Vocational Qualifications Day

Liam Byrne Excerpts

Tuesday 9th June 2015 Westminster Hall

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

It is a privilege to serve under your chairmanship, Sir Roger. I, too, want to start by congratulating the hon. Member for Stroud (Neil Carmichael) on securing the debate. I was of course very disappointed at his re-election to the House, but I notice that he is back with an increased majority; that is a testament to the work that he has put in, in his constituency. He reminded us of some of the reasons for his re-election by making an excellent speech in an excellent debate.

I want to add a word of praise and congratulation to the organisers of Vocational Qualifications Day. The wisdom of the hon. Member for Stroud in securing the debate has been much in evidence as we have listened to a wide range of excellent speeches. It can be seen, at the beginning of the present Parliament, that there is great interest in this field of policy, and a shared agenda across the House for strengthening it and moving it forward. We all know how important it is to our economic future.

I also congratulate the Minister. I am disappointed that he is doing the job and I am not; but there is no better member of his party to serve in that role. He has taken a huge interest in the subject and has bothered to spend a great deal of time in colleges, talking to students, teachers and principals. I hope that he will bring energy to the brief, and maintain and sustain it in the months and hopefully years ahead. What this field of policy needs above anything else is stability, and I very much hope that he will provide that. For my part, I will provide the Minister with all the support and scrutiny that he has enjoyed over the last year. When he does well, he will get hymns of praise, and when he does badly he will get a forensic verbal assault here and elsewhere. I hope that the hymns of praise greatly outnumber the words of verbal assault.

However, I will start where the hon. Member for Stroud started: I too welcome the fact that, rather belatedly, the Chancellor has woken up to the grave productivity crisis that our country confronts. The truth is that we have the worst productivity record in the G7. There is something like a 20% productivity gap between ourselves and our major competitors, and it is not getting better; it is getting worse. We have to ask ourselves what it is about this country today that means that despite our long history of genius and innovation on these islands, what the rest of the G7 finishes making on a Thursday afternoon takes us until the end of Friday to get done. If we want to break out of the cost-of-living challenges that many families still confront, we have to earn more as a country, and skills are absolutely at the core of that problem.

I look forward to the Chancellor putting his money where his mouth is in the Budget later in the parliamentary Session, because of course setting out a Budget that seeks to raise UK productivity is incompatible with further withdrawing money from skills and from the Minister’s domain.

[Mrs Miller]

I know that the right hon. Gentleman is not implying that workers in this country do not work as hard as workers elsewhere. Perhaps he will agree that, when considering productivity, he cannot ignore either the figures on congestion on our roads or the need for us to trade more broadly as a nation.

[Liam Byrne]

That is absolutely right. The right hon. Lady helpfully points to the fact that global competition is intensifying, and if we are to improve our performance in trade markets in which we have been losing market share during the last four or five years, we will have to raise our game. Skills are absolutely at the core of that, because there is a risk, given the pattern of economic development over that time, that our country is becoming a cheap labour economy. About 80% to 85% of the jobs that have been created have been low-paid jobs, which is a problem if we are to earn our way out of the cost of living crisis that we are trapped in. There are not necessarily the column inches devoted to this issue that there should be; The Economist has done a good job, as has Nigel Nelson of the Sunday People, in highlighting the risk associated with this change.

We have to look hard at the competition that we are up against. When the programme for international student assessment results in Shanghai are so much better than ours, when China is about to spend more on science than the whole of Europe put together and when four out of the top 10 global tech firms are Asian, we can see how the battle for good jobs will intensify over the next 10 years, and the risk is that we will lose it. We will not beat the global competition without a much bigger and bolder plan to improve the skills of our country in the years ahead.

Of course, that situation has particular consequences for not only families but young people. All of us now serve the younger generation, which is the first generation in a century that is worse off than the generation that came before it. Social mobility is, in effect, going into reverse; none of us can be proud of that, and all of us must want to alter it. Young people in particular desperately need breakthroughs in this policy area, and I know that the Minister is absolutely focused on it, like a laser.

I hope that the Minister will use this debate and this great day to begin telling us a bit about an ambitious vision for system reform—reform that is evolutionary, perhaps, but revolutionary in scale. The truth is that although we talk about a system of technical education in this country, we do not have a system worthy of the name. We have a piecemeal, ad hoc system of institutions, exams and funding entitlements that are yoked together, often in a very rudimentary way. That does not allow young people from the age of 14 a clear line of sight for a technical education career that goes up to the degree level of skill, which many hon. Members have talked about, celebrated and underlined as being critically important.

