Building a High-Skilled Economy

Steve McCabe Excerpts

Thursday 17th June 2010 Commons Chamber

[Mr Hayes]

The fact that I anticipated my hon. Friend’s intervention merely gives it more force. He is right to say that the Open university plays a critical role in that regard. I will happily visit that place once again to cement the relationships that I have already formed there.

The economic case for skills will continue to be important because of the link between skills and competitiveness. It is well established, and it was made clear five years ago in the Leitch and Sainsbury reviews. Already their analysis has become orthodox in the debate about skills and the economy. The essence of their case was, and it remains salient, that driven by new technologies, the pace of economic and industrial change is growing, not just here in the west but in Asia and increasingly in Africa and South America. Once, those countries either did not compete in the same markets as this country or could offer only technologically inferior products. That is no longer the case. The unequal competition between high quality and low cost has been replaced by what Lord Sainsbury called a “race to the top”.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

In the context of international competition, how worried is the Minister by the letter in today’s The Daily Telegraph from senior executives of leading British companies, who warn against the dangers of cuts to university funding and the risk that we will be left behind in the international competitive league as a result?

[Mr Hayes]

There is no doubt that the relationship between research and development and the kind of dynamism that I have described is a profound one. I know that my right hon. Friend the Minister for Universities and Science will take that very seriously indeed in the process of framing our policy in respect of higher education.

I know that the hon. Member for Birmingham, Selly Oak (Steve McCabe) is sympathetic to the argument, so I may be pushing at at least a half-open door when I say that further education matters too. Building skills from the bottom up, re-engaging young people who are not in employment, education or training, up a ladder of skills to the levels that he is describing—levels 3, 4 and 5—is critical. The hon. Gentleman will understand why today I want to speak particularly about further education, as that is my responsibility.

We need to provide workers with the skills they want and businesses with the skills they need to compete in this increasingly challenging world. The Leitch analysis pointed towards an intensive effort to raise skills in this country, and indeed the House more than once debated these matters when the Labour party was in government. It is easier perhaps to say on the Opposition Benches, but I will repeat it from the Government Bench, that I do not accuse the hon. Member for Cardiff West of anything worse than a mistake. I do not think that Labour Members are malevolent; I think their intentions are broadly the same as ours. I just think they are misjudged. This is not about malice; it is about error. I know that they will want to acknowledge that when they speak in the debate. They are big men, and I want to give them this chance, because I am a generous Minister, to rush to the Dispatch Box to say that they got it wrong. Wouldn’t we welcome that? Wouldn’t the whole country welcome it, too?

--- Later in debate ---

[Mr Hayes]

No; I am saying that some of the existing apprenticeships may not be classified so, and that the new money and the new emphasis will be on level 3. I want to return to the main text of my speech.

[Steve McCabe]

Will the hon. Gentleman give way?

[Mr Hayes]

I want to make progress; I will give way later. The hon. Gentleman has had one turn, and although I am generous, my generosity is not without limit.

I want now to focus on the highly centralised and bureaucratic system that developed under the previous Government, whereby funds that could have been used for teaching and training were actually used detailing plans, complying with targets and formulating schemes. Instead of enabling colleges and other providers to respond to the needs of businesses and learners, Ministers thought they knew what was best. Excessive bureaucracy sapped precious energy from our education system. If I might, as a primer, offer advice again, particularly to newer Members, that if proof were needed of that assertion, it is to be found in the report commissioned as early as 2005 by the last Government under the auspices of Sir Andrew Foster. That report concluded that there was a “galaxy” of oversight, inspection and administration in the FE sector, and called for precisely the kind of streamlined and more responsive structure that we in this Government will now put in place.

Even worse, though, that centralised, target-driven micro-management led to a systemic failure in the form of an FE capital funding crisis from which the sector is still reeling. Members will know that the Learning and Skills Council encouraged bids that would have cost 10 times more than the available funds. Across the country, 144 capital bids were frozen. Members across the Chamber came to the House to complain about the circumstances in their localities and the effects on their local colleges, and rightly so. Seventy-nine of those projects had already received agreement in principle. Many colleges incurred considerable cost.

