Westminster Hall debate on Skills and Labour Shortages
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Patricia Gibson (North Ayrshire and Arran) (SNP) I beg to move,
That this House has considered the matter of skills and labour
shortages. I am delighted to have secured this debate on labour and
skills shortages across the UK. The reality of those shortages
affects my constituency of North Ayrshire and Arran and every
single constituency across the UK, so the matter should be of
concern to all of us. It acts as a drag on our whole economy, and
unless specific and...Request free
trial
Patricia Gibson (North Ayrshire and Arran)
(SNP) That this House has considered the matter of skills and labour shortages. I am delighted to have secured this debate on labour and skills shortages across the UK. The reality of those shortages affects my constituency of North Ayrshire and Arran and every single constituency across the UK, so the matter should be of concern to all of us. It acts as a drag on our whole economy, and unless specific and deliberate measures are taken to address it, it will undoubtedly prevent the kind of economic recovery that we all want to see. I thank hon. Members for turning out for this important debate.
Margaret Ferrier (Rutherglen and Hamilton
West) (Ind)
Patricia Gibson I extend my thanks to the Association of Colleges, the Chartered Management Institute, the Heart of London Business Alliance, the House of Commons Library, the Open University and several others for the helpful and informative briefings that they have provided for this debate. The shortage of skills and labour affects, to a greater or lesser degree, every single sector of our economy and every area of our lives. It affects our productivity and our public services. We see it in areas such as health and social care. There are shortages right across our NHS —in radiology, audiology and that is not to mention doctors and nurses. The Nuffield Trust estimates that in England alone, the shortage of doctors in the NHS could be as high as 12,000, and the shortage of nurses could be over 50,000. There are also shortages in food processing, agriculture, transport, haulage, construction, butchery, tourism, manufacturing, veterinary medicine, information and cybersecurity and hospitality. Pressures on supply chains have helped to increase the cost of goods and services, which we see particularly in the soaring cost of food. As the title of the debate indicates, there is a shortage of labour and required skills in a range of areas. That matters. The Open University’s 2022 business barometer estimated that 78% of UK organisations suffered a decline in output, profitability and growth as a consequence of a lack of available skills. The Recruitment and Employment Confederation estimates that if labour shortages are not addressed, the UK economy will be £39 billion worse off each year from 2024. The Chartered Management Institute found that overall, 71% of managers said that their organisations experienced ongoing difficulties in recruiting the skilled staff they need. The cost is huge. Research, again from the Open University, found that 72% of businesses had increased the workload on other staff because of staff shortages, and 78% reported that those shortages were causing a reduction in activity, service delivery, profitability and long-term growth plans. Significant strains are consequently placed on service levels and supply chains, and members of existing workforces leave due to the impact on their own wellbeing of prolonged staff shortages. According to the Federation of Small Businesses, 80% of small firms face difficulty recruiting applicants with suitable skills. The number of vacancies unfilled across the UK is now slightly higher than the number of people registered as unemployed. Managers are doing all they can to recruit the staff they need. They may be doing so through the old-fashioned method of word-of-mouth recommendations, by engaging recruitment agencies, by use of social media and print media, by distributing leaflets and flyers advertising vacancies, by offering introductory pay bonuses, by paying more competitive salaries, and by revising their wider employment practices and policies to attract and retain those with the skills they need—such as offering flexible working hours where possible—but despite those best efforts, the challenges remain. There are several reasons for the shortage of labour and skills across our economy. We know that the demand for labour has recovered faster than the labour supply since the pandemic; indeed, the labour demand is above pre-pandemic levels, while the labour supply is below pre-pandemic levels. When the pandemic hit, older workers responded to the initial reduction in labour demand by no longer looking for work, so they went from being unemployed to being inactive. Since the pandemic, the number of people unable to work due to health reasons seems to have increased. However, in October 2022, the Institute for Fiscal Studies’ longitudinal data showed that many among the older population who are economically inactive because of long-term illness left the labour market before they became ill—they left because they decided to retire. Indeed, with the advent of remote working, many older workers found that they quite enjoyed spending time at home and did not wish to return to the workplace, and they took the opportunity to retire as a result. The other driver of the labour and skills shortages we face, which poses the real threat to our economic recovery and potential prosperity, is—as everyone in this Chamber and outside it knows—Brexit. Even a House of Lords report last month pointed to an increase in early retirement and changes to migrant worker patterns since the Brexit referendum as exacerbating the main drivers of those shortages. It found that “Over the last few years many EU workers, who filled these roles, have left the UK.” There is no dispute about the fact that before the EU referendum and the pandemic, free movement from the EU was a major source of labour in the UK. By 2020, an estimated 55% of foreign-born workers who said that they originally moved to the UK for work-related reasons were born in EU countries. Now, many have left the UK since the UK left the EU—years that coincidentally saw a pandemic, as well. Even if those workers who have left want to return to the UK, many will find themselves unable to do so because of the UK’s restrictive post-Brexit immigration policies. That is despite the fact that our economy—our labour market—needs them to fill the gaps that we are suffering, which are acting as a drag on our economy and our current and future prosperity.
