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Further and Higher Education (Employer Engagement)

– in Westminster Hall at 12:00 am on 2nd February 2006.

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Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Heppell.]

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Education and Skills 2:30 pm, 2nd February 2006

I am pleased to have the opportunity to lead this important debate. It used to be the view on the left and the right of the political divide that further education, and especially higher education, stood in grand isolation from what might be described as the grubby utilitarian economic needs of the nation. That view has significantly changed. It is now recognised that if we want a more productive and prosperous economy the further and higher education sectors have a crucial and significant role in developing our skills base and educational attainment, linking directly to the needs of business and engaging in local, regional and national economic development across the country.

The picture nationally shows that the UK has a strong economy, but in key respects we lag behind our competitors in Europe and the rest of the world. Raising skills levels in the work force is therefore vital to our country's well-being. It is vital for our economy to raise productivity and competitiveness to world-class levels, which will give young people the best life chances and enable them to make the most of their potential in education, work and training. For adults already in the work force—more than 50 per cent. of the 2020 work force are over 25 now—we need to create sustainable employability, give them the opportunity to progress in their working lives, and through upskilling and reskilling develop and sustain better public and private services. If we want personalisation and customer care to be at the level that all in society require, better education and training will be needed.

A modern, successful economy with high-performing, productive workplaces must have an education and training system that can develop top-quality learning, driven by the needs and ambitions of employers and individuals. Research has shown that we will need a rapidly increasing number of young people to gain higher skills for the new jobs that will be created in the global marketplace of the future. However, in order to compete in the international marketplace, we must help people in work to update their skills. To take just two examples, India and China are no longer low-skilled, low added-value economies but compete directly with us in high-skilled, high added-value businesses.

I led the higher education delegation to India last summer and I was palpably struck by the absolute commitment and determination of the education providers, the universities, the training providers and the people in that country. That is a significant challenge to this country and our economy. Unless we rise to that challenge, we will be blown away by the global competition. It is not a given that Britain will remain the fourth largest economy in the 21st century. We have to strive to achieve that.

Photo of Annette Brooke Annette Brooke Shadow Spokesperson (Children, Schools and Families), Shadow Minister (Education), Shadow Spokesperson (Home Affairs)

I was interested in what the Minister said about the Indian experience. Will he comment on the type of jobs that people in India get when they have graduated? It would be worrying if their newly acquired skills could not be used to the fullest extent.

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Education and Skills

There is evidence that Indian graduates, whether they are educated in India or in this country, have access to high-quality jobs. In technology, business and commerce in India, there is a follow-through to the available opportunities. I do not criticise that development but it is a challenge for us, which is why we need to respond and to ensure that every person in this country has the opportunity to develop their skills. At present the Government help more than 6 million people to improve their skills every year. Raising the proportion of workers trained in industry can bring a 4 per cent. increase in added value per worker and a 1.6 per cent. increase in wages. This is very much a win-win situation. Because we regard skills as so important, we commissioned Lord Sandy Leitch to undertake an analysis of our skills profile as we move towards 2020.

Photo of Philip Hollobone Philip Hollobone Conservative, Kettering

May I mention the Tresham institute, which has campuses in my constituency and the neighbouring constituency of my hon. Friend Mr. Bone, and which does marvellous work in further and higher education and has established tremendous links with local employers to improve the skills of the local young work base?

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Education and Skills

I am aware of the work that the institute undertakes. The hon. Gentleman has mentioned it before. I pay tribute to that work.

Photo of Peter Bone Peter Bone Conservative, Wellingborough

One of the first visits that I made as a Member of Parliament was to Tresham institute in my constituency. It made the point that the Government are directing it to take money from adult learning and into young people's learning. As a result it has had to cut adult classes. Can the Minister comment on that?

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Education and Skills

I am happy to. The picture is much more complicated. First, there is no way in which the Government can be described as underfunding the further education sector. Over the past eight years, we have increased funding to that sector by about 48 per cent. in real terms. I do not wish to make a crude party political point, but I will. The level of financing for further education colleges in the five years prior to 1997 was cut by 14 per cent. in real terms. Therefore, there has been a step change in funding.

Money has to be spent on the right priorities. Those priorities were established through the Government's two skills White Papers, which received cross-party support and established consensus that they were the right priorities. Sixteen to 19-year-olds are a priority, but so are adult basic skills and the roll-out of the national employer training programme, on which I will comment later. I think that those are the right priorities. If we argue that, within a budget that is still increasing, more needs to be spent on those areas, it means that other areas, which one might crudely describe as adult leisure and recreation, will not receive as much funding.

I say not that those courses should cease but that the individuals should be asked to pay a little more for them. Under the financial regime that we brought in, the average cost of an adult education class will rise over the next two years from approximately £1.42 an hour to £1.94 an hour. Alongside that there will be significant protection for people on means-tested benefits. That is the right strategy. As I go up and down the country talking to providers, I find that people understand the strategic direction in which we are moving, but we need constantly to explain and rationalise what we are doing.

Photo of John Hayes John Hayes Shadow Minister (14-19 Reform and Apprenticeships)

The Minister cannot be allowed to get away with that. He knows that the skills for life programme, which is designed to bring adult learners back into the process and to re-engage them, is unfortunately heavily skewed towards younger people. That may be due to paucity of provision in state education. I do not know. But certainly it is not providing the opportunity to the degree that is necessary to bring people back into the process of learning and training, so that they can be reskilled for the needs of the workplace. Demographic change means that fewer young people are coming through, so that will become more and more of an embarrassment to the Minister. What specific measures will be put in place to encourage people, perhaps 30, 40 or 50-year-olds, to reskill and to re-engage? They are hard-to-get groups and he is not getting them at the moment. I rushed here from a meeting with the chief executive of the Learning and Skills Council and that is what he told me.

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Education and Skills

It is clear that, if what one might describe as stepping-stone provision—the courses that get someone into the education and training system and lead to a level 2 qualification, which is the equivalent of 5 GCSEs—is properly mapped against the national framework, it receives funding.

As to the group to which the hon. Gentleman refers, one of the most radical and justifiable initiatives that we are undertaking is the national roll-out, from 1 April, of the national employer training programme, or train2gain. It is incredibly radical and positive. For the first time in this country, adults in the workplace are being told that if they do not have their full level 2 qualification, the state, through a broker, will step in and provide the training either in a college or through another training provider. That is the right thing to do.

I want to throw back the Opposition's criticisms to them. We are increasing funding to the further education sector by far more than was achieved under the Conservative Government. If the hon. Gentleman does not think that we are handling the matter correctly, where would he make cuts? Where in the increased budget does he propose that we should make cuts to fund the provision that he wants in particular areas? Unless he is prepared to answer that question honestly and openly, his approach will lack credibility.

Photo of John Hayes John Hayes Shadow Minister (14-19 Reform and Apprenticeships)

The Minister is far too intelligent to resort to such a primitive line of attack. He knows that we are discussing a partnership between employers, the Government and all kinds of elements in the process to engage people in education and training. In expressing the curious idea that it is just a matter of spending, he is making a cheap dig. I think—he has acknowledged this in comments that I have read—that all kinds of other things are involved. They include expectation; the way learning is perceived; making sure that there is sufficient flexibility in the system to make learning possible, by working with employers on where learning and training take place; and making the bridge between schools and FE and the world of work easier to cross. All kinds of things matter in that context, and not all of them are about money, as he knows. Some may be, but he needs to elevate the discussion on the subject, just as he has, I am sure, elevated his thinking.

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Education and Skills

Forgive me. I do not know about being primitive, but if the hon. Gentleman asks me to spend more Government money, which was the clear thrust of what he said earlier, he should not be surprised if I ask him where that is to come from. Unless he can answer that question, we will not credibly tackle the issues.

Photo of John Horam John Horam Conservative, Orpington

The Minister has been very good about giving way. He mentioned the training broker programme, which is an excellent scheme. It has been widely welcomed, and I too welcome it. However, the evidence from Orpington college in my constituency, which has an excellent record in the relevant matters, is that it is not working as well as it could. One reason for that is not money—my hon. Friend Mr. Hayes is right on that point—but the profile that the programme has. It is not being publicised as well to employers, in particular, as it might be. I should like the Minister to deal with that, because it is important. The arrangements could work a lot better than they do.

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Education and Skills

I accept the hon. Gentleman's integrity in raising that matter. The programme is developing and is not being rolled out nationally until the coming financial year. We deliberately started with a pilot programme to learn from the pilots as things move on. I particularly take his point about awareness in business. One has only to breathe about school issues and one immediately commands attention and media coverage, but if one wants to talk about work-based training, which is in many ways equally important, and can fundamentally affect the development of the economy, it is extraordinarily difficult to get newspapers, television and radio interested. We are working on that, but I should welcome his support in pursuing progress.

As I was saying, we regard skills as very important, which is why we commissioned Lord Sandy Leitch to undertake an analysis of our skills profile as we move towards 2020. Our position has improved over the past decade, and that is likely to continue, but despite those improvements, we still have a poor basic skill level and an unacceptably high number of adults without at least a level 2 qualification. That is the crucial platform on which we are trying to build so that we can progress to the higher skill levels that business and the economy need. To improve our performance, we must tackle the demand for and supply of learning. We must ensure that employers are increasingly actively involved in shaping training and learning so that they respond better to employers' needs.

The challenge involved in that is great. About 80 per cent. of the 2015 work force is already in the world of work, so there must be a significant drive to improve their skill levels. The Government are making significant strides in that respect. Through our five-year strategy for children and learners, we are setting the framework for developing an education and learning system that is among the best in the world. Our vision is also about putting employers centre stage in improving the skills of the nation, as we set out in our two White Papers on skills. Our skills strategy is about supporting businesses to improve their bottom-line profitability and success. The train2gain scheme, to which I referred earlier, is a key element of that.

We therefore have a programme of transformation to build skills for the future. It involves transformation throughout the system, and I want to explain in some detail what I mean by that. First, we are transforming the way in which employers shape the learning system through the skills for business network. That network is now complete, and 25 sector skills councils, representing employers from 85 per cent. of the working population, have been tasked with producing the crucial sector skills agreements. Those agreements are not just pieces of paper; indeed, if they are to work, they cannot just be pieces of paper. Rather, they must be a living and changing analysis of skills demands and learning needs, and must reflect what employers want and what learning providers should deliver. Sector skills councils projects are now influencing further and higher education.

