(i) approved local area agreements (as defined in section 82(2) of the Local Government and Public Involvement in Health Act 2007), and
(ii) local improvement targets (as defined in section 83 of that Act);’.
With this it will be convenient to discuss the following amendments: No. 18, in clause 4, page 4, line 8, at end insert ‘, including consultation with—
‘(i) responsible local authorities (as defined in section 78 of the Local Government and Public Involvement in Health Act 2007), and
(ii) partner authorities (as defined in section 79 of that Act).’.
No. 23, in clause 4, page 4, line 8, at end insert
‘, in particular, to determine the level of demand for specific skills in the economy’.
No. 24, in clause 4, page 4, line 39, at end insert
‘, in particular, to determine the level of demand for specific skills in the economy’.
With your permission, Mr. Atkinson, I should like to make some general remarks about the clause before going on to discuss amendments Nos. 17 and 18.
Thank you for that clarification. In principle, we are very supportive of the clause. First, it establishes the skills and employment board for London, which brings democratic accountability to the organisation of training in London, and most critically, it allows it to be integrated with other economic planning and provision of services such as transport. That is particularly essential for a place such as London. As a London MP, I was quite excited by that idea, and felt that it offered a real opportunity to ensure that we take account of London’s uniqueness. London generates a large proportion of the country’s wealth, and draws in many of the tourists who come to this country, but we also have significant levels of unemployment and lower rates of employment than the rest of the nation.
London is by its nature a more transient place. There are waves of immigration and pockets of poverty and wealth are found side by side. Many other cities across the UK have those factors, but none in the same concentration as London. London has unique training needs because of that, which are heightened by the Olympics and the considerable building programme that goes with that. We support that aspect of the clause.
The second important thing that the clause does is to allow flexibility for sub-regional structures to be set up, and we support that idea in principle. We have already had a discussion about sub-regional structures and the need sometimes to take account of a city organisation and the way in which employment is drawn into a city hub. Amendments Nos. 17 and 18 are probing amendments designed to probe the relationship between any new bodies that will be set up, given the structures outlined in the clause, and local authorities. More specifically, they are designed to probe local area agreements.
I know that the Minister referred to some of those aspects in the discussion on clause 2, but I would like to push him a little further on this point. When local authorities set up local area agreements, they are designed to set targets for improvement between local authorities and their partners, and Government as a whole. My concern about the wording of the clause is that it appears to over-rule that, or appears to allow the Secretary of State to over-rule that. I would be grateful if the Minister could be clear about the relationship between existing partnership arrangements and any new bodies that might be set up. Obviously, it is essential that any new bodies take account of existing plans and partnerships, and I would like to ensure that there is consistency between the Bill and the Local Government and Public Involvement in Health Bill, which defines that relationship with local area agreements.
Local area agreements bring together a whole range of services, and economic development targets as well as skills and further education plans and partnerships that are outlined in local area agreements. It is essential that any new body works closely in collaboration with those existing plans. They are probing amendments that are designed to get on the record from the Minister exactly how that relationship will work and to ensure that it is consistent with the other Bill that is proceeding through Parliament at the moment.
I shall not add to what the hon. Member for Brent, East said about her amendments, although I am sure that the Minister will want to respond to her interesting and useful comments. I take her point that they are probing amendments, designed to elicit clarification.
On amendments Nos. 23 and 24, section 24A of the 2000 Act allows the Secretary of State by order to specify a body to formulate a strategy in relation to specified functions of the LSC for the whole of England or part of it. However, it contains no provision about consultation to determine demand, in line with the Leitch review. In tabling the amendments we are anxious to insert the term
“the level of demand for specific skills in the economy”.
Perhaps I should remind the Committee that the Leitch review says that
“analysis shows that previous approaches to delivering skills have been too 'supply driven', based on the Government planning supply to meet ineffectively articulated employer demand. This approach has a poor track record—it has not proved possible for employers and individuals to collectively articulate their needs or for provision to be effectively planned to meet them. Employers are confused by the plethora of advisory, strategic and planning bodies they are asked to input to. Under a planned system, the incentives are for providers to continue doing what they have done in the past so long as that meets the requirements of planning, rather than responding flexibly as demand changes”.
Our concern is that the system should provide what the economy needs. Like Lord Leitch, we believe that a demand-led system, with employers in the driving seat, does that best. I do not say for a moment that that does not depend on there being a partnership between educators and employers; of course it does. I said at the outset that I value immensely the role that further education and other training providers play in equipping our people with the skills that they need if they are to make a worthwhile contribution, as well as those that add to their well-being.
However, in an advanced economy, in which need is dynamic, it is critical to communicate demand as effectively as possible to trainers so that what is provided through the system accurately reflects real economic need. That is fairer to trainees and to employers, because all too often, people who have been trained have to be retrained when they obtain employment because the training with which they were provided was not up to date. It is difficult to be absolutely sure of achieving that, but it is most likely to be guaranteed, as Leitch argues, by a demand-led system. Our purpose is to assert that decisively, hence the wording of the amendment.
Amendment No. 24 concerns the function of the council in London when the LSC’s powers are delegated. It would require the body established by the Mayor to consult SSCs to determine the level of demand in London for particular skills. It, too, is born of our determination to ensure that, in a demand-led system, the needs of a particular locality are transmitted as effectively as possible. We believe that the SSCs will play a critical role in that regard. All SSCs are not equally strong; they are evolving and there will be further changes in the way in which they operate. However, they are the vehicle that should be used as a conduit for the supply of information about demand and to ensure that what is provided meets that demand. The amendments are designed to achieve that outcome and I shall be interested, as ever, to hear the Minister’s response to our helpful suggestions. They would improve the Bill and bring it into line with the findings of the Leitch review which, I can tell, will play a lively part in our deliberations.
