saying that putting in all the money through the tax system will not work. That decision is in the Minister’s red box and I hope he will be able to tell us whether he is planning to go wholesale and introduce the plan in the autumn, as originally proposed, or whether to listen to the voices of 4 million or 5 million small businesses across the country that are asking him to think again.

The third thing that the Minister was left with by his predecessors, as underlined by my hon. Friends the Members for Scunthorpe (Nic Dakin) and for Stretford and Urmston (Kate Green), is the strategic problem with adult skills. Big cuts to further education, a very marketised higher education system and a huge explosion in the private sector college system have unleashed a series of competitive pressures in the further and higher education system. As a result, system collaboration is incredibly difficult. That problem is compounded by a broken bridge between funding for 18-year-olds and funding for those over the age of 24.

My hon. Friend the Member for Scunthorpe underlined the appalling impact of big cuts in further education funding for those at 18, but between the ages of 18 and 24 there is only 50% funding towards tuition costs and 0% access to the Student Loans Company. That means a broken bridge between the funding system that works up to the age of 18 and the one that then kicks in at the age of 24. There is no clear escalator through the skills system. Some funding for level 4 and above is offered by the Skills Funding Agency, but only for a higher apprenticeship. The problem is that, out of 200 apprenticeship frameworks, only 14 go up to level 4. Furthermore, people need a degree to understand the system. Why is that a problem? It is a problem because, as the OECD cited in its seminal report on skills in England back in 2013:

“the weak articulation between level 4 and 6 programmes and university bachelor programmes is a serious problem”.

There is a broken bridge, and a radical rethink is needed.

On behalf of the Labour party, the shadow Secretary of State for Education, my hon. Friend the Member for Stoke-on-Trent Central (Tristram Hunt), and I have set out a different approach—a “gold standard” route for vocational education, so that we begin to reform the school system, the further education system and the university system. We believe that everyone should be doing some vocational education from the age of 14. We believe that there should be a new gold-standard technical baccalaureate with compulsory English and maths up to the age of 18. We believe that the priority for expanding the higher education system should be the creation of technical degrees, so that people can study while they are still working. We floated the idea over the summer that a new institutional partnership between further education colleges and universities is needed, along the lines of the American community college programme.

Those new technical universities should have partnerships with universities with world-class engineering and science facilities, perhaps as part of new university enterprise zones up and down the country. That could be one of the ways in which we make the decisive shift that was explained by my hon. Friend the Member for North West Durham. We have got to rebalance our economy, and rebalancing our skills system has got to be part of it.

We have had an impassioned debate. Particularly welcome was the emphasis of my hon. Friends the Members for Luton North (Kelvin Hopkins) and for Sheffield Central (Paul Blomfield) not only on the sheer economic importance of further and higher education and of adult learning, but on the life-changing power of such investment. This country faces a productivity crisis and a poverty crisis, so we must leave the Chamber hearing the note sounded by my hon. Friend the Member for Hackney South and Shoreditch sounded—she said that there is poverty, but no poverty of ambition—as well as leaving with a determination to do something about it.

The Minister is a thinking member of his party and has a track record of thinking through complicated issues. He is someone with a conscience and he cares profoundly about increasing social mobility in this country. He is blessed by simply having been appointed, with that great mind of his, to one of the most fantastic jobs in the Government. We look forward to his brief and his work with a heightened sense of anticipation. We also look forward to what he has to say to us this afternoon.

--- Later in debate ---

[Nick Boles]

The other awkward truth is that a lot of the spending from the adult skills budget was, frankly, on a series of qualifications that were a fraud on those who were duped into taking them. A whole bunch of the qualifications that were funded did not prepare people for work, enrich their CVs, enable them to command better jobs or add to the productivity that, as the right hon. Member for Birmingham, Hodge Hill so rightly said, everyone needs. It was therefore right to do what we did, which was to focus the system of qualifications down and to ensure that the funding goes to produce qualifications that will actually help people.