Secondly, we are rightly transforming the schools experience of young people from the age of 14 by means of the specialised diplomas, which should and can provide young people with a real choice when deciding whether to pursue the academic or the vocational route. That is an important initiative, which allows us to tap in to those young people, who can be switched off from the academic route. If we can engage them in decent vocational education and training, they can be enthused and become committed to achieving to the right levels of qualification. If it suits them, they can ultimately progress down that route to higher education.

In that respect, we are also transforming our higher education system. We are introducing variable fees and a modern system of student support, and I should also mention foundation degrees, our focus on gateways to the professions and the sector skills projects. In a modern, knowledge-driven economy, knowledge transfer is about transferring good ideas, research results and skills between universities, other research organisations, businesses and the wider community to enable us to develop the innovative new products and services that we need. That has been one of our goals. We recently announced the third phase of the higher education innovation fund, under which £238 million is being made available, and that figure has risen in each consecutive round. As I witnessed at Sheffield Hallam university the week before last, there is a host of examples of where the necessary changes are being made, with teaching and research in the university sector being applied to business situations and to developing products that can be used in a meaningful way.

One thing that I have picked up by talking to higher education providers throughout the country is that that process is working well. However, higher education institutions need to develop their skills and the profile of their personnel, so that they not only do the excellent knowledge-transfer work, but develop the entrepreneurial skills necessary to exploit that potential commercially. Many higher education providers are looking at that at the moment.

Higher education has a great deal to offer employers. By accepting the need to think afresh, the sector has rightly opened itself up to the potential benefits that partnerships with business can bring.There has been a transformation in thinking on the issue within our universities. More than 89 per cent. of higher education institutions now have a single inquiry point for businesses, and higher education institutions already engage with employers to a significant extent— for example, in providing continuous professional development. However, I should add that the higher education sector could expand that. The sector currently receives about £130 million of business in continuous professional development, but the market for that amounts to about £4.5 billion, so the sector could undertake significant further development.

Foundation degrees are a crucial element in our efforts, and they are beginning to be a significant success. They are higher education level qualifications that are designed alongside the employer, with their needs very much in mind. Already 50,000 students will be undertaking foundation degrees by the end of the year. Our aim is to have 100,000 such students by the end of the decade, which is achievable.

We are also transforming the further education sector. That is the right thing to do. FE colleges and skills providers are important for achieving our objectives, and we want to support them to maximise their impact. The recent Foster review of further education has been significant. In my experience of talking to people from colleges throughout the country, the review has commanded widespread support. Its focus is on the vocational, more specialised mission in further education colleges. That is the right way forward, and the Government aim to respond shortly to the issues that the review raises.

We want the further education sector to work closely with employers to identify their training needs, to develop business solutions tailored to their skills needs, and to involve them directly in the design and delivery of learning provision. That type of engagement has real benefits for everyone concerned. Employers get the services they want; colleges keep up to date with local business and vocational needs, thus providing a valuable additional source of income; and, crucially, learners get the training and skills that their employers will require of them when they enter the workplace.

Photo of John Hayes John Hayes Shadow Minister (14-19 Reform and Apprenticeships)

I appreciate the Minister's comments on the Foster report. He is right about the essential link between education and employment. However, does he appreciate the size of the mountain that we have to climb? Sir Andrew Foster comments that

"the relationship between employers and FE colleges is patchy and needs to be significantly improved."

We all want that to happen, but will it happen, and what time scale do the Government have in mind for making serious improvements in that relationship?

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Education and Skills

The hon. Gentleman anticipates the next couple of things I was going to say. It is crucial that we identify how we are going to respond to Foster, and over what time scale.

From all my experience—I have made a virtue of going out and about in the past nine months to talk to as many colleges as possible—I know that an enormous amount of good work is being done. However—this cuts to the quick of the hon. Gentleman's intervention—Ofsted's 2004 report on colleges and employer engagement identified that only about half the colleges surveyed undertook significant work with employers. While the Learning and Skills Council national employer skills survey of 2004 found that 95 per cent. of employers surveyed that used their local colleges were happy with those services, only 15 per cent. of employers surveyed make use of their colleges when seeking solutions to their training needs. That is not a situation that any of us can be comfortable with. I do not think that FE colleges are comfortable with it. We need to do more.

The LSC's agenda for change, which is already in place, recognises the need for change and promises to work with colleges to create colleges that are valued by employers as their partner of choice for developing the skills they need. The train2gain initiative to which I referred earlier and which is being rolled out nationally from this year, will help further. Driven by the funding lever, colleges that want to balance their books and continue to expand will have to prioritise that vocational mission and that engagement with employers at the local level.

Photo of David Drew David Drew Labour, Stroud

I apologise for missing the first few minutes of my hon. Friend's speech. Will he have a word with his colleagues in the Department for Work and Pensions? Difficulties with some of the work-related courses have led to a massive shutdown of provision by the college and work providers in Gloucestershire, my part of the world. The DWP seems to have been finessing a lot of its provision by reducing it and not coming completely clean about what it wants. That has delayed things and is causing a great deal of problems. Will he take that up with the DWP? It is causing alarm and will damage the very things that he is talking about.

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Education and Skills

I take my hon. Friend's point. I assure him categorically that I am in regular conversation with my colleagues at the DWP. It is crucial that we work together on that agenda. At the end of the day, somebody seeking access to a training place does not give a tinker's cuss whether the Department for Work and Pensions, the Department for Education and Skills or Uncle Tom Cobleigh and all happen to be funding them. My colleagues in the DWP share the view that joined-up government is needed on such issues, and we shall prioritise that.

I return to train2gain. It is a significant element of what we are undertaking. We in the Department are beginning to think about whether in the longer run—I hasten to add that the resources are not available yet—we ought to build a higher education dimension into that programme. If we say, properly and radically, that the state has a responsibility to intervene at level 2, and if we want to increase participation levels in the higher education sector to what we know we need, we need to ask whether there is a way to build a higher education element into that process. We should consider that.

Overall, the transformation is beginning to yield benefits and create opportunities for the future. We are creating through education and training the foundation for personally fulfilling and economically productive working lives, and providing young people with the skills they need to enter and to progress in work. We are re-engineering qualifications to provide a foundation for progression, to better meet the skills needs of employers and, crucially, to develop individuals' employability. Employers are being involved in course design, content assessment, teaching and learning styles through apprenticeships—a key element of our employer engagement programme—specialised diplomas, and the review of qualification frameworks such as unitisation, modularisation, credit accumulation and new methods of accreditation.

Photo of David Drew David Drew Labour, Stroud

On apprenticeships specifically, I have evidence of employers that are committed to modern apprenticeships but seem to take on too many apprentices. One company had 20 apprentices out of a work force of 50. It was able to do so by losing some of the apprentices during their apprenticeships. That meant that people signed on at college were unable to pursue their college courses because they had lost their apprenticeships. That is not acceptable. I have no reason to believe that they were poor apprentices, although they may have had arguments with their employers. It is a negation of encouraging young people through the process if they feel that they are being sacrificed in favour of someone better. It is time that we looked into the matter and did something about it. Does the Minister accept that it is a problem?

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Education and Skills

My hon. Friend is right. Improving apprenticeship completion rates is a key priority for us. We have improved; we have reached a level of about 40 per cent. However, if we compare that with evidence of practice elsewhere in the European Union, we see that we have a lot further to go. We must prioritise that.

Recently, I hosted an event in my constituency promoting apprenticeships. One of the companies actively engaged on the issue gave a presentation in which the managing director described how he tells his line managers, "Take these people on and, after six months, make a judgment about whether or not they can succeed.If you get them through the apprenticeship and then say that they cannot carry on to full employment, you, the line manager, have a problem." That is the right way for companies to engage on the issue. They should not seek a short-term, quick fix, but see apprentices as a route whereby people are brought in, and companies mould their own people and develop their potential for the benefit of the organisation.

We are strengthening the role of employers in sector skills councils by encouraging them to transform the interface between employers and education and training, through informing demand at national, regional and local levels, and creating a truly demand-led system at every level. That is the right way forward. Of course, we must ensure the effective delivery of all that we have in hand. That will require a strong, combined effort by all who are part of the skills alliance partnership—both skills demand and supply will be involved—at national, regional and local levels.

We need a vision that takes us beyond our immediate delivery objectives. The high level of work force skills capability that we will need to compete effectively in world markets in 2020 and beyond will require a fundamental step change in our attitudes to skills. If we look at the best examples of what is already being achieved by partners, we can see what could form the foundation of that vision. The benefits will accrue for everyone—employers, individuals and society—which means that everyone has a stake in making that transformation.

There is an important role for Government: to create the infrastructure and environment and to tackle the areas of market failure. Employers and individuals will also have to play their part by participating and contributing to the costs. The oft-quoted figure is that employers spend about £23 billion a year on training. Speaking bluntly, that needs to be increased. That was made clear in our skills strategy White Paper and it has been confirmed in the Leitch review.

We are shifting on the issue. For donkey's years, we have heard employers say that the education and training system does not fulfil their demands. We are now moving to change that situation. We are putting the needs of employers centre stage, and, to put it crudely, it is put up or shut up time for employers. They must engage in the process and help us to make things a reality. I strongly sense that the vast majority of them want to do that.

I am not neglecting the role of the Government for a minute. They continue to invest on a massive scale in supporting employers to achieve the best results. In 2005–06, the Learning and Skills Council spent £7.6 billion, excluding school sixth forms. Employers should accept shared responsibility for developing the skills of their work force, commensurate with the benefits that they receive for funding the higher level skills and qualifications that bring more substantial financial rewards—increased productivity and profitability for employers, and increased wages for individuals.

We will need to rebalance the contributions between employers, individuals and the state. It is therefore important to set clear priorities for public spending. Even though we have increased public funding significantly from the levels that we inherited from the previous Government, it will still be finite and needs to be prioritised. That is the right thing to do. In that real sense, we need a cultural change about who pays and who makes a contribution. The international comparisons about what the individual and the business contribute towards education and training show that the UK lags significantly far behind. We need a transformation in such areas.