Theresa Villiers (Chipping Barnet)
(Con)
Patricia Gibson 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)
Patricia Gibson 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.
Jim
Shannon (Strangford) (DUP)
Patricia Gibson The Scottish Government are doing everything they can with their very limited powers to address skills and labour shortages across Scotland, and have developed a “working with business” action plan. They are identifying new and existing actions that they can take, alongside business and partners such as skills agencies, to mitigate the impact of skills and labour shortages, and to stimulate economic recovery through a range of employability, skills and sector-specific interventions. However, the Minister knows that the real levers of power that have to be used if we are to address the issue are with the UK Government. If he says that the UK Government are not willing to take the necessary steps right now to address the shortages that are damaging the economy in Scotland, as well as the rest of the UK, he should make the case to his Government for devolving the necessary powers to the Scottish Parliament, so it can tackle this problem in a more effective and logical way in the interim, before independence for Scotland. In that way, Scotland can in the meantime attract and retain those with the skills and attributes that we need in our workforce, so that our communities, our economy and our country can grow for the benefit of the people of Scotland. 15:21:00
Theresa Villiers (Chipping Barnet)
(Con) Apprenticeships are a highly effective way to improve people’s skills. That is important for several reasons. First, they make our economy more productive and competitive, and that boosts growth and raises living standards. They help plug the labour shortages that we have been hearing about this afternoon.
Margaret Ferrier
Theresa Villiers 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
Theresa Villiers 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.
Patricia Gibson
Theresa Villiers In the APPG’s July report, we appeal for a reduction in the complexity of both the creation of new apprenticeships and the delivery of current ones. I hope that the Minister will look at how the system, including the apprenticeship levy, is working, to make it more cost-effective for small businesses to take on apprentices. We also need the Institute for Apprenticeships and Technical Education to engage closely with sectors such as construction, healthcare, life sciences and green tech, to ensure that apprenticeship standards keep up to date with the pace of change. All of us, whether we are MPs, parents, teachers, Ministers or employers, need to do more to promote apprenticeships as a great way for young people to get on in life and achieve their goals. I have welcomed the opportunity to do that in today’s debate. I hope that there will be many more opportunities to discuss these important matters in the House in the months to come. 15:30:00
Margaret Greenwood (Wirral West) (Lab) 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
Margaret Greenwood 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. 15:39:00
Jim
Shannon (Strangford) (DUP) First, I will speak about the Afghan refugees who have been staying at the Marine Court Hotel in Bangor, in the neighbouring constituency to mine, since their arrival from Afghanistan. As I have made the responsible Ministers aware, two major food production employers in my constituency, Willowbrook Foods and Mash Direct, have jobs available right now. Those jobs were available months ago; indeed, they were available more than a year ago. I find it frustrating that we have people who want to be active and have skills, and that there are jobs available for them, so I support the point made by the hon. Member. I not sure whether that issue falls within the Minister’s remit, but if not, will he pass it on to the relevant Minister? The situation is frustrating because there are vacancies in food production in my constituency that are difficult to fill. It is not as though employers have not tried to fill those vacancies; they have been energetic and have been into further education establishments and schools to talk to people at an early stage about that type of work. It is well-paid work, with excellent remuneration, but it is frustrating for them not to be able to recruit within their area. In modern times, there often seem to be shortages in many things. For businesses, especially our small and medium-sized enterprises, shortages in skilled staff are rife. That has been brought to my attention by many business owners in Strangford. After a few horrific years, with the impacts of covid, a dire economy and the cost of living crisis, we have to improve the situation. There are things that we can do, as other hon. Members have said. Staff are the reason our businesses can function. Without a sustainable staffing base, businesses cannot work on a day-to-day basis. I mentioned Willowbrook Foods and Mash Direct, and in both those cases, the companies were in a position to offer workers accommodation as well, which is a real plus. They are often looking for new staff to fill the most important roles in the business. They are casting their recruitment campaigns widely, across the whole Province. They bus people in from Newry and Mid Ulster, and people even come from the Republic of Ireland to work there. The hospitality sector in my constituency is facing major staff shortages. We are fortunate to have a number of coffee shops and small