Andrew Foster was once again brought out of mothballs by the Government to produce another report, and he made it very clear that a top-heavy, bureaucratic system had failed. He concluded that the LSC was too slow to respond—

“there were straws in the wind, early storm warnings, but the problem was not crystallised fast enough.”

So we will look closely at FE capital. Next week, I shall make it clear how we will spend on a bid basis with colleges the extra £50 million that the Chancellor has agreed to devote to FE capital projects.

--- Later in debate ---

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

Let me begin by congratulating the hon. Member for Romsey and Southampton North (Caroline Nokes) on an entertaining and well-informed maiden speech. I am sure that she will make a great addition to the House and will serve her constituents well. I also congratulate the hon. Member for Milton Keynes South (Iain Stewart) and my hon. Friend the Member for Liverpool, Walton (Steve Rotheram). I must tell my hon. Friend that I am another Scot who hopes that the England side does well—but I look forward to hours of arguments about football in the years ahead.

I welcome the Minister of State, Department for Business, Innovation and Skills, the hon. Member for South Holland and The Deepings (Mr Hayes), to his post and wish him well, although I see that he has just left the Chamber. I thought that his speech was a wonderful performance. I have concluded that if the pressures of government grow too great for him, as they inevitably will at some point, he will have a great future in amateur dramatics.

I was pleased to hear the Minister’s plans, some of which I think deserve consideration. For instance, I was glad to learn that he plans to look at the careers service with a view to possibly revamping it. I was surprised and worried to read in a briefing that I received from Edge—the independent foundation that promotes vocational qualifications—that in response to a survey conducted last year, more than 50% of secondary schoolteachers admitted that their knowledge of apprenticeships was remarkably poor.

[Mr Hayes]

I am grateful to the hon. Gentleman for his tribute and for the information that he has just provided. The same survey revealed that teachers knew less about apprenticeships than about any other qualification apart from the Welsh baccalaureate. I have nothing against the Welsh baccalaureate, but the hon. Gentleman will understand the point.

[Steve McCabe]

I am glad to learn that the Minister has taken that information on board. As I have said, it worried me to read it, and also to read that many apprentices who were surveyed said that very little information had been given to them about apprenticeships either by secondary schoolteachers or, more importantly, by careers specialists. It seems pretty obvious to me that, if we are interested in promoting apprenticeships, we shall have to convey some basic good information to young people. Both the careers service and the information available to secondary schoolteachers must therefore improve.

I am not quite sure what the Minister was attacking in his comments on level 2—I am not sure whether that was code for a cut in numbers down the line. It seems to me that £50 million could buy an awful lot of opportunities for young people, and if that sum is taken out of the budget in the years ahead, perhaps the Minister has to prepare the way by telling us that he will downgrade certain qualifications and opportunities.

I welcome, however, the Minister’s acknowledgement that level 2 can provide a very useful foundation. I was struck by the statistic in the CBI report, “Ready to grow” that 32% of employers found it remarkably difficult to recruit people with the necessary intermediate skills. It seems to me that those people will never be available unless we can provide them with a basic foundation to start with, and the general definition of level 2 is that it provides people with a solid grounding and a basic set of skills from which they can begin to build and develop their chosen careers.

I do not particularly want to quibble with the Minister about the definition of apprenticeships, but level 2 is very important in getting some young people on the path. Whatever the Minister’s comments today about level 3 were intended to mean, I hope he will bear in mind that it is essential that youngsters have a route in, and that the only way that we will be able to provide employers with people with the requisite skills is by giving young people that starting point.

I also welcome the Minister’s plans to set further education colleges free, although I am not sure how free they will be if they are starved of funding, as it strikes me that that can be a fairly empty form of freedom, and I noticed that there was very little detail about exactly what this freedom will amount to. I would like FE colleges to be encouraged to develop programme apprenticeships—they already have a great deal of skill in that respect—and those apprenticeships are a way of enabling young people in particular to begin their apprenticeship at a time when it may be quite difficult for them to find an employer to take them on. Employers, particularly small businesses, are struggling to develop apprenticeships at present because of their fears about the economic future.

