HL Deb 27 March 1990 vol 517 cc747-58

3.35 p.m.

The Parliamentary Under-Secretary of State, Department of Employment (Lord Strathclyde)

My Lords, this may be a convenient moment for me to repeat the Statement made by my right honourable friend the Secretary of State for Employment in another place. The Statement is as follows:

"With permission, Mr Speaker, I should like to make a statement about training credits for young people. The initiative that I am announcing today marks an important new departure in our policies for training young people. Its aim is to excite young people about the benefits of continuing in training and further education after they have left school and to raise the amount and quality of training provided by employers. The initiative has the potential to revolutionise attitudes to training in this country.

"If we are to compete effectively in the world economy of the 1990s, we need a skilled workforce which is second to none. The basis for that must be effective and high quality education and training for young people. In schools the Education Reform Act, GCSE and the technical and vocational education initiative are raising levels of attainment and preparing young people for the world of work. The new arrangements for youth training will build on the achievements of YTS and lead both to higher levels of training and to training which is more relevant to the needs of employers. We are currently establishing training and enterprise councils throughout England and Wales and local enterprise companies in Scotland. One of their key tasks will be to mobilise local employers to offer more and better training to young people in the skills needed by industry.

"But we must also motivate young people themselves to understand the importance to them of quality training and to come to expect training as a normal part of employment. There has been widespread interest in training credits as a means of achieving this. The CBI in particular has advocated credits in its report Towards a Skills Revolution and has proposed pilot schemes at local levels to test them out.

"Training credits represent an entitlement to train to approved standards. They would be issued to young people who would be able to present their credit either to an employer who makes training available or to a specialist provider of training if the young person is unable to find employment. Young people should be given quality careers advice and guidance to help them to put their credit to best use.

"A monetary value would be shown on the face of the credit and it would be open to employers and the body issuing the credit to supplement this as necessary to secure higher cost training or other priorities. I and my right honourable friend the Secretary of State for Education and Science, together with the Secretaries of State for Scotland and Wales and other Ministers concerned, have looked closely at the range of proposals for training credits. We agree that credits are potentially an exciting means of motivating young people to train.

"Credits are, however, as yet untested. We have therefore decided to invite training and enterprise councils and local enterprise companies to run pilot credit schemes to come into operation from April 1991. To this end, I am today issuing a prospectus inviting them, in co-operation with local education authorities, to submit bids for my approval.

"The aim is to select 10 such schemes to operate from April next year in areas covering up to 10 per cent, of the national total of 16 and 17 year-olds leaving full-time education—that is, some 45,000 young people per year. Every pilot will provide young people with an entitlement to train. Under some pilots, the entitlement will be for all young people leaving full-time education. Others may take a more selective approach, focusing, for example, on improving training for particular occupations or skill levels in small firms or through inner city compacts or other business-education partnerships.

"In all cases, the training and enterprise councils will need to work closely with local education authorities, further education colleges and the careers service. The Secretary of State for Education and Science, together with the Secretaries of State for Scotland and Wales, will ensure that the authorities are properly involved.

"The training and enterprise councils will be expected to ensure that credits are only used for training which is relevant to the needs of employers and which meets approved standards. Their schemes will need to lead to larger numbers of young people undertaking training and to the attainment of higher skill levels. There will be rigorous evaluation of the effectiveness of the schemes.

"The councils will also have to make sure that all young people who are unable to find jobs will, as now, be guaranteed a suitable training place and that there is appropriate provision for young people who are disabled or who have other special training needs.

"Overall funding for these pilot schemes will come in large part from planned provision for youth training. There will also be a contribution from the relevant element of local education authority provision for 16 to 18 year-olds undertaking part-time training and education. From their existing expenditure plans, the Government are making available a further £12 million in 1991–92 rising to £25 million in the following year. This will bring the total estimated resources available to the training and enterprise councils running pilot credit schemes to £115 million by 1992–93.

"Mr. Speaker, this is the first important step in an exciting new direction. Its purpose is to make a major impact on the motivation of young people to train after they have left school and so to increase the skills and productivity of our young workforce. I am sure that these proposals will be widely welcomed. I commend them to the House."

