In-Work Training

HL Deb 13 June 1996 vol 572 cc1891-908

7 p.m.

The Earl of Dundee rose to ask Her Majesty's Government what plans they have to encourage in-work training.

The noble Earl said: My Lords, all those of your Lordships about to speak are very well informed on employment matters and on the subject of in-work training. I am particularly grateful, therefore, for that support.

Once launched, yet before they had taken effect, a large measure of confidence had already been placed in the commitments given to full employment in the 1944 Government White Paper. Equally, there was conviction from the start that the Beveridge social insurance system would work well. As with all new schemes, it was also expected to improve with use and to mature through time. The planners did not therefore forecast that the results would be much better over the first 20 years than over the following 30 years. The opposite, in fact, occurred regarding both the control of unemployment and the connected operation of the social insurance system. The first 20-year period proved much better than the following 30 years.

While unemployment is now in decline and the proportion of unemployed people who have been out of work for more than six months is also decreasing, there can be no strong assurance of returning to the lower levels that prevailed before the mid-1970s. One reason is that in recent years new technology has changed the kind of jobs, skills and flexibility required in advanced countries. Another factor is the different attitude which has developed within families towards work since Beveridge's day. Clearly, a job is now seen far less as a career for life. And the man in the family is no longer assumed to be the only breadwinner.

If jobs themselves and attitudes towards them have altered, no doubt a principal task of government is to facilitate training in order to match work which is in demand. This is exactly what the TECs have set out to do. Many of us will agree that they have proved to be both effective and adaptable. As your Lordships are aware, a merger has been proposed between the Scottish qualifications authority and SCOTVEC. This should improve the scope within the Scottish education system for matching teaching and training to jobs in the labour market.

As regards in-work training itself, the current Workstart pilot schemes have undoubtedly alleviated long-term unemployment. Viewed in terms of current national statistics, that is encouraging. Such national figures suggest that of those who have reached two years of unemployment only about 50 per cent. leave within the next year. Your Lordships will be acquainted with the various tests used to assist with the evaluation of pilot projects and to arrive at a judgment on their relative merits. I shall not detain the House with the technicalities. Suffice it to say that, as regards the Workstart pilot projects, if they can be shown to have benefited the long-term unemployed, for that reason alone they must have proved their worth and thus deserve to be a model for further extension.

That brings me to the Government's future plans for in-work training. What modification of the current workstart projects may now be called for in order to improve employment prospects? Given the difficulties, as we know them to be, the Government have surely been wise to proceed cautiously and through pilot projects instead of imposing schemes nationwide too soon and without supporting evidence. Even within pilot projects themselves there is still a need to balance and restrict government intervention in order to obtain a true picture of cause and effect. However, if within a pilot scheme the Government choose to act as employer of last resort they can do so perfectly well without having to compete with other sectors. That was a central recommendation of the recent Employment Committee report of another place. In particular the committee recommended that the Government should experiment with combinations of the Workstart job subsidy programme and the WISE group's intermediate labour market to achieve the delivery of a nationwide programme of government-subsidised and government-funded employment for unemployed individuals with a high training element.

In view of that, can my noble friend the Minister say whether the Government are prepared to extend the existing pilot projects in this way and thus facilitate a right to work for the individual and social cohesion for his community?

7.6 p.m.

Lord Haskel

My Lords, this week's national skills audit confirms that there is a tough training job to be done if we are to catch up with our competitors. With excellent timing the noble Earl, Lord Dundee, asks the Government what they are doing to help with in-company training. He is right to concentrate on in-company training because, as numerous people have pointed out, large companies have the facilities to provide it, but small and medium-sized companies rarely do. Your Lordships are all well aware of the importance of encouraging and improving the performance of our small and medium-sized enterprises.

Every manager knows that to remain in business today companies have continuously to improve their products, services and understanding of their market. This same ethos of continuous improvement also applies to staff. The reason is simple. As business becomes more competitive so the demands on employees become greater. Nowadays shop-floor workers are expected to work without supervisors, and so they must learn some of the skills and attitudes needed to supervise themselves. They need to learn the skills of working in teams. There is now less clerical back-up, and so employees must become more numerate and better at record keeping.

These skills, which are necessary to work in a modern business, have to be acquired by training. The major contribution which the Government have made to in-company training in recent years has been the establishment of national vocational qualifications. These NVQs cover all aspects of work; manufacturing and services. Indeed, qualifications are available for some 85 per cent. of people at work.

