Skills and Labour Shortages

Debate between Margaret Greenwood and Kevin Hollinrake

Thursday 12th January 2023 Westminster Hall

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kevin Hollinrake)]

It is a pleasure to speak with you in the Chair, Sir Graham. I congratulate the hon. Member for North Ayrshire and Arran (Patricia Gibson) on securing this vital debate.

Despite the shocks of the pandemic, the labour market has recovered well, as the hon. Lady pointed out. The employment rate is at a historic high, and unemployment and inactivity are low by historical and global standards. She is right that employment shortages are a drag on the economy. In many ways, the shortages are counter- intuitive: as my right hon. Friend the Member for Chipping Barnet (Theresa Villiers) said, there was net migration of over 500,000 people last year—a huge amount of immigration. Of course, we need to ensure that the immigration that we get meets the needs of employers.

The shadow Minister, the hon. Member for Chesterfield (Mr Perkins), made an interesting point. It is wrong to look at the issue in the context of the UK alone; the issues affect all developed nations. In fact, the World Economic Forum recently said that labour shortages are apparent across all OECD countries. In the UK, there are 1.187 million vacancies and 1.247 million unemployed people. In the US, incredibly, there are 10.5 million vacancies: 1.74 job opportunities for every person who is looking for a job. On that basis, the US has an even greater problem than the UK. Nevertheless, we have to take the issue seriously, and do what we can, competitively and in an international context, to try to resolve the problem and grow the economy for the benefit of all. Ensuring that the right people, with the right skills, are in the right jobs is essential to achieving that.

The hon. Member for Chesterfield may be aware that both skills and labour shortages have been at the centre of much ongoing work and many discussions across Government. The causes of labour shortages are complex; they are not attributable to any single factor. Broadly, some of the major causes of reduced labour supply include long-term sickness, which has been mentioned, and early retirement—two areas that the Government are making a significant effort to address. Indeed, I will meet next week with colleagues in the Treasury, the Exchequer Secretary to the Treasury, the Minister for Employment and key stakeholders—largely employer organisations—to see how we can address the issues.

Late last year, the autumn statement set out the scope of a review that will thoroughly assess workforce participation early in 2023. Numerous Select Committees have also taken an acute interest in labour shortages. Most recently, the Lords Economic Affairs Committee published its findings on labour supply. I appeared before the Committee and hold the members in very high regard, and I welcome its conclusions and the continued attention paid to labour market policy. A resilient labour market is vital if the UK is to retain its position as a world-leading economy. We must ensure that people of all ages are able to climb the ladder of opportunity and develop the skills that they, the country and business need.

I recognise that, as Members have said, businesses are struggling to recruit the right people and face other issues. The Government are committed to helping businesses that are struggling to get through those issues. The hon. Member for Strangford (Jim Shannon) raised an important point about hospitality, which clearly features in most of our constituencies. I am fully aware of the some of the difficulties that hospitality faces. There is no doubt that Brexit has been an issue, and we should not try to ignore the issues of Brexit. The net migration figure has increased, but the profile of the workers is different, as the hon. Member for North Ayrshire and Arran said. We need to ensure that the supply meets the demand—not least for hospitality. I chair the Hospitality Sector Council, which has a sub-group looking at the issue right now. It includes leading people from the world of hospitality and business representative groups. We are keen to resolve these issues.

I will touch on Brexit. Even though I voted to remain in the European Union, it is wrong to look at it as simply a difficulty for the United Kingdom; there are clearly opportunities as well. One particular opportunity in the UK is the opportunity to mine lithium. We have been able to do that more effectively and quickly than some of our international counterparts, as we have managed to change our health and safety rules to cut some of the red tape and make it more viable.

As many Members have concluded, it is clear that the country has a number of skills gaps and, in certain sectors, those gaps are causing labour shortages. The hon. Member for North Ayrshire and Arran raised the issue of nurses. She is right that we have nurse shortages that we need to fill, despite having 40,000 more nurses than were working in the service in 2010.