My Lords, that concludes the Statement.

3.40 p.m.

Baroness Turner of Camden

My Lords, I thank the Minister for repeating the Statement and I congratulate him on the very clear way in which he has presented this new scheme to the House. I understand that the scheme has the support of the TUC and the CBI, both of which, I gather, have wished it a fair wind. In such circumstances we on this side of the House certainly do not want to adopt a negative attitude to it. Indeed as the House will know, we have constantly raised the issue of training; we have constantly pressed for further resources to be devoted to it; and we have constantly raised the whole issue of training as a major question for the economy of this country and for our future well-being.

I wish to raise one or two points although, as I said earlier, we certainly do not oppose the scheme and indeed wish it well. First, an important element will be monitoring. I am glad to note that it is intended to run a pilot scheme in the first instance. It is an entirely new endeavour and everyone will want to know how effective it will be. But clearly there must be some assurances that the employers responsible will be in a position to offer quality training, and that there will be proper monitoring of the schemes in operation on employers' premises.

Secondly, there is the whole issue of resourcing. We said earlier that we are concerned about the lack of resources being devoted to training. In that connection I should like to bring to the attention of the Minister a rather troubling report in today's Financial Times. It is headed: YTS agents attack 22 per cent, cut in training grants". There is a reference to cuts being made in training grants. The comment is made: It is part of the Government's attempt to pass more of the cost of training to employers as the number of young people falls and the demand for them in the labour market increases". That seems to be the general thrust of government policy, although I am glad to note that they intend to put more money into this credit scheme.

Resourcing and monitoring are the two factors that most matter in a scheme of this kind. There is also the issue of what happens at schools. I am glad to note from the Statement that it is intended to involve local education authorities. But motivation of young people in the direction of skill training needs to be undertaken in schools. One hopes that that will be taken on board as well.

With those comments, I welcome the overall thrust of the scheme. Like the TUC and the CBI, I wish it a fair wind.

Baroness Seear

My Lords, on these Benches we too give a general welcome to the Statement, realising that it is a much needed step in the direction of improving training in this country. We welcome too the suggestion for pilot schemes and for different kinds of pilot schemes. If we can have a number of different pilot schemes dealing with different areas and different types of trainees we shall learn a great deal and be able to improve the national scheme accordingly. It will be interesting to hear the results of those pilot schemes as they are made available.

I notice that early in the Statement reference is made quite correctly to the importance of improving both education and training. Unless the level of education is improved it will be very difficult indeed to provide the training that is necessary. I remind the House that one of the great difficulties faced by YTS was that a great many of the youngsters—to say "a great many" is an exaggeration—but far too many of the youngsters coming forward for YTS training were so inadequately prepared in schools that it was not possible to give them the kind of training that they ought to have been given. Deficiencies in their original education had to be redressed before training was possible. This means that schools will have to have adequate resources and the teachers make use of them. I do not propose to enlarge on that point but it has to be underlined that one cannot have good training unless it is preceded by good education.

I should like to raise one or two questions with the Minister. As I understand it, the youngster will be given a credit. He will take it to a college. That is simple. One can see how that will work. It will be used to pay the cost of the course. He will take it to an employer. Will the employer take the credit and then pass it on to the college if he releases the youngster for training? Is that the idea? Let us suppose that the employer, as some employers do very successfully, runs a high quality training establishment himself. Will the employer take the credit and then use it for financing the training workshop in his own enterprise? I should like some explanation of how this will work in relation to the employer. The college part is straightforward but it is a little more complicated to see how the scheme will work when training is done on an employer's establishment.