However, the actual take-up has been disappointing. By the end of 1993 some half a million NVQs had been awarded. By the spring of 1996 this figure had reached 1 million, but this only represents about 5 per cent. of the working population. This seems to be confirmed by a survey carried out by the Institute of Manpower Studies in 1994, and reported in the CBI document Quality Assessed. I quote from page 14, only 5% of employers are using NVQs. This rises to 6% if organisations using only the underpinning occupational standards are also added. By any measure that take-up is disappointing. What are the reasons for the low take-up and what can we do about it? First and foremost, it is because NVQs are simply a standard to be achieved. They do nothing about the means of achieving that standard. The emphasis is on the outcome and not the means of achieving the outcome. What employers are interested in is not only the standard, but how to achieve it and how to encourage staff to lift themselves to even higher standards of NVQ. However, it is expensive for employers to buy in this training, or to provide the day release for staff to go on courses. No doubt the Minister will tell us that it is the task of the local Training and Enterprise Councils to provide this training, but the figures show that the Government and the TECs have a tough selling job to do.

Away from large companies there is little understanding by employers and employees of the way the system works. A survey in March this year by the Institute of Directors reported that almost half the directors of SMEs do not even know what an NVQ is—and most of those who did, did not think the system was working well.

Among those who do know what an NVQ is, the consultancy services and training projects are not perceived as a partnership between government and business, but are rather perceived to be a compliance system which people have to go through in order to get the grant. It is a hoop through which a company has to jump. The Government must apply themselves to the task of changing that attitude towards training because training has to be far more spontaneous and perceived to be of mutual interest.

A further problem with the TECs is that they are variable. Certainly, some produce excellent training, but others do not. So the quality of training is a lottery depending on where you live. Because there is also inequality between the training provided by large companies and small and medium-sized companies, access to training becomes even more of a lottery. Equality of access is not only socially just, it is essential if we are to improve our nation's industrial performance.

One of Labour's main proposals to even out this inequality of access and to raise the level and quality of training is the university for industry. Broadly, this is the provision of learning and training material using modern, interactive, on-line information technology or CD-Roms. All the elements are available. BT and the cable companies are ready to provide the broadband network, and many colleges, universities and professional organisations are anxious to provide the software. Companies of all sizes wish to participate because the university for industry will provide training and learning in the employers' time or in the employees' time, thereby reducing costs and the need to attend courses off-site—and there is the additional benefit that it will encourage and enable firms to develop their own information technology skills. All the pieces of this jigsaw are there—what is needed is the will to fit them together.

Another task for the Government is to persuade companies of the financial benefits of training. The existing benefits and tax system helps employers to operate old equipment which requires low skill and little organisation. Low pay subsidised by the benefits system and long hours can make that profitable. It is competition which forces employers to invest in new equipment and better organisation and better management which demands more skill and versatility from the staff.

I look forward to hearing from the Minister how he would alter the tax and benefits system to encourage investment in training; how he will break down the barriers of perceptions so that the various schemes will be seen as partnerships and not as compliance; and how he will deliver the in-company training and learning necessary to upgrade our workforce and encourage people to take up NVQs from the present rather pathetic low level.

7.14 p.m.

Viscount Thurso

My Lords, I too congratulate the noble Earl upon providing this opportunity to debate such an important subject. All training, particularly on-the-job or in-work training, is absolutely vital for all industries, but in my own industry, the hospitality industry, it is particularly important. In my current business, the payroll cost is in excess of 40 per cent. of turnover on an annualised basis and is therefore by far the largest cost we bear. Training is vital both for ensuring a continuous quality of product and for achieving maximum efficiency of operation.

I should like to touch briefly on three points. I turn first to a success. Without doubt, Investors in People, although not in itself a training mechanism, has been a great success. It relies heavily on training to achieve its objectives and consequently promotes it. Investors in People has been warmly embraced by the hospitality industry and is now established as a hallmark of businesses which genuinely believe in the importance of the human resource.

The first requirement of successful training is for the management of any business to have a clear understanding of its training needs so that it can develop a training plan. Investors in People, requiring as it does the establishment of objectives and a plan for the business, ensures that the business has a well-thought-through training plan.

Investors in People also requires management to establish effective communication with all levels in the workplace, which is another key ingredient for ensuring the success of training. Investors in People has therefore been extremely successful in the hospitality industry, and both the British Hospitality Association and the Hotel, Catering and Institutional Management Association, which represent respectively the establishments and the people within the industry, support it fully. The decision by many TECs throughout the country to use much of their funds in promoting Investors in People has been an extremely cost-effective method of maximising the training resource in work. I sincerely hope that they will continue to receive every encouragement from the Government to continue that.

