Skills and Labour Shortages

Toby Perkins Excerpts

Thursday 12th January 2023 Westminster Hall

[Patricia Gibson]

I plan to touch on that. However, migration is not enough; it does not fill the range of gaps, including skill gaps, and needs in our economy. I will say something about that in just a moment.

Between Brexit and the start of the pandemic, the number of national insurance numbers issued to people from the EU fell by 24%. That impacted our NHS, and the number of specialist doctors in the UK from the EU or the European free trade area; it was more than 4,000 lower than if pre-Brexit trends had continued. Just to be clear, the shortfall is not being made up by non-EU workers. The situation is particularly acute in rural areas, prompting the Migration Advisory Committee to warn of the risks of rural depopulation, which is pretty serious.

The Minister will wish to argue that this serious situation could be addressed by investing in skills and education, to which I would say this: first, that would require real investment that is not forthcoming at the levels that we would all wish to see; and secondly, that strategy would not help the situation right now. It would perhaps help us to plug some gaps in the longer term, but our economy—our public and private sectors—need help right now. The situation is particularly worrying for Scotland, given that ours is the only country in the UK in which the population is projected to fall in the next decade.

What can the Government do about this situation? Well, they could make it easier for businesses to recruit from abroad as and when they need to, for all skill levels. Employers are concerned about how onerous, time-consuming and bureaucratic it is to recruit staff from abroad, and it should not be. Employers make every effort to recruit locally, but when that does not result in their gaining the staff and skills that they need, it should be much easier and smoother to tap into the labour markets of our European neighbours. That would make perfect sense for our employers, our economic prosperity, and those who are recruited. The Government’s own MPs are coming to realise how urgent the situation is. That was evident when the hon. Member for Lichfield (Michael Fabricant) echoed the Scottish Government’s calls for the Home Office to provide long-term stability for migrant workers with a 24-month visa.

It pains me to say it, but the UK Government are prisoners of their own rhetoric; they have somewhat boxed themselves in over visas and immigration, despite the demands of our economy. The Chancellor told us in his autumn statement last November that the Prime Minister would ask the Secretary of State for Work and Pensions to

“do a thorough review of issues holding back workforce participation, to conclude early in the new year.”—[Official Report, 17 November 2022; Vol. 722, c. 848.]

Some people’s hopes were raised that those words might signal change, driven by common sense, but as we have heard nothing since about a review, I fear that those hopes were misplaced. Perhaps when the Minister responds to the debate, he can update us on that review.

The temporary exception to the skilled worker criteria under the Government’s points-based immigration system for care workers, and the introduction of a bespoke visa for seasonal agricultural workers, are absolutely fine moves, as far as they go. However, they are clearly inadequate to address the scale of the workforce challenges faced by the sectors to which they are directed. They also take no account of the range of needs in other sectors. Similarly, the kickstart scheme, well-intentioned though it is, is simply inadequate to address these challenges.

[Mr Toby Perkins (Chesterfield) (Lab)]

I congratulate the hon. Member on her speech. She is absolutely right about the impact that Brexit has had. That impact has perhaps been escalated and exacerbated by covid; a lot of migrant workers went home as soon as the pandemic began. Obviously, it is more difficult than before for others to come in, which has escalated the situation. I want to clarify what she is asking for by way of response. Am I right in saying that it is a 24-month visa, and an escalation of the schemes that she mentioned, within the confines of not returning to freedom of movement? Or is she saying that we should have a return to complete freedom of movement, and that anyone from the EU who wants to come and work here should be able to?

[Patricia Gibson]

I have absolutely no problem with freedom of movement—we have suffered enormously as a result of no longer having it—but I appreciate that the Government will not move in that direction, so I am asking them to allow our public and private sectors to recruit from Europe as and when they need to in order to fill their skills gaps and jobs gaps. That is very difficult. The skilled workers criteria are too narrow and do not fill the gaps, even for the sectors that they are intended to help. They are not enough and do not take into account the strains and shortages in areas of the economy that they are not directed at. I believe that the Minister and the Government understand all the difficulties that I and others have mentioned, but feel trapped by their rhetoric. I hope they will get over that and take a common-sense approach, for the sake of our economic prosperity.

The Government commissioned the Migration Advisory Committee to review the shortage occupation list, but I understand that the review has been paused pending clarification of the Government’s priorities surrounding the skilled workers route. When the Minister gets to his feet, perhaps he will give us more detail of how the review is going, when it will be unpaused, and when we might see some benefit from it.