Quality is the most important and difficult of the issues raised. The scheme will not be of any use unless the training is of a much higher quality than in many cases it has been in the past. There is a tendency at present to accept as training the kind of performance that no person professionally involved in training would accept as proper training. I see that the running of the schemes is being left to the TECs. This is all part of the Government's policy and in many ways there is much to be said for it. However, I should point out—I know that the Minister knows this already—that the TECs have been told that they should have on them only people who are senior executives. People who have professional training experience, which now involves a considerable amount of knowledge and experience, are explicitly excluded from membership of TECs. I can give examples of people of high standing in their own organisations who are well recognised nationally as being highly knowledgeable about training who have been turned down from membership of TECs because they do not fulfil the definition of senior executive. If we want quality I stress that there should be people on the TECs who are experienced in developing high quality training. It is not sufficient to leave it to people who have risen to the top through finance or marketing and have never had to be involved directly in training. They know what they want as the final result of training but they have no experience of developing quality training. I beg the Minister to think again about the personnel on the TECs.

I have one further point. We are told that the schemes will have to be related to employers' needs. That is fine but how will it be interpreted locally? A youngster of considerable ability might want to train in some aspect of engineering which is nationally very much in demand but in which there is no specific local interest. It would be highly undesirable if the use of these vouchers were to be so narrowly constrained locally that people with a talent and ability for taking training in much needed areas, but not areas needed locally, were denied the opportunity to do so. Can the Minister clarify the position?

I see that the credits are to be given to 16 to 17 year-olds. We want to avoid discouraging people in the 16 to 17 year-old age group from staying on at school. If they can get these vouchers at 16, is there not a danger that they will take the vouchers straightaway rather than staying on for a longer period at school which in many ways would be advantageous to them? They could get vouchers later on and then go from a better level of education to a better level of training.

Lord Strathclyde

My Lords, it is always a great pleasure to come to this House to make a Statement which is so generally welcomed by the noble Baronesses opposite. I was pleased to hear the noble Baroness, Lady Turner, say that she supported the idea, that it is a good scheme and one which should be encouraged. I am glad that she mentioned the Labour Party's record because for a long time it did not show any great concern about training. It is only in recent years that it has started to say that training should play a far greater part in our national economy than it did previously. I hear one or two noble Lords opposite muttering dissent, but they will no doubt be aware that the real cost of training undertaken by the Government has increased by three times in real terms over the course of the past 10 years.

The noble Baroness, Lady Turner, talked about evaluation, as did the noble Baroness, Lady Seear.

It is of course of great importance that the pilot schemes are evaluated. They will be rigorously evaluated at national and local level. My right honourable friend the Secretary of State will be looking for success in increasing the take-up of training opportunities by young people and progress towards securing jobs with training for all the young people on the labour market. It will be crucial for those pilot schemes to continue to provide training places under the guarantee for all those needing one and to demonstrate opportunities and achievement by those with disadvantages and special training needs.

My right honourable friend will also want to see success in raising the general level of skills among young people and meeting demanding targets for the numbers reaching craft and technician skills. Once the pilot schemes have been evaluated we shall, at that stage, be in a far better position to see exactly how they should be expanded nation-wide. But obviously the question of evaluation both with the pilots and thereafter on a national scheme is absolutely paramount.

The noble Baroness, Lady Turner, also mentioned an article which appeared in today's Financial Times on the resources made available to youth training and to training generally. The Government are determined that the value and quality of training given to young people should rise. However, it is perfectly true—and we have always made this absolutely clear—that we are expecting the contribution from employers to increase. I am not sure that the noble Baroness should necessarily object to this, because her friends in another place are always saying that employers should contribute more. But their way of achieving this would be to set a tax on jobs.

When dealing with young people there are two major factors to be taken into account. First, there are the demographic changes which we have discussed many times in this House; and, secondly, there is the massive decrease in unemployment generally, especially as regards young people, which has obviously alleviated the problem. However, we are dealing here with training and I think that the moves we have announced today are very sensible.

The noble Baroness, Lady Seear, asked me a great variety of detailed questions which I shall try to answer as effectively as possible. Her main question was about the link between the TECs and the education authorities. The Secretary of State for Employment and the Secretary of State for Education and Science will be looking for co-operation between TECs and local education authorities as a key element in the pilot schemes. The involvement of LEAs is essential to identify the local circumstances which a pilot scheme should address and to secure coherent provision for the age group as a whole. Schools will have a key role in distributing credits and advising young people about their use. Colleges will be the major providers of training and will need actively to market themselves to young people and employers. I hope that that will reassure the noble Baroness, who pin-pointed the drawback of YTS. We are now creating a very real link between schools and future employment.