Turning now to NVQs, the picture is less rosy, as the noble Lord, Lord Haskel, said. Without doubt, the concept of providing a qualification to a nationally recognised standard through testing competence in the workplace is an extremely good one. Indeed, it enjoys support from both the CBI and the TUC, as well as many industry bodies. Colleges offer NVQs with great success. However, in the academic situation it should be noted that NVQs have only replaced other qualifications such as the old City and Guilds and, although the label has changed, the product is pretty much the same.

The concept of NVQs was to extend the ability to earn qualifications into the workplace and, as I have already said, it is a laudable concept. However, in practice in the workplace NVQs are simply not working. In our industry—I believe that this is the case in other industries also—they are too complicated, too bureaucratic and too expensive. Consequently, the very businesses which would benefit most from them, small businesses, are turned off by the work complexity and the cost of attempting to implement them. I can testify to that because that is exactly the decision that we have taken in my own business, although we have gone in for Investors in People.

That fundamental flaw has meant that the take-up of NVQs by businesses has been nowhere near what one would need for it to be counted as successful. I understand that the Beaumont Committee has suggested simplifications, but it is still the view of our industry that NVQs are fundamentally too complicated. I stress, however, that there is absolute support for the concept and objective, but a smoother and less costly mechanism is required for NVQs to become the success that they deserve to be.

I should like to make one final point on a slightly more general note. It is, I think, fairly well recognised—it is certainly alleged by many people—that the strongest influence in senior management in the United Kingdom comes from the accountancy profession. A great many of our chief executives in this country began their career by qualifying as accountants and have reached the top job having been finance director. That is in sharp contrast to what happens in other countries and other cultures, most notably the United States, where the predominant influence in achieving the role of chief executive officer is through a more general business education, such as an MBA.

As a result, there is quite a wide difference in management culture, since we tend to take a narrower cost control and return approach rather than a wider strategic planning and investment approach to the profitability of our businesses. Too often, training is seen as an easy line to cut in the budget when times are tough or the return has to be improved. Without doubt in the short term a cut in training can achieve that, but it also lowers the profitability of the business in the long term.

I greatly regretted it when the training levy was abolished in our industry, because it worked successfully in ensuring that there was continuity of training in businesses. Certainly in the hospitality industry I am constantly struck by the low overall management skills of middle and senior management. They are good at everything we teach them in terms of production, but in overall management and administration we are weak.

To try to help combat that in a small way, the Master Innholders, of which I am chairman, has created a scholarship for people in our industry to attend management colleges. I recently visited both Ashridge and Cranfield as part of that exercise.

More than anything else, if we could find a method by which we could encourage companies, particularly those who would not normally consider training their senior and middle management, to invest in management education, then we would, I believe, make an enormous impact on levels of training undertaken in the workplace, as those managers would, first, understand the need and relevance of in-work training; and, secondly, have the knowledge and skill to implement it. It is always said: There is no such thing as a bad soldier, only bad officers". One could well say the same for managers. Management education is fundamental to the economic success of all industries, and hence of the country. I very much hope the Government will look hard at what they can do in that area.

7.22 p.m.

Lord Trefgarne

My Lords, I, too, am grateful to my noble friend Lord Dundee for raising this important issue.

Before I begin my remarks, I must declare an interest as chairman of the Engineering Training Authority, the successor body to the Engineering Industry Training Board, which is now an independent employer-led charitable trust, and also as president of Metcom, the Mechanical and Metal Trades Confederation, which has a strong and active interest in work-based training. I receive a salary and a fee respectively from those appointments.

Many of us have read with great interest the conclusions of the recently published report by Sir Ron Dearing and his committee which reviewed the qualifications framework for 16 to 19 year-olds. Of particular relevance to this debate is the emphasis that Sir Ron gives to creating parity of esteem to bridge the perceived gap between academic and vocational qualifications, principally by ensuring parity of quality for the different qualification routes.

I listened with interest, and some surprise I must say, to the speech of the noble Lord, Lord Haskel. I do not agree with him that NVQs are the failure that he seems to think. In the engineering industry at least—I confess that my experience is confined to that area—the take up is increasingly encouraging. Nor do I agree, I must confess, with the noble Viscount, Lord Thurso, about the inadequacy of the qualifications provided. They may be too difficult and too complicated for some industries, but the engineering industry, at least, facing as it does competition from competitors from around the world, has to ensure that its employees are of world standard. Reducing or keeping low the standard available through NVQs will not achieve that.

The timing of our debate this afternoon means that none of us has yet had a chance to study the Government's third competitiveness White Paper, which was published today and which we know contains some valuable information on international skills benchmarking. It was however very clear from the earlier competitiveness White Papers that training, and in particular work-based training, is one of the 10 critical key areas to which our industries must pay attention if we are to improve the underlying performance and competitiveness of United Kingdom industry.