In his speech, my hon. Friend the Member for Scunthorpe (Nic Dakin) forensically exposed the inadequacies of the current system. If I might be so bold, I will throw a few suggestions on to the pile that hon. Members, particularly the hon. Member for Stroud, have given us this afternoon. In our schools, there has to be a bigger and bolder effort to expose more 14-year-olds to technical education. That is why I support many of the reforms pioneered by Lord Baker. I hope that the Minister, with his colleagues at the Department for Education, can continue to lobby for practical and empirical subjects.

I hope that we make serious progress in building a stronger careers service during this Parliament. I think it was the CBI, of all organisations, that said before the election that the careers service in this country was “on life support”. That situation will not help us to compete with the global competition that we now confront. Although small amounts of money were offered before the election, the Minister will know, and in his heart believe, that that was not a solution to the problem, given its scale. We need a radical increase in apprenticeships; I am glad that there is all-party consensus on that. The Minister will know that we intend to focus constantly on ensuring that quantity does not come at the expense of quality. Quite simply, there is no point in putting our people on to programmes that do not genuinely equip them with the skills to compete globally. I know that he, too, cares about that issue passionately.

However, the bigger and more complicated question is about the whole system of qualifications, entitlements and funding arrangements for our constituents who are aged between 18 and 24. At the moment, there is not a smooth pathway on a technical education track for our constituents in that age range. There are entitlements to maintenance, which stop at the age of 18 but restart at the age of 24, with the availability of advanced learning loans. The funding entitlements for colleges differ according to whether their students are under 18, between 18 and 24, or over 24. There is a quagmire of qualifications. There are too many qualifications; they are too disjointed; they are delivered at far more cost in England than in Scotland; and, frankly, the whole field of technical qualifications needs a good root-and-branch review. I know that there has already been some simplification of the system, but we have much further to go.

Crucially, there must be a revolution in the collaboration between further education and higher education. Hon. Members made some very good contributions this afternoon about the need to join those systems up. It is not good enough that just 2% or 3% of apprentices go on to degree-level skills; we will not compete globally if that situation continues. There have been some welcome advances, which I know the Minister helped to drive through before the election, but there must be a revolution in the number of apprentices going on to degree-level skills. Apprenticeships should be a route to the top in the same way that doing A-levels and going to university is. At the moment, I believe that many people are not taking the apprenticeship route because they know that the ladder only goes so far up the wall. We want an apprenticeship to be a fast track to the top, in the same way that a degree at a good university is.

I know that all of this work will be detailed and involved, and there are few better minds than that of the Minister to puzzle all of it through. However, his bigger challenge will of course be the funding settlement that he will have to contend with. As the last Government put up our national debt to £1.5 trillion, this Government will have to deliver some savings. I hope that they will also sensibly raise some taxes from those who can afford to pay just a little bit more. The Budget will tell us more.

If we are to close the productivity gap that our country confronts, we must support technical education in a radically new way. My hon. Friend the Member for Scunthorpe made an excellent point when he sounded the alarm about the 24% cut in adult skills delivered in-year.

During the many visits he made before the election, the Minister will have been lobbied about some colleges now being unviable. I know this because I visited many colleges after him. Some colleges are at risk of falling over without urgent action this year. On top of that, a third of the cuts announced by the Chancellor last week are set to hit the Department for Business, Innovation and Skills and the Department for Education. Many colleges are already on the brink. The Minister will have to move fast with his colleagues at the Treasury to ensure that colleges do not fall over and become unviable, despite the Chancellor saying that we need to fix the productivity gap, and many in this House saying, “Look, technical education is key to this.”

The Minister will also want to, or have to, consider other funding pressures, including the performance of advanced learning loans for those over 24, because they are vastly underperforming at the moment. There has to be a sevenfold increase in the number of people taking up these loans if the budget is to be consumed. I want to put on record my thanks and congratulations to the Association of Colleges and the National Institute of Adult Continuing Education for their work in consistently highlighting this risk.