On the role of higher education institutions in local and regional economic development, universities are now major players in their local economies. I recently visited Leeds university, which has an annual budget of £170 million, 30,000 students and several thousand employees. The idea that an organisation such as that is not a major player in the local economy is nonsense. It is welcome that universities increasingly see their role as that of key players in the local economy—Leeds university certainly does. That should develop and go further. Higher education institutions are, and should be, involved in regional skills partnerships and regional development agencies in developing the city agenda. The days of a university sitting in, but apart from, the local community are going and will very much be long gone.

There is also a key role for further education colleges. In my experience, FE colleges are already strongly embedded in local economic community decision making. The principal of Harlow college chairs the local strategic partnership. The FE college is much engaged in the local community in a series of decisions, including economic regeneration.

The experience of my college in Harlow is far from unique. It is becoming the practice and model throughout the country. Overall, we are seeing a change in further and higher education institutions. They are becoming more involved in business, economic development and community planning. I believe fundamentally that that is a force for good. It is a development that the Government strongly support.

Photo of Boris Johnson Boris Johnson Shadow Minister (Higher Education), Education, Shadow Minister (Business, Innovation and Skills) 3:05 pm, 2nd February 2006

I congratulate the Minister on securing this important debate and on the great verve with which he set out his case for greater emphasis to be placed on training and improving our skills base. He made his case passionately. No one in the House could disagree with him. I agree with 95 per cent. of what he had to say. However, when will he live up to the Government's promise about further education colleges and make sure that students at Henley college are funded on the same basis as students elsewhere in Oxfordshire and receive the same capitation support? I hope that he will return to the matter when he sums up.

I admire greatly the urgency with which the Minister put forward his argument. I want to alert him to a detail in the Conservative party's arrangements. Such is the importance that we attach to higher and further education that we have divided the business of responding to his great brief. I intend to cover only higher education. My learned colleague, my hon. Friend Mr. Hayes, will deal with further education. I hope that he will catch your eye, Mr. Amess, in due course and get some of the balls back over the net on the further education front.

I want to deal with the relationship between the employer and higher education. It is an important subject and, in a collegiate sort of way, I want to tease out the Minister's thinking and find out how far I can encourage him to agree with me about certain matters, and see whether he agrees with me as much as I agree with him. About 150 years ago, Cardinal Newman produced a definition of a university and, as the Minister will doubtless recall, he said:

"It is a seat of wisdom, a light of the world, a minister of the faith, an Alma Mater of the rising generation".

He added:

"It is a place where inquiry is pushed forward, and discoveries verified and perfected, and rashness rendered innocuous, and error exposed, by the collision of mind with mind, and knowledge with knowledge".

Cardinal Newman also said that a university is

"the place to which a thousand schools make contributions; in which the intellect may safely range and speculate, sure to find its equal in some antagonist activity", and that universities are

"great centres of pilgrimage and throng", in which the student makes use of

"the ancient method, of oral instruction, of present communication between man and man", and so on. I find Cardinal Newman's vision of a university still quite inspiring, although it is completely out of date.

The story of British higher education institutions in the past 50 years has been one of fantastic success. As the Minister rightly said, it is also a story of expansion. When my parents met at university in the 1960s, not long before I was born, only 4 per cent. of relevant cohorts were at university. There are now 43 per cent. That means that our assumptions of what a university must be have changed, and the taxpayer is now paying the overwhelming share of the costs. There are about 2.3 million students at British universities. I am sure we consider that to be a fantastic investment for the United Kingdom. Higher education generates £4 billion in export earnings alone and is wonderful for students and their future prospects. However, we must ensure that it maximises the rewards for society as a whole. That is an entirely reasonable thing for this or any other Government to do.

It would be wrong to be too crudely utilitarian. At Question Time a couple of weeks ago, I made my first attempt to find common ground with the Minister. Does he share my preferred definition of academic freedom, which is the one enunciated by the great American Supreme Court justice, Felix Frankfurter, in 1957? I shall repeat it—I am sure that the Minister knows it, but there may be hon. Members present who do not. [Interruption.] Clive Efford says something from a sedentary position, which I am afraid I missed, but I shall repeat Felix Frankfurter's definition of academic freedom for his benefit, if for no one else's. He defined it as an institution's freedom

"to determine for itself on academic grounds who may teach, what may be taught, how it should be taught and who may be admitted for study."

Speaking for myself, "Ich bin ein Frankfurter", as I have had occasion to say recently. Does the Minister also subscribe to that definition? He can say so now if he chooses to, but if he prefers to reserve his position on whether he is a Frankfurter, I will happily wait and see. I think that it is a very good definition of academic freedom.

We all understand that there are many courses and disciplines that have no obvious vocational importance, but whose study may none the less be of huge benefit to the economy. At the same time, it is obviously the function of government to encourage and facilitate maximum co-operation between employers and institutions of higher and further education. There are some phenomenal success stories in that department, where synergy is taking place between employers and institutions of higher education with or without Government interference.

We all know—if not, I will tell hon. Members—what happened in the 1980s when Kumar Bhattacharyya, now Lord Bhattacharyya, arrived at Warwick university. Engineering companies were haemorrhaging jobs in the area and the future looked bleak. There was an innovative vice-chancellor hoping to make his mark, and he made Bhattacharyya professor of manufacturing systems and let him get on with it. Some 25 years later the international manufacturing centre occupied six buildings on campus, having long outgrown the department that spawned it. It is the headquarters of the Warwick Manufacturing Group, formed as a club of largely midlands-based companies that put money into the university in return for research facilities and a stream of well trained graduates. The annual revenue of the operation is well over £80 million, and more than 5,000 postgraduates are educated every year through its worldwide network of operations. I read last week that the Warwick Manufacturing Group has opened a new school in Singapore in co-operation with the Singapore institute of management.

The same phenomenon can increasingly be seen across not just the leading 19 universities but other higher education institutions. Anybody who goes to Loughborough university knows of the dense interconnection between that institution and the JCB plant nearby. The Minister will know what is going on in York, where there are incubators where people can set up cutting-edge technology and science ventures. If they go bust, too bad—they come and go. I could go on to give countless examples of ways in which universities have been at the forefront of innovation, commercial success and the devising of drugs and patents. Atracurium is an example that springs to my mind; it was devised by scientists at Strathclyde university and is now used in half of all heart operations worldwide as a muscle relaxant.

From the point of view of big business, one can see the attraction of such co-operation with universities. Their corporate laboratories are increasingly uneconomic and are closing down, and they cannot afford to have specialists in every field. We have come a long way since the days of the Bell laboratories, when AT&T had a huge monopoly and could recruit Nobel scientists in this, that and the other, and simply ask them to get on with it. No single pharmaceutical company could now afford to conduct work on all the aspects of the human genome.

We are moving away from research being carried out by great commercial interests in the privacy of their own laboratories towards what is known, in the buzz words, as open innovation. That is a wonderful development. Anybody who knows anything about innovation says that it is not a linear process; it benefits hugely from accident and serendipity, the chance running together of experts from more than one field. It might be that in the common room, or whatever turns out to be the incubator, somebody who knows about computer sciences meets somebody who knows about biology, who meets a third who has a business application in his head—that is how innovations are generated. That is why the Cambridge area now receives one eighth of the venture capital coming into western Europe, although it has only 0.1 per cent. of the population.

The Minister was absolutely on the money when he described universities as being of huge economic importance to the areas that they are in. Nottingham has 46,000 students. It used to be known as a place where bicycles, motor bikes and heaven knows what were made; now it is a place where 46,000 students contribute hugely to the economy. Such centres are the intellectual resources for entire areas and for the businesses around them.

How should we support such connections? What should Government do to encourage such synergy? What sort of principles should we apply to the question? I should like to see how far we can agree. There is no use in pretending that all universities are equally good at everything.

Photo of Boris Johnson Boris Johnson Shadow Minister (Higher Education), Education, Shadow Minister (Business, Innovation and Skills)

I see the Minister nodding, and that is a great relief to me. Sometimes, we labour under that pretence, and that leads to madness. I can see the arguments, and I am sure that everybody here can too, for spreading research funding around and for ensuring that everybody has the potential to benefit. The argument about serendipity is that one never knows what will sprout if one chucks seeds about—there is probably a biblical text about it and my hon. Friend the Member for South Holland and The Deepings will probably furnish me with it in due course.

We should also have regard to utility—the Government must be conscious of the need to maximise return to the taxpayer. That is why the top 15 Russell group universities receive some 60 per cent. of research funding and—I think that this is correct—the top four receive 29 per cent. of the total research budget. That is an invidious figure, but I am not convinced that it is the wrong way to do things.

Photo of John Hayes John Hayes Shadow Minister (14-19 Reform and Apprenticeships)

I am reluctant to interrupt my hon. Friend's eloquent flow, but it is important to get the scriptural point right. I cannot quote chapter and verse, but he will be mindful of the scriptural advice not to cast our seed on stony ground. He is making a powerful case in that respect. Does he feel that the specialism that he advocates for universities might be extended to further education? There is a sense from the Foster report that FE is doing a lot of things, but it is doing fewer than it ought to well. Perhaps he should add greater specialism in FE to his list of ambitions.

Photo of Boris Johnson Boris Johnson Shadow Minister (Higher Education), Education, Shadow Minister (Business, Innovation and Skills)

I am grateful to my hon. Friend for supplying me with the parable. The story that I had in mind was that of the sower who went forth to sow and some of what he sowed fell on stony ground and some yielded an hundredfold. It might be that that principle could be applied to FE if we are to try to produce the best return on investment. I leave it to the Minister to reply to my hon. Friend's excellent suggestion.

We cannot treat all universities equally, but in an ideal world, every university would at least have the potential to deploy its intellectual resources to the benefit of business, industry and the university, although we should not expect that to happen everywhere. We should not demand spin-offs as the price of our support. The Opposition support the higher education investment fund and believe in the principle that cash should go to universities with a track record of commercial co-operation. We should encourage the maximum co-operation between employers and the higher education sector because we face a real question about student finance, which the Minister mentioned. Everybody must think with the utmost seriousness about what we ask of our students in the next few years and the extra burdens that will unquestionably be placed on them. It is our duty to think of the most creative possible solutions.