Engineering is, of course, an industry with a proud tradition in work-based training stretching back at least to the late 18th century, but over the past 20 years or so, the industry has undergone some profound structural changes which have had an inevitable influence on the work-based training scene.

Overall, the number of people employed in engineering manufacturing has almost halved since 1980 from about 3 million to close on 1.6 million. But overall output is about the same as it was in 1980. In essence, large productivity gains have been made, which have closed the productivity gap between the UK and our main competitors but have not yet eliminated it.

Much of the contraction is the result of voluntary redundancy at the upper end of the age profile, and we have seen the average age of the workforce in engineering fall from about 51 years to 39 years or thereabouts.

Technological changes have also altered the skills needs of employers, who nowadays need a workforce which is at once flexible, responsive and multiskilled.

With the significant rise in young people staying on in full-time education past 16, we have seen the expectations of some employers change. Many have been tempted to turn away from the traditional work-based apprenticeship and instead to recruit young people directly from the further education colleges. That trend has, in part, been driven by funding considerations.

The public funding provided to companies via the training and enterprise councils varies from place to place, but is on average just under half that provided for similar training leading to an identical NVQ level 3 qualification via an FEFC-funded establishment.

To train an engineering apprentice costs an employer anything from £26,000 to, say, £40,000, depending upon the type of training provided. The maximum funding available from the local TEC to help with that training would be about £7,000 and can often be much less.

The largest cost of engineering apprentice training comes during the foundation period at the beginning of the training, but most of the TEC funding is output related and therefore comes at the end. Thus, if a trainee discontinues his training before he qualifies, the training provider may receive only a tiny fraction of the costs incurred. I must say plainly to my noble friend that that is a major barrier when trying to convince engineering employers to commit to work-based training.

That is not to say that there are not some bright spots. The engineering modern apprenticeship, which has been developed by employers for employers, is finding increasing acceptance and is fulfilling a real need by encouraging talented young people into the profession via a work-based route.

Early next month I shall be speaking in Cardiff at one of a series of regional conferences that are being organised under the auspices of the Action For Engineering initiative which was established by my right honourable friend, the then President of the Board of Trade, Michael Heseltine, in 1994.

My right honourable friend set up six specialist task forces to spearhead the initiative and one of those, Task Force 3, was charged with improving the skills and numbers of employees in the engineering industry qualifying at intermediate levels as technicians, craftsmen/women, team leaders and supervisors.

Study of best practice by the task force in engineering enterprises of all sizes has confirmed that those enterprises which are prepared to commit resources and to invest in work-based training are more successful than others in their peer group and also that they are more competitive internationally.

Most of the successful enterprises have made a commitment to the Investors in People national standard, to which reference has been made. This sets a level of good practice for the continuous development of people in the workforce throughout their whole working life to improve the performance of the business.

The main output of the Action for Engineering Task Force 3, which I shall be supporting in Cardiff, will be to throw down a challenge to engineering employers to invest in certain minimum levels of commitment for the training of their new recruits and for the continuous development of their adult workforce.

Companies in all sectors in the United Kingdom are facing an increasingly competitive environment. Emerging nations are achieving rapid growth rates. Advances in technology are opening new markets and transforming existing industries. Those challenges present opportunities to those who seize them and threats to those who do not.

Work-based training is only one of the factors which needs to be addressed within this overall picture, but it is an important one and one which will, if tackled properly, provide a focus for improving the competitiveness and productivity of our workforce, our industry and our country.

7.30 p.m.

Baroness Seear

My Lords, I too declare an interest in that I am chairman of the lead body for administration. Like the noble Lord, Lord Trefgarne, I am not prepared to say that the development of NVQs has been so unsuccessful, as suggested by other speakers. The administration lead body has sold a large number of standards. We have been approached, for example, by overseas countries which want to find out more about our standards and to buy them.

I do not believe that anyone will accuse me of being inclined to load praise on the Government Front Bench. I find that a very unusual position to be in. However, the Government must be congratulated on their attempt to tackle the fundamental weakness in the British economy; that is, the gross under-training of people throughout the economy. The imagination in setting up the whole NVQ scheme and supporting it is to be praised, as is the Government's introduction of the new apprenticeship scheme. That is linked in many interesting ways with the work of the NVQs; the two are closely related.

I suspect that the public as a whole, even Members of your Lordships' House, have not realised what a vast undertaking it is. Is it really understood that the proposal under the NVQ scheme is that every single job in this country should have an accepted standard as a qualification and that that should be done at five levels, starting from the lowest to the professional qualifications. That is a huge and ambitious scheme. It is entirely satisfactory and the Government are to be much admired for taking it on.

