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Skill Shortages in Business and Industry

Volume 836: debated on Wednesday 28 February 2024


Asked by

To ask His Majesty’s Government what assessment they have made of the skill shortages affecting business and industry.

My Lords, one-third of UK vacancies are due to skills shortages. Sectors with large shortages include construction, information technology and communications. This Government have committed to developing a world-leading skills system that delivers the skills that employers need through T-levels, apprenticeships, skills bootcamps and higher technical qualifications. Where there are key shortages, we have introduced programmes such as the construction and digital bootcamps to increase the supply of people with the right skills.

I thank the Minister for that helpful Answer. Since this Oral Question was tabled, I have been shocked by the number of employers who have written to me. The Heat and Building Business Council says the UK has faced significant challenges in attracting engineers, despite substantial salary increases of up to 35%, which of course contribute to rising costs for the clean heat sector that are ultimately passed on to the consumer. How do we encourage young talent to consider engineering and green technologies as a secure path for the future?

I am sure the noble Lord will agree that many young people are attracted to working in areas that will address climate change, environmental issues and sustainability, but they might not always make the association with those engineering roles as opposed to some others. We are working with business through our Green Jobs Delivery Group, and with the Green Apprenticeships and Technical Education Advisory Panel, making sure that our standards map on to those occupations and that that is backed by great careers advice for young people.

My Lords, last week, the Labour Force Survey had a set of statistics that I find staggering—namely, that 850,000 16 to 25 year-olds are not in education, employment or training. Do the Government have any plans, perhaps next week, to give flexibility to the apprenticeship levy, so that we can train and employ these young people?

About half of apprenticeships are taken up by young people under the age of 24. I think the noble Lord referred to 21, but it splits at about half under 24 and half above that. The Government have done a great deal: investing in 16 to 19 education, improving the range of options and introducing qualifications that are directly linked to the careers that young people need.

My Lords, I did not hear the Minister mention the creative industries, which certainly suffer from skills shortages in many areas. Looking at this issue in the round, does the Minister agree that cuts to the arts—such as, for instance, the proposed 100% cut in local authority funding for the City of Birmingham Symphony Orchestra—are the worst possible advert for attracting skilled workers into the creative industries?

As the noble Earl knows, one reason why there are skills shortages in the creative industries is their very rapid growth rate. Between 2010 and 2019, they grew one and a half times faster than the wider economy, and in 2021 they employed 2.3 million people, which is a 49% increase on 2011. We have created flexi-job and accelerated apprenticeships, and improved the transfer system, particularly aiming to support our world-beating creative industries.

My Lords, is my noble friend aware that the United Nations International Labour Organization warned that a

“temporary … shortage … of trained native workers, can … be made … permanent by the attempting a quick fix from migrant labor. Any program which imports migrants into a sector whose employers are complaining of insufficient trained natives, can be expected to exacerbate (rather than alleviate) its native shortage”?

Since Tony Blair ignored that warning, we have imported millions of workers—

We have. As the ILO predicted, shortages have got worse, even though Members opposite want to deny the facts. When will we abandon this failed policy and start training and paying our own people better?

As my noble friend well knows, we have introduced a points-based immigration system, making sure that we can focus on the brightest and the best to make a positive contribution to our economy. But my noble friend is quite right that we need to invest in a way that promotes productivity and creates great careers and livelihoods for all our people.

My Lords, does the Minister accept that one part of the answer to this is to stop losing so many of our best and brightest young people, who may be emigrating to look for work? Do the Government have any system at all for tracking such people to make sure that they have opportunities to come back for the appropriate jobs when those jobs are available?

I am aware that we are doing a great deal of work to try to understand some of the issues that the noble Lord rightly raises, and which are particularly acute in some of our shortage occupations. I am not aware whether we track specifically how to encourage people to return, but I will take that back to the department.

Apprenticeship schemes are essential for developing vital skills in young people, yet in the last decade apprenticeship starts have fallen by one-third, while over £1 billion raised by the apprenticeship levy goes unspent every year. Does the Minister accept that the apprenticeship levy requires a total revision of how companies are encouraged to offer apprenticeships?

Apprenticeship starts fell because we had to do so much work with what we inherited as an apprenticeship system to make sure that we offered the quality that employers required. I do not agree that the apprenticeship levy requires a major overhaul. In the last two years, the levy has effectively been fully spent; where it is not spent by levy-paying employers, either they can spend 25% of the levy on companies within their own supply chains, so enhancing that productivity, or it can be spent by small and medium-sized enterprises. I wonder what the noble Baroness would say to them if her party was to be elected and go through with its proposed policy.

My Lords, as chair of the East Midlands Institute of Technology and of the national Careers & Enterprise Company, I think my noble friend is somewhat selling this Government’s achievements short in support for training, skills and careers advice. Does she agree that the important thing now is to make sure that the system—a strengthening system—continues, including working with the local skills improvement partnerships?

I would never want to sell this Government’s achievements short. I absolutely agree with my noble friend’s point about working with local skills improvement partnerships and getting a sense of where the emerging opportunities are in each area of the UK.

My Lords, would the Government agree that we have a shortage of traditional level 4 and 5 skills in our skills package? This is dealt with by local skills partnerships, but we have a national problem. What are we doing to make sure that people become aware of training opportunities on a national level, not just locally, because there are well-paid jobs to be had?

I have already talked about some of the things we are doing. It is important that people know what options and opportunities are available in their local area, and the LSIPs are critical for that. In particular, the Government have invested up to £300 million in a network of 21 institutes of technology, which are providing exactly the kind of higher technical education to which the noble Lord refers.

My Lords, the Government’s figures indicate that fewer than one apprenticeship in five is in a shortage occupation. Given those figures, is it really plausible that no changes are needed in the apprenticeship levy?

I hope I did not suggest that no changes are needed. What employers need and want is a degree of stability in the apprenticeship system. We have done a huge amount of work, and the noble Baroness has been a critical part of achieving that, in improving our apprenticeships system. I am not suggesting that there is not some tweaking required—the noble Baroness is a great expert on that. Broadly, stability for our employers is vital, so that they know how they can use the levy and that it will be here to stay.