In the absence of any attempt to address the very serious situation in the way that I and many people across this House would like, and that would have the necessary impact on the challenges, I urge the Minister at the very least to play his part in persuading his Government to allow a Scottish visa to be established, so that those who wish to live in Scotland and contribute to its workforce may do so. By way of precedent, similar successful schemes have been established in Canada, Australia, New Zealand and Switzerland on a regional basis. Scotland should not suffer from a one-size-fits-all UK approach; its demographic, geographical and labour needs are entirely different.

It makes sense to allow asylum seekers who come to the UK to enter our workforce. They are stuck in hotels or Home Office accommodation at huge cost to the taxpayer, but many of them have valuable skills that we need, and they are desperate to enter our workforce, while we suffer skills and labour shortages. That defies all common sense.

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[Theresa Villiers]

I certainly agree that investing in adult education, apprenticeships and skills is crucial for giving people opportunities in life and the skills that they need. That is why I welcome the huge amount of work that the Government have done on this issue. Indeed, the Prime Minister identified that as a key priority for him.

Apprenticeships, skills and adult education are crucial in giving people the chance to succeed in life, whatever their background. They can be an engine of social mobility and social justice. Apprenticeships in the science and technology field can strengthen the capacity of our workforce to tackle the two huge environmental challenges we face: climate change and nature recovery. For those three reasons alone, I am a big enthusiast for apprenticeships. I have met a number of people whose lives have been transformed for the better because of them.

[Mr Perkins]

I absolutely share the right hon. Lady’s enthusiasm for apprenticeships, so I suspect she will be as concerned as I am that, since the introduction of the apprenticeship levy, the number of apprenticeships has fallen, and the number of apprentices in small and medium-sized enterprises has fallen massively. Companies that do not pay the apprenticeship levy are much less likely to do apprenticeships. Does she agree with me and the Labour party that we need to make the apprenticeship levy more flexible, and bring more small businesses under that regime?

[Theresa Villiers]

There is scope to review the apprenticeship levy and make it more flexible; I will come on to that. We also have to recognise the success in recent years in delivering apprenticeships; there have been around 5.2 million since the Conservatives returned to office in 2010. Yes, there has been a slight fall since the covid pandemic, which we need to address. I will come on to that later.

I commend Middlesex University, which is local to my constituency, for its work on degree apprenticeships. They deliver a great combination of academic and in-work learning, without creating the burden of debt that comes with a more traditional degree. It was great to meet young people in the university’s apprenticeship programme who are training for roles in the NHS at Barnet Hospital. Those dedicated apprentices show that skilling up people already working in the NHS can help to address labour shortages in healthcare, which we urgently need to tackle if we are to expand the NHS’s capacity for dealing with rising healthcare need.

I also praise the work of the BioIndustry Association. Last year, I met the association, along with some of its young people who are undertaking apprenticeships in the biotech and life sciences sector, to discuss these important matters. That part of our economy is truly world beating, as the inspirational work on delivering a vaccine during the covid pandemic showed. We need to ensure that the life sciences sector has a great pool of talent from which to recruit if it is to live up to its potential to deliver the new treatments, vaccinations and diagnostics that could transform healthcare in years to come, and if it is to provide hope for people suffering from devastating conditions such as cancer and dementia.

In his winding-up speech, I want the Minister to consider how we can get more people into apprenticeships. When it comes to tech sectors such as life sciences, co-ordination between the Government’s research and development and skills programmes can be invaluable. For example, the network of catapult centres created by the Government to encourage cutting-edge science and innovation could play a positive role in supporting small businesses in handling the apprenticeship process. That is illustrated by the cell and gene therapy catapult’s development of ATAC—the Advanced Therapies Apprenticeship Community. That engaged over 48 companies in using apprenticeships to attract, train and retain talent. Over half of the companies were small or medium-sized enterprises at the time of first recruitment.

Like the shadow Minister, the hon. Member for Chesterfield (Mr Perkins), I ask the Minister to consider the wider point of how we can make it easier for small businesses, such as that owned by my constituent, to employ and train apprentices. I am the vice-chairman of the all-party parliamentary group on apprenticeships, which considered that issue in a report published last July.

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[Mr Perkins]

On that point about basic skills, there was an incredibly successful Unionlearn programme, which enabled people who were in the workplace, whether they were members of a trade union or not, to access some of the basic skills they might not have got at school. It made a radical difference to people’s careers and their progression. Does my hon. Friend agree that getting rid of Unionlearn was a retrograde and politically motivated move and that we are paying a dear price for it?