The noble Baroness made a second point about education. She said that these schemes would encourage young people to leave school and go for the vouchers. Over the past few years with the introduction of the GCSE we have seen a tremendous growth in the number of young people staying on at school. We have no reason to believe that the situation will change. We are not seeking to encourage young people to leave school in order to take up employment. We seek to ensure that, if they decide to leave school, the training they will then receive will be as effective as possible.

The other point made by the noble Baroness concerned the membership of TECs' boards. There has been some concern about this matter. Because the TECs are so revolutionary and exciting they have been immensely popular and many people would like to be board members. When we set up the councils we introduced quite strict criteria that they should mainly be made up of senior board members in industry. Of course, there is room on the boards for chief executives of local authorities, chief officers of local education authorities and members of some voluntary bodies. But there is not sufficient room for everyone. Below the board level there is room for precisely the kinds of experts to whom the noble Baroness referred.

The training and enterprise councils are there to provide training. It is not in their interests directly to exclude those experts who have built up a wealth of experience over many years. I hope that as TECs come on stream the noble Baroness will be reassured that all the people who have such knowledge about training will have their brains picked by the existing TECs. If I have omitted anything from my response to the issues raised by both noble Baronesses, I shall certainly write to them. However, I think that basically I have covered the situation.

3.57 p.m.

Baroness Carnegy of Lour

My Lords, I do not wish to detain your Lordships for too long but I should like to say that I regard this initiative as a tremendously encouraging step forward. Over many years attempts have been made in this country to move to some sort of credit system. It has been most difficult for various parts of industry to accept the position. I think that the unions have taken time to accept the situation, as indeed has the CBI. However, I understand that the confederation has proposed pilot schemes and that it is very much committed to the idea. It was excellent to hear from the noble Baroness on the Labour Front Bench that she feels that the initiative will receive general backing. That is really good news because I am sure that it is the right and modern approach.

The most important aspect of the initiative is the shift in emphasis that it will produce. Instead of young people saying, "Shall I, or shall I not, go on this scheme or that scheme?" they will go, credit in hand, and say, "I want this training; please may I have it?" Then, having accomplished the training to which the credit entitles them, they will feel that they own that training and that it is part of them. Moreover, when they move from job to job, or they progress in the same job, they will take that training with them and build upon it. They will see it as something which belongs to them. It will give them a strong incentive and it will also motivate employers who will find that the scheme works because young people are so motivated. Therefore, the change in emphasis is absolutely excellent.

However, can my noble friend say what the effect will be on youth training? Will the YTS continue for people who are not in work? Will there still be youth training opportunities for those who are not at work and who are unemployed? It seems most important that young people should not have to wait for training until they get a job. Moreover, will any of the credits be spent within local authorities or will they only be used in conjunction with employers? I hope that my noble friend can give us a clear idea as to how the whole system will work. I also hope that I have not bowled him too fast a ball.

Lord Strathclyde

My Lords, again it is a pleasure to hear my noble friend welcome the scheme in such glowing terms. She makes a valid point about the psychology of the scheme that will encourage young people to realise the worth of their training and therefore make even greater efforts to use the training throughout their careers. It will also encourage employers to recognise the motivation of their young employees.

My noble friend asked a specific question about youth training. At this stage the idea is that the government guarantee that there is a job for every single young person, every single school leaver, will remain. When we evaluate the pilot scheme and how it will operate, it will be up to TECs to bring in proposals as to how to incorporate the YT guarantee into the credit scheme. However, in the long term that guarantee will remain.

Lord Dormand of Easington

My Lords, I wish to apologise to the House and to the Minister for arriving one minute late. I was attending another meeting and came out as soon as I saw the annunciator change.