I will focus on three core things: what the Government are doing to identify skills gaps; where we see skills gaps and how we need to tackle them; and wider action that we are taking to address labour supply shortages. The Department for Education is leading on improving the collection, analysis and dissemination of labour market information to support decision making by actors across the skills system. That important point was raised by the hon. Member for Wirral West. That will ensure that we can improve the skills system. That work includes a regular cycle of employer skills surveys to gather insights on employer needs and engagement with the skills system.

We have established the Unit for Future Skills, a new analytical and research unit working across Government to improve the quality of jobs and skills data, which will be made more available and accessible to policymakers, stakeholders and the general public, and will support a better understanding of skills mismatches and future demand. The hon. Member for North Ayrshire and Arran may be aware that Skills Development Scotland does similar work to the Unit for Future Skills. Officials from DfE and the devolved Administrations have met to discuss how that work can be shared, and will continue to engage on it.

For England, the Government are also establishing local skills improvement plans; that goes to some of the issues raised by the hon. Member for North Ayrshire and Arran about rural areas and depopulation. The plans will help to forge stronger and more dynamic partnerships between employers and providers, and help to make training more responsive to employer and local market needs.

The hon. Member for Strangford raised the issue of skills in the food production sector. I think he has a Karro facility in his constituency—a pork production facility. That production is key to his constituency and mine. I have visited that organisation and that facility, and I was struck by what it was doing to ensure that it was equipping young people in the local area with the skills that they needed for butchering and the like. Normally, those people would be coming in from eastern Europe, so these things are having specific beneficial effects for young people in our areas. It is key that businesses invest in the skills of their domestic workforce.

Local skills improvement plans in England are already working and making a difference. In the west of England, the local skills improvement plans identified health and social care, aerospace and advanced engineering as the sectors with the greatest skills challenges. We have awarded £2.75 million to colleges in the area to develop new courses and facilities for both sectors, including new apprenticeship routes for allied health professionals.

[Margaret Greenwood]

The Minister is talking about LSIPs and the areas of skills shortages that they have identified; he has given examples. Will he describe how we will get the investment that we need in adult basic skills? Local employers will not naturally think about people who cannot really read and write very well. My concern is that if they are describing what the offer is, that whole cohort of people who desperately need help to improve themselves may never get any help at all.

[Kevin Hollinrake]

I think the adult education budget has something to do with that, but the hon. Lady is right to point to the improvements that we need to make in numeracy and literacy. Clearly, that is not directly the responsibility of my Department, but I am very keen to go back to DFE and make sure that it is aware of her views.

On identifying skills gaps, evidence from the Chartered Institute of Personnel and Development shows that 46% of employers reported having hard-to-fill vacancies. The top response from employers with hard-to-fill vacancies has been to upskill staff, which is clearly key. We know which regions have the highest skill-shortage density, and we know about the impact on employers when they lose business. The key areas where we feel that the skills gaps are most acute are workforce sectors with high volumes of vacancies, green jobs, which have been mentioned by many Members, growth sectors, and science and tech. We are committed to tackling these skills gaps through major investment and reforms to skill and further education provision.

I turn to some of the excellent work done by my colleagues in the Department for Education on apprenticeships, which were mentioned by my right hon. Friend the Member for Chipping Barnet and the hon. Member for Chesterfield. There have been over 5.1 million apprenticeship starts since May 2010. In recent years we have transformed apprenticeships, driving up the quality so that they better meet the skills needs of employers. I fully recognise and support businesses’ calls for us to make the levy funds more flexible, but we have to see the issue in context.

Some of the earlier apprenticeship schemes were criticised for not being sufficiently robust and challenging, or of the right quality. It is about striking a balance, but I am very impressed by some of the skills bootcamp-type schemes that perhaps we should focus on in order to give more flexibility. I went to see a new initiative called Trade Up, which seeks to double the number of construction workers. It is a private sector initiative with very short, 10 to 16-week courses, and it involves getting gas fitters and joiners back into the sector.

There are lots of different solutions that we need to look at. The Government have launched T-levels for young people, which will boost access to high-quality technical education. The Government are also committed to ensuring that, at any stage, adults can upskill to reach their potential through skills bootcamps and level 3 free courses for jobs in priority areas. The adult education budget, and giving adults a funding entitlement to get English, maths and digital qualifications, is hugely important, as the hon. Member for North Ayrshire and Arran said.