[Margaret Greenwood]

My hon. Friend makes an excellent point, and I agree; getting rid of Unionlearn did a disservice to our country and everybody in it.

A recent report by the Centre for Social Justice points to a huge deficit of basic skills across England. One of those basic skills is adult literacy. According to the National Literacy Trust, 7.1 million adults in England—that is 16.4% of the adult population—are functionally illiterate. However, the Government have failed to respond to the severity of the crisis. I highlighted the matter with amendments to both the Bill that became the Skills and Post-16 Education Act 2022 and, more recently, to the Levelling-up and Regeneration Bill. Both amendments called on the Government to review levels of adult literacy, publish the findings and set out a strategy to improve levels of adult literacy.

In ignoring the scale of the crisis in adult literacy, the Government are wasting the talents of more than 16% of the adult population. That makes absolutely no sense. We need a Government that will provide people with the opportunity to acquire skills that they need to progress, both for their personal development and the good of the economy.

I am also concerned about the Government’s approach to skills and adult education more widely. It seems that Ministers are focusing intensely on skills for jobs, to the detriment of education as a whole. The benefits of an educated society cannot be overestimated. Some of those benefits are demonstrated clearly in the Workers’ Educational Association 2022 impact report. The WEA does a fantastic job in providing the secretary to the all-party group for adult education, which I chair.

The WEA supports adults to gain the skills they need to get into work and to improve their prospects if they are already in work. It also helps adults who are often far away from the labour market to develop skills to cope with social isolation, to improve their physical and mental health, and to acquire a love of learning by helping them to develop interests and connections with the communities around them. The WEA’s impact report notes that 84% of the association’s students reported improvements in their overall wellbeing, 51% reported an increase in their self-confidence, and 43% said that their course helped them to make new friends.

The Government’s recent consultation document on implementing a new further education funding and accountability system sets out proposals to

“re-orientate the vision for non-qualification provision”

in areas funded by the Education and Skills Agency, which account for about 40% of adult education provision. The Government propose that, in future, all non-qualification provision in adult education

“should meet at least one of the following objectives:…achieving employment outcomes for all learners…achieving progression to further learning that moves individuals closer to the labour market, for all learners…helping those with learning difficulties and/or disabilities to support their personal development and access to independent living”.

Although all of those are hugely important, stakeholders are understandably concerned about what this might mean for people who need longer to gain the confidence or basic skills to progress into work. I am also concerned about what the Government’s approach means for the delivery of a broad adult education curriculum. I would be grateful if the Minister could give a reassurance that his Government’s policies will not mean the abolition of courses in subjects such as art, history, sociology, drama, music and literature.

Sue Pember, the policy director at HOLEX, the professional body for adult community education and learning, has pointed out that the consultation

“seems to have missed the point that many adult learners don’t sign up for their first course because they think it might lead to a better job or set them on a pathway to a brand-new suite of qualifications. Most turn up to adult community education because they want a fresh start, they’re hoping to find a sense of community and to improve their wellbeing.”

That certainly rings true with my experience as a former adult education tutor. On many occasions, I have seen the impact that being able to learn a subject later in life can have on an adult who may not have benefited from education in their younger years. There are many reasons why someone did not thrive during their school years, such as ill health, the ill health of a family member, or the fact that they moved around a lot as a child and were not able to settle in one area.

Sue Pember’s statement also brings to mind something that I heard during a recent meeting with the University and College Union’s adult education members. One of the people there told me a story about their student who went on to attain a PhD, I believe, in biochemistry. When the student first attended the college, she went to a course in belly dancing. She wanted some relaxation—I think she wanted to get away from her kids—but she wound up with a PhD in a very difficult science subject. That is a good example of how having something on offer for people who want to pursue their own interests can lead to further opportunities.

It seems that the cultural shift away from education and skills, and towards the Government’s narrow focus on solely vocational skills, will significantly reduce opportunities for adults to learn in subjects that they can enjoy and that can bring them benefits that are not necessarily employment-related. We need not only skills training opportunities, but adult education in community settings with a broad curriculum offer. That can be particularly important for people who find themselves unemployed after decades of work, as well as for retired people who want to learn something new.

At a time when we have an ageing society and increasing problems of loneliness, it cannot be right to bring in measures that have the potential to remove community-based learning opportunities. Further, someone who has come out of paid employment to care for a family member, or who has been made redundant, may well benefit far more from a course that does not have any obvious career outcome, particularly if they need to regain their confidence after being away from the labour market. Redundancy can knock people’s sense of confidence.