It will not surprise the Minister that I give only a cautious welcome to the scheme. The first point that I must make is, why the change now? Why this particular change? I think I am correct that the Minister's words were "We are now moving in a new direction". To me that seems to mean that it will be a pretty fundamental change. Therefore I put it to the Minister that at least it is an admission in part that what has happened so far has not been too successful. As he knows, some of us have questioned it for many months. I am glad to hear about monitoring; it is absolutely crucial. I am sure that the Minister takes it seriously. Perhaps I may add that I hope that the House will learn the results of monitoring as the scheme progresses.

Further, one presumes from what has been said that one of the aims must be that many more youngsters will be included in training. That is laudable and the way it ought to be. Therefore I assume that we shall need more trainers. The Minister may recall that I have raised this on a number of occasions. The quality of trainers is absolutely fundamental. Those of us who regularly visit various training courses can see some of the splendid work being done by some trainers. But it must also be said that there are many who, with the best will in the world, do not provide the standards that business, industry and the economy require. I ask the Minister from where will the extra trainers come? Can we say that extra training will be provided for the trainers?

My next point concerns the role of the public sector. I am delighted that the LEAs are now involved. That is a sensible and logical part of the scheme. I am glad that the Government and the Minister have seen fit to involve them on this occasion. It seems to me that other parts of the public sector could be involved and I should like to hear more on that.

Finally, perhaps I may repeat for emphasis what was said by my noble friend on the Front Bench. Unless the scheme is to be fully resourced, frankly it will either fail or not be as good as the Minister expects.

Lord Strathclyde

My Lords, of course it comes as no surprise that the noble Lord, Lord Dormand of Easington, does not fully welcome the scheme. He used the word "cautious" and said that this is a matter of changing direction. That reinforces the view that I have held for quite a long time that the noble Lord has not listened to what I have said in the past and does not recognise the direction that the Government have been taking for some time now.

Many years ago we introduced the concept of youth training, then employment training. Last year we introduced training and enterprise councils and this year we are introducing training credits. The noble Lord's party has on every single occasion said that this is the wrong thing to do. It is the noble Lord's party that is changing direction, not this side of the House.

He made the point that there would be more young people in training. I am not sure that that will be the case, partly because of the demographic trends which I have already mentioned, but also because under the existing provisions for youth training there is already an enormous number of young people who take part in training.

The more serious and valid point that the noble Lord made concerned the quality of those who provide the training. That is precisely why we put the provisions of training under the auspices of the training and enterprise councils which will be in the best possible position to judge whether or not the training provided is the most relevant, both for the trainees themselves and of course for the role of industry. That is fundamental.

I also welcome his words about local education authorities. However, he is no doubt aware that they have been involved in TECs since they were launched. Of course they play a full part in Compacts which are an inner city partnership between local authorities, schools and local businesses.

I do not think that we have got it wrong. I am glad that in retrospect the noble Lord, Lord Dormand, may possibly feel that he can welcome the scheme less cautiously. No doubt we shall have plenty of opportunities to discuss the matter in the future.

Lord Cledwyn of Penrhos

My Lords, like my noble friend and other noble Lords, I also extend a welcome to the further effort by the Government to improve training in this country. I am sorry that the noble Lord thought fit to make a small party political point. He is too young to remember that it was the Labour Party that was responsible for the enormous growth in further education in the post-war period. No doubt as his education increases, he will grasp that as well.

Perhaps I may ask him two questions. First, can he say where the pilot schemes are to be sited and how many specifically will be in Wales? He indicated that his right honourable friends the Secretary of State and the Secretary of State for Scotland take a close interest. We shall be interested to know where the pilot schemes will be sited.

Secondly, I am particularly concerned with those school leavers who are unable to find work in the rural areas. The cities and towns are far better catered for. In the small towns and villages it will be difficult to find suitable employers or places for training. How will the credits work there? For example, will they cover board and lodging if students have to travel distances? Is it envisaged by the noble Lord and his right honourable friend that, for instances, students will be expected to travel distances from small towns and villages in North Wales and parts of Scotland? This needs clarification.