[Mr Hayes]

rose—

[Steve McCabe]

I will happily give way to the Minister again.

[Mr Hayes]

I am grateful to the hon. Gentleman for giving way for a second time.

For the sake of clarity, let me repeat something that I have already said: I am writing to every Member to describe these freedoms to which the hon. Gentleman refers, and they are all things that have been specifically requested by further education representatives in numerous conversations that we have had with them over a period of years.

[Steve McCabe]

Well, the detail is obviously in the letter then, and I look forward to reading it.

I was slightly disappointed that the Minister did not make any specific reference to small businesses. If we want to grow meaningful apprenticeships, small businesses are the obvious sector that we need to target, but we all know that they have difficulties in dealing with apprenticeships. I was glad to hear that the Minister is enthusiastic to cut through the red tape, but when I talk to small employers, they tell me that they need help in developing apprenticeships; they need help with the basic training and assessment. That is the other side of what needs to be done. One side is to encourage youngsters by ensuring they have the necessary information and by promoting apprenticeships, and the other side is to make it possible for small employers in particular to take on young people.

I wonder whether the Minister has considered the idea of group apprenticeship schemes, which I understand have been particularly successful in Australia. I believe that there are some pilot schemes in this country. The essential idea is that the apprentice is employed by a group and is sent out on placement to various employers. It then becomes possible for a group of small employers to get together and to save on the administrative costs and overheads. A number of youngsters can therefore be placed on an apprenticeship scheme and get real practical experience with employers.

Has the Minister any plans to consider university technical colleges? There is one in the Birmingham area, at Aston, and I think there are about four around the country. That model seems to bring universities together with employers. In the engineering and manufacturing sectors in particular, it encourages the development of a steady skill development path. It builds on vocational levels through to level 5, and the previous Government sought to encourage it. I would like to know whether the Minister has plans to pursue it.

[Mrs Madeleine Moon (Bridgend) (Lab)]

Is my hon. Friend aware of other initiatives coming out of universities that also help to build the high-skill economy? I cite, for example, Wendy Sadler’s scheme out of Cardiff university, of which my Front-Bench colleague, my hon. Friend the Member for Cardiff West (Kevin Brennan), will be aware. They have used “Science made simple” to reach out to 250,000 youngsters, getting them to understand science and how they can have a career in science and find employment through science in high-tech and high-quality jobs. Universities have a unique role in reaching out to young people before they make their career choices, perhaps involving universities or apprenticeships.

[Steve McCabe]

If we are going to create jobs for the future and to have a generation in work rather than unemployed, all such initiatives should be encouraged and explored. I agree with the Minister—I do not think that any of us has ownership of these issues—but it is pretty important that we get it right, because we have one chance.

[Stephen Pound (Ealing North) (Lab)]

Does my hon. Friend agree that one of the difficulties with apprenticeships is finding an employer to take the apprentice on for the third year, or even in some cases for the second year? In the benign balmy days of a sophisticated Labour Government who had the economy moving forward, that was quite easy, but now, as the chill winter of Conservatism starts to freeze the economy from all corners, might it not be an idea for us to revert to what the Conservatives did the last time that they were in power and introduce schemes such as the Manpower Services Commission scheme, the youth opportunities programme and so on to provide some support and encouragement to employers? It is easy to take on an apprentice in the good times, but very hard in the bad times.

[Steve McCabe]

I agree absolutely with my hon. Friend. Employers need help and encouragement, and the only people who can provide that are the Government. If we are going to get this to work, that is what has to happen.

The Minister struck a note of optimism today. As I said to him in an earlier intervention, I do not think that that is the view of the senior executives who wrote to The Daily Telegraph today; they struck a note of anxiety and pessimism about cuts in university funding and about being left behind in international competition. It was difficult to see the Minister’s optimism when it came just after the speech from the Chief Secretary to the Treasury, in which he told us that he was axing the young person’s guarantee.

I wish the Minister well, but I warn him that this is going to take more than warm words. The last thing we need to see is a lost generation that does not even get the chance of work. That is the legacy that the Tory Government of the ’80s left us, so I hope that he will learn from the mistakes of the past.

[Several hon. Members]

rose—