However, we must not believe that it will be easily fulfilled. Those of us who are close to the work are most anxious that the Government should continue to back the scheme until the good work that has already been done reaches fulfilment. It is not in the least surprising that there are many understandable and correct criticisms about the way in which NVQs have been developed and the standards that have been produced. The Beaumont Report, while approving of NVQs, pointed out a number of deficiencies. Those deficiencies require a great deal of work if they are to be overcome. Although a certain stage in the NVQ development has been reached, I hope that the Government will not limit their support. That would be an extremely foolish economy because a great deal of money has been given to the development of the scheme. That money has been well spent but the job is not finished. To cut back on resources would be a folly of the first order.

There are a number of things which need to be done. Of considerable importance is the fact, as Beaumont pointed out, that the way in which we are to achieve the proper understanding and knowledge which must underlie the acquisition of skills has not yet been worked out. How can that be introduced into the NVQ scheme and how can it be assessed? It is vital that that knowledge and understanding should be a totally satisfactory part of the NVQ scheme, not just because knowledge and understanding are good things, which obviously they are, but because in the modern labour market and in the modern economy few jobs remain stationary.

Jobs are no longer cast in concrete, if they ever were. A particular job in respect of which someone will be tested for an NVQ will in all probability no longer exist in two or three years' time. The person carrying out the job will have to move on to something else. That may be closely related to what he has been doing but he will not be able to make the transfer, which is an essential part of operating a modern economy, unless he has adequate knowledge and understanding. Without that a great deal of money that is being spent on the NVQ scheme will be wasted because of the speed with which jobs change.

Other weaknesses have also been identified. I agree that there is too much jargon. Every occupation has its jargon; everyone uses it but accuses other people of using jargon and not taking the trouble to use the proper language in which things are described. However, I believe that there could be a great deal of simplification.

The standards are and have been expensive to produce. The Government have put a great deal of money into the scheme. There is no reason why, as it is raising the level of skills and knowledge inside industry to the benefit of employers, someone should not pay a reasonable amount for the use of the standards which have been so laboriously, expertly and expensively developed. There is a danger that the Government will believe that they have spent a great deal of money and that it is about time the scheme paid for itself. There is a fear that there will be cutbacks which will undermine the good work that has already been done.

I wish to make a point that is unconnected with NVQs, although there are problems at the higher levels. A benefit of the NVQs is that they are forcing the jungle of professional qualifications at the middle and higher levels in industry to be sorted out and to become better related one to the other. That is highly desirable, but the process is by no means complete. We need more time and resources to ensure that that is properly carried out.

I turn to a point that I have made in your Lordships' House on previous occasions and one which I put to Sir Ron Dearing who was not uninterested. We are deeply troubled about youth unemployment; about the large number of youngsters between 16 and 18 who have no jobs. Because they have no jobs they have no training. I shall not recite the gloomy tale of what happens to so many of those unemployed, untrained youngsters. The recommendation increasingly in the political programmes of all parties is that there should be daytime release for youngsters to receive education and training.

A few years ago I operated a scheme which was so simple that perhaps people did not realise how easy and beneficial it was. It was done in the company for which I worked. For each job carried out by a school-leaver two were taken on. Half the day was spent at work and the other half in training and education. As 16 to 18 year-olds receive no benefit, the fact that they would not be earning high wages should not be a disincentive. However, if one takes on two school-leavers for each job one makes a sizeable contribution towards reducing the number of school-leavers out of work. One also ensures that by spending half the time at work—many youngsters learn better when they are in work—and half in training one is developing people who have the right kind of training related to work. That means something to them during the crucial years when they should be learning but when a great many of them are not. I should like the opportunity to talk to the Minister about the matter, but I beg the Government to consider such schemes. They would not be expensive and I believe that they would make a great deal of difference.

Finally, I wish to revert to another aspect of NVQs. As I have said, I do not often find myself singing hymns in praise of government departments. However, as regards the development of NVQs I believe that the collaboration between the Department for Education and Employment and the headquarters of NVQs has been extremely beneficial. It is a difficult area to develop and all of us are feeling our way. We do not know the answers; we are experimenting. The advantage of having two authoritative bodies which can rub their minds together and can check one another is of the greatest importance. I hope that the department will keep its interest in and control over the developments.

7.40 p.m.

Baroness Turner of Camden

My Lords, I am sure that the House is grateful to the noble Earl for introducing a debate on this important subject of on-the-job training and I should like to express my appreciation to him.

Britain's record in skills training is not a good one. The OECD says that Britain has a skills deficit with other developed countries. Seven million working people in Britain today have no qualifications at all and those with fewer formal educational qualifications are much less likely to receive training than those who already have qualifications. People in small firms, in particular, have fewer opportunities for training than those working in larger companies, and several noble Lords referred to that.