cafés, and a coffee culture has been created in my major town of Newtownards. Examples of coffee shops in my constituency include Fika in Greyabbey, No8 Court Street in Newtownards and Sugarcane in Comber, but there is often high employee turnover and wages are, by their nature, low. Hospitality businesses have been reaching out to previous applicants to entice them back and to hire them to fill vacant positions, which shows the huge impact of labour shortages on the hospitality sector. There cannot be an MP in this House, including you, Sir Graham, who is not aware of the dire shortage of staff in the hospitality industry. The shortage of skilled labour is now the second biggest threat to the motor repair industry, compared with being ranked the 10th biggest threat in 2020. The mechanical industry can combat the skilled labour shortage by incorporating apprenticeships to train and develop new talent. To my eyes, the major issue with skilled apprenticeships is the low rate of pay, which has to improve. The Minister has good ideas to take things forward, which I know come from his previous business, so I am keen to hear his feedback on how businesses can progress with apprenticeships. There may have to be a wee bit of a difference, where some sort of apprenticeship bonus is paid to some of those companies. Most apprenticeships, by their nature, last three years. I can give the example of a constituent who started an apprenticeship for a well-known car company when he was 15. He was being paid £3.10 per hour for his work. Wow—not many people could get away with that, even with funding from their mum and dad. Government funding of apprenticeships allows for apprentices who want to continue their work with their company to be paid fully and fairly, causing less of a problem for staff and businesses. The right hon. Member for Chipping Barnet (Theresa Villiers) rightly referred to apprenticeships and I endorse what she said; I feel that apprenticeships can be improved. Again, I look forward to hearing the Minister’s thoughts on that issue. The Recruitment and Employment Confederation stated that the UK economy could lose up to £39 billion a year from 2024—a massive sum—if the Government do not resolve labour and skills shortages. In a way, we in Northern Ireland have been very lucky, because our population has risen from 1.75 million to just over 1.9 million. Most of those people coming in are from Europe or further afield, so I suspect that we in Northern Ireland do not feel the pain as much as people in other parts of the United Kingdom. When those people come over, many of them stay; when Brexit happened, they applied to stay, and I helped some of them get jobs. They have become a very integral part of our community. People from Poland, Latvia, Lithuania and Romania—lots of people have come in—have brought their culture and their work ethic into my Strangford constituency, and have done extremely well. I see a real bonus in retaining them. To put this into perspective, that loss of £39 billion a year from 2024 is equivalent to losing almost the entire current defence budget. It is also equivalent to roughly two Elizabeth lines annually—by the way, that line is off today, for some reason. That shows the financial sums that can be lost if we do not get this right. If we take those figures at face value, we see how severe our labour shortages are. The public look to us in this House—to us as MPs, to our Minister and to the Department—to give them the support and the answers they need, so let us do that to support our local communities. I know the Minister well and I am very keen to get his thoughts on how we progress this issue. I do not say that just because he is a long-time friend; I believe that he has an understanding of the issue, and I look forward to what he has to say. 15:48:00
Joanna Cherry (Edinburgh South West)
(SNP) Like me, as a Scottish Member of Parliament, she has focused on the particular problems that the Scottish economy faces as a result of the loss of free movement, particularly because of our demographics. Her message was clear: we have lost a lot as a result of the end of free movement. What has replaced it involves far too much red tape for employers, and indeed for universities, which I will come to in a moment. That red tape needs to be cut. The British Government must not be prisoners of their own rhetoric; we need change driven by common sense. We in the SNP would like to have retained free movement. Our ultimate aim is to become an independent nation and rejoin the European Union, and again enjoy the benefits of free movement. However, while we are in our current situation as part of the United Kingdom, we would like the British Government to take a much more pragmatic approach to replacing what has been lost as a result of the end of free movement. The right hon. Member for Chipping Barnet (Theresa Villiers) made an important contribution on the importance of apprenticeships. I commend her and her cross-party colleagues on the work they do in the all-party parliamentary group on apprenticeships. We have a good news story to tell about apprenticeships in Scotland. That is not just the view of the Scottish Government; Liz Cameron, the chief executive of Scottish Chambers of Commerce, wrote in The Press and Journal just nine days ago that “apprenticeships and the services delivered by Skills Development Scotland”— the Scottish Government’s national skills agency—are “a shining example of aligning with economic trends and industry demand”. At the moment, 