Education gives people the opportunity to develop and explore things that are of interest to them. When it comes to learning, there is no greater motivation than being interested. To narrow the focus of adult education and skills in the way that the Government are doing is to leave us much poorer culturally. Unless adults are provided with a good range of opportunities in their communities, we are not harnessing the talents of everyone in the country, and we are depriving people of the opportunity to become the very best that they can. That is a detriment to us all.

As I said, we do not know what the jobs of the future will look like, so we need to make sure that people have the opportunities to retrain and to enrich their lives through education at any point in life. The Government need to invest in all of our futures.

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[Mr Toby Perkins (Chesterfield) (Lab)]

It is a great pleasure to serve under your chairmanship, Sir Graham. I congratulate the hon. Member for North Ayrshire and Arran (Patricia Gibson) on securing this useful debate and on her contribution, which I will reflect on in more detail in a moment.

Skills shortages are prevailing throughout all four corners of the United Kingdom, so this debate is very welcome. As someone who spent nine years in recruitment in the ’90s and noughties, I am aware that skills shortages are by no means a new phenomenon. However, the scale of the issue is now more serious than ever before. The scale of the failure requires the Government, private and public sector employers, and educationalists to work collaboratively and strategically to address it. Sadly, there is no sign that either the resources or ambition required to address the issue are close to being found.

I will touch upon some of the key issues raised by hon. Members. The hon. Member for North Ayrshire and Arran spoke about Brexit at some length. She is right; there is no question but that the removal of freedom of movement will have made a big difference, coupled with—as I said—the accelerated exit of people who might have stayed here longer but decided to return when covid came and work slowed down. Lots of people during covid just wanted to get home to their families, so there was an increase in the number of workers who left the UK as a result. That has no doubt made a big difference as well.

The hon. Member also touched upon rural depopulation and the fact that there have been 24% fewer national insurance numbers issued to EU residents, as though that was an unfortunate consequence of Brexit. However, that was the entire purpose of Brexit from the perspective of many of my constituents who voted for it; that was what they wanted to happen. It was not an accident and it cannot have been a surprise to the Government that that happened.

I share the hon. Member’s view that we need a far broader, strategic migration plan. We need to try to level with people in the UK about our needs for further migration. We should absolutely recognise the need for migrants to come in to work—not in highly skilled environments, but in what we might class as unskilled environments. We need those. I am currently staying in a hotel when I am down in London, and virtually every person cleaning it has been a migrant worker. I speak to them when I meet them. The idea that we can somehow just cope without them, or that there is an educational solution to it, is not true.

However, it is important to give some context for all these conversations. Since Brexit, the population of the United Kingdom is 1.4 million higher than it was in 2016, so the numbers have continued to increase. She is absolutely right that the context in England and Scotland is different. It is currently estimated that between 2014 and 2039, over a 25-year period, the population of England will grow by 17% and the population of Scotland by 7%.

Since 2011, in the 10 years between the censuses, the population of England grew twice as fast as the population of Scotland. If we go back to 1950, the population in Scotland was 5.1 million. It has barely changed and is now 5.3 million, whereas in England the population has gone from 40 million to 58 million, so the context is different. It is therefore easy for Scottish MPs to say, “We want to return to freedom of movement”, but we are in a United Kingdom, and there are different needs in different areas. However, Scotland is not unique among the nations and regions of the United Kingdom; in the north-east, there has been very little population growth in that time, though there was a lot of population growth in London and the south-east.

The right hon. Member for Chipping Barnet (Theresa Villiers) spoke passionately about apprenticeships. She and I share that passion. I always say that the greatest advocates for apprenticeships are apprentices, and those who see the difference that an apprenticeship has made to a young person’s life. She also spoke about the importance of apprenticeships in tech sectors, and I agree with her entirely on that. The Labour party would like greater flexibility around supporting people to get on to apprenticeships, and an ability to use the apprenticeship levy more flexibly.

The right hon. Lady was absolutely right about the need to make things easier for small businesses. We are pretty unique in this country. The apprenticeship levy is not a unique idea, but we are the only country that has created a divide between levy payers and non-levy payers. The non-levy payers have to scrabble around to find funding for apprenticeships, and have to hope for good will from an apprenticeship levy payer who might donate some of their levy spend, but that is not a coherent system in any way.