Lord Strathclyde

My Lords, it is always a pleasure to hear the noble Lord the Leader of the Opposition joining us in these debates. The political points that I made right at the start were aimed not really at the long distant past but at the last Labour Government. I referred to their present policies which the noble Lord may know are still confused.

The noble Lord asked where pilot schemes would take place. We are today issuing a prospectus to all the TECs throughout the country asking them to bid for the pilot schemes. We suggest—and I return to something which the noble Baroness said—that they should offer a variety of schemes. Some will be universal schemes for all 16 to 17 year-olds, some will be selective towards particular industries and particular skill levels, as well as particular problems in their areas. That is the whole point of pilot schemes. I hope that TECs in Wales and LECs in Scotland will be some of the successful bidders so that we may obtain as broad a view as possible of how the future national scheme will work.

The noble Lord's point about rural areas is also valid. Perhaps I may refer back to the question raised by the noble Baroness about training required by an individual in one area which was not provided in that area but which was available in another area. At that stage the TEC has a responsibility, as we have always made clear, to provide for the training needs of local people. It will then decide exactly how that training should be provided. If it is in its interests to send people to an adjoining area and perhaps even to pay for the residential or travelling costs, it will be for it to decide with its private sector partners exactly how that will operate.

Lord Mackie of Benshie

My Lords, is there not a danger in the pilot schemes that the local enterprise board or whoever operates the scheme will choose its own industry to run a pilot scheme in the area whereas the great need might well be for a different kind of training in another area?

Lord Strathclyde

My Lords, we have as many TECs or LECs as possible covering as many different areas as possible; so there is a direct link between local provision and local needs. As they will cover the whole of the country, the noble Lord's problem will be covered.

Baroness Seear

My Lords, I do not want to take up time, but the noble Lord referred to my question to which he did not give an answer. My point is not what the TECs are thinking about in terms of local need, but where a youngster who has a credit and wants to train for something which is nationally desirable but not of immediate interest to the local TEC will go. That is my point. There is a national interest which is wider than the local TEC interest.

Lord Strathclyde

My Lords, as TECs will cover the whole of the country, there will be no national need which is not by definition a local need somewhere. So long as the individual can prove his or her need to be trained, it is up to the TECs to decide with other TECs exactly how that training need is to be provided.

Baroness Seear

My Lords, is the noble Lord saying that, if an inner-city girl wants to be a milkmaid, an inner-city TEC will find a TEC in the country which will take her? That is what I am asking.

Lord Strathclyde

My Lords, as I understand how TECs work, the onus is on them to decide the most valuable amount of training required. In the example used by the noble Baroness, there is no reason why, if the TECs were in agreement with that proposal, it should not be put into effect.

Lord Dormand of Easington

My Lords, will the Minister say when the country will be completely covered by TECs?

Lord Strathclyde

My Lords, the noble Lord no doubt knows that we set ourselves two years to cover the country. We hope to have covered 90 per cent, of the country by the end of the year.

Lord Dormand of Easington

My Lords, my question -elated to the whole country.

Lord Strathclyde

My Lords, we must wait to see how the bids come in for the existing TECs which need development funding. The noble Lord misses the point. We are already two years ahead of schedule in putting TECs into place. The process has gone extremely well and I hope that the noble Lord encourages the TEC in his area.

Lord Mackie of Benshie

My Lords, perhaps I may return to the question of the milkmaid as I believe it is important. The TEC in the town will surely not be interested in providing training for a milkmaid. Surely it would come out of its budget if it were to send the girl to a country area where there was training. I do not think that it would do it. There should be some overall control which would allow that kind of training outwith the budget of the particular TEC.

Lord Strathclyde

My Lords, the point of training provision in this country is not that it should offer a free-for-all for anyone who wants any kind of training in whatever industry he or she wishes. It is important that it is proved to be worthwhile and there is an attainment of skill levels at a national level. That is what is so important about training. TECs can support training needs in other areas and will be encouraged to support centres of excellence. That is the point.

Baroness Seear

My Lords, we are grateful to the other Members of the Government Front Bench for that answer.