Priti Patel calls for closer working between businesses and training programmes

23rd January 2018

Priti Patel highlights the importance of working with businesses to develop relevant skills and training programmes and calls for a review of the Apprenticeship Levy to provide more flexibility in training courses.

It is an honour to serve under your chairmanship this morning, Mr Paisley. I congratulate the hon. Member for Hornsey and Wood Green (Catherine West) on securing this important debate and on her thoughtful speech, which covered the whole gamut of skills and policy. She had some good initiatives and suggestions for how we can start to address the ongoing skills shortage across our country and our economy in a wide range of sectors.

I remember often discussing young people here in 2010. We talked about a generation excluded from employment and about the employability barriers facing them. We had a system that was simply not functioning and not getting them the engagement that they needed to help them get the skills necessary to join the workforce. During those years, when we had had a recession too, we found that older workers were finding it difficult to retain their jobs and also to find new employment as the economy changed. There was more part-time employment as demands across the economy fundamentally shifted. One of the things that I feel strongly about, which the country and our Government should focus on, is the agility that is required to sustain the flexible economy. We must ensure that people of all ages, all skills and all backgrounds can still remain active in the labour market. To do that, we need to look at education.

My hon. Friend is making a strong case on the economic benefits of addressing the skills shortage, but there is also a moral case to do with social mobility, aspiration and allowing people to fulfil their potential in society generally.

My hon. Friend is absolutely right. I will come on to the ladder of opportunity, the moral obligation and responsibility, and the progression pay that the hon. Member for Hornsey and Wood Green mentioned earlier. In fact, we have a good economy right now, but we are faced with a shortage of people in the key sectors that cover the health and wellbeing of our economy: construction, nursing, social care, engineering and a whole range of other sectors. Full-time employment and part-time and temporary employment are all incredibly vital to our labour market.

We have record levels of employment, but we should look beyond that to the next generation and ensure that, while they are at school, they are engaged and nurtured to think about the world of work. The Government have the Careers & Enterprise Company and other models of engagement, but that is simply not good enough in terms of overall coverage—engagement with schools and the requirement on our education establishments to open their doors to businesses, so that they may talk to young people about careers, and to bring into schools sectors that reflect the local economy.

I feel strongly about the role and significance of devolution. In my short apprenticeship as the Employment Minister in the Department for Work and Pensions, I oversaw some of the devolution deals around the Work programme. I worked with the combined authority in Manchester and on other devolution deals. Employment programmes and employability were a major factor in giving devolution to local authorities up and down the country. At the heart of that success is working with the private sector, not just the public sector, to ensure that the private sector and the needs of the local economy are fully reflected in devolution deals. Importantly, the combined authority and local authority models require an absolute understanding of what is going on in the local economy, where the skills shortages are and where future demand might come from. There is also a need to look at succession planning and how businesses can work with their workforce.

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.

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

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.

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