We have seen over the last 20 years the decline of the old apprenticeship training. The noble Lord, Lord Trefgarne, referred to that. That has disappeared, along with much of heavy manufacturing industry and it was at one time the main route to the acquisition of skills for many people from poorer backgrounds—mainly young men, of course, about whom there is now much concern, since so many are without employment or the prospect of it.

The Engineering Construction Industry Training Board has maintained apprenticeship schemes and, indeed, it and the Construction Industry Training Board are much to be commended for the work they have done and continue to do in the training field.

I was for many years a supporter of ITBs. I still believe that the CITB and the ECITB do a very good job—supported by both employers and trade unions—and I have argued, whenever regulations concerning them come before this House, for their retention. The Government have so far agreed to this, although there is still not a commitment to their continued existence.

The grant and levy system by which they are sustained nevertheless does have some flaws. There are exemptions for small firms. I am quite prepared to accept that the ITB system may no longer be adequate in the light of the changing shape of industry and of working patterns, but certainly those two boards should be retained. My union—the MSF—recently undertook a survey, jointly with the University of Leeds, among its own members to ascertain their experience of vocational training. It must be remembered that this was a survey among white-collar employees of a reasonable educational standard. Nevertheless, some deficiencies were revealed. Although the majority of the respondents had received some form of training since joining their present employer, only about 22 per cent. were currently receiving training. Where training was received, it was typically of very short duration; that is, fewer than three days. Only in a relatively small number of cases-30 per cent.—had the training resulted in the award of a recognised qualification, and while 66 per cent. of the respondents had heard of national vocational qualifications, only 6 per cent. had been given the chance to train for an NVQ.

It is clear that ways must be found to encourage employers who do not provide training to do so, or who do not participate in TEC schemes to do so and to provide the necessary training themselves. It is no longer acceptable that firms who do not train should get by through poaching employees from firms who do train. This is important, not only for the general success of industry and commerce in this country, but also as an attack upon the problem of unemployment.

Individuals also must be motivated to improve the skills they already have. As everyone knows, we now live in an economy which is increasingly globalised. We have no hope of competing with newly developing countries in the Far East on the basis of a low-wage economy. We cannot hope to undercut them by developing a sweated labour force nor should we wish to do so. We have to become and remain a high wage, high tech, high quality economy and the development of a highly skilled workforce is a part of this. We have to equip people to cope with change. Only if we do so can we hope to overcome the deep sense of insecurity which affects large parts of the workforce—in industry and commerce and services.

This lack of security is the cause of the "feel bad" factor since even those in employment wonder just how secure that employment is and whether they will have it next year. This undoubtedly leads to stress with all that can mean in terms of sickness, lack of consumer confidence and even marriage breakdown.

Running an economy on these lines may produce some short-term advantages but they are essentially ephemeral. The "flexibility" which the Government advocate and which has been adopted by so many firms tends to militate against good on-the-job training, since what is the point of an employer bothering to train someone who is on a short-term contract? Neglect of long-term perspectives has led to our present situation, which is far less happy than government spokespersons would have us believe. In fact, we continue to have a serious employment problem, particularly among men, and particularly in areas where there was once heavy industry and most of the new employment created has been part-time, among women, and low-paid.

There have however been a number of government initiatives which have been worth while and upon which we should build. There is the NVQ system under which people may attain continually improving levels of skills and the Investors-in-People initiative. However, far too few small employers participate and the NVQ system needs to be developed so that participants have the opportunity to develop portable skills.

Small enterprises are important wealth creators and employers of labour. There ought to be a suitable statutory framework to encourage them to provide both on the job and off the job training. Six out of 10 small firms have no contact at all with their local TEC. Somehow they have to be persuaded that training is in their interest: it produces greater staff commitment, and therefore less absenteeism, less wastage and fewer accidents. I do not know whether the possibility of encouragement through the tax or national insurance system has been considered, but it might be an idea. My noble friend Lord Haskel mentioned that. In larger firms, where there is trade union recognition, there have been a number of innovative schemes in which unions have participated. Some unions, including my own, have been entering into training agreements with managements because they rightly see that this is just as important, perhaps even more so, to their members as the next wage round. Pilot schemes have also been introduced by some TECs to promote individual training.

My own party is developing the idea of individual learning accounts from which employees could pay for accredited courses to develop portable skills. In this way the Government could encourage individuals to take charge of their own career development and employers could be encouraged to participate and perhaps to contribute.

It is clear that it is in all our interests to develop innovatory ways of persuading both employers and employees to undertake and maintain continuous skills training. I thank the noble Earl for giving us the opportunity this evening to debate this important topic and await with interest the response of the Government.

