Skills Devolution (England)

Ian Paisley Excerpts

Tuesday 23rd January 2018 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

In Northern Ireland we have recognised it is important to address the issue of skills shortages and to go into secondary schools. Some people have suggested we should even go into primary schools, although I am not sure that is entirely appropriate. We have also addressed the skills shortage in engineering. We should encourage ladies and girls to look to engineering as a possible job for the future, because they can do it as well as we men.

[Ian Paisley (in the Chair)]

Order. Interventions should be short and not made into speeches.

[Priti Patel]

The hon. Member for Strangford (Jim Shannon) is absolutely right. Young girls should be encouraged and should have the opportunity to look at the careers that they might not even consider to be suitable for them. In STEM subjects—science, technology, engineering and maths—engineering is a classic example.

If I may, I will share with the House a little bit about Essex and how we are approaching the skills issue locally. Essex is famously the county of entrepreneurs. Firms based in my constituency have a proud and strong record of creating jobs and local employment. Businesses in my constituency are almost entirely small and medium-sized businesses and they have now created 25% more jobs leading to more than 30,000 people in employment. They are doing well, but they could do even better. They want to see the barriers to recruitment, employability and access to the labour market brought down. They want people with the right kinds of skills. They want change because we have seen that a deficit in skills standards is one of the biggest barriers to growth locally, and to productivity in our wider economy.

On Friday I attended a skills forum organised by the excellent Essex Chambers of Commerce and Industry, which was also attended by my equally brilliant colleague, my right hon. Friend the Member for Harlow (Robert Halfon). In that business-led forum the spotlight was on skills and on the barriers that prevent businesses recruiting people. It particularly looked at the barriers around the skills and training programmes in Essex and the demands and challenges for the future workforce who are being trained. We need highly trained people, but the lack of flexibility within the training and provider landscape was clearly on display in the discussions that we had.

What stood out in the skills forum, and in my previous meetings and engagement with local businesses, was that they want to be at the heart of the decisions that are made on skills policies, and they want to be involved in designing and shaping courses. They want to play their part in offering job training opportunities. However, there are many barriers and restrictions on their doing that. They are best placed to understand the needs of their businesses and the local economy in a way that no Government with a centralised approached and no local authority can fully understand until those businesses are a full part of the discussion. The devolution of skills to local authorities can be successful only if businesses play a leading role in developing that skills agenda, including working with the education establishments and the courses in those areas.

Over the years, I have received endless complaints from businesses about the time it takes for new courses to be approved. They also complain, as I have mentioned, about barriers put up by the public sector to engagement with businesses. It can take years, with hundreds of hours of input from business and trade organisations, for new courses to be signed off. That equally applies to relevant courses. On Friday, I met representatives from a business who said that finding a course that was specific to their business was near-impossible. They just wanted a course, for a young person who wanted to be on an apprenticeship scheme, that covered the basic employability skills.

There is so much more that can be done, and I welcome the many creative suggestions in the all-party parliamentary group report. We need to ensure that there is flexibility, and that businesses are at the heart of the devolution agenda. I strongly support the idea of devolution in skills coming to the county of Essex. I think that we would benefit from that, in some of the ways that have been suggested today. Devolving skills, and focusing on skills in the workforce, is important not just to businesses, but to individual workers. The skills deficit has a drag not only on our economy, but on the life chances of people who want to work. We have so much untapped potential across our workforce, and there is a great opportunity for the Government to lift the lid on the talents of those people who are struggling to access the labour market.

One way that we can do that, as the hon. Member for Hornsey and Wood Green mentioned, is through the apprenticeship levy. We need to look at how we can unlock the potential of the levy and use the funds it raises to support the upskilling of a whole generation who are simply not accessing the levy. I also suggest using the funds to upskill agency and temporary workers. More than 1 million people go to work every day to do agency and temporary work. That model offers a great deal of flexibility, but those workers make an enormous contribution to our economy; their net contribution stands at something like £35 billion. There is growing concern that the funds that agencies put into the apprenticeship levy cannot be used to train and upskill workers on their books. Somewhere in the region of 2,000 to 2,500 businesses are paying the levy, and the rules on the spending of funds raised by the apprenticeship levy are so rigid that it is almost impossible to use that money to invest in agency or temporary workers.

We have a very good record in Government when it comes to revitalising apprenticeship schemes, and we should be proud of that. The levy has a critical role to play in providing a great pathway. We know that the current pathways are not suitable for everyone, and we need more flexibility when it comes to the levy and apprenticeship schemes. Many workers need to go on shorter, practical courses to take the next step to move on in their career. Examples include courses in food hygiene and fork-lift truck driving, which are not covered by the apprenticeship levy. The flexibility of the levy could be increased to support some of those courses, so that we can support more people to get back into work and get better pay progression, and give them long-term employment opportunities.

If we are to deliver a fair society that invests in people and provides opportunity for those who want a hand up so that they can reach their full potential, why on earth would we not do this? We have a fantastic opportunity to provide greater training support; existing employment programmes are far too rigid and inflexible to do so. A very good way in which we could do that, I suggest, is that the Minister, working across the Department for Work and Pensions footprint, could give people who are on universal credit, and who are limited in their hours of work, the freedom and flexibility to access the levy, to get on some of these courses, and to get skilled up so that they can progress.

We are on the cusp now. The levy is new, but it represents a fantastic opportunity. Devolution of skills is surely a success for our region, and it deserves to receive more encouragement.

