Skills: Importance for the UK Economy and Quality of Life

Lord Lilley Excerpts

Thursday 9th May 2024 Lords Chamber

[Lord Lilley (Con)]

My Lords, I congratulate the noble Lord, Lord Aberdare, on securing this debate and opening it so brilliantly, and the noble Lord, Lord Marks of Hale, for a gently brilliant but forceful speech. If I am not down in the Chamber and up in my room and I see his name on the annunciator in future, I certainly will turn the sound on and listen to what he has to say.

The skills problem in this country is of long standing. There are Blue Books written in the 19th century which decry the shortage of skills here relative to Germany. As people such as Correlli Barnett and others have pointed out, the roots lie in a sort of class prejudice that attributes prestige to a subject in inverse proportion to its practical and commercial value: the prestige is higher the more academic it is and lower the more practical and commercial it is.

I saw that in my own life. My grandfather, who was a skilled lathe operator during the First World War producing torpedoes, educated himself in mechanical engineering and rose up the firm a bit. Eventually—obviously, he was inspired by the prediction of what my noble friend Lord Baker would recommend—he ended up teaching mechanical engineering in a college of further education. So it always seemed a wonderful thing to me, and when I went to university and acquired a degree in natural sciences, I asked my director of studies if I could move to mechanical engineering. He said, “No—you’re quite clever enough to continue doing pure science”. He was wrong in two respects: I was never going to be another Einstein, and we need clever people, whether at university or in colleges and schools, to acquire the skills to make the things we use. If I go over a bridge, I want to know that the engineer who designed and created that bridge was good, and that the people who welded it were skilled in what they were doing.

Sadly, there are only two ways to increase the supply of skills in this country. One is to increase the skill levels of the domestic population, and the other is to import skills from abroad. My thesis is that unless and until we break the national addiction to importing skills from abroad, we will never seriously tackle the lack of domestic skilled people. Almost the only person who has done anything useful and practical is my noble friend Lord Baker; most of the other initiatives have been ineffectual or half-hearted.

Since Tony Blair opened our borders to the importing of skills from abroad—this is not a party-political point, because he was, sadly, followed by the coalition Government and Boris Johnson—spending on training of people at work has declined, and, predictably, the time people at work spend on training has declined. One of the things that brought home to me how deeply entrenched this belief is in the need to import skills from abroad—and, indeed, the virtue of doing so—was when I was on the Select Committee in the other House and we went up to Sunderland after the referendum. We were greeted by people from the local district council, the county council, the local CBI, the Institute of Directors and the chamber of commerce, and they said their principal fear was that they would no longer be able to import skilled workers from abroad.

The only major employer that was not present was Nissan. I remembered visiting Nissan when I was Trade and Industry Secretary shortly after it set up, and I asked a rather stupid question. They were too polite to point out who was stupid, but I asked them whether they had had any problems recruiting trained automotive workers in Durham when they set up. Of course, there were none within hundreds of miles of there, so it was a stupid question. But they said no, they had trained them, and they were very keen to be trained. Now, the Nissan factory is the most productive factory in the whole Nissan network across the world. So I put it to the local CBI, IoD and chamber of commerce that if Nissan had been able or inclined to follow its belief that the way to get skills was to import them from Europe, there would be 7,000 people in Sunderland flipping hamburgers or unemployed, instead of being the most productive workers in the Nissan network.

We have to break this addiction—but, unfortunately, we have convinced ourselves that, at least for specific skills shortages, we must import the workers from abroad. Yet, since we took that view, in almost all the areas where we initially had a shortage, the shortage has got worse. That should not come as any surprise, because the International Labour Organization, way back in 2004, warned:

“What may begin as a simple temporary ‘spot shortage’ of trained native workers, can be made considerably more permanent by attempting a quick fix from migrant labor. Any program which imports migrants into a sector whose employers are complaining of insufficient trained natives, can be expected to exacerbate (rather than alleviate) its native shortage. Rather than raising incentives to entice new workers to seek training to fill the empty slots, visas are likely to be used to avoid the needed market response”.


But we did not take any notice of that.

My conclusion, therefore, is that if in future we say there is a specific shortage and for a while, we will have to import people from abroad, that must be permitted only if there is an agreement between the employers, educators and the Government that they will train more people in that sector, so that we do not have such a reliance, within a specific period. Employers will have to recognise and acknowledge that during that period—probably indefinitely—they will have to pay more for those people.

I mention pay because it is rather important. The very idea of a shortage of labour in a free market is an oxymoron. Again, this was pointed out by a colleague of the author I have just quoted, who said:

“Long term labor shortages do not happen naturally in market economies. That is not to say that they don’t exist. They are created when employers or government agencies tamper with the natural functioning of the wage mechanism”.


Allowing indefinite reliance on importing labour from abroad has enabled us to put off tackling the shortages, which the noble Lord, Lord Aberdare, has, thankfully, brought to our attention, and which, hopefully, with the advice of my noble friend Lord Baker, we will in future remedy.