I want to try a small idea out on the Minister. Students can be sponsored by the Army or the police when they go through higher education or get loans for their studies from them. Does he think that business and industry might be prepared to sponsor students and help with their top-up fees and the cost of their education? I am sure that this is not an original idea, but it might become an increasingly urgent issue as the higher education financing reforms come into play and students start to face considerable debt problems.

I think that everyone in the House recognises that it is good to have graduates in the physical sciences and mathematics. The Minister spoke eloquently about the problem of improving our skills base, but he did not narrow that down to the particular problems. We face a serious shortage of people who specialise in the physical sciences and mathematics. At least, everything that I read leads me to that conclusion; British business and industry certainly seem to complain about that. It strikes me that the top-up fee regime may contain the kernel of a solution to that problem in that British firms that are eager to recruit top-class graduates in the sciences and mathematics may think it worth while to support them. As an arts graduate, I hope that they would also think it worth while to sponsor arts undergraduates.

I am grateful to the Minister for his comments, and I hope that my hon. Friend the Member for South Holland and The Deepings will be able to tease a little more out of him on some of his points about further education. The greater the links between business, British employers and higher education, the better it is for employers, students and universities. I doubt whether any of us would accept that universities and institutions of higher educations are businesses or that they should be transformed into businesses or run solely for the purpose of adding to the bottom line of UK plc, but I think that we all accept that they should be run in a business-like way. We will get the most from our higher education institutions if we recognise that they are all different and that the pursuit of equality in all departments is chimerical and that excellence must come first.

Photo of Annette Brooke Annette Brooke Shadow Spokesperson (Children, Schools and Families), Shadow Minister (Education), Shadow Spokesperson (Home Affairs) 3:24 pm, 2nd February 2006

I, too, start by agreeing with most of what the Minister said. I hope that we will have a stimulating debate, and I am relieved that more people have attended, because initially as I was listening to the Minister and thinking, "I do not disagree with much of that," I also thought that interest would not last long.

However, I hope the Minister is prepared to accept that there are questions to be asked. That does not mean that we are rubbishing what the Government are doing, but surely it is right to be critical about how well particular schemes are working, or about the size of the problem. I hope he takes my comments in that way. The skills are essential to our economy and society. The link between national productivity and international competitiveness is obvious, but we also need to focus on the broader benefits that are contributing to the quality of our lives as individuals, in our communities and in society as a whole.

As the Minister indicated, the scope of the problem of our skills deficit is enormous. The Government are having to make up for lack of investment in the past in this incredibly important area. We seem to have been speaking about this matter for long enough, but it seems that it is only in the past few years, with the various strategies, that there has been a real attempt to get to grips with it. The 2004 national employers skills survey shows that one in five establishments reported skills gaps in their work force and some 1.5 million workers—7 per cent. of the work force—were described by employers as not being fully proficient.

There has been progress. The 2001 survey showed that 23 per cent. of employers reported a skills gap and 9 per cent. of the work force was described as not fully proficient. An estimated 3.5 million people go to work each day without being able to read very well. The CBI has calculated the effect of poor basic skills on the UK economy at some £10 billion per year. When talking about the large sums of money that need investing, we must have regard to the cost of not investing in this important sphere.

As Leitch reports, more than one third of adults in the UK still do not have a basic school-leaving qualification, which is double the proportion in Canada and in Germany. Some 5 million people have no qualifications at all. The Government have set ambitious targets for 2020, but worryingly it seems that Leitch's conclusion will be that even if they are met, we will still be far short of having a world-class skilled work force. The challenge ahead is getting bigger.

We have made enormous strides in expanding higher education and I congratulate the Government on that, although we are still lagging other countries. However, it is worrying—I am picking up on what Mr. Johnson said—that a report last year by Manpower estimated that just over half of graduates felt that they were entering the work force with the necessary skills, while only 37 per cent. of employers were satisfied that the new graduates had the right skills for the job. They are likely to acquire those skills on the job, but even so, that is a worrying gap.

I am afraid that I am going to refer to some uncorrected evidence from the Public Accounts Committee last week—I believe I have to tell the House that—from an interesting sitting in which the Committee questioned the National Audit Office report on employers' perspectives on improving skills for employment. Mr. Bell quoted the Leitch report, talking about the

"tripartite responsibility on skills development".

That is a good phrase, although I would have included the words "plus one", as I will explain. Mr. Bell continued:

"The individual has a responsibility to contribute to" the skills development. He went on:

"The Government have a responsibility if they want to create a healthy and competitive economy and business also has responsibility. It would be good to encourage employers not just to say 'What are the Government going to do for me?' but to say, 'How can you contribute alongside employees and Government to become more competitive?'"

The title of our debate is a bit narrow, because we have to think about the interaction between the individual, the Government and business, as well as a fourth strand, which I would add in—the providers of the skills training, whether we are talking about further or higher education or public or private provision. There is a lot involved in the issue.

The skills agenda is covered by two Departments. There is also an enormous number of Government bodies involved in the delivery of skills. That is the plus side, for those who like local delivery. However, the enormous number of bodies leads to some questions: is there effective focus on improving skills? Is money being spent to best effect? Are businesses getting the improvements they demand?

The CBI often expresses the view that the education system should ensure that people leave school with the proper skills. Obviously, we need to address that issue, but as Leitch points out, we must also harness and develop the skills of those who have already left school and who will make up an important component of the 2020 work force. Those are two big issues.

I think I am allowed to say this: it is a pity that the Government have not fully adopted the Tomlinson proposals for schools. Parity of esteem between vocational and academic studies starting at age 14 is vital. Our education system needs a fundamental overhaul, although that should be phased in. There is good news, however, as companies such as JCB and Rolls-Royce are involved in the design and delivery of foundation degrees, and other companies are involved in the development of the new vocational diplomas. So there is a lot of good news, but could we do better if we really took the Tomlinson proposals on board and were brave enough to implement his recommendations?

The National Audit Office report makes it clear that improving skills for employment and ensuring that employers get what they want require the co-operation and involvement of those employers. I shall touch on some points made by that very good report. Employers are a diverse group—that has not been picked up so far in the debate. Small businesses provide a high proportion of our total employment, and it is obviously harder for a small business—with less than, say, five or 50 employees—to provide training in the first place. There is also an enormous variation in employer-supported training across the different sectors. So, there is no simple equation; we cannot pour the money in and expect employers to co-operate more. The approach should be more targeted.

As the National Audit Office pointed out:

"Recent research estimates that, on average, an eight per cent. increase in the proportion of trained workers can lead to a 0.6 per cent. increase in UK productivity."

I think that the Minister quoted similar figures. Given all the benefits and the effect throughout the economy, can we afford not to invest? Obviously, training is expensive, so what will make employers want to invest? They will want direct economic benefits and training that meets their needs. It is difficult to tackle the problem of the lack of level 2 qualifications, which some employers might be reluctant to invest in, and it is too easy to blame the schools system.

We need to make a breakthrough on the issue, which is why I support the strategy of focusing on young people and adults who do not have a level 2 qualification. I have said that to the Minister directly, although I do not like all the side effects of that strategy. There will be a market failure if employers do not have the incentive to invest in level 2 qualifications. I can see no other way around the problem than Government intervention in what is clearly a market failure.

A few problems, however, are thrown up by the free provision of basic skills and first level 2 qualifications. We have already heard about the impact on the other courses previously provided by colleges of further education. I am concerned that the focus on basic skills provision has cut provision of some other courses that might provide, or lead up to, basic skills in a more user-friendly way for people who have not participated in education for a long time, or who find it hard to participate. The colleges had a real point to make: the ones that are accredited for finance might not be the first stepping stone for some students or adults.

Also, much of the large amount of money that the Government allocated has been used up on high numbers of 16 to 19-year-olds, who, some say, might reasonably be expected to gain their qualifications at school. I do not think that that is a reason why money should not be invested, but while we are evaluating, we have to appreciate that there are two groups—those who have just left school and adults—and that it will take a lot of money to solve the issues.

There is also the matter of what we might see as dead-weight investment; the Government have conveniently provided an opt-out for some employers who might previously have invested the money themselves. I hope that most employers feel that their training money has been freed up, perhaps for investment in level 3. There is a more obvious direct economic benefit to a company from investing in level 3.

I hope that the Minister does not throw this question back at me, because I am generally not very keen on targets. As far as I know, the Government have not set a target for the number of adults achieving level 3 in vocational or academic subjects. It strikes me that that is a gap in the array of targets, and if a target is missing, that can lead to distortion in investment.

The Institute of Financial Services looked into the impact of the employer training pilots and did not reach incredibly optimistic conclusions, although I read the Minister's foreword on the subject. The IFS identifies only a small positive effect, and also highlights quality issues. I hope the Minister will respond on that point. Also, there is the roll-out of train2gain, but obviously there were big issues with the pilots. How will he tackle those?

On the employer training pilots, the principle of skills brokers is absolutely excellent, as is getting employers to talk to other employers. I want briefly to refer to my local college. I was employed there for quite a long time many years ago, so I am in regular contact. I asked the college for some input on its experience locally, and the principal provided me with the college's "working with employers" strategy for 2006–07. The first paragraph says:

"It is the intention of Bournemouth and Poole College to become the automatic first point of contact for employers in the sub-region, as the valued partners of choice for developing the skills of their workforce and supporting local economic development. Our clear message to employers is 'Your business is our business'."

It is a very good document, and there are some good examples in it.

I also considered the university of Bournemouth and spoke to a local leading employer, the chief executive of Hamworthy Engineering, who sits on the board of Bournemouth university and the regional development agency. All that networking and all those links are incredibly important. The university has good roots for continuous professional development.

I want to refer to a case study on Hamworthy Engineering's website, because it brings the "tripartite plus one" strategy to life:

"Mary is a degree-qualified engineer working in a medium sized engineering company in Dorset. She graduated some 10 years ago and has risen through the ranks from Junior Engineer to her latest promotion as Project Manager. Mary will manage a team of 10 people . . . and a budget of £750,000. She feels she is lacking skills and understanding in contractual law, and wants to boost her confidence by learning about management accounting. She also feels the need to update her technical knowledge in the specialised area of object oriented design. Mary works full-time so she has a limited amount of time . . . to devote to studying. Mary has embarked on her own, tailored professional development programme . . . Her employer will be sponsoring her study, as part of their staff development plan."