It is some time since I have contributed to a wide-ranging debate on clause 4, but I am happy to be able to do so. For the record, may I correct something that the hon. Member for South Holland and The Deepings said when he summed up on the previous group of amendments? He asserted that it is Sandy Leitch’s view that the LSC will, over time, wither on the vine. That is not what Sandy Leitch has said. He has explicitly said that he is not in favour of ripping up structures for the sake of it and starting again, but that he is of the view, as am I, that the LSC’s role and function, and the way in which it operates, should continue to evolve.
Amendments Nos. 17, 18, 23 and 24 relate toclause 4 and the strategies for the functions of the LSC. Amendments Nos. 17 and 18 apply to directions and guidance about the consultation, and matters to which a body specified to formulate a strategy for an area of England outside Greater London is to have regard when formulating or reviewing its strategy. Similar amendments were tabled at Committee stage in another place. We considered the points that were raised, and have made a number of changes to the draft directions and guidance in relation to the formulation and review of the skills strategy for London by the London skills and employment board. Similar directions and guidance will apply to other bodies outside London. I am, therefore, pleased to be able to restate the reassurances given by my noble Friend Lord Adonis.
I agree that provision should be made in directions and guidance, but I do not believe that specific reference to these matters should appear in the Bill. While I agree that a range of bodies should be consulted, I cannot see a case for favouring particular categories of consultee by naming them in the Bill. If we were to go down that path, we would burden the Bill with unnecessary detail, and to name only some would be misleading and unhelpful. Those drawing up and reviewing strategies will want to have regard to existing local area agreements and local improvement strategies, as the hon. Member for Brent, East has asserted, and also to other relevant matters such as sector skills agreements. Again, I believe that the place for such matters is in directions and guidance, not in specific mention of them in the Bill.
Taking London as the first example, a list of bodies to be consulted and matters to which the board is to have regard is provided in the draft published directions and guidance. Those draft directions say, as the result of a debate on amendments tabled in another place, that the board must consult responsible local authorities where the authority falls partly or wholly in Greater London, and partner authorities where the board considers it appropriate. Directions also require the London skills and employment board to have regard to local area agreements and local improvement targets specified within them, which have been prepared by any responsible local authority where the area of the authority falls partly or wholly in Greater London.
I refer the hon. Lady to the documents about the Bill that we circulated to the Committee, particularly item (c), draft regulations on the strategy-making body for London, made under clause 4. Section 7 explicitly mentions the board’s having to consult particular bodies, including responsible local authorities, as defined in section 78 of the Local Government and Public Involvement in Health Act 2007, where the area of the authority falls partly or wholly within Greater London, and each of their partner authorities within the meaning of section 79 of the Local Government and Public Involvement in Health Act 2007 where the board considers it desirable to do so. I hope that that provides the reassurance that the hon. Lady seeks and that she and the hon. Member for Leeds, North-West will feel able to withdraw their amendment.
Amendments Nos. 23 and 24 would provide that, where directions and guidance about consultation are given by the Secretary of State, the particular need to consult to determine demand for specific skills in the economy should be considered. I agree that the level of demand for skills in the economy is an exceedingly important issue as we formulate or review our strategy, but I do not see a reason to refer to it specifically, when we do not refer to other matters of equal importance, such as improving employment and tackling worklessness.
The demand for specific skills, along with many other relevant matters, will be taken into account in our strategy. It would not be appropriate to refer to just one matter in the Bill, and to include all relevant matters would over-burden the Bill with too much unnecessary detail. For those reasons, I ask the hon. Member for South Holland and The Deepings not to press his amendment.
Thank you for your indulgence and advice, Mr. Atkinson. We need to be absolutely clear. The Leitch review is explicit in its advocacy of a demand-led system, which I think the Minister has fully acknowledged. The report is unequivocal about the changes that would be needed to achieve such a system. The Learning and Skills Council is not mentioned in any significant way until page 73, and then in not particularly glowing terms. In describing the move from a supply-driven to a demand-driven system, Lord Leitch says:
“The LSC allocates funding on the basis of expected demand. If demand does not meet expectations, funding for subsequent years is adjusted. This can mean that colleges aim to ‘recruit’ employers and individuals into planned courses to fill places, rather than responding flexibly to demand.”
The assumption underpinning the report was that the current system does not always deliver, which is reflected in our skills performance. The Ministers on the Committee have been straightforward about that in the past. We need to improve our performance radically, particularly in intermediate and higher level skills, where we lag behind France, Germany, the USA and other competitors.
The purpose of our amendments is to enshrine in the Bill the principle of responsiveness to demand. There is no difference of principle between us in that respect, but the Minister has made the case that the amendments would entangle the Bill in a level of detail that would not be appropriate from a legislative perspective. I hear what he says, but I use this opportunity to probe and to reinforce my absolute determination to ensure that the principle behind the Leitch report, of moving from a supply-driven to a demand-driven system, should inform all that we do in the Committee, as well as future public policy. Having heard the Minister’s assurances, I beg to ask leave to withdraw the amendment.