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National Skills Academy (Crewe)

Volume 481: debated on Tuesday 21 October 2008

It is a pleasure to serve under your chairmanship, Sir John, in my first Westminster Hall debate. I thank Mr. Speaker for granting me the debate. I also congratulate the Minister on his new role and wish him well in it.

This important debate has three purposes. The first is to establish common ground on the fact that there is a skills shortage in the rail sector, that it will continue to be enormous and that maintaining the status quo is simply not an option. The second purpose is to recognise that the current system of vocational training for apprentices, although well meaning, is still too disparate, is not working for the railway industry and is not meeting the ever-growing demand for specific rail engineering skills. The third purpose is to proffer a potential solution to the acute skills deficit in the form of an employer-led and apprentice-focused national railway skills academy in Crewe.

I invite the Government to view such a proposal as providing the most effective and sustainable vehicle for meeting the inevitable surge in demand for railway engineers and technicians, as well as ensuring that our young people have the opportunity to build a strong and long career in the railway industry. I hope to tease out from the Minister the prospect of a fifth round of funding for the national academies in the next three to six months. I hope that we can have an assurance that the Government are looking at that closely for the near future.

On 5 June, the Secretary of State for Innovation, Universities and Skills recognised the skills gap in the rail industry in rather stark terms:

“We know there are major skills shortages in finance, construction, science, engineering, and IT. We anticipate a huge demand for skilled workers to build and deliver nuclear power stations, green power generators, Crossrail and the 2012 Olympics.”

What is interesting about that statement is that the one skills area identified with no recognised national employer-led skills academy is engineering, which needs to be put right. Crossrail is only one of a number of rail investment projects that will see the demand for skilled labour rise. It is expected that, by 2012-13, Network Rail, Transport for London and Crossrail expenditure will have risen by 50 per cent. to approximately £9.5 billion.

In its review of the transport sector, the “Skills in England 2007” report said this about the rail industry:

“In the last decade, passenger numbers have soared by 40 per cent., with 1.3bn train journeys last year. This is the greatest number since 1946, when the network was twice the size. Freight on railways has rocketed by 60 per cent. in the same period, with credible current projections of similar growth over the next decade.”

Against a backdrop of an insufficient number of engineers to meet the current capital expenditure, it is not difficult to see why we are heading towards a serious shortage of skilled workers, which could threaten the delivery of some major rail schemes. That is backed up by research from both the sector skills council, GoSkills, and the Railway Industry Association. To see the effect that the shortage is having on the railways, we need only look back to 2004, when Network Rail was forced to fly in 12 mechanical engineers from India to ensure that the £15 billion west coast main line upgrade was completed on time. That enables us to appreciate the severity of the situation. Whether it is rolling stock maintenance, mechanical or electrical engineering, civil engineering or infrastructure maintenance, the cupboard is in danger of becoming bare.

The average age of a member of the railway engineering work force is 56, which does not bode well for its future. We must create a new generation of skilled workers to free the railway industry from the current constraints on its output. There are areas of the railway industry where apprenticeship schemes are working and bringing some success, but as the severe shortage of skills demonstrates, those schemes do not even come close to meeting the demand.

So what is needed? I shall suggest three things. First, we need the development of a clear career route for all those entering the railway industry. Secondly, we need a national co-ordination of skills that brings in a single new gold standard for industry training, which is what the national academy is looking for. Thirdly, we need the re-energising of the rail industry as a vibrant, highly skilled and valued career choice that helps to improve social and economic inclusion.

I have been spending time in Crewe visiting the various railway businesses, both passenger and freight, and seeing at first hand the apprentices working on steam engines, on overhauls and on freight. Two things become clear when one spends time with those young people—I say young people because we are talking about both men and women. They value the work that they do and are dedicated to it, and they see it as providing a real future for them and an opportunity that they might not otherwise have had.

One of the goals set out by the Learning and Skills Council is to

“raise the skills of the nation, giving employers and individuals the skills they need to improve productivity, employability and social cohesion”.

That could have been written for the rail industry, because it fits perfectly not only with the situation that the rail industry is in, but with where it needs to be now and in the future.

National skills academies are defined as

“employer-led, world-class centres of excellence delivering the skills required by each major sector of the economy”.

It seems to me that a national railway skills academy would meet all the core elements of a national skills academy. I return to my earlier point—engineering is a huge sector that lacks cohesiveness in its training and apprenticeship schemes. A national centre at Crewe with regional training centres of excellence that draw on and complement existing schemes around the country would provide the backbone that we need to ensure that the reskilling of the railway industry starts now, rather than when it is too late.