When Mary finishes, she will have

"achieved her personal and career aims, but also gained a postgraduate certificate in Professional Vocational Development".

That is excellent. I also have experience of incubator units, mentioned by the hon. Member for Henley, at the arts institute and at the university.

The Association of Colleges has made a few points to which I can particularly relate. It calls on the Government to adjust the pace of implementation, and I throw that at the Minister for consideration. It would like colleges to be allowed to be funded to offer qualifications in bite-size chunks tailored to local needs, rather than only long, whole qualifications that local employers may not want to buy. I have some sympathy with that argument.

The association would like national prescription, which does not fit every regional locality, to be reduced to give more local flexibility. In particular, it wants colleges to offer individuals essential stepping-stones training from basic skills to level 2.

We have mentioned the Foster review, which identifies the fact that experience of employer and college relationships is patchy, although I hope that my own local college is a good example. We also have to be aware that only a small proportion of employers have contact with FE colleges. There are important relationships with private providers, which is important. The Foster report mentions specifically the centres of vocational excellence and the skills academies, which are good examples.

This issue is a real challenge. We should look not only at the employers' perspective, but at how all four strands interact. There is an issue about how to use the money in the most effective way, although I accept that we have started from a low base. It is very encouraging that the Government are seeking to close the gap between further education funding and schools funding for the same age group, but there is still more to be done in that respect.

In the state sector, streams of money still come from lots of different directions. Can we simplify that funding? Like all MPs, I know how off-putting it is to make complicated and bureaucratic applications or bids for public funds—it takes an awfully long time to deal with the forms. We ought to be proud of how our further education and higher education colleges are developing and taking on the challenges of meeting the skills agenda. However, they need a great deal of support and a little less hassle.

Photo of Clive Efford Clive Efford Labour, Eltham 3:43 pm, 2nd February 2006

I shall speak mainly about my local further education college, but before that I want to pay tribute to my local university. The university of Greenwich hosted a business forum in partnership with me, the local chamber of commerce and the Greenwich Enterprise Board. We had discussions with a number of local businesses about the business opportunities in our area resulting from the regeneration of the Thames Gateway, the developments on the Greenwich peninsula, the investment in our local transport infrastructure—essential for Crossrail—and, of course, the Olympics. Furthermore, we have heard recently that the tour de France may pass through our borough.

There are a lot of opportunities for businesses and a lot of training needs, and the university of Greenwich was instrumental in bringing those people together. It is working extremely hard to be part of the local community and to play its part in supporting local businesses.

Last week, I visited my local community college—Greenwich community college—and spoke to the principal, with this debate in mind. I want to highlight some innovative things that the college is doing for my local community and for businesses there. The key change in further education is flexibility. For too long, we have had straight corridors of education that do not necessarily join up with the needs of businesses. Those are the forms of education that we provide and the routes that we have traditionally gone down, but when students leave college and seek a job, they find that their qualifications do not match up with business needs. That is why the Government's train2gain initiative is essential, as is the flexibility of FE colleges in recognising and meeting the training needs in their local community and marrying them up with the needs of local employers.

I will give an example of flexibility in meeting needs at community level. I have spoken about this before in the House, but it is an excellent example of the community and further education coming together. I chaired the neighbourhood renewal programme in the south of my constituency. One of the schools had a head who was very energetic and wanted to engage with the whole community, not just the primary school pupils. Her idea was to introduce an adult learning centre in the primary school. She managed to beg, borrow and steal some cash, but the neighbourhood renewal programme came along and provided the financial impetus to make the idea a reality.

I presented the prizes at the school at the end of the year. We went through the nursery year and all the years of the primary school, but then we got to the adults. In the same presentation, we gave prizes to mums, dads and grandparents who had taken part in basic skills training or family learning, or had worked for GCSEs, as a consequence of the community college becoming involved with the local primary school to provide those education opportunities for the whole community.

When I spoke to the parents afterwards, I asked what had got them involved. First, it was the mutual support from other parents in the school and, secondly, they saw their children moving on to secondary education as an opportunity for them to seek employment. One turned round and said to me, "You lay on the training and I will do it, because I am going to get a job when my child is more independent and in secondary school." Other parents wanted to improve the education of their children. By improving their own education, they were able to pass that on and assist their children. Some felt that there were gaps in their education that they had never filled, and they were going back and filling them.

In terms of raising aspiration on the whole estate, improving the opportunities for the children within the school and improving the economy—because people were making themselves more employable—I could not put a value on the relatively small sum that we put in to furnish the premises and buy the computers, but we need more of that flexibility in the further education system.

As I have already said, there are enormous opportunities in my area. The development of the Thames Gateway, the Olympics, the development of the peninsula, Crossrail and the docklands light railway coming to Woolwich mean that people will have greater opportunities to seek employment, and they will need the training opportunities to make the best of that situation.

My local FE college is also making a great effort to build links with local businesses. It provides training to 20 small businesses through the train2gain programme, as well as to 20 medium-sized businesses and 17 large businesses in a variety of sectors, including care, catering, engineering and construction. It has even trained classroom assistants, which takes us back to the school that provided the adult learning centre. Some parents there have improved their qualifications to the point where they are training to become classroom assistants—putting back into the local community some of what has been invested in them.

The large companies that are being supported by my FE college have a range of training needs in customer services, team leading, heritage and visitor services, and business administration, but the key area where the college has been very innovative in its approach is sports and leisure. The millennium dome is now owned by Anschutz and, as we speak, a 36,000-seater stadium is being built within it, which will provide a venue for one of the major events of the 2012 Olympics. In the intervening period, major sporting events, pop concerts and a range of leisure activities will be held there. There is the potential for a casino to be built in the dome, and many hotels and leisure and recreational facilities will open up in the area.

Some years ago, my FE college positioned itself to provide training in that field. It got together with Charlton Athletic football club and opened the London Leisure college, which is based in the Charlton Athletic stadium. It provides training for the whole range of leisure, tourism and recreational activities, and has also entered into partnership with Greenwich Leisure Ltd.

I am very proud about that, because when I was a member of Greenwich council, without getting too political about it, a certain Government were determined to close down many local authority facilities. One way that we got round some of our financial difficulties with our leisure centres was to set up an arm's-length co-operative, which became Greenwich Leisure Ltd. and is now one of the biggest leisure concerns in the country, as well as one of the most successful co-operatives.

GLL works in close partnership with my FE college and employs 1,000 full-time and 2,500 casual staff. It runs 50 centres and is in 12 partnerships with local authorities and businesses. The FE college in my area is its main training provider. All the training opportunities are provided in close co-operation with Greenwich Leisure Ltd. Indeed, it has one of its own leisure facilities on the Charlton Athletic site. The college provides a wide range of training opportunities in the sports and leisure field with GLL.

Across London bridge, GLL provides a range of sporting, recreational and leisure facilities. It has been invited to run facilities for local authorities as well as going into partnership with businesses in the private sector. The London Leisure college provides accredited training and statutory qualifications, including first aid certificates, the Institute of Sport and Recreation Management supervisor's certificate and pool plant operator's certificate, the Institute of Qualified Lifeguards pool supervision certificate, central YMCA qualifications for fitness instructors and the Amateur Swimming Association swimming teacher's certificates levels 1 and 2. It trains approximately 750 people a year in those areas.

The first class leisure level 1 full-time programme, jointly delivered between Greenwich community college and GLL, delivers 60 17-year-old sessional staff through three partners per year, with another 20 planned to be added in 2006–07. The first class leisure level 2 programme delivers 42 qualified 18-year-old permanent employees per year, and a further 28 will be added in 2006–07. The intensive recreation assistant academy contributes 60 new 18-plus fully qualified recreational assistants per year, and a further 180 are planned in 2006.

London Leisure college is London's leading dual employer. It offers further education collaboration and also designs and delivers learning opportunities and qualifications to meet the needs of the learner and the industry alike. In collaboration with a number of London's leisure employers—the national governing bodies of sports and the SkillsActive sector skills council, and not just Greenwich Leisure Ltd.—it is submitting a bid to the Department for Education and Skills to become the London regional hub of a national skills academy for the sport and leisure industry.

The college is one of the leading lights in its field. It has demonstrated that by anticipating the regeneration of the peninsula and the Thames Gateway. Understanding what the profile of its end-users is likely to be in terms of that regeneration, it has positioned itself to provide the training opportunities for local people that will enable them to make the most of the huge change that has occurred. Winning the 2012 bid has only added to the success of that strategy, but—there is always a but—as other speakers have said, FE colleges nevertheless face one or two difficulties.

A great deal of money is going into further education, and the changes have been possible only because of that investment. If we look back a short time, we see a completely different picture of FE—the problems were different only a few years ago. Now, the income for the college is focused on students aged 16 to 19, to the detriment of older students, which places the college in some difficulty. I want to draw the issue to the attention of my hon. Friend the Minister, because it is causing concern in FE colleges.

The college's income for the year to 31 July 2006 is approximately £18.5 million, of which £13.8 million, or 75 per cent., comes from the Learning and Skills Council. Of that—I am sorry to bombard hon. Members with so many figures—£8.8 million, or 63 per cent., is for adult learners. For 2006–07, adult funding is forecast to be reduced by £300,000. In real terms, adjusting for inflation and salary increases, that is the equivalent of £550,000. A reduction of that magnitude equates to a loss of 167 full-time equivalent students. The focus on 16 to 19-year-olds is to be welcomed, but there is a knock-on impact.

We should consider the issues in the context of the overall improvements and increasing funding. Let me quote another statistic. There has been a transformation in the unemployment figures in the past nine years. The Office for National Statistics summary for December shows a huge reduction over that time for non-seasonally adjusted computerised claims by those aged over 25 years and unemployed for more than 18 months—83.8 per cent. for the UK as a whole and 81.3 per cent. for London. That has been a consistent factor in unemployment: London has resisted the Government's attempts to reduce the rate to that for the rest of the country. There is an underlying long-term unemployment problem in London, which must be considered in the context of a massive reduction. There is still a problem, however.

