Skills and Labour Shortages

Margaret Greenwood Excerpts

Thursday 12th January 2023 Westminster Hall

[Margaret Greenwood (Wirral West) (Lab)]

It is a pleasure to serve under your chairmanship, Sir Graham. I congratulate the hon. Member for North Ayrshire and Arran (Patricia Gibson) on securing this important debate.

According to the Confederation of British Industry, 90% of the UK workforce—or 30 million people—will need to be reskilled by 2030. In its report published in October 2020, it also said that automation and technology will bring millions of new jobs to the UK, and that there would be a big rise in demand for skills such as digital, STEM and interpersonal, but many other roles will change significantly or disappear. The occupations that are most likely to shrink have the lowest rates of training, the highest unemployment rates and the lowest wages.

We do not know what the workforce of the future will look like. However, we know that with more automation and artificial intelligence, some sectors will be changed beyond recognition. It is clear that we need to think very carefully about the skills strategy, and in particular, what that means for those on low pay. Although it is important to look at current skills shortages and to plan to address them, a long-term perspective is much needed. Adopting too narrow an approach to skills and education will not serve us well. We also need to be clear that investment in education and skills is crucial for the future of our economy and wider society.

It is therefore massively disappointing that, last month, the “Annual report on education spending in England” from the Institute for Fiscal Studies found that even though total spending on adult skills is set to increase by 22% between 2019-20 and 2024-25,

“this only reverses a fraction of past cuts: total adult skills spending in 2024-25 will still be 22% below 2009-10 levels.”

Spending on classroom-based adult education has fallen even more

“and will still be 40% below 2009-10 levels even with the additional funding.”

There is a particular need to focus on basic skills if we are to improve our economic outlook.

[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.

--- Later in debate ---

[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?