I hope that the Minister shows us a little bit of leg this afternoon as regards his plans for system reform. We famously designed a wonderful system of technical education for the new Germany after the war, but forgot to implement a similar blueprint for our own country. Perhaps it is time to move on and introduce system changes of our own. I hope that the Minister can tell us about those changes. I hope that he can say a bit more about his ambitious plans to devolve control over skills to local authorities, and particularly city regions. Many people throughout the country told me that they would not have had to contend with a 24% cut to the adult skills budget this year if they had just been given the budget they were entitled to and were allowed to make decisions about priorities much more locally.

I hope that the Minister tells about his conversations with the new Minister for Universities and Science, whose father was rather unfair in attacking his lack of exposure to science as a young man. I have always found that new Minister a thoughtful, clever and progressive individual. I hope that the Minister here today and the new Minister in BIS will make a good double act, because, heaven knows, there is an awful lot of work to do.

--- Later in debate ---

[Nick Boles]

I fear that cuts often require difficult choices to be made. Colleges are all trying to ensure that they make economies chiefly through efficiencies and in areas of lower value. Following on from that, I should like to correct something said by the hon. Member for Huddersfield (Mr Sheerman), who is no longer in the Chamber, about the relative value of full-time FE courses and apprenticeships. I am not for a minute suggesting that full-time FE courses do not have a positive impact—they do—but their positive impact on people’s earnings between five and seven years later is not nearly as high as the positive impact of apprenticeships. We have just done one of the biggest data studies undertaken by Government, matching people’s education performance and their earnings as recorded by Her Majesty’s Revenue and Customs. Almost 500,000 individuals were covered by this study, which found that a level 2 apprenticeship leads to approximately a 16% improvement in the individual’s earnings five to seven years later, whereas the impact for a full-time level 2 is roughly 6%. At level 3 it is 16% for those on an apprenticeship, against 4% on a full-time course. There are positive impacts from full-time courses and some of those courses—not least the BTEC mentioned by my hon. Friend—may well have a higher value, but the averages suggest that it is sensible to do what the Government have been doing and shift resources out of full-time FE courses into apprenticeships, while continuing to invest in full-time FE.

My neighbour, the hon. Member for Scunthorpe (Nic Dakin), mentioned the in-year cuts to both the DFE and BIS budgets. Although I cannot go into detail, because it would be way above my pay grade to do so, he should not assume that the only way of cutting the unprotected part of the DFE budget is by cutting funding for 16 to 19 education, including funding for FE colleges. He should also not assume that the only way of cutting the part of the BIS budget that has been subject to in-year cuts is by cutting funding for FE colleges. No doubt everybody will have to make a contribution, but he should not assume that those cuts involving large figures will fall entirely on the sectors that he so admirably represents in the House and in this debate.

We are at the start of a five-year Parliament, so we have a bit of time to think and plan and be strategic, and to try to build something that addresses some of the problems that have afflicted us as a country for decades. There has been a huge amount of agreement across the House about the nature of the productivity challenge that we face as a country. We have lower productivity—all that means is how much value people are producing for every hour that they work—in part, I am glad to say, because we manage to find jobs for people with very low skills who are less productive. Of course, a large number of the least productive workers in countries not too far from here are not employed, and by necessity that means that their average productivity per hour of employment is higher. I prefer to live on this side of the channel rather than on the other side, where that is so, but that does not in any sense diminish the challenge to us of ensuring that the productivity of everybody, whether relatively low-skilled or high-skilled, is improving so that they can command higher wages, pay higher taxes and have better lives for themselves and their families. That is, of course, a fundamental challenge for this Parliament.

The Opposition spokesman was right to say that Members of all parties have long bemoaned our inability to create a system of technical and professional education that commands the same level of understanding in the country, and in families and schools, and in this House—not to mention the level of respect—as the academic education system, which is admired around the world. He is absolutely right to challenge the Government in these early weeks to grapple with the problem systematically, rather than in a piecemeal way, and I hope and intend to rise to the challenge.

I will resist the temptation, long though my legs are, to show too much of them in my response to the debate. That is not because I am coy, because I am not naturally that coy, as you may have noticed, Sir Roger, but because it is a little premature for me as a Minister, although I was in this post for 10 months before the election, to start rushing to judgment. I would like to hear from others, and it has been tremendously useful to hear the contributions of my hon. and right hon. Friends and Opposition Members on the elements of the system that they see as needing to be reformed, changed or improved.