Further education colleges are a key tool in tackling long-term unemployment and providing opportunities for people to train and make themselves more attractive to potential employers. The impact of funding issues on older further education students can only make tackling the underlying trend more problematic. I urge the Minister to take that concern on board. We are right to focus on the opportunities that further education can provide for young people, but we also need to recognise its vital role in providing opportunities for people of all ages who are trying to get the qualifications they need.

If the Minister ever wanted to visit Greenwich community college or the facilities of London Leisure college at Charlton Athletic, he would learn a lot and see what can be achieved in real partnership between businesses, the local authority, training providers and the local community when people have a vision and an understanding of what the community needs.

Charlton Athletic football club has been incredibly far sighted in providing for the community, in its acknowledgement of the ideas put to it by local authorities and training providers, in how it sees its role at the heart of the community as facilitating the big change that is coming about and in the active role it is playing. The further education college is the real driver for what is happening. It set up the London Leisure College to make the most of the employment opportunities that will result from the expansion of the leisure and recreation industry in the area. If the Minister wants to see that at first hand, he will be very welcome.

Photo of John Hayes John Hayes Shadow Minister (14-19 Reform and Apprenticeships) 4:03 pm, 2nd February 2006

What an immense pleasure it is, Mr. Amess, to contribute to a debate under your chairmanship, and how appropriate it is that a patriot like you should be sitting under a portrait of King Alfred. Whenever I think of King Alfred, I think of my constituency and the noble town of Crowland, the birthplace of Hereward the Wake, but that is a matter for another debate, another time.

I have three things to discuss in the debate: engagement, appropriateness and effectiveness. We have already heard a good deal about those, by allusion. I want to end my remarks by speaking about a dream—not "The Dream of Fair Women", like that of Henry Williamson, although like you, no doubt, Mr. Amess, I have had many dreams of fair women—but a dream about a future that is skilled, in which we can deliver the parity of esteem that Governments of all political persuasions have sought over decades and perhaps a generation, but certainly during my lifetime.

Engagement in education and training is a matter of profound concern, with which the Minister dealt at some length. My hon. Friend Mr. Johnson also dealt with it. It is true that there is a high level of engagement in comparison with previous years and that 75 per cent. of 16 to 18-year-olds are in education or training. However, the Minister will be as concerned as I am about what are rather unfortunately described as NEETs—young people not in education, employment or training—and will, I hope, discuss them in his concluding remarks. The 10 per cent. figure masks those about whom we do not know—Connexions has no real record of them and is not certain where they are. To some degree, the figure also hides regional variations. In the north-east of England, for example, the number of those who are not engaged in education, employment or training rises to about 20 to 25 per cent. of the relevant young people. Engagement among young people is therefore vital.

I have already mentioned engaging groups that are hard to get at. In an intervention on the Minister, I mentioned my concerns about older potential learners—those who perhaps do not have basic skills. The report from the Public Accounts Committee on those who are innumerate and illiterate, which we received last week, was shocking. It showed that tens of millions of our citizens are innumerate or illiterate, and that is a significant problem in my constituency. However, in addition to those people who need to re-engage to gain basic skills, there are others who need to be reskilled to meet the demands of a rapidly changing economy. As I said in my intervention, all political parties and all hon. Members present will be aware of those difficulties. I think that the Minister will also be aware of them, and he might want to say something more about the issue.

Also on engagement, there is the matter of the completion of apprenticeships. The Minister said that apprenticeship numbers have risen, and they have. The Government are to be congratulated on that, but the problem of completions remains. It is, in part, a feature of the nature of the placements. In the retail sector, for example, completions are a bigger problem than in some of the more traditional skills areas, such as construction and engineering.

The problem might also be a feature of the practical issues involved in people getting to where they need to be. In an area such as Lincolnshire, in a glorious place such as South Holland and the Deepings, even the delight of living in the fens is mitigated to some degree by the difficulty of getting about. Travelling 10, 15 or even 20 miles to engage in education or training can be a fairly arduous business for a young person. That makes it quite difficult to maintain engagement, particularly over a long time, and I am told by the experts in the field that that can affect completions on education courses and apprenticeships. I am not really surprised by that.

There is also a difficulty—I sense that this is an aside, Mr. Amess, but it is relevant—in terms of vocational education for younger people. The Minister will know that, in the 14-plus group the business of engagement between colleges and schools in rural areas of the kind I am thinking about is sometimes inhibited by the difficulty in getting young people to where they need to be. I shall talk, when I speak of my dream, about bringing learning to the learners. That is a critical challenge for all of those of us who are interested in the subject.

Yesterday I was speaking about such matters with the Minister's esteemed junior colleague, the Under-Secretary of State for Education and Skills, Phil Hope who is also enthusiastic about them. We were talking about construction industry skills and I was able, although not pleased, to point out to the statutory instrument Committee that, during the 1970s, 100,000 people were trained each year in a range of construction industry skills, but that, by 2004, the figure had declined to fewer than 40,000.

The problems of engagement are a real issue in certain sectors. That is significant because of the need, for example, to build houses. As Kate Barker pointed out in her report on housing supply, one of the inhibitors of her plan to build many more houses, which the Government have, I think, largely welcomed, has been the lack of skills in that sector. We need to talk about engagement on a sector-by-sector, area-by-area basis and to consider what might act as disincentives to people engaging in and completing education and training.

The second matter is appropriateness. The National Audit Office report has already been referred to and I do not want to be tedious in what has otherwise been a lively and interesting discussion. However, it is worth pointing out that the National Audit Office makes it absolutely clear that, from the employer's point of view, there are barriers to improving employer engagement in training that can be summarised pretty straightforwardly: employers want a simple way of getting the best advice on skills training for their staff; they want appropriate training that meets their needs; they want supply to be in close line with demand; they want more incentives to train their staff; and they want influence in skills training without getting weighed down by bureaucracy.

The report states:

"Through its Agenda for Change, the Learning and Skills Council is seeking to enhance the reputation of colleges so that they are more often the partners of choice for employers looking to develop their workforce. A number of factors can, however, undermine the effectiveness of training in tackling skills shortages: for example, qualifications available may not necessarily directly meet employers' needs; in a particular geographic area there may be shortages of skilled trainers; and there may be a need to use expensive capital equipment for training which is not available."

So, we know that the report deals with some of the issues of appropriateness that the Government need to tackle now and later in the implementation of their policies.

The Foster report has also been mentioned and it deserves amplification. We have talked implicitly about the link between further education, higher education, other training providers and commerce and industry. The Foster report makes it clear that there are significant problems with further education both in the terms that I described earlier—the fact that FE colleges often try to do too much, and that is why I mentioned greater specialism—and in terms of FE's links with the world of work. Those links vary. We heard about some of the good colleges that have managed to develop effective links with the world of work—the businesses in their area—but the Foster report makes it clear that that effectiveness is patchy. We need to do much more work to ensure that what we do in the education system—not just colleges but also secondary education—is closely linked to the demands of the local employment base and the assumptions of local employers. I may talk later about how we might achieve that but it is certainly the imperative that seems to shout loudly from Sir Andrew Foster's observations about further education.

It would be remiss of me not to say something about effectiveness. Hon. Members will worry about the barriers to engagement and completion in the difficult-to-get-at groups, and about the deficiencies in basic skills that were identified by several pieces of recent research. We anticipate that they will be addressed by the report on the Leitch review, which will be published later this year and to which we are all looking forward with bated breath.

According to the Government's own Leitch review of skills, even if they meet their own target on skills by 2020:

"At least 4 million adults will still not have literacy skills expected of an 11 year old, at least 12 million will be without numeracy skills at this level (equivalent to three in ten adults) . . . 6.5 million adults will not have qualifications at the equivalent level to five good GCSEs. In comparative terms, the UK will continue to be an 'average performer'."

Those comments are shocking. The problem that we face is not simply that the lack of basic skills inhibits quality of life for the individuals concerned. It also has a collective effect on our competitiveness. We need skilled people to be effective economically and we need a skilled work force.

I hinted in my earlier interventions that the problem is exacerbated by demographic factors. The population is ageing, and that is adding to the skills shortage. It is almost as though the Minister is desperately trying to pour more water into the tank while it is draining out at the other end because of the changing demographics. It might be draining out faster than he can refill it. I would not want him to end up with a dry tank in terms of skills. He needs a rich, full, bubbling tank of skills so that he can draw on it.

Photo of Boris Johnson Boris Johnson Shadow Minister (Higher Education), Education, Shadow Minister (Business, Innovation and Skills)

I confess some perplexity at my hon. Friend's metaphor. Surely the tank is getting fuller and fuller at the deep end.

Photo of John Hayes John Hayes Shadow Minister (14-19 Reform and Apprenticeships)

I do not want to get into hot water by rising to my hon. Friend's intervention and having to explain my metaphor to a degree that would test its validity beyond reason. Suffice it to say that the changing demographics mean that more people are older and therefore less likely to be engaged in the work force. It may also mean that even though the skills of those who are actively employed are being increased, more people are retiring than are coming into the work force. I hope that I have made that sufficiently clear and that my hon. Friend now understands it.

As an aside, while my hon. Friend was fine dining at Balliol college, Oxford, I was engaged in my higher education at Nottingham university, which he revered in his earlier contribution. I was delighted: not only did he detail my former alma mater—the place of my education—with such reverence, but Clive Efford mentioned my birthplace, Woolwich, and the place that I was educated, Eltham. It has been like drowning: I have seen my life flash before my very eyes as we have deliberated on these important matters. I will, I hope, emerge from the tank without drowning. I also hope that the Minister, having followed my advice, will emerge from it too.

There are real worries about basic skills, and their effect on individuals and the economy. In addition, there are worries about the appropriateness of placements from further education colleges into the work force. I raised the issue yesterday with the Under-Secretary of State for Education and Skills and he tells me that he anticipated my fear. I think that he said that he had civil servants working on it as I spoke. That is another aspect of the difficulty of the link between further education and the world of work.

Annette Brooke said that fewer then 40 per cent. of employers think that the current arrangements produce a work force skilled to do the job. I think that she drew on a survey that was completed last year. That again raises questions about effectiveness, which I hope the Minister will deal with. It is perhaps worth mentioning that the standard of training currently offered in the construction industry may make the situation worse; 40 per cent. of those who provide training were judged by the adult learning inspectorate to offer inadequate training, and only 34 per cent. of trainees in that sector complete their apprenticeship.

