It is good to see you in the Chair, Ms Furniss, for these proceedings today. I rise to speak against Government amendment 1 and, by extension, in defence of clause 12 as it came out of the other place.
To be clear, we want Skills England to succeed, and clause 12 as drafted will help Skills England to succeed. It is a breathing space clause, allowing Skills England to operate for a year before it has to absorb IfATE’s functions. The Minister just described it as disappointing that this clause was inserted by the other place. I do not think it is disappointing at all. It is a very good thing. It is not anti-Skills England. It is a pro-Skills England clause to give the new body its best chance of success.
My hon. Friend the Member for Harborough, Oadby and Wigston and I did not confer in preparing our notes for this morning, but I, like him, was very struck by what another former Sheffield MP, the noble Lord Blunkett, said in the other place. He noted that with the transfer of functions, close to 200 people would transfer from IfATE over to Skills England and, in his words,
“there is a real danger that IfATE will swamp Skills England at birth.”—[Official Report, House of Lords, 21 November 2024; Vol. 841, c. GC98.]
Skills England has a really important function to perform. Were it to be hampered in that because of operational complexities and difficulties, that would be deeply regrettable. To understand why this is significant, it is important to note that Skills England and IfATE have different shapes—as an analogy, think about different depths and breadths. Skills England will, at least initially, prioritise 10 sectors: the eight sectors identified as growth-driving sectors in the industrial strategy. Added to those we have construction and health and care, which are also essential to some of the Government’s other missions—so eight plus two makes 10. It will develop skills needs assessments for each of those 10 priority sectors to feed into the industrial strategy planning process.
In the noble Baroness Smith’s very helpful letter to peers on 18 March, she says that work is under way on the eight growth-driving sectors identified in the industrial strategy. That begs the question: what about the other two? They are also identified as being crucial to Government missions. Another question: what about the other volume sectors of employment in the economy? I worked in hospitality for almost 20 years before coming to this place. Hospitality is a fundamental part of our economy; hospitality and retail along with care form the biggest employers in our country. There is sometimes a danger with being mission-led that, if something falls slightly outside the scope of the mission, it gets slightly overlooked. I know that many in those sectors would be keen to hear more about that.
On top of the three big volume sectors of hospitality, retail and care, we could also add admin and support—four sectors that collectively historically have accounted for about a quarter of gross value added in this country, but account for about three quarters of the people in the country who are low paid. For many social justice and equality reasons, those sectors need to have proper focus.
That is what Skills England is currently planning to do. IfATE does something rather different and is on a different scale. That goes back to what I was saying about the difference between depth and breadth. IfATE creates and maintains over 600 occupational standards for apprenticeships, T-levels and higher technical qualifications. It works with employers to develop, approve and review occupational standards. It creates and maintains the occupational maps, which group together occupations into 15 routes. It approves, reviews and ensures the quality of approved technical qualifications and their alignment with the occupational standards, and it develops, reviews and approves apprenticeship standards.
Skills England is initially looking at a narrower set of sectors, but with a much broader remit for those sectors; that is what I mean about the difference between breadth and depth. It does more than IfATE, and each of the additional things will, in its own right, take a lot of work to properly establish. That is why I say that clause 12 as currently drafted is a pro-Skills England clause: it seeks to give Skills England the best opportunity to achieve those ends.
Each of the three elements of Skills England’s remit is big. It will, first, identify where skills gaps exist and, secondly, work with the Industrial Strategy Council and the Migration Advisory Committee to address them. Those are the two bodies that have typically been mentioned in the Government documentation, although recently Ministers have also started mentioning, importantly—it should not be overlooked—the Labour Market Advisory Board, which the noble Baroness Smith spoke about in the House of Lords recently. Thirdly, Skills England is to identify the training that is accessible via the growth and skills levy. Each of those is a very large undertaking that will take time to establish.
Let us take them in turn. First, Skills England will identify skills gaps. On the face of it, that might sound straightforward, but it is not. The first question is: what constitutes a skills gap, and what level of detail are we talking about? Are these individual job roles, groups of job roles or industries? It is also necessary to distinguish between skills that need to be provided systemically, in our education and training system, and skills that firms themselves should be able to train for.
We all know that filling vacancies can be difficult. In my constituency, which has had very low levels of unemployment over the past 10 years or so, it is the No. 1 thing that businesses talk about. It is obviously related to skills gaps, but it is not necessarily the same thing as skills being absent. The Minister talked about the need to home-grow our labour, but a key question for firms that are importing labour—this is relevant to some of the sectors I mentioned—is whether they can be persuaded to make the investment and take on, in some cases, the risks involved in not bringing in labour from abroad. That is a question for individual firms. It is also a question for some whole sectors or sub-sectors.