I also want to learn from other countries. The Opposition spokesman referred to the example that we always beat ourselves over the head about: the German system of technical education. He is right to say that we honourably and admirably had some part to play in creating that system, but it is also right to observe that it is the product of a deep economic, educational and social culture that is somewhat different from ours. We need to ensure that we are looking to learn from relevant examples that are, in a sense, transferable and applicable to our system. I am keen to look at—I encourage Members to come forward if they have better example—the Dutch example. The Dutch economy is more similar to our own in culture and approach than the German one. It is smaller, but it has what we would see as—I am not sure that the Dutch would accept this—Anglo-Saxon features. As the Opposition spokesman said, they seem to have a better system of clear routes through education to high, degree-level qualifications.

[Liam Byrne]

The Minister is absolutely right to sound a warning that it is impossible to import one system wholesale to one economy from another. The key thing we have to learn from the German system is that smooth pathway through. A couple of things have been mentioned in the debate that are important to incorporate into some of the Minister’s research, of which one of the most important is the growth in self-employment and enterprise. There are superb colleges up and down this country—not least Sheffield College and others in the Peter Jones network—that are doing a first-class job in encouraging an entrepreneurial revolution among our young people. They are a good example of how we cannot simply import a system from a country such as Germany that does a much less good job at fostering a culture of self-employment, the skills for self-employment and a yen for enterprise, too.

[Nick Boles]

I thank the shadow Minister for that; it was very interesting and I entirely agree with him. My hon. Friend the Member for Stroud raised this, too, but when people are working for 50 or 60 years of their lives in a fast-changing economy, we have to consider the kind of qualifications that are relevant by being sufficiently flexible to cope with the different employment situations that a person is likely to want to go through, which may well include working for themselves, setting up their own business and acting in a whole range of different circumstances.

My new and fantastic Parliamentary Private Secretary, my hon. Friend the Member for Newton Abbot (Anne Marie Morris)—she is the Select Committee’s loss, but my gain—is also operating as the PPS for my hon. Friend the Minister for Universities and Science. If any Member here would like to come through her with any suggestions or answers to the following questions to which I will be seeking sensible and systematic answers over the next few months, I will be incredibly grateful. The first question is: what do people think should start at 14 and what do people think should start at 16? That is an age-old debate that will not be settled in this parliamentary term, but we should have it again, not least when we look at the work of the university technical colleges and Lord Baker in introducing to the system some education that starts at 14. Should that become a common thing or remain an exception to the rule?

The second question is about the institutions. We have all talked with affection, admiration and praise about the further education colleges in our constituencies, and I am lucky enough to have two such institutions. Are those institutions in their current guise equipped for all the demands that we are going to place on them and the financial pressures that are inevitable, even if we can maintain funding broadly at the current level? Should they specialise more? Should some of them focus more on higher level skills and others more on training for people who have not received an adequate education at school? What institutions do we need, what institutions have we got and how can we get from one to the other? That naturally leads to the question of who should be making such decisions. Should it be the Minister in his Whitehall office with the help and guidance of the Skills Funding Agency, should it be local enterprise partnerships, or should it be combined authorities on the Greater Manchester northern powerhouse model? Who is properly placed with a sufficient understanding of the local economy to decide what institutions are needed locally to meet the full range of young people’s and employers’ needs?

The final question, although it is only the final one because I will probably run out of time soon—there will be many other questions—is on qualifications. The shadow Minister raised it, as did several other Members who talked about the different qualifications and how badly known and badly recognised they are among parents and young people. Do we have the right set of qualifications? Have we been prescriptive enough? We have weeded out a whole lot of very weak qualifications, and I think we can all agree that that was a necessary and a good step, but do we need to be more prescriptive about the combinations of qualifications that denote a sensible route to a high-quality career and so should receive the benefit of taxpayer funding?

The questions about who should be involved in making the decisions about local institutions and qualifications will lie at the core of the long-term system plan that the shadow Minister has urged on me. While I know that he will be forensic and at times even a little brutal—I know, because I have witnessed it before—in his examination, I also know that he and all other Members will make a positive contribution, because ultimately we want the same thing: a country where everyone can get the skills they need, at whatever point in their life that they feel the need for them, so that they can prosper and have fulfilling lives.