The Government’s research and development people and culture strategy puts people at the heart of research and development, and sets out our plans to attract enough people with the rights skills across all roles. We are aiming for a full pipeline of research and innovation workers for the future. A huge part of understanding the role that skills play is making sure that we can respond to labour market shortages. The Government are working closely with businesses, and encouraging them to take a stronger role in providing their workforce with skills and training.

Do you want me to conclude, Sir Graham?

Section 21 Evictions

Debate between Margaret Greenwood and Kevin Hollinrake

Tuesday 25th October 2022 Westminster Hall

[Kevin Hollinrake]

I have spoken to every single Government Minister about my opposition to their plans. Section 8 uses a court-based process. It takes around eight months to get somebody out of a property using section 8. If a person is guilty of antisocial behaviour or is well behind on the rent—measures cannot be taken until somebody is about two months behind—it will take months. It is not that much of a problem for Legal and General, Grainger, Fizzy Living or whatever. They have thousands of properties. If they have a few dodgy tenants, they can blend that problem across their whole estate, so everybody pays for the tenants who make trouble, do not pay their rent or behave in an antisocial manner. What about the small landlord?

I like it when the Opposition talk about business. They always talk about small and medium-sized businesses, as do I. They say that we should abolish section 21, but if someone with one or two properties has a tenant who does not pay their rent for eight months, for whatever reason, that can be devastating to their investment, so lots of SMEs will exit the marketplace, particularly if we abolish section 21 without first reforming court- based process.

When the section 21 measures were introduced in the Housing Act 1988, we saw a massive increase in supply, which has been very good for tenants. The reality is that in most parts of the country, most yields on properties—the return on capital investment—are pretty low. We are looking at a rental yield of 2% to 4%. Interest rates will be 5%, 6% or higher, so if landlords borrow money to buy a property, most will not get an annual return. Most landlords are not profiteering from the private rented sector—far from it.

[Margaret Greenwood (Wirral West) (Lab)]

Is the hon. Gentleman suggesting that it is appropriate for people who live in rented accommodation to be subject to the vagaries of the market? We are talking about people who live their lives in these homes. What exactly does he envisage they will do in this scenario?

[Kevin Hollinrake]

That is an interesting point. The vast majority of people in the private rented sector are happy with the shorter-term nature of rented accommodation. I wish the hon. Member for Liverpool, Walton, would not shake his head and would listen to what I say. There is a cohort of people who want to live in rented accommodation permanently. They want it as their family home. I absolutely agree that the Government should provide accommodation for those people. The Government should invest in this much more, and provide long-term, affordable rented accommodation and social rented accommodation. That is definitely the Government’s job where there is market failure.

I concede that there are market failures for people who want to live in permanent rented accommodation. I am not against the Government stepping in and ensuring that can happen. However, if they step in, tell the private rented sector to ensure that, and set out the rules that apply to someone who wants to make an investment in the sector, the reality is that we will get a reduction in investment in the private rented sector, which will mean a reduction in supply, which will make it more difficult for the tenants on whose behalf Members are speaking. That is the reality of the situation. So, yes: we should make greater public investment in long-term rental accommodation to deal with this issue. However, we should not tell landlords, who invest their private money in the private rented sector, that they have to let their property for life, which is what the hon. Member for Liverpool, Walton is considering.

If the hon. Gentleman wants the private rented sector to do that, a way of dealing with the issue would be to offer incentives for that. We could look at capital gains tax, for example; perhaps people who are willing to rent their property for a much longer period—for five or 10 years, or maybe even for life—could get beneficial capital gains tax treatment. Alternatively, we could reverse some of the changes we made in the Finance (No. 2) Act 2015, in which we restricted mortgage interest in the private rented sector; that was pretty damaging for lots of landlords in the sector. We could say to landlords, “We are no longer limiting the way you can deduct interest against your annual rental income, as long as you’re willing to rent your property out for longer, or for life, to give security of tenure to those kinds of tenants.”

I will conclude very shortly, Ms Nokes. The other unintended consequence of what the hon. Gentleman proposes is that private rented sector landlords will prioritise the best tenants. They will not take a risk because of concerns about non-payment of rent. You are going to disadvantage the people you seek to protect through the measures that the Government are planning and that the Opposition—