The Minister of State, Department for Education (Baroness Smith of Malvern) (Lab)

First, I thank noble Lords who contributed to the debate following His Majesty’s gracious Speech, when we first discussed this Bill. That was also my maiden speech, and it seems an awfully long time ago. I thank noble Lords who attended the recent open briefing sessions with me in this House to talk about the Bill and the work that the Government are doing in this area. Our central mission is to grow the economy. We have set out a modern industrial strategy with a primary objective of long-term sustainable growth in our highest-potential growth-driving sectors. To succeed in our growth mission, we need to harness the talent of our people, meet businesses’ skills needs and break down the barriers to opportunity. Education is critical to breaking down those barriers, and we are focused on ensuring that all children and learners can achieve their ambitions and thrive in education, work and life, no matter their background. However, I am sorry to report that this country’s workers still lack the skills they need. This means that businesses cannot grow and people are not able to make the most of the opportunities that come their way. For example, around 7.5 million working-age adults do not have even basic digital skills, despite most employers saying that these are vital for their businesses. As recently as two years ago, UK employers put over one-third of their vacancies down to skills shortages. Our businesses have become overly reliant on importing skilled workers from abroad as they have not seen a plan to develop the skills they need in this country. Compared with other countries, our workers are underqualified. The OECD states that 26% of the UK workforce are underqualified for their job, compared with an OECD average of 18%. That underqualification is in part the result of a “missing middle” in our skills system. Not enough people attain post-school qualifications in sought-after disciplines. Technical training at levels 4 and 5, between A-levels and undergraduate study, is low compared with other countries and with our own historical levels. In England only 4% of people have level 4 and 5 qualifications as their highest qualification, compared with around 20% in Germany and 34% in Canada. Not only do we lack the skills we need today; our economy’s skills needs are changing, with 1.4 million jobs in new fields projected by 2035. England’s skills system has a crucial role in ensuring that businesses and individuals are prepared for the future, but the current fragmented skills system is preventing young—and older—people from seizing the opportunities that are out there. That is the sorry state of the skills system that we have inherited from the last Government, a system that employers and individuals report is overly complex, where people cannot find the training opportunities that would help them achieve and which is holding back our businesses, our public services and our economy from accessing the skills they need to grow. After 14 years of tinkering with qualifications, introducing a levy that has seen apprenticeship starts fall, and a failure to look to the future needs of our economy, the skills system is failing individuals and our country. The skills system needs an overhaul. It needs to be strategic, creating opportunities for young people to get on and for adults to upskill and retrain, and delivering the skills that will help our businesses to grow. The Bill is a crucial step towards creating a skills system fit for the future, enabling our growth and opportunity missions to deliver better life chances for all, meeting the challenge of our industrial strategy, supporting our NHS to have access to the people and skills that it will rely on, and delivering the skills to build the houses and infrastructure that we need and to support our clean energy superpower mission. This Government have already begun to take action. In July the Prime Minister announced the launch of Skills England, which then published its first report in September. This new organisation will bring coherence to the system, ensuring that we have a clear assessment not just of where the skills gaps are now but of what we will need in the future to realise our potential in a rapidly changing world. It will use that assessment to ensure that there is a comprehensive suite of apprenticeships, training and technical qualifications for individuals and employers to access. At its heart will be employers working with trade unions, training providers across our further education, higher education and independent sectors, and local and regional government—a partnership raising the profile and impact of our skills system. Skills England’s strong board and chair will deliver the operational independence, external expertise and challenge to drive the change that we need to see. Its link back into government will provide the voice and the advice to ensure that skills sit at the heart of joined-up decision-making across government. Skills England will transform our ability to determine and then deliver the skills that our country needs, giving it a key role as part of an even more ambitious programme of reform and national renewal. The launch of our industrial strategy will provide the firm foundation and confidence for businesses to plan. We are moving away from the chaos of recent years, where policy changed as quickly as Prime Ministers. Skills need to support this growth and investment rather than being the barrier that many employers highlight, so Skills England will work closely with the industrial strategy council to remove those barriers. Skills England will work closely with the Department for Work and Pensions on our major cross-government effort to get Britain working and tackle deep-seated challenges in our labour market. It will work closely with the Migration Advisory Committee to ensure that we have a strong skills pipeline. We plan further fundamental reform to support a vibrant and responsive skills and education system. We are creating a growth and skills levy to bring the focus and flexibility lacked by the last Government’s levy; a curriculum and assessment review to ensure that our schools are providing the learning to maximise all children’s chances to develop the skills, knowledge and creativity to make the most of their education; a youth guarantee to ensure that all young people have access to jobs and training; and a new national