My Lords, in this wide-ranging debate, like my noble friends Lady Sharp and Lord Cotter I shall refer to training, apprenticeships and the role of employers. In the current economic situation it has become increasingly challenging for employers to fulfil their part in training and education.
As a nation we have centuries of experience of education, training and apprenticeships. All three disciplines have evolved sometimes for the better, sometimes for the worse. Where the forthcoming Bill promises reform, we hope that our debates will be influenced by a great deal of good practice which has been gathered over the years and that we shall not be reinventing wheels or proposing change for change's sake.
On these Benches we believe that the best results come from winning hearts and minds. Those mastering manual and practical skills take particular pride in responsibility for their achievements. Enthusiasm is sucked out when doing a job well is deemed less important than proving to unseen external bodies that boxes have been ticked. The most effective apprenticeships are when the learner has a genuine interest in their trade or craft and the employer, trainer or master has skills and knowledge that they are enthusiastic in passing on to a succeeding generation.
The Government should seek to encourage, not stifle, motivation. One of the quickest ways to discourage is to introduce overbearing regulation from the centre. Central government currently has a grip on education and training which risks excluding employers and channelling learners into the assumption that success lies principally in meeting external targets.
Employer participation has been built into many parts of the education system. At school, work experience is part of the curriculum. Diplomas and apprenticeships require input from employers although, as we heard from my noble friend Lady Sharp, a diploma is not quite enough input from employers. Accreditation for vocational qualifications is possible only with on-the-job evidence. Yet more than ever businesses, especially SMEs, need to concentrate on developing trade, making a living and—we hope—a profit. The time and resources for training can get squeezed out. Government actions are not always helpful. Noble Lords have already referred this evening to the announcement of reducing VAT from 17.5 per cent to 15 per cent. It made good headlines, but at what short-term cost to business? I heard last week from a major DIY chain of the daunting task of changing labels and prices on every VAT-able widget on every VAT-able shelf. Of course, the tills all had to be changed too. An additional concern was that customers had been led to expect lower prices and would be the first to complain if any apparent savings were not immediately passed on. Yet the new prices, which were 46-47ths of the old prices, were hardly a startling budget.
What about SMEs in the run-up to Christmas, with catalogues printed and stores hoping to be at their busiest? My noble friends Lord Smith and Lord Cotter have already referred to the excellent reports from the Association of Chartered Certified Accountants, which records that barely a quarter of SMEs have any managers with financial qualifications. How much more time-consuming is it for them to implement short-notice changes to pricing? Will the Minister say what consultation took place with businesses large and small before making the VAT announcement?
The country has a regrettably poor record of financial literacy, a theme propitiously chosen by the current Lord Mayor of London during his year of office. He will know as well as anyone that the City of London's position as a world finance centre can be sustained only by replenishing our population of those financially literate. He holds an ancient office; by contrast, the Mayor of London holds a modern office, and today we read that he, too, is bringing his influence to bear on promoting the City and financial services. That should be a powerful duo.
We have had some positive feedback from the manufacturers' organisation, the EEF, which reported that 60 per cent of large companies intend to expand apprenticeships in the future. Many already contribute to training in smaller enterprises in their supply chain, and that is to be encouraged but, with the best of intentions, training budgets are likely to be tightened.
Another government plan affecting apprenticeships is the increase in weekly wages from £80 to £95 a week from August 2009. This will be welcomed, but may well cause employers to think even more carefully before taking on apprentices. More funding has been promised, and we should like to see a greater proportion of it available for adults, who make up a critical part of the workforce seeking new skills.
Whatever the response of employers, we can be sure that further education colleges will have a key part to play in training for work. Their commitment and care have been demonstrated recently towards students whose grants have not come through. The breakdown in the educational maintenance allowance system resulted in some colleges making funding available from their own resources to encourage those most disadvantaged not to drop out.
The FE sector is being tasked by Ministers and the Learning and Skills Council to come up with innovative and imaginative schemes to respond to the heavy job losses anticipated. Its involvement will need to be through services of career information, advice and guidance, as well as in its provision to reskill and retrain. Colleges have a fine record in managing their curriculum offer to meet employment growth. They have been responsive to the demands for higher skills in sectors such as construction, engineering, health and social care. They deserve the public recognition and resource to match the demands made of them. The Association of Colleges has recently declared:
"Our main concern is that funding of colleges should be sufficiently flexible to allow them to respond to local economic circumstances".
It also points out:
"Programmes must be sufficiently flexible to allow apprentices to participate when not directly employed. In sectors like construction is has always been necessary to help people acquire skills before they start on site. In other sectors affected by the recession it is necessary to support apprentices to complete their course".
Will the Minister offer reassurances that government measures will include appropriate funding for off-the-job training, a lighter touch in regulation and documents expressed in plain English? The simpler it is for industry and education, employers and trainers to work together, the better they will be able to respond to these difficult times and create a skilled workforce for the future.