12,000 companies in Scotland are employing apprentices and 43,000 people are employed in apprentice training, so that is a good news story for Scotland. Turning to the remarks made by the hon. Member for Wirral West (Margaret Greenwood), it was very important that she reminded us of the need to look at the long term as well as the short term, although, as my hon. Friend the Member for North Ayrshire and Arran said, we face an acute short-term problem. However, it is important to look at the long-term problem. It was good to hear what the hon. Member for Wirral West said about adult education, which was based on her experience as a former adult education tutor. We will all have experience of constituents or family members whose lives and working capabilities have been transformed by adult education. Very importantly, the hon. Lady also reminded us of the contribution that trade unions can make to improving skills and addressing labour shortages. Indeed, the Labour spokesperson, the hon. Member for Chesterfield (Mr Perkins), intervened on the hon. Member for Wirral West on that subject. It is important in this week particularly—when the trade unions are coming under attack from the Government, and the right of freedom of association and the right to strike are coming under attack—for us to remember what an enormous contribution trade unions make to the life of the nations of this Union, in encouraging people to move forward in their employment and gain new skills, particularly through their adult education programmes. It was good to hear something positive about the contribution of trade unions to our society. Last, but most certainly not least, the hon. Member for Strangford (Jim Shannon) spoke about the difficulty of filling vacancies in the food production sector in his constituency. That is a familiar story across the United Kingdom for those of us who have those sorts of services in our constituencies. He also spoke about the difficulties faced by small businesses, such as coffee shops and those in the hospitality sector, which have a quick turnover of employees. I can speak from personal experience, as my constituency is in the centre of Edinburgh and contains a big chunk of the financial sector. There are lots of little coffee shops that face that problem, particularly now that they cannot employ expert baristas from nations in the European Union. The hon. Gentleman also spoke passionately about an issue that was raised by my hon. Friend the Member for North Ayrshire and Arran: the need to let our asylum seekers work. I will say more about that in a moment. In my constituency of Edinburgh South West, we have faced particular employment problems in hospitality venues. I have met many business owners in the food and drink sector who are struggling to attract and retain staff. They are struggling with increasing wage bills, a lack of available staff, and increasing food and energy inflation, which all makes for a difficult situation. I am sure many hon. and right hon. Members will have had the experience over the holiday period of being unable to book a table to eat and then walking into a half-empty restaurant, only to be told that no tables were available because the restaurant was operating under capacity due to staff shortages. As a result of the pandemic, I have been holidaying at home a lot more, and I have noticed staff shortages in hospitality venues across Scotland and in the north of England, where I have been on holiday. Heineken UK is headquartered in my constituency. Through its Star Pubs & Bars, it leases almost 2,500 pubs and bars across the United Kingdom. It tells me that feedback from its licensees is that staffing is a really big problem for them and that, in particular, a shortage of chefs is forcing many pubs and restaurants to close for one or two days a week, so that they need only one chef and one team to work for the other five days. That helps the business to survive, but it means losing one or two days’ trade per week. Consumers get used to fewer visits to the restaurant or pub, and that becomes a self-fulfilling prophecy and creates problems in the sector. I mentioned the role of universities. I have two major universities in my constituency—Heriot-Watt University and Edinburgh Napier University—and many academics and administrative staff from the University of Edinburgh live there. I have had a lot of communication, particularly from professors, about how Government mismanagement of policies such as the academic technology approval scheme is preventing talented postgraduate students from overseas from coming to study in Edinburgh, which means that our universities are losing out on some of the best PhD candidates. That has a deep impact on UK skills and research. Often if those people come here to study at a high level, they end up working here. We need to be encouraging that, not discouraging it. Another acute problem in Scotland is in the renewables sector. Obviously, the renewables sector is an integral part of the Scottish economy, and becomes more and more important as we attempt to make the just transition from fossil fuels to renewable energy necessitated by the climate crisis. One of my colleagues recently spoke to Green Cat Renewables, a group of successful Scottish companies located in Scotland whose shareholders are based in Scotland. For the past 17 years, it has been servicing the renewable energy and low-carbon sectors, but in recent years its ability to grow and service that market has been significantly hampered by the availability