The right hon. Lady was happy about the number of apprenticeships since 2010. When we look in more detail at the statistics, we see that there was a big increase when the Train to Gain programme was rebranded as an apprenticeship in 2010-11, but since the introduction of the apprenticeship levy, there has been a fall in apprenticeships, a big fall in the number of SMEs taking on apprentices, a big fall in the number of level 2 and level 3 apprenticeships, and a lot more apprenticeship spending being dedicated to MBAs at level 7, which I do not think any of us envisage when we talk about apprenticeships, so there are real problems with the apprenticeship levy, and the Labour party has ideas on that.

My hon. Friend the Member for Wirral West (Margaret Greenwood) spoke about the adult skills budget increase. She was absolutely right, but what she did not say was that the 19% increase in the next five years is still, at the current rate of inflation, a real-terms cut. It is—I will touch on this in more detail in a moment—a tiny step back up the mountain, given the reduction that there has been in apprenticeships.

My hon. Friend also spoke about the journey from belly dancing to biochemistry. She is right that numerous people, particularly given the scale of the mental health crisis in this country, might return to education via flower arranging, belly dancing, or learning a foreign language or whatever, and will see that as part of their path back to the workplace. Given that we have more vacancies than people unemployed, and about 1.5 million people who are not in either of those groups, the need to get more of those people back into the labour market is crucial.

My hon. Friend said that the Government have narrowed the focus to much more vocational education, and she is right, but we have a huge reduction in the number of vocational routes that people can pursue now, so we are failing even on those narrower terms. She also spoke about the need for people to be able to retrain; she is absolutely right that many will need to do so. In 10 years’ time, people will be doing jobs that we have not even heard of today; many people will go through four, five or six careers in their working life, so the ability to learn and soft skills are more important than a narrow focus on vocational education.

The hon. Member for Strangford (Jim Shannon) spoke about the skills and labour shortages in his constituency, and talked about people being bussed in from Newry every week, which I understand is an hour away. It cannot make sense for people to have to do that. He was speaking up for his constituency.

In her summing up, the hon. and learned Member for Edinburgh South West (Joanna Cherry) spoke about the need to cut red tape. That is an irony for us all; we were told that moving out of the European Union was the answer to red tape, but of course this Government are just as capable of creating it. We totally share the hon. and learned Member’s view on apprenticeships, access to labour, the labour market and many other areas where the Government have been tremendously productive in creating, rather than removing, red tape. She discussed hospitality shortages, as well as speaking very wisely about universities being engines for growth, and a part of our reskilling our economy and making it more productive.

The hon. Member for North Ayrshire and Arran said that the Scottish Government are doing all that they can. Scottish Labour colleagues have told me about the national recovery plan that they proposed during the aftermath of covid, which would have guaranteed a job for every young person in Scotland. It would have meant investing in a national training fund and a business restart fund. They also told me of their comeback plan, under which there would have been investment in schools, and IT support in every primary and secondary school; they also wanted the creation of a community recovery fund, which would invest in local areas and make communities safer. Their view is that there was a missed opportunity there for Scotland, but it is important to say that in both Scotland and Wales, things are happening on skills, but the same schemes are not available to English businesses.

There is much we can learn in England from other Governments in the United Kingdom, as well as from our foreign competitors. In England, the apprenticeship levy has largely shut out too many small and medium-sized enterprises. It has hampered attempts to address skills shortages, particularly in sectors such as construction and engineering. In contrast, the Labour Government in Wales have just committed an extra £18 billion to be invested in apprenticeships, bringing the total to £140 million for apprenticeships across the country.

Levy-paying businesses in England have often argued for greater flexibility. Labour has proposed the introduction of a skills and growth levy to replace the apprenticeship levy; 50% of that pot could be spent on other kinds of high-quality training, which would not necessarily have to be apprenticeships. That would provide support to people who might be pre-apprenticeship, perhaps through traineeships or other programmes. It would also support the massive transition towards a greener working environment by helping people to retrain; for example, motor vehicle engineers could retrain so that they could do mechanics on electric vehicles, and heating engineers could retrain so that they could move into installing heat pumps. Those are the kind of areas where we think greater flexibility would be relevant.

We also propose establishing Skills England, to ensure courses and qualifications are of real benefit to learners and employers. The Government’s sticking-plaster solution to skills shortages is not working. It feels as though there has been a real desire to pit organisations against each other, rather than a collaborative approach, which would make a real difference.

In conclusion, we envisage a confident and dynamic skills sector that is fit for purpose and able to react quickly to the challenges of the future, which include moving Britain to a greener economy, taking advantage of increasing automation and ensuring that home-grown talent is fully supported in a post-Brexit economy.