Skills: Importance for the UK Economy and Quality of Life

Lord Birt Excerpts

Thursday 9th May 2024 Lords Chamber

[Lord Birt (CB)]

My Lords, the noble Lord, Lord Aberdare, has plainly scored a real bull’s-eye in initiating this debate. I also cannot help but applaud the noble Lord, Lord Baker, for his everlasting ebullience and fighting spirit. Long may that continue. Finally, I welcome the hopeful and positive messages in the maiden speech from the noble Lord, Lord Marks of Hale.

In total, there are just under 1 million vacancies in the UK economy. As the ONS recently identified, most UK businesses now face a significant shortage of workers. In most sectors of our economy, shortage of skills is a critical factor, as it is, for instance, in construction, manufacturing, health, education and business services—just some among many.

There are shortfalls in every category of worker with skilled trades in the lead. I give just two examples: in 2022, there were 43,000 vacancies in skilled metal, electrical and electronic trades; and 83,000 vacancies in social care. In all, the ONS estimates that the UK economy is short of over half a million workers with the appropriate level of skill. This is surely one, if not the only, reason why the country is experiencing low growth and relatively low productivity—a point made by the noble Lord, Lord Patten, a moment ago.

One root cause of the skills shortage is the post-pandemic exodus from the workforce of around 400,000 adults aged 50 to 64, but there is other causation too. We lack an appropriate balance between vocational and academic education. Allow me to offer some evidence of that imbalance and the reasons for it.

Fewer than 3% of 16 year-olds are becoming apprentices. In 2021, 250,000 students entered university, while fewer than a quarter of that figure took on apprenticeships. Remarkably, the number enrolling in FE colleges is only a 30th of the number attending university. The OECD records that our secondary schools perform above average by global standards, which we all welcome, but that the bottom quartile in those schools has a very low sense of personal well-being.

Poorer children are performing far less well than their richer classmates. For instance, the richest 33% gain an A or A* at A-level, compared with only 5% of the poorest decile of students. The problem appears to be worsening; post Covid, persistent absence has affected almost one-third of all UK schools. The ONS has identified that one in seven 16 to 24 year-olds is not in education, work or training. According to the Prince’s Trust, the main cause for that shocking statistic identified by those dropping out is their mental health.

Over 3 million people in the wider population now draw PIPs—personal independence payments. Nearly 8 million people of working age in the UK now say that they have a significant disability or health condition. Can we not do more to help these individuals to find work which suits them and in which they will be happy and productive? Can we do more, especially in our schools, to expose young people to the satisfactions and pleasures of work and to arm them with the soft skills necessary to navigate the workplace?

The economy is highly dynamic, constantly reinventing itself and demanding new skills and abilities. Society too is dynamic, constantly evolving, and embracing social and cultural shifts. It is not clear, however, that our education, skills, health and welfare systems are acting in step and that they are sufficiently dynamic and innovative to keep abreast of and respond to these ever-changing needs of both individuals and the economy. These issues are deep, stubborn and challenging and, as a nation, we need to step back and consider in the round how best to address them.