Why Crewe? My first point is clear: why should it not be Crewe? Crewe is a strategically and geographically vital part of the railway structure. It is at the heart of the railways. It is synonymous with the railway industry, but perhaps over and above that it has people with the experience, expertise and passion to drive the railway industry forward. In addition, the academy would provide a much-needed boost to the regeneration of Crewe. Many young people in Crewe are looking for direction in their lives. Those who have discovered the apprenticeship schemes running in Crewe that I have described are thriving in that environment. Unfortunately, the lack of funding for setting up apprenticeship schemes means that young people are being turned away at a time when we need more engineers to fill the skills gap.

We have reached the unfortunate position of knowing that we need the skilled labour, yet the skills gap is increasing—this at a time when the skills are most needed. The danger is that the schemes that we have to move the rail industry forward, such as Crossrail, new high-speed links and the regeneration of the railway network, are lost at the time when they are most needed. We need to equip the rail industry for the changes and expansion that lie ahead. To do otherwise would represent not only a lost opportunity but another generation lost to the railway industry.

This debate is not about making Crewe the only winner as a centre for a skills academy. It would be a national scheme. The advantage of such a scheme is that it would bring the rail industry together under one umbrella, so that everyone knew the required standards and qualifications, and what skills were needed to meet the challenge. Crewe is and always will be a railway town. It has the potential to raise the railways again, and to provide another generation with the opportunity to work in a tremendous and extremely enjoyable career.

It is a pleasure to serve under your chairmanship, Sir John. Just as this is the first Westminster Hall debate for the hon. Member for Crewe and Nantwich (Mr. Timpson), so it is for me. Indeed, it is my first debate as Minister. We are as green as each other. I congratulate him not only on making a well-argued and sincere speech on behalf of his constituents, but on securing the debate. He raised many important issues.

The national skills academy network is one of my Department’s flagship programmes. The academies are employer-led centres of excellence that sit at the heart of the skills system, enabling young people and adults to train for jobs that are crucial to Britain’s long-term economic success. They bring together employers—from small and medium-sized enterprises to multinationals—and specialist training providers to address skills issues in a range of industries and to provide training solutions to the practical needs of businesses.

It is important to note that the skills academies highlight the extent to which we are trying to design a truly demand-led system in which the Government are the enabler. Provision is led by demand from employers and learners; it is not dictated by the Government.

The hon. Gentleman said much about apprenticeships. I am delighted to see his commitment to them and his advocacy on their behalf. I applaud him, and encourage him to retain sight of them as the situation becomes longer and broader, as it inevitably does in this place. I hope that he will retain his focus on apprenticeships. The Government have certainly prioritised them, and are investing large sums of money in them. Apprenticeships were effectively a broken system that had fallen into disuse and disrepute under the previous Administration. In a typical year, there were only 75,000 apprenticeships at any one time—that is not even starts or finishes. We now have well over 100,000 quality apprenticeship completions a year and rising, and investment is still rising.

Skills academies, which are part of the national blend in delivering upskilling projects, offer a range of provision from basic literacy and numeracy to higher education, and from national vocational qualifications to pre-employment training. Some programmes are for full-time study; others are available in a flexible format, depending on what companies and employees want. Government investment in the NSA programme is expected to reach an estimated £120 million by the end of 2011, which sum we expect to be matched by employers. We anticipate that that investment will help about 880,000 learners to receive skills and learning support during the first five years of the programme.

The Minister will have noted that I mentioned a gap in the national skills market for engineering. Does he accept that? Does he engage with my view that that is the area that the national skills academy should concentrate on if it is to fill that gap?

There is not a gap in engineering, but there are pressing needs, as in many other sectors. Nor is it entirely true that we do not have a skills academy that deals with engineering. We do not have a skills academy called “The National Skills Academy for Engineering”, but skills academies deal with manufacturing, process change, materials and the production and supply industries. All those contain a significant engineering component.

I make it clear that the Government are cognisant of the fact that there are pressing needs in engineering. Driving up the outputs that we get from SMEs is clearly part of the Government’s strategy, but the fact that we can always use more does not betoken a system that does not work. The hon. Gentleman referred to apprenticeships being oversubscribed, but that does not mean that the system does not work. It is a demand-led system, and it is a roaring success, particularly as investment has grown exponentially over the Government’s time in office.

Currently, 10 national skills academies are up and running. They cover a range of sectors, including construction and financial services, nuclear energy, and sports and leisure. They involve household names such as Tesco, Toyota, Reuters and British Nuclear Fuels Ltd. Six more academies are in planning, four of which were announced a fortnight ago by my right hon. Friend the Secretary of State. Those four are enterprise, power, IT and social care. A national skills academy for power will obviously involve a significant engineering component.

I may be jumping the gun, but the rail industry needs to see the establishment of a rail national skills academy. There would need to be further consideration of a fifth round for that to become reality. I ask the Minister directly: is that now going to happen? Are the Government considering it? Can we have a clear answer as to exactly where we are going with the national skills academies?

