Employment

Lord Young of Norwood Green Excerpts

Thursday 27th October 2011 Lords Chamber

[Lord Young of Norwood Green]

My Lords, I, too, congratulate my noble friend Lady Prosser on giving us the opportunity to debate what I believe to be one of the biggest challenges faced by all countries. The economy and employment will be the litmus test of the Government’s success and how they will be judged at the next general election. The coalition will not be able to continue the fiction that it was all the fault of the previous Government. When we left power, we had rescued the banks, introduced a number of successful measures to stimulate growth—for example, the car scrappage schemes and a cut in VAT—and a plan to reduce the deficit by half by 2015. No one on this side pretends that it would have been plain sailing but getting growth back into the economy would have been at the top of our agenda.

I congratulate the Library research department on the excellent briefing pack that it has provided; on many occasions, it is the unsung hero. On growth, the briefing pack states:

“UK GDP grew by a meagre 0.5% in 2008 and fell by 4.9% in 2009”.

After analysing that, it states that growth in the OECD and the UK,

“remained below that average in 2010. In the UK, the rescue measures implemented by the government during the recession, including emergency loans to recapitalise large banks, came at a time of sharply reduced tax revenue and so were funded by a large increase in the budget deficit. The Conservative-Liberal Democrat coalition has since announced cuts in government spending and increases in taxation to eliminate the structural deficit before 2015”.

I love the next couple of lines, which state:

“The extent to which this will act as a drag on growth during the recovery is a matter of debate among economists”.

You can say that again; it certainly is a matter of debate among economists. We still believe that the Government’s current policy is too far and too fast.

For the purposes of this debate, I want to focus on youth unemployment, which I believe is one of the biggest challenges, if not the biggest, that we face. Looking across to the Benches opposite, it is unfortunate that there is no one on the Conservative Back Benches here today speaking in this debate. Whatever their views, no one utters the terrible words “unemployment is a price worth paying” any longer, so we have progressed a bit. But, as my noble friend Lady Gould has reminded us, we have the highest youth unemployment since records began. As regards the impact of this, recently, on Radio 4 I heard a programme with young offenders. They were asked, “What’s the most important thing that would impact on your life that would stop you reoffending?”. The answer was, “Getting a job”. There were no ifs, buts or anything else, just the desire to get a job, which indicates the importance of this debate.

I shall now have to tread carefully or my noble friend Lady Gould might become my noble friend no longer. The Library briefing pack states:

“The fastest-growing group of workers between 2007 and 2009 was those aged 65 or over, followed by those aged between 60 and 65. These changes reflect an aging population, coupled with increasing life expectancies. These trends have led to rising activity rates and declining unemployment rates among older sections of the population. The age group in the working age population with the lowest activity and employments rates is those between 16 and 24. This is also the group with the highest unemployment rate. Conversely, the age group with the highest activity and employment rate is those aged between 35 and 49”.

I do not want this to be a battle but if you were a young person you could not help thinking, “Wait a minute, where are we going?”. It is not any good to lay blame. We have to look at the way in which we manage this change in the world of work. We still have what I have described in another debate as cliff-edge retirement. We have not got around to working out that we need to encourage people to depart from the world of work in a more phased and staged process, which would make some contribution.

I was interested in the point made by the noble Baroness, Lady Randerson, in relation to part-time working. I would suggest that flexible working overall has impacted on the world of work, which has changed dramatically. Looking at the whole scope of working life, the Government need to do much more to address this issue if we are to solve the problem of youth unemployment. It should be intergenerational. Of course it was a good thing to remove the retirement age of 65. I was in favour of doing that but we cannot leave it at that.

Young people face a number of challenges, as has already been said. The Future Jobs Fund has gone, as have education maintenance allowance and tuition fees. Let us look at this issue from their perspective. We are not generating too much hope. The loss of public sector jobs, without the consequent increases that we were told would happen in the private sector, will inevitably have an impact on youth unemployment, because of the impact on apprenticeships, to which I will come later.

I want to reflect on the question of skills. I agree with the noble Baroness, Lady Brinton, when she talked about the importance of key skills. They are vital. It is not just literacy and numeracy, although they are there. I would say you cannot do much, as we have described in this debate today, without IT skills as well. In the 21st century the key skills of literacy, numeracy and IT have to be there if we are talking about equipping young people for the world of work. My noble friend Lord Kestenbaum, who is unfortunately not here, uttered what I regard as the dreaded phrase: “soft skills”. Can we do away with that? They are not soft skills; they are essential skills for young people. You hear employers talk about soft skills, but turning up for work on time and being able to work as part of a team are not soft skills. The noble Baroness, Lady Brinton, referred to pre-apprenticeship schemes. There are a number of great schemes for getting young people ready for the world of work.

I want to praise the Government for what they are doing on apprenticeships because they are continuing the good work that we did. The previous Government rescued apprenticeships from near oblivion. We gave you a great foundation to build on. But I have a worry. Yes, this Government are spending more and getting more starts in apprenticeships, but a lot of them are adult apprenticeships. I do not knock adult apprenticeships because they are an important means of re-skilling, but we cannot take our eye off the ball for apprenticeships for young people aged 16 to 19. Every one that is created is a beacon of hope for a young person. We know that to be the case. As a young person at the age of 17 I was able to walk down the road and get an apprenticeship with what was then British Telecom. I do not think I would be able to do that any more. BT has 300 apprenticeships a year and 25,000 applications. So what can the Government do? The Leitch report has fallen out of fashion these days. We do not hear much about it but I think it was a very far-sighted report. My noble friend Lord Leitch said that there should be about 500,000 apprenticeships in learning by 2020 and that we ought to ensure that an apprenticeship place is available for all qualified young people by 2013, with significant growth in apprenticeships for older learners as well. We put that entitlement into the Apprenticeships, Skills, Children and Learning Act 2009. It was an ambitious entitlement but I believe it was the right thing to do. We tabled an amendment to this Education Bill, providing a bit more latitude given the difficulties, saying that entitlement should be there by 2015.

The problem we have with apprenticeships is not the number of starts, which is okay. There is a much more worrying statistic if you scratch beneath the surface and that is the number of employers who take on apprentices. It is still pathetically low with something between 4 per cent and 8 per cent overall. Even in the FTSE 100 companies it is only a third. I continually meet employers who, when I talk to them about apprenticeships, seem to know little or nothing about them. So what can be done? The Government have to lead by example. I cannot understand why this Government are still refusing to accept that a requirement to employ apprenticeships as part of a public procurement contract should be mandatory. We did it; we got over 300 apprentices for the Olympics and a promise of 400 for Crossrail. Why on earth are this Government taking that requirement away? What sort of signal is that giving to employers? More could be done on the small and medium-sized employer front as well with group training associations. The number of apprenticeships starts is okay but we need to get every employer in this country to understand that apprenticeships are not a burden but a great stimulus to any company and vital. If we do not solve this problem we know that, in terms of young offenders and disenchantment generally in young people, we will pay a much higher price in the future.