--- Later in debate ---

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

I say with even greater feeling than normal what a pleasure it is to serve under your chairmanship, Mr Paisley.

I thank my hon. Friend the Member for Hornsey and Wood Green (Catherine West) for securing this debate. Her contribution was thought provoking and adds to an ongoing debate on this serious issue. I describe it as serious because successive Governments have wrestled with the problem of the national provision and accountability of skills funding and the effectiveness of local delivery. Certainly the Government’s own initiative of the apprenticeship levy will not, as far as we can tell at this moment, solve or resolve those historical tensions and problems. We need to look at the issue from a fresh perspective. Now is a good time to do that.

In the Government’s regionalisation agenda—we talk about the northern powerhouse, the midlands engine and so on and so forth—skills is an essential driver of economic growth in a region. To devolve economic power to the regions without devolving the provision of skills in effect leaves a vital part of economic infrastructure out of regional control. I am here to advocate increased devolution of skills, in particular in an area such as mine, which now has a new metro Mayor, Andy Street, who has pledged to enhance economic growth in the area and to see what can be done with local provision of skills funding in order to enhance the initiatives already in place.

Nothing could be more appropriate at this time. Only last week the local chamber of commerce in my constituency warned of acute skills shortages. My area is the historic Black country, which in years gone by was the workhouse of the world, when Britain was an international manufacturing powerhouse. Despite all the reduction in manufacturing as a proportion of our economy, the Black country still enjoys that role—it is a vital part of the engineering and motor manufacturing supply chain, which drives one of the most successful parts of our economic profile, the motor industry, vital to both productivity and our balance of payments.

There are more foundries not only in the Black country but in my constituency than there are in any other constituency in the country, and they are suffering from an acute skills shortage. Those foundries have survived the globalisation drive because they had unique skills and a quality not deliverable in any other part of the world. However, they now have an acute skills shortage. First, they have a problem with the age profile—the average age group in most of those foundries is of people in their 50s—and, secondly, they have survived largely by recruiting from eastern Europe, and if that supply is in any way diminished, the existing skills problem would be enhanced.

In the last quarter of 2017, 82% of businesses in the Black country were reporting recruitment problems. It is estimated that we will need to reduce the number of the workforce with no qualifications by 50,000 over the next 15 years just to bring us in line with the national average, and that the Black country will need a 70% increase in the number of apprentices to meet basic demand. That is a monumental task, but our local area is seeking to address it.

In my constituency, in Tipton, the Elite Centre for Manufacturing Skills is being built. It is a joint venture between Dudley College of further education, the University of Wolverhampton and the historic metal casting company Thomas Dudley. The centre is designed to recruit and attract young people from the area to obtain not only apprenticeship but degree-level qualifications in the range of skills necessary to the local foundry industry. That is an example of a local initiative in which local businesses engage with the academic sector and Government, knowing what is needed locally and delivering the sort of courses and expertise to get the right balance of skills needs in the area.

Unfortunately, if we look at the national picture, central Government policy engages with the regions only on its terms, seeking insights of the problem but not giving direction, and seeking advice but not giving local agencies the funding to be able to deliver on their unique insight and expertise. A particularly bad example of that came to my notice in December.

The BCTG—Black Country Training Group—executive director Chris Luty got in touch with me and other Members of Parliament in the area because the group had lost its apprenticeship funding from the Education and Skills Funding Agency. BCTG is the largest provider of apprenticeships in the Black country. It had tendered for its Government funding to be renewed and, to the astonishment of Chris Luty, was unsuccessful. That meant that all the contracts with SMEs in the Black country would have to be closed, leaving a huge gap in local skills provision for small companies in the area that are vital to the supply chain for Britain’s motor industry.

In all, BCTG has recruited 4,000 apprentices, 750 since last May alone. That is the sort of scale it operates on and demonstrates the gap that would have been left had it not been able to secure the funding. I wrote to the Minister and so did other Black country MPs. To the Government’s credit, they realised that that was an error and changed their decision.

The reason given for the original decision, however, is illustrative:

“The review was conducted by a member of the Agency’s staff who possesses the appropriate technical expertise in the provision of apprenticeship training but who had not previously evaluated your tender.”

If that is not a classic case of Sir Humphrey-speak, I cannot think of a better one. It is outrageous for an organisation so key to the delivery of a vital driver of economic growth in the regions to make such a mistake. That sentence highlights the need for a change in approach to the devolution of skills to the regions.

I realise that other people wish to speak so I will bring my remarks to a close. Enhanced devolution of skills to the new bodies that are being set up affords the possibility and potential of enabling regional and even sub-regional needs to be correctly identified, backed up by initiatives from local businesses working with whatever partners are available to analyse the needs and to address them with the appropriate training and level of funding.

At the end of the day, if we are to be successful, we have to find another way of doing that. The brutal fact is that at the moment we invest billions of pounds into education and skills training but in so many of our vital industries we still have key shortages. I am sure that what is happening in my area is very similar to what is happening in many other areas. Finding mechanisms to devolve skills funding to local agencies is the key to unleashing the skills potential of so many young people and meeting the needs of local industries in a way that has not been done for many years.

[Ian Paisley (in the Chair)]

Before I call the next person to speak, I remind hon. Members that Front Bench speeches will begin at 10.40 am. I call Rachael Maskell.