[Mr Byrne]

May I draw the Minister back to the future, rather than to the past? In the autumn statement last year, the Chancellor talked about one of the most important adult qualifications available in this country, which is degree places. He said that degree places would be uncapped and he set out, conservatively, the cost of about £1.9 billion, which was to be financed by selling off student loan debt.

On 20 July the Minister’s boss, the Secretary of State, said that he and the Deputy Prime Minister had decided that the sale of student loan debt would not now go ahead. Will the Minister confirm whether the expansion will still go ahead and, if so, where on earth the money will come from?

[Nick Boles]

Needless to say, not being the Minister responsible for higher education and certainly not being my boss, the Secretary of State or indeed the Prime Minister, I can do no such thing. We are talking about the adult skills budget and that is what I will return to.

The right hon. Gentleman asked me to focus on the future and I am happy to do that. The position we are in now is not as bleak as some hon. Members have tried to paint it. Yes, we have a dire skills shortage in this country, but I remind hon. Members that all the young people who are not currently equipped to get the jobs that have been created and that hon. Members listed were educated under a Labour Government. All of them went through primary and secondary school under that Labour Government, so if they have left the school system ill-prepared for the jobs of the modern economy, let us share the responsibility for that lack and together work out how to fill the gap.

There is more agreement about the future than there will ever be about the past, and I will come on to the key elements of that. Specific questions were raised, however, and I want to make sure that I address them before I run out of time. The hon. Member for Stretford and Urmston (Kate Green) made an interesting speech, in which she specifically challenged me to take up with the DWP the question—[Interruption.] Was it the hon. Member for Hackney South and Shoreditch (Meg Hillier)? I am sorry, I cannot remember. I was asked to take up the issue of jobcentres being inflexible about courses and requiring people to leave them. I am aware of the issue broadly but not in detail, and I will be happy to take it up.

The hon. Member for Birmingham, Perry Barr (Mr Mahmood), who is no longer in his place, invited me to visit an apprenticeship centre run by the EEF. Will somebody tell him afterwards that I will be happy to do so if I can, as it sounds like an interesting venture?

I am happy to take up any issues that individual hon. Members have with particular colleges and funding situations. The hon. Member for Sheffield Central (Paul Blomfield), for example, raised some issues about a specific college, and I would be happy to take those up.

Now I come to the actual question from the hon. Member for Stretford and Urmston. She asked about funding of HNDs and HNCs. If I may, I will get back to her with more specific detail on that. She also asked specifically about extending the internship model to older adults. That is an interesting idea, but not one in which I am sufficiently well versed to give a response now. I will be happy to meet her to discuss the issue and see whether we can do more.

Now, to the future, and how we improve the productivity of people in this country so that they can secure the fantastic jobs being created—I hope we will all acknowledge this—in record numbers in this economy, to an extent that no other European country seems to be able to match at the moment. For the Government—we make no apologies for this—the most important policy to ensure that improvement is the policy on apprenticeships. That is why, even with a declining skills budget, we have ensured that the funding of apprenticeships is maintained and have been able to secure a dramatic increase in the number of people taking apprenticeships.

That is not at all to say that we are in any way satisfied with the position we are in. We also recognise, for instance, the very low number of higher apprenticeships as a proportion of the total and want to expand those, but without in any sense diminishing the lower level apprenticeships. Those are often the ones that young people who leave school without qualifications are going to be able to access first; we are not necessarily saying, either, that they should not move on to a higher apprenticeship in due course.

[Mr Byrne]

In that case, the Minister will want the maximum value for money from the programme that he is responsible for. A total of £340 million has been earmarked for the employer ownership pilot for apprenticeships, but the latest figures show that only 20,000 new apprenticeships have been provided. That is a unit cost of about £17,000. Will he explain whether he thinks that is value for money and what he is doing to drive up numbers for that programme?

[Nick Boles]

The right hon. Gentleman is too good a numbers man not to recognise the trick he has just played, which is to take the total budget as his denominator and use only the number of starts achieved so far as the figure that he is declaring it against. If he looked at the amount of money that has been drawn down from the pilot, he would see that his denominator is a very much smaller figure and that dividing that three-hundred-and-whatever million by 20,000 does not present an entirely accurate picture.