jobs and careers service to provide direction and support for people entering the workforce. To create a single, unified body in Skills England, it is crucial that the functions that currently sit with the Institute for Apprenticeships and Technical Education are folded into it. Skills England will build on IfATE’s role in securing the quality of technical qualifications and apprenticeships, and we are grateful for the role that IfATE has played in doing that—but, to pave the way for Skills England, the Bill will abolish IfATE. It will remove functions relating to IfATE’s current accountability to the Secretary of State and Parliament, transfer IfATE’s functions to the Secretary of State and amend five of them. It will allow the skills system to operate without organisational boundaries and administrative hurdles. Skills England will help the skills system become more agile and responsive by identifying what skills are needed where in the economy, supporting our industrial strategy and securing the availability of high-quality qualifications that meet those needs. The Bill is narrow in scope and technical in nature. There are two main elements. The first part of the Bill, as outlined, will abolish IfATE and transfer its functions to the Secretary of State. These functions will largely be exercised by Skills England, operating as an executive agency. The Bill will also enable the transfer of IfATE’s property, rights and liabilities to the Secretary of State. The second part makes changes to some of the functions to be transferred. We have examined the functions carefully and determined that the way some of them are set out in the existing legislation is overly prescriptive and could hamper the responsive and agile skills system we need. The Government therefore propose some changes to functions relating to apprenticeships and technical education to increase our responsiveness and allow the Secretary of State to make small and fast adjustments to our education and training programmes. This should provide the speed and flexibility the skills system needs. Clauses 4 and 5 remove the requirement for each occupational standard and apprenticeship assessment plan to have been prepared by an appropriate “group of persons”. Employers will continue to be central to how technical qualifications and apprenticeships are produced. In the preparation and design of standards and apprenticeship assessment plans, while design by employers and others will be maintained as the default position, these changes will allow greater flexibility in scenarios where preparation by a group can be unnecessary or restrictive—for example, where training requirements are already tightly defined as a result of there being a regulator or an industry-recognised qualification, such as the dental hygienist occupation being regulated by the General Dental Council. Giving the Secretary of State the flexibility to consider whether to convene a group of persons in such cases will enable the skills system to be more agile. Where the Secretary of State makes the determination not to use a group of persons to prepare standards or apprenticeship assessment plans, a high level of rigour and recognition of the value of external input will be upheld, for example by publishing standards in draft for stakeholder comment before they are finalised. Clause 6 will retain the duty to maintain arrangements to review technical education qualifications, standards and apprenticeship assessment plans. But we will remove the duty to review these at regular intervals and publish information about these intervals. This change is necessary in light of there now being more than 700 standards, spanning a huge range of sectors and occupational specialisms. The frequency with which different standards should be reviewed and updated will depend on their performance, how widely they are used and the pace and extent of technological advancements resulting in changes to the type of tasks performed and expertise required. This change will therefore allow the Secretary of State flexibility to focus on reviews with the greatest need and impact. Clause 7 will remove the requirement for a third-party examination of a standard or apprenticeship assessment plan to be carried out before approval. Again, we expect the default position to remain that standards and assessment plans will be examined by independent third parties. The Secretary of State will deviate from this only in a minority of instances, where appropriate. This change will allow flexibility where examination would add limited value—for example, in highly regulated occupations in the health and finance sectors where the assessment plan simply sets out the regulator’s requirements. Clause 8 will allow the Secretary of State to grant an exception to Ofqual, which is currently prevented from exercising its accreditation power for technical qualifications. This amendment would allow Ofqual, where the Secretary of State deemed it appropriate, to be given the discretion to apply its accreditation power to specified technical education qualification types, subject to appropriate consultation. This change reintroduces the potential for technical qualifications to be accredited in the same way as general qualifications, so that learners and employers can be assured of the quality of the most high-stake qualifications. These flexibilities reflect the calls from employers and others to ensure that the system is agile and flexible and can respond to rapidly changing needs. In developing Skills England we are already building the vital partnership I mentioned earlier through a series of engagement events. So far, the round tables led by Skills England’s interim chair, Richard Pennycook, have involved more than 100 key stakeholders, including a wide range of employers. These sessions have emphasised the need for greater flexibility in the skills system and more opportunities becoming available to shape technical qualifications and apprenticeships so that they best reflect the changing needs of industry, particularly in the most critical sectors. It is in this spirit that we bring forward the Bill. The Bill makes vital, practical changes that enable us to deliver Skills England, to bring coherence to the skills system and ultimately to deliver the skills we need for the future. These reforms will sit at the heart of this Government’s missions to drive economic growth and to spread opportunity across all parts of this country. I beg to move.