7.49 p.m.

The Minister of State, Department for Education and Employment (Lord Henley)

My Lords, like other noble Lords, I am grateful to my noble friend for initiating this debate. I hope that in the short time available, I shall be able to deal with some of the points which have been raised and assure the House of the Government's commitment to a well-educated and well-trained workforce, which we believe is absolutely crucial to this country's competitiveness.

I referred to a well-educated and well-trained workforce. I make no apology for mentioning education and training because that is very much the reality behind the merger of the former Department of Employment and the Department for Education to form the new department. I believe that that merger has brought a whole new coherence to the concept of lifetime learning from nursery education, which we shall discuss on Monday, right through to adult education.

As I said, we believe very strongly in training, and I intend to deal with that in due course. But it may help if I start with the point made by my noble friend about the Workstart project and the pilot schemes in that field. I am grateful to my noble friend for reminding the House that the Employment Committee in another place thought very highly of that initiative, as does my noble friend.

The Government have operated Workstart pilots to see whether such a selective approach can help the very long-term unemployed into work without inefficiency and the distortionary effect associated with the more general employment subsidies, which I suspect would be welcomed by the party opposite. It remains the Government's view that employment subsidies may have a place in whole menu of opportunities, particularly for the long-term unemployed. We shall make a decision on the future of the workstart project based on the evaluation of the pilot schemes.

My noble friend asked whether we would consider other pilots. Obviously, I have to say yes. That is the point behind the experiment and why we would like to continue to try other methods as appropriate. Certainly the noble Baroness, Lady Seear, made some most interesting suggestions. Indeed, I would be most happy to look at them in due course should she wish me to do so. However, I am sure the noble Baroness understands that, with the constraints of time which apply this evening, it will be very difficult for me to deal with them more fully at present.

As I said, we believe strongly in the importance of training and, particularly, in-work training. However, the employers must have the lead responsibility. It is they who very much know what their skill needs are; it is they who know their business needs; and, indeed, it is they who know their competitive needs.

The Government will continue to invest in training, as they always have done. But their prime role must be to give leadership and strategic direction and guidance. That is what I believe we have done. At a national level we have put in place the qualifications framework about which many noble Lords spoke. I am especially grateful for the welcome that my noble friend Lord Trefgarne gave to NVQs and even more grateful for the welcome—even if I was somewhat surprised by it—from the noble Baroness, Lady Seear. With NVQs I believe that we have benchmarks against which we can measure performance—that is, national targets. However, we do need to involve business, as I believe the noble Baroness, will accept, at all stages. Again, I believe that we have done so.

We fully support the national education and training targets devised by the CBI. We have supported the setting up of NVQs and we have encouraged the Investors in People initiative, mentioned by the noble Viscount, Lord Thurso, to which I shall refer in due course. I accept that the targets are tough, but I believe that they need to be tough if we are to compete in the future.

Again, as other speakers mentioned, today we published the skills audit results which highlighted areas where, obviously, further improvement is needed. The targets help us to know where we are. However, for the targets to be meaningful, we need measurements. For education we have the examination results and for training we have both the NVQs and the GNVQs that fit somewhere between the more academic qualifications and the NVQs.

I accept that a number of criticisms have been made of NVQs. That is why we believe that their reform is central to our whole United Kingdom training strategy. I believe that that reform is working. Something over 1 million NVQs have now been awarded, as I believe the noble Lord, Lord Haskel, made clear. There are now 840 NVQs—possibly too many in some areas because I believe that there is a good deal of overlap—which cover about 88 per cent., not 85 per cent., if I may correct the noble Lord, Lord Haskel, of the workforce. As I believe many speakers made clear, employers like them and are using them. Overseen by the National Council for Vocational Qualifications, a business led organisation, I believe that they have cut through the jungle of myriads of qualifications that we had before.

As the noble Baroness, Lady Seear, made quite clear, we have reviewed the most frequently used NVQs. That was the Beaumont Review of what we initially called the top 100 NVQs. That is a major strand of the measures to improve the quality, rigour and take-up of NVQs. I am most grateful for the work that Gordon Beaumont undertook in that review. I believe that we could have a whole debate—indeed, a whole day's debate—on what Gordon Beaumont reported and what the likely responses ought to be.

Despite the wide approach adopted and the diversity of perspectives, the findings are remarkably consistent. There is widespread support for NVQs generally and the specific benefits that have resulted. I believe that the findings—and, indeed, the review does highlight a number of weaknesses, as many speakers made clear; and I accept that there are those weaknesses—will help us to strengthen their effectiveness, particularly through simplification (much was made of excessive bureaucracy and jargon) and clearer specifications. In due course, I hope that that will lead to increased coverage and take up.

