Economy: Growth

Lord Baker of Dorking Excerpts

Thursday 6th December 2012 Lords Chamber

[Lord Baker of Dorking]

My Lords, the essence of the Heseltine report is the growth and wealth of the economy over the next 50 years. We all know that it will not come from banking services and real estate but from technological innovation, inventions and the capacity to make goods and services that the rest of the world wants to buy, but there is a massive skills shortage. The Royal Academy of Engineering and the Engineering Employers’ Federation have recently forecast that by 2020 there will be a shortage of 1.25 million professional scientists, engineers and technicians in this economy. If we have that, we cannot meet any of the targets that the Chancellor set yesterday.

The only educational institutions that are trying to meet that demand are the colleges that I have been pioneering for four years, which started under Labour, as the noble Lord, Lord Mandelson, will remember: university technical colleges. They are for 14 to 18 year- olds. There are 600 students. They are employer-led, university supported, and the youngsters do up to two days per week practical work.

The first one, which has operated for two years in December, was the most successful school in the country. Every youngster at 16 or 18 got a job, an apprenticeship or a place at college or university. We have five colleges open; 33 approved and 21 applied for. We need masses more of these colleges—seriously a large number. They accord very much with the spirit of the Heseltine report as they are employer led. Hitachi wants one in Durham because it is building a factory for 700 staff to build rolling stock and there are simply not enough skilled technicians in that area to fill the factory.

In Salisbury the LEP, the agency my noble friend is quite rightly using, came to us and said there was a skills shortage there because of the redeployment of the Army from Germany and the building of new maintenance depots, so together with the local employers, the University of Southampton and local people it was going to apply for one.

My point is that if we do not fill this skills shortage, you can forget all the targets because we will simply stagnate. This is the single most important thing we have to do. Matthew Hancock, the Minister for Skills in my noble friend’s department today issued a statement setting out the policy for the next two years. In particular, he said that the LEPs should be given a strategic policy for skills policy. That is going to be very important. I hope that they will bid for some of the money that has been suggested and have some money of their own. This is singly one of the most important things we can do. Without those skilled people, unless we import from overseas, we will meet none of our targets.