Therefore, there are issues to do with effectiveness, engagement and appropriateness. We have had a useful debate that has illustrated the broad consensus about the nature of the challenges. They were eloquently identified by my hon. Friend the Member for Henley—and by me, but with much less skill.

Let me move on to the dream. I know that Members have been looking forward to this; I can see that my hon. Friend has been. In the short time that I have been studying these matters in detail, I have had an emerging vision: it is of greater synergy between all the elements that provide training, education and employment.

I invite the Minister to come to my constituency after he has been to Eltham, or vice versa. He could visit my birthplace in Woolwich—that would be a treat for him—although he would have to travel there from Eltham. He can then move on to Holbeach in the Lincolnshire fens. When he is there, he can visit the Holbeach campus, which my hon. Friend is going to visit on 3 March. There he will be able to see a marvellous example of the work of local FE colleges, the university of Lincoln and local employers drawn largely from the food industry. At that place, those agencies are collaborating to provide high-quality skilling, a high level of expertise that would not normally be available in Holbeach, and a service to local businesses that they invest in, but that they would not have the resources to be able to deliver on their own. That provides a strong example of the synergy I envisage, but it is not the only one, of course. Members present will have examples from their own areas. The point is that there is good practice in this regard, and we need to examine ways to export that.

The second part of my dream is about specialism. I have mentioned it twice already, but there is no harm in repeating a good idea. I have increasingly come to the view that the kind of specialism that my hon. Friend mentioned in respect of higher education—and which has long been the experience in higher education—needs to be considered more thoroughly in respect of further education. That happens to some extent already; certain FE colleges get a reputation for doing particular work. However, we could go further; for example, where a part of the country has a dominant business sector—I have mentioned the food industry in my area—it would be entirely appropriate for local FE provision to work in tandem with that specialism. Expertise of national, or international, quality might be developed around that kind of partnership.

There are also some schools that are doing excellent work in respect of vocational education. I draw hon. Members' attention to the Gleed girls technology college in Spalding. It is a splendid place. I was recently there, and I spoke with the new headmistress—I do not like to use the modern idiom, so I do not say head teacher—and she told me that the school has recently acquired vocational specialist status. It is looking at ways to work afresh with local further education and local industry. One of the problems in an area such as Spalding is that the biggest further education colleges are a fair way off—Boston, Stamford, Peterborough—so giving young people the opportunities that they deserve is quite difficult in practical terms.

That is what I meant about bringing learning to the learners. We must think imaginatively about how to make the best use of technology and the provision of resources and expertise, so that people from the age of 14—I might even argue that it should happen from the age of 11, but that is a debate for another day, rather like the one on Hereward the Wake—can be engaged in a synergistic process running through to the world of work. That process might involve specialisation reflecting the local opportunities available to people as they go through education and training and into employment.

It is always good to know the weaknesses of one's own ideas. The risk is that the process would reinforce local employment patterns. Where the local employment base is narrow, it might discourage the development of other opportunities. However, the benefits outweigh that risk. The process would ensure a better match between supply and demand in terms of skills and economic need, and would prevent duplication or even contradiction among schools, colleges, other providers and local industry. I should like the Minister to consider specialisation.

I should also like the Minister to consider status. I mentioned parity of esteem. We need to raise the status of vocational education and skills. Four hundred years ago, most people were illiterate, but they were not uneducated. The modern notion that education is exclusively about book learning is just that: a modern notion. I want us to value the skill of people's hands as well as the skill of their minds. When we look at the place in which we now sit, with all the beauty that it encompasses, and imagine the skills that created it, how can we believe that those involved were anything less than highly educated?

We need to raise the status of such skills. That is easy to say and difficult to achieve. I would happily join the Minister and Members of other parties—we must draw the line somewhere, but on this occasion I am prepared to include the Liberals—in thinking about how to raise the status of skills and vocational education.

Photo of John Hayes John Hayes Shadow Minister (14-19 Reform and Apprenticeships)

I am delighted to give way. Never waste an opportunity to bait a Liberal.

Photo of Annette Brooke Annette Brooke Shadow Spokesperson (Children, Schools and Families), Shadow Minister (Education), Shadow Spokesperson (Home Affairs)

It would be enlightening if the hon. Gentleman could tell us the current policy thinking of the Conservative party on the Tomlinson proposals.

Photo of John Hayes John Hayes Shadow Minister (14-19 Reform and Apprenticeships)

I can see that I have upset the hon. Lady; she cannot deny it. My friendly jibe has enlivened her, and she is now trying to catch me out. I think that that is what she is up to.

Suffice it to say that my hon. Friend the Member for Henley and I, who are new to this job, are ceaseless in our attention to such matters. We are listening and learning; we are studying existing policy and considering the challenges and potential solutions. The hon. Lady will not have to wait long before exciting policies emanate from this side of the House. They will not only command the attention of the wider world but encourage support from all political parties, even her own.

Photo of Clive Efford Clive Efford Labour, Eltham

Will the hon. Gentleman give way?

Photo of John Hayes John Hayes Shadow Minister (14-19 Reform and Apprenticeships)

Hon. Members are trying to make me digress, but that will earn your anger, or at least your rebuke, Mr. Amess, so I shall not risk it. If the hon. Gentleman is going to be completely on message and on subject, I will happily give way to him, because he represents dear Eltham.

Photo of Clive Efford Clive Efford Labour, Eltham

I am grateful to the hon. Gentleman. I just could not resist the temptation. If there is about to be an announcement from the Conservative party, it is likely that we will have heard it before. It is going to be one of ours, is it not?

Photo of John Hayes John Hayes Shadow Minister (14-19 Reform and Apprenticeships)

My hon. Friend the Member for Henley and I are fully signed up Cameroons, so the hon. Gentleman cannot catch us out like that either. We understand the need for permanence; but we understand equally the need for relevance. Let me leave the matter there.

I look forward with hope to a new generation of craftsmen, proud and valued, creating beautiful things for our people and to a new generation of Britons, enlivened by learning and enriched by their skills, rooted in and serving strong communities. I know that the Minister in his summing up will embrace my vision, move towards our position and translate that adjustment into a new and exciting range of policies, which he is about—I assume—to announce.

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Education and Skills 4:31 pm, 2nd February 2006

With the leave of the House, I shall take this opportunity to sum up the debate. I agree with Mr. Johnson, who led for the Opposition, that the debate has been constructive. There has been strong consensus, and that should not be a cause for concern, because it broadly shows—I would say this, would I not?—that the Government's policy is moving in the right direction. It probably shows also that in the areas in which we are deficient, the problem is sufficiently difficult that it is not easy to come up with other propositions. However, I certainly welcome the debate.

The hon. Gentleman mentioned the funding gap between further education colleges and sixth forms in schools. It has been an issue for a good period, and during our time in government, we have sought to tackle the problem. From talking to FE principals throughout the country, I sense that the announcement made by the Secretary of State at the Association of Colleges conference in November has been welcomed. The commitment during the next financial year to reduce the funding gap from an estimated 13 per cent. to 8 per cent., then to 5 per cent., and then, as resources allow, to move beyond that has been welcomed. There are some anomalies between the funding of school sixth forms and FE colleges, and we have a commitment to tackle that issue.

The hon. Gentleman compared the proportion of young people going to university today—43 to 44 per cent.— with the proportion when his parents went to university. We should all regard that expansion of higher education as a force for good and something to celebrate. Inevitably, however, it brings in its train a debate about how to fund such a massive expansion. That is why we took the difficult but justifiable decision to introduce this year a new finance system with variable fees, which is backed up by an improved system of student financial support.

The hon. Gentleman asked whether "Ich bin ein Frankfurter". I want to consider the details of that definition carefully. However, I concur with the broad thrust of his argument that there are significant benefits from university autonomy in this country. If we compare the model in Britain with those elsewhere in the world, its quality, independence and investment, and the connections that it has brought, have been of significant benefit. In the Hampton Court declaration during our recent presidency of the European Union, we underlined the importance of the role of universities in helping the European Union to meet the Lisbon goals, in terms of increased productivity and prosperity. We should be working on the British higher education model and sharing it with our colleagues elsewhere in the European Union, because it has been a success story.

I agree that not every course has an immediately realisable vocational outcome. Clearly, there should be a link with the world of work and business, but not every course will immediately have that link.

I am saying that I agree far too much today, but I also agree that not all universities are equally good at everything. The sector is diverse, and that is a strength in our higher education system. Different institutions pursue different specialisms, which is to be welcomed.

The hon. Gentleman commented on our research funding approach. Government policy is to fund excellence, but through that process there has been a greater concentration of research in terms of the number of institutions covered. That process is not unique to Britain; it has been taking place across the advanced world. However, the higher education innovation fund initiative is a means of tackling that issue.

However research is distributed, one of the key issues is to ensure that institutions that are research intensive have good links with those that are not, so that academics and teachers in non-research intensive institutions have experience of and contact with departments that are undertaking significant programmes of research. There is a link between research and teaching and a benefit to be gained from that.

The hon. Gentleman went on to talk about whether there is a model through which to get more businesses to contribute directly to the costs of higher education. We would like that to develop. With the Secretary of State's funding letter to the HEFCE, which was made public this week, we give a strong steer in that direction, not so much to get businesses to fund students while they go to university, although I encourage businesses to do that—there is money in the settlement for the forthcoming financial year—but to encourage, on a match-funding basis, much greater engagement by employers directly with higher education institutions. If we can get a greater match between business and universities, and a university can come in, work with a business and accredit existing training and educational programmes to contribute towards a higher education qualification, not only will that mean significant upskilling within the economy and particular sectors, but it is one of the most effective things that we could do to broaden participation.

The hon. Gentleman commented on the importance of STEM subjects: science, technology, engineering and mathematics. There are concerns, but in this academic year there has, for the first time in a while, been a significant and welcome uplift—about 10 per cent.—in students undertaking those subjects. We need to have a better understanding of what has gone on with teaching and learning in science. There are 120,000 more students studying science-related degrees than there were eight years ago, but there has been a shift in the kind of science that students are studying. Some of that is in our control, but some of it, frankly, is beyond our control. It is to do with how the media and the worlds of literature and television present science, but we can do more. One of the most significant things that we can do is to highlight the direct financial benefit for a student undertaking a degree in a STEM subject: the graduate earnings premium is about 30 per cent. more than that for students undertaking degrees in non-STEM subjects.