Obviously I should like to say a great deal more about the success of NVQs; indeed, I could recite a whole number of different cases from different companies in different sectors to show just how much they have done to improve the motivation of their workforce by improved productivity, and so on. However, I am short of time tonight and cannot go into that aspect of the matter. But, as I said, that might be the subject for another debate.

I move on to the training and enterprise councils. I believe that they have been a great success. It is hard to believe that the first one was set up only five years ago. They are now fully accepted, fully efficient private sector organisations that actually do deliver, as I believe my noble friend Lord Trefgarne made clear. Overseen by the TEC National Council and led by top local businessmen, they are the Government's key private sector partners in delivering training in the regions. They are critical to the regeneration and economic development of the community. Sensible but effective financial controls and licensing mean that the TECs provide value for money. I think that I can say that they are very much the Government's training champion at a local level.

The Government are keen to ensure that the resources they devote to training are well spent. That is why they target assistance. They target the long-term unemployed through Training for Work which helps about 200,000 people annually, and they target young people. Again, I accept what the noble Baroness, Lady Seear, said about the importance of improving the levels of unemployment among young people. I accept that they are high; indeed, the figures stand at some 15 per cent. However, I must make the brief political point that, if we went down the line suggested by the party opposite of signing up to the social chapter and a minimum wage, as likely as not we would see those figures rising to levels that we see in France of some 27 per cent., in Italy of some 36 per cent. and, indeed, in Spain of 39 per cent. I am just reminding the noble Baroness of those figures—

Baroness Turner of Camden

There is no time to interrupt!

Lord Henley

My Lords, noble Lords may think that I am going on too long, but I believe that I do indeed have 12 minutes and I shall continue as I wish.

As I made quite clear, we believe that employers have the lead responsibility for in-work training, but we also believe that we should encourage this—that is what I want to get across to the noble Lord, Lord Haskel—through the Investors in People initiative. It is logical that a company's most important assets are its people. It is logical that we should properly develop those people. It is logical that such people will contribute more fully to the company if they are committed. If they are committed, it is because the company cares. In that type of environment the business prospers.

That culture, which after all is only common sense, has produced tangible results, such as greater customer satisfaction, increased profits and generally more effective working of a company's staff and its business. That is why the Government spend about £50 million per annum. I believe that the results are very good indeed. We now have about 21,000 organisations employing 5 million employees who are committed to that very exacting standard.

I believe that that should apply to all businesses, whether large or small. The noble Lord, Lord Haskel, mentioned small businesses. We know that small businesses need extra help to develop their workforce. Obviously training can be very expensive in terms of time. A simple equation used by some is that time for training equals production time lost. I believe that to be a mistake, short-sighted and wrong. But the competitiveness White Papers have very much addressed that problem. That is why we introduced the Skills for Small Businesses initiative. That is why we conceived the Skills Challenge—a fund for small businesses; and, indeed, why we have small firms training loans.

Many thousands of small businesses have been helped to develop in-work training in that way. Only today, as I am sure the noble Lord is aware, the Government published their response to the points raised from the "Your Business Matters" regional conferences, organised and facilitated by the Government, where small businesses were able to articulate their concerns. We have listened to those concerns and we will certainly act upon the points that were made.

As I said at the beginning of my remarks, we also believe in the culture of life-long learning. It sees vocational training as an equally valued route for young people into the world of work. A learning culture inculcated in young people will, I believe, last into adulthood. Training is a means for the individual to reach full potential and for a business to prosper. Again, that is why we have looked critically at the education and training needs of our young people. That is also why we have asked Sir Ron Dearing to look at the routes to the world of work and the qualification structure for the 14 to 19 age group. Indeed, that was also mentioned by my noble friend, and, again, that is why we have introduced modern apprenticeships, which were praised by my noble friend Lord Trefgarne and the noble Baroness, Lady Seear. We have committed much money to that and I believe we are making a great deal of progress. We already expect to see the number of young people gaining NVQs at level 3 to increase to over 60,000 a year through the modern apprenticeship movement.

Today is a significant day. We have seen the publication of our third competitiveness White Paper. We have seen the skills audit and the Government response to the "Your Business Matters" conferences. All of those had one thing in common—the need to make the best use of our most valuable resource, our people. I believe that the economy is healthy and the country is healthy and that we are now competing with our global rivals. The Government know that to maintain our position we must have a well-educated and well-trained workforce. We are fostering the reality of lifetime learning—as I said at the beginning—from nursery vouchers into adulthood. A key component of that will always be in-work training—a component recognised, encouraged and acted upon by this Government.