A real example is social care. Most people would say that it is perfectly possible to train people up to work in social care, but for a potentially complex set of reasons—I do not intend to go into it today, and we do not have time for it—people do not want to go into social care. When business leaders complain to us about the lack of skills, they are typically not talking about the sorts of things that can be certificated. They do not say, “Not enough people have grade C or above GCSE maths,” and they do not say that not enough people have a BTec in such and such or an apprenticeship in something else. They mostly talk about soft skills, or what are called soft skills—some soft skills really are soft skills, but some of them are what in business terms are more properly called behaviours: self-discipline, turning up to work on time and so on. It is not clear to me how that set of soft skills—in my experience, the No. 1 thing that businesses talk about—relates to the work of Skills England.
To come back to the specific questions about the skills required for particular sectors or individual job roles, there is also the question of how far into the future Skills England is looking. Is it talking about how we fill the skills gaps we have today, or about the future effect of artificial intelligence on the labour market, and what we should be planning for 10 or 15 years hence?
There is also a question about the level of ambition. There is a certain set of skills required—craft skills and so on—to fill the vacancies we have today, as jobs exist today. But it is also true that this country has a productivity gap against the United States, Germany, France and others. By the way, that has been true every year since I have been alive—I think I said that last Thursday as well. I am 55 today—I do not mean it is my birthday today, but I am 55 now—so that is quite a long time. If we were being really ambitious, we would not ask what skills we need to fill the jobs that we have today, but what we need to do to make up that skills gap, and what skills are needed to fulfil that.
In identifying where skills gaps exist, Skills England will also have to deal with localities, because jobs exist in certain places. It will have to work with devolved Administrations and with mayors, and mayors will have their own views about the skills gaps in their areas. Will there be a hierarchy of analysis? At what level is Skills England going to identify gaps, and to what extent will that fall to the local area? I will come back to that later. It is also true—I have experienced this myself when talking about the adult education budget, for example, with mayors and local authorities—that, quite rightly and understandably, local governance structures and leaders often want more power to be devolved to their local area. Skills England will have to find its place in what can be a tense area.
There is also the question of LSIPs—local skills improvement plans and local skills improvement partnerships. In the debate on this subject in the other place, Lord Lucas said:
“The word I hear is that LSIPs have been a real success, as they are effective and flexible. It takes a couple of years for the DfE to evolve a qualification but LSIPs can do it in weeks, because they are so focused on the actual local employer need and work closely with a provider.”—[Official Report, House of Lords, 21 November 2024; Vol. 841, c. GC125.]
The Liberal Democrat, Baroness Garden, said:
“I think it is important that the Secretary of State must set the priorities for LSIPs and review them regularly to ensure that their priorities are reflected in national strategies for the creation of standards”.—[Official Report, House of Lords, 21 November 2024; Vol. 841, c. GC106.]
The Minister herself, Baroness Smith, said:
“LSIPs and the employer representative bodies that develop them will also provide important intelligence to Skills England to inform its assessment of national and regional skills, both now and in future. They will work with Skills England to resolve skills gaps.”—[Official Report, House of Lords, 21 November 2024; Vol. 841, c. GC128.]
However, in her letter to peers two days ago, she wrote that Skills England is now—already—responsible for oversight of LSIPs and relationship management for all 38 of the designated employer representative bodies, but also that LSIPs will be a joint responsibility between mayoral authorities and those employer representative bodies.
Devolution is increasing, so the other part of the background is the English Devolution White Paper. At the same time as we are creating Skills England to be the uber skills authority in the land, the foreword to the White Paper, in the hand of none other than the Deputy Prime Minister herself, says:
“We will give Mayors strong new powers over...skills, employment support and more”.
The White Paper states:
“The majority of the Adult Skills Fund is devolved…but we need to go further”,
continuing:
“Strategic Authorities will take on joint ownership of the Local Skills Improvement Plan model, alongside Employer Representative Bodies, which set out the strategic direction for skills provision in an area.”
The question for Skills England, therefore, is how that will work in practice. Clearly, it will take a lot of time and work to make the new structures operational, at a time when the structures themselves are changing in so many areas, with the devolution White Paper being implemented. This is complicated architecture anyway, but potentially something is still missing: ultimately, how we match up demand and supply.