Annette Brooke spoke about the expansion of higher education and how we compare internationally. We are still behind on a comparable basis. According to figures provided by the Organisation for Economic Co-operation and Development, we are about 5 per cent. behind, so we need to do more to encourage young people and mature students to go into higher education, but it is a bit more complicated than that. When the completion of courses is taken into account, we are doing much better than the initial figure suggests, because we have very good completion rates—some of the best in the advanced world. In some countries, the institutions get an awful lot of people through the front door, but a huge number of them drop out. We need to do more, but we need to look carefully at the figures, too.

The hon. Lady referred to Tomlinson. I came to this debate as an Education Minister after Tomlinson, and I find the subject a bit theological. We have implemented 90 or 95 per cent. of what Tomlinson proposed. Where we disagreed was over the continuation of A-levels. If she is advocating the scrapping of A-levels, I understand her argument, but happen to disagree with it. We should focus on the new diplomas—on bringing them in, making them worth while, and getting as many young people as possible who want to do them to choose them.

Photo of Annette Brooke Annette Brooke Shadow Spokesperson (Children, Schools and Families), Shadow Minister (Education), Shadow Spokesperson (Home Affairs)

What plans does the Minister have to get parity between A-levels and the new diplomas?

S

Universities have one aim when selecting applicants - to...

Submitted by Sam Evans Continue reading

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Education and Skills

As we move forward with the roll-out of the diplomas, we are working proactively with higher education institutions, particularly the research-intensive ones, to get them to recognise the diplomas and to see them as a clear route of access to higher education. That will be their decision, because admissions decisions are autonomous within universities. If we can do that—if the institutions regarded as the best in the country are seen to recognise and to value the diplomas—that will send out a strong signal to young people undertaking those qualifications.

The hon. Lady referred to what I would describe as the stepping stone provision issue in adult education. By statute, we fund at level 2, but what about the courses that need to be undertaken in order for someone to get a full level 2 qualification? Under the existing framework, if a course of that stepping stone-type is properly mapped against the national framework, it is funded. We need to ensure that that happens locally. There is another issue that I am considering. It has been put to me repeatedly over the past nine months that, particularly in disadvantaged communities, people sometimes progress at a slower rate. At the moment, there is a statutory cut-off for funding at the age of 19. Arguably, there is a case for looking into that, and we are considering the issue.

The hon. Lady referred to dead weight. Where the state steps in and funds the full level 2, so that the employer who was funding that is no longer required to do so, part of what we—the Government, learning and skills councils and colleges—have to do is work with employers actively to encourage them to trade up and displace that investment to level 3 and indeed beyond.

The hon. Lady asked whether we should have a target at level 3. The reality of the situation is that sector skills councils will consider the level 3 needs in each sector, through their sector skills agreements. She is right to say that we will need level 3 qualifications in 2012 for two thirds of jobs. We are prioritising level 3 training at the moment, with two pilots, one in the west midlands and one in the north-west. Certainly, we will look into that issue again when Sandy Leitch reports later this year. However, the debate about level 2 and level 3 is sometimes artificially polarised. If we look at the figures, £457 million is spent on level 2 and £418 million on level 3, so there is not such a disparity in funding commitment, contrary to what is sometimes suggested.

The hon. Lady referred to the concerns of the Association of Colleges about the pace of change in terms of the funding strategy that we are pursuing. All I will say is that, when I came to my post last May, one thing that I heard time and again was that colleges wanted information about the new financial settlement as quickly as possible. We listened and responded. In relation to the funding letter to the Learning and Skills Council for the coming financial year and its being made public, that is the earliest that that information has ever gone out, according to my understanding. Not only have we done that, but we have given an indication of where we are going for the following year as well. That gives further education colleges the ability to plan ahead, knowing what the terrain is likely to look like.

My hon. Friend Clive Efford is a champion for his local college and I pay tribute to the work that he does in that area. I take his point about flexibility. One of the success stories of the further education sector is its flexibility and willingness to respond. I take his points about Greenwich Leisure. Representing a constituency not far from his, I am aware of the work that it undertakes.

I welcome my hon. Friend's acknowledgement of the step change in funding that we have brought to the further education sector in the past years. He raised questions about the prioritisation of funding. I am keen to get across that this is not a simple divide between 16 to 19-year-olds and adults. We are prioritising 16 to 19-year-olds, but we are also prioritising adults, through the national employer training programme, or train2gain, and through adult basic skills. Again, colleges say that their adult education budget is being reduced. Part of that is because of a shift in priorities, but part of it is because they have yet to build into their budget allocations the money that will be forthcoming, which they can bid for, under train2gain, which totals £238 million for the coming year. Colleges will not yet have built that sum into their planning assumptions. People need to see the whole picture before reflecting on what the overall financial settlement is.

With regard to my hon. Friend's last point, I will bear in mind his invitation to see the good work being undertaken by the college and Charlton Athletic, but I think that I will wait until after Spurs have beaten Charlton on Sunday before agreeing to that.

Finally, Mr. Hayes made an important point about NEETs—those not in education, employment or training. This is an important area of concern. We have estimated that some 9 per cent. of 16 to 19-year-olds are not in education, employment or training. We have made some progress through the Connexions service and have set ourselves a justifiable and ambitious public service agreement target to reduce the NEET group by two points by 2010.

One mechanism that we are using is the activity allowance pilot. We have already rolled out educational maintenance allowances, which are benefiting some 270,000 young people, and there is evidence that that is leading to increased participation rates. We now want to pilot the extension of those principles to young people in the NEET group, with an activity agreement and an activity allowance to help them to move into education and training.

Photo of John Hayes John Hayes Shadow Minister (14-19 Reform and Apprenticeships)

We know that 75 per cent. of young people, roughly speaking, are in education or training and, from what the Minister has told us, we know that 9 per cent. are in the NEET group. Some of the remainder are in work—perhaps he can give us that figure—so where does that leave the group that is unidentified, containing the people about whom we know almost nothing?

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Education and Skills

I am not going to quote those figures off the top of my head. Once the figures for the number of people who are in work are built in, we are close to squaring the circle. If the hon. Gentleman wants to write to me about that, I will respond and seek to give him full clarification.

On the hon. Gentleman's final couple of points on Foster and whether we should seek greater specialisation, there is strong merit in what Andrew Foster has said on that issue. A historical critique of further education colleges can be made. It is a bit like the flip side of my response to my hon. Friend the Member for Eltham. FE has been very good at picking up every ball thrown at it, but that sometimes means that it is a complex organisation. Crucially, it is not immediately there in terms of community understanding and empathy for its role, because it is too complex. We are considering that issue in our response to Foster and we will urge greater specialisation.

We are already moving down that road, for example, through the national skills academies. We have four of those in prospect, funded with the private sector. That is a positive move. My one word of caution—I am making it clear that there is a case for greater specialisation—is that we should bear in mind the limits. More A-levels are being taught in general further education colleges than in school sixth forms. We cannot suddenly say that we will have exclusively vocational education. It is about having a balance, but I take the point on specialisation.

Photo of John Hayes John Hayes Shadow Minister (14-19 Reform and Apprenticeships)

The Minister gives a very interesting analysis, and I am brainstormed to some degree. I wonder whether the situation that he describes is a good one. Some of it will be a matter of choice—some young people will go into FE because that is where they want to be, they have had enough of school, and they do not want to continue to sixth form or whatever. However, we should not make an a priori assumption that the circumstance that has arisen, whereby so many A-levels are being taught in FE, is the best use of FE. We may want to re-examine that. I offer that suggestion to the Minister as a random thought and something that we will be thinking about more closely following the debate.

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Education and Skills

I do reflect on such issues, and it is welcome to debate them. I do not think that the proportion of A-levels undertaken in FE as against school sixth forms is set in tablets of stone for ever and a day. I add the note of caution that there would be a significant financial consequence in deciding to transplant A-levels from general FE to school sixth forms. That would cost money that would not otherwise be spent on the sector. It better suits the purposes and needs of some young people to undertake A-level teaching within an FE college rather than a school sixth form. However, I am not dogmatic on those issues.

On the hon. Gentleman's point about the Holbeach campus, the work that he identified as being undertaken there is exactly the kind of joined-up, collaborative working that we want to see between the further education sector, universities and businesses. On his point about status for vocational education and skills, the skills academies will help us, embedding to a greater extent the vocational mission within the core mission of a further education college.

As I said earlier, the recognition of diplomas by institutions regarded as being among the best in the country in the higher education sector will help. One of the key aims is enabling more young people who choose the vocational route to enter higher education. One of the most challenging statistics in my job is that, if someone has two A-levels, they have a 90 per cent. chance of going to university. If, however, they have the vocational level 3 equivalent, they have only a 50 per cent. chance of going on to higher education. That is the scale of the challenge we face—how to make it clearer, more easily identified and better signposted, so that those young people who choose the vocational route but want ultimately to go on to higher education can do so.

My final point about the status of the sector is about further education colleges themselves. They do tremendous work up and down the country. The FE sector probably transforms more lives potentially than schools or universities.

S

Could this have anything to do with the fact that a person who chooses to take a vocational course is more likely to want to go out, get a job and earn some money?

If the Minister meant that 90% of 2-A-leveled people who apply for a University place are offered one, but 50% of vocational-level-3'd people who apply are offered a place, there may be more of an issue (but I don't think that's what he did mean). If he did mean that, I would be wondering whether the kind of person who takes a vocational level 3 rather than A-levels, but then applies to University tends to be the kind of person who is looking for an easy option (as non-easy-option vocational types probably took the vocational route because they wanted to get a job rather than to go to University).

Submitted by Sam Evans

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Education and Skills

We are funding them properly. However, there has been a tendency over a number of years for people within the FE sector to see the glass as half empty rather than half full. Across all parties, we have a responsibility to work with FE colleges to value and sell the story of what FE is successfully doing.

This has been an extremely constructive debate. There is an enormous amount of work to be done. I am grateful for the contributions that have been made this afternoon.

Question put and agreed to.

Adjourned accordingly at six minutes to Five o'clock.