of suitably skilled staff. It told us that it has been at the forefront of developing subsidy-free renewable projects, multi-technology projects, and behind-the-meter and private wire projects. Since 2019, it has been growing steadily. However, as the country has come out of the pandemic, it has seen an unprecedented increase in the number of inquiries for new business, which it simply cannot keep up with, as its growth rate has slowed because it cannot get the skilled staff it needs. That means that it may lose out to international competitors. It pointed out to us that Governments in other jurisdictions subsidise part of the salary of fresh graduates and the retraining of candidates while they are in training. The Government could also help by assisting with the cost of training, new software and other resources. As my hon. Friend the Member for North Ayrshire and Arran said, the Minister will probably want to deflect away from Brexit matters and focus on the slowness of the recovery of the labour supply and economic activity since the pandemic. I am sure the Government will also say that they have responded to some needs through the health and social care visa and the seasonal agricultural visa, but the fact remains that the supply of labour is not keeping pace with the return to economic activity. The Government must not be allowed to use the pandemic or the war in Ukraine to deflect from the effects of Brexit and the loss of free movement on our labour market, particularly in Scotland, where we have the demographic problems that my hon. Friend referred to. The Scottish Government do not have full competence in these areas, and do not have competence over immigration. We have asked for it. We would like to see immigration devolved. As my hon. Friend said, other countries that have federal or provincial systems, such as Canada, allow the provinces to have their visa. That is what we want for Scotland, and indeed across the UK, although ultimately we want Scotland to become an independent country, return to the EU and get all the benefits that freedom of movement brings. Finally, I would like to say something about giving asylum seekers the right to work, about which my hon. Friend and the hon. Member for Strangford spoke passionately. The Joint Committee on Human Rights, which I chair, took evidence yesterday afternoon about the rights of asylum seekers. We heard that they do not have the right to work while their claim is being decided unless they have waited more than 12 months. Even then, they can work only in jobs on the shortage occupation list. There is currently a campaign called Lift the Ban that aims to lift the ban on working and allow asylum seekers to work after six months, and not limit their opportunities to the shortage occupation list. The reality is that the majority of people who claim asylum in this country go on to get asylum, so they are going to be staying here. Why not give them the dignity of working and make them economically useful to the country that is going to become their home while they wait for their asylum application to be processed? Yesterday we heard that, as of October last year, 85% of the small boat arrivals who had received an initial decision on their application had been granted asylum or another form of humanitarian protection. That is 85% of the people who we are told should not be here at all. Many of them are bringing all sorts of skills that would benefit our country. I was distressed to hear yesterday about the practice of dispersing asylum seekers and moving them from place to place with minimal notice, which means that their children often have their education interrupted. A child will have just got settled in a school and then his or her family are moved on. As well as being distressing for the child, it disrupts their education. That child will grow up to stay and live in the United Kingdom, and we need him or her to have a good education so that they can contribute to our economy. The Government are not doing many things that they could be. Giving asylum seekers the right to work is just one glaring example that would save us a lot of money and contribute a huge amount to our economy. My hon. Friend the Member for North Ayrshire and Arran listed other examples, and I am looking forward to hearing some concrete answers to her asks when the Minister sums up. 16:01:00
Mr Toby Perkins (Chesterfield) (Lab) 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. 16:15:00
The Parliamentary Under-Secretary of State for Business, Energy
and Industrial Strategy (Kevin Hollinrake) 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
Kevin Hollinrake 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?
Sir Graham Brady (in the Chair)
Kevin Hollinrake I thank the hon. Member for North Ayrshire and Arran for securing this very important debate. It has been fascinating and stimulating, and we have had a great discussion on a topic that everyone across these Benches believes is vital. 16:29:00
Patricia Gibson The Minister says this is a global issue. That means that our competitive edge needs to be even sharper as we seek to bring in workers to fill the gaps in our workforce. That is not happening because bureaucratic and other barriers are being put in place for people who might otherwise choose to come to work in Scotland or the rest of the UK. If the Government are not willing to tackle these matters and take the necessary action that the SNP would like, they should devolve the powers to Scotland, so that we can do it for ourselves. |