I was coming to that—the hon. Gentleman asked about it in his speech. That is the direction in which we want to go. I am not in a position to promise the fifth round, just as I am unable to promise an NSA for railways, but I can tell him that the programme so far is successful and popular, and that all the rounds have been considerably over-subscribed. The fact that he is here today to debate the matter is testament to that. Although I cannot promise in the Chamber today the new money in advance of future spending rounds, I can tell him that that is the direction in which the Government wish to go.

It is worth pointing out that all successful bids in the process went through a rigorous competitive selection programme, which was organised by the LSC independently of Ministers. The selection programme is supported and validated by employers, whose job it is to ensure that it is robust at every stage. Each bid is assessed against three key criteria at the first review stage and against two additional criteria at the interview stage. One would expect those sets of criteria to be challenging. Although the projects are match funded, we are doling out large amounts of taxpayers’ money, so the systems must be rigorous to ensure that the best bids are successful and that the best value is derived.

I know that the Minister would like to make some progress, but I want to go back to what I said at the beginning of my speech about putting right the dearth of skilled labour for the railways. Does the Minister accept that there is a shortage? From what his Department has said previously, that seems to be its position, as I mentioned. If so, is he sympathetic to an NSA as a means by which to recreate that skilled-labour work force for the rail industry?

We need more engineers in the railways and in other sectors of the economy. It is to train more people to higher standards that we are driving up the skill level of the work force across the board. There is no limit on the number of NSAs that can proceed to business planning, but they must all be consistent with the overall skills priorities for their sector, be able to offer training through specialist providers and present a sustainable business plan that includes substantial funding from employers.

I applaud the submission of a bid for an NSA for railways and I hope that the people who put the bid together, who will inevitably be downhearted and miserable at not being selected, step back and see that the process was competitive, and that although some bids were selected, others were not. We hope that there will be another round. If there is, I hope that those people come back with an even better bid.

The hon. Gentleman tells the story and makes the case well, so he could help them to put their case again going forward. I say to the railway community in Crewe: please do not be downhearted or take this as a “no” from the LSC—it is not exactly that at the moment. He makes a good case for an NSA for the railways, and the Government are more than open, as is the LSC in managing the process, to hearing it again.

The hon. Gentleman knows that I cannot go into the details of the bid. The LSC has already given detailed feedback to the bidders and has told me that it is more than happy to keep working with the Cheshire and Warrington Economic Alliance on any future bid. I share his view on the importance of the railways to the nation, the future economy, the 2012 Olympics and, obviously, Crossrail. There will be an even faster-growing demand for skilled railway workers in future and, as a nation, we need to get things right.

I was impressed by Pete Waterman’s piece in The Mail on Sunday about skills shortages in the rail industry and the need to develop the next generation of engineers, as I have been by the hon. Gentleman. Others in Government and the education and skills community will also have read the article. He wrote from personal experience about the value of apprenticeships and capturing the enthusiasm of young people who are left cold by formal qualifications, and putting them on course for well paid jobs. That is what the Government want. In fact, we give every 18-year-old a right to public funding so that they can continue their training and education at university, college, in work or through an apprenticeship until they are 25 or achieve a level 3 qualification.

I should restate that the Government want every major sector of the economy to have an NSA, as resources allow. The programme has been successful so far, and if and when we move to a new phase, unsuccessful applicants such as the railway NSA will be encouraged to reapply. I say again to the bid team: please do not be downhearted and have another go, because NSA status is a prize worth seeking. Railways are vital to the country as well as the local regional economy in Crewe. As the hon. Gentleman said, there are skills challenges within that sector that we need to address.

I am grateful for that and I am sure it will hearten those behind that robust and important bid. However, is there a time limit for any future NSAs, bearing it in mind that the LSC’s existence might come to an end? What time scale would we be working to if there was a fifth round?

There is no time limit and there are no fixed time scales. At the moment, NSAs are administered by the LSC, but they are not a function of its existence. When the LSC is reorganised and becomes a different kind of organisation, we expect the successor organisation to take ownership of NSAs. I can reassure the hon. Gentleman that we certainly do not expect the NSA programme to die with the passing of the LSC. In the meantime, the LSC and regional LSCs remain on hand to help railway employers to design and deliver the best training, increase employer demand for and investment in skills, and boost the training of individuals so that they can flourish in the labour market.

I would like to ask one last question. The Department for Transport and Transport for London have shown some interest in the bid. Can the Minister hold discussions with representatives from those organisations to gain more knowledge of what the NSA for railways would offer?

The bidding process is not really a matter for me as it is run by the LSC, but I am more than happy to meet TfL and anybody the hon. Gentleman would like to—