I am pleased to have been able to secure this important debate. I am aware that there is a great deal of interest in this topic, and I wish to associate myself with the comments of my hon. Friend Helen Jones.

I want to draw attention to the problems that are being experienced in adult education in Liverpool and in other large urban areas as the unintended consequence of changes to Government funding for further and adult education. In particular, I want to focus on a highly valued course at risk, "Second chance to learn", in the hope that the course's future can be secured.

There are three key players in this matter: the Government, the Greater Merseyside learning and skills council and Liverpool community college. Government provide major funding and set national priorities, the Greater Merseyside LSC allocates funding based on those priorities, and the college itself makes decisions on specific courses, although that is strongly constrained by the priorities already set and the funding allocated.

The Government, through the Department for Education and Skills, have given priority to securing employable skills and expanding participation among 16 to 18-year-olds. They prioritise level 2 and level 3 qualifications to be funded partly by transferring money from level 1 and courses inauspiciously designated "other". That is where the problem lies. The transfer of funds threatens the adult skills for life provision and second chance learning, where Liverpool community college has been judged as "outstanding" by Ofsted's adult learning inspectorate in its 2005 inspection.

Greater Merseyside LSC's initial allocation to Liverpool community college reduced its adult further education budget by £2.7 million—8 per cent. That was in order to transfer money to fund higher priority courses. Following representations, the allocation has been increased by £1.2 million, and I understand that further negotiations are still under way.

The Government's national priority of improving employability is to be commended, and is highly relevant in Liverpool where, despite the city's growing economic success and a 43 per cent. reduction in unemployment since 1997, high unemployment persists. For example, in the Riverside constituency the unemployment rate is 12 per cent. and male unemployment runs at 18.1 per cent. If we look more closely at local areas, we see that those figures increase. For example, in the Granby ward, the unemployment rate is 26 per cent.

It is essential that people are equipped with the skills to take up growing opportunities provided by successful regeneration. The unanticipated consequence of this national policy is, however, to reduce funding for people who either need support to enable them to step on the skills ladder or require education that boosts their confidence as individuals and as active citizens. The courses at risk include those that address that objective. The courses may well become the gateway to further qualifications, but they are valid in their own right.

The courses are highly relevant to Liverpool, where long-term deprivation persists: 46 per cent. of Liverpool's special output areas are in the highest 5 per cent. in England, and 23 per cent. of Liverpool's SOAs are in the 1 per cent. of most deprived areas in the country. According to the Basic Skills Agency, 27.3 per cent. of Liverpool people between the ages of 16 and 60 have poor literacy skills; the corresponding rate for England is 24 per cent. In addition, 32.3 per cent. of Liverpool people in this age group have poor numeracy skills, compared with a figure of 24 per cent. for England. The constituency of Liverpool, Riverside alone has 10,900 people on incapacity benefit—the highest number for any constituency in the country. For many families with that long-term problem, formal education has not been seen as a high priority and there is a high level of alienation. That is why provision characterised unflatteringly as "other" is so needed.

Liverpool community college remains the arbiter on the provision of specific courses, although, as I said, its decisions are heavily constrained by funding decisions taken elsewhere. It is an exceptional college, whose skills for life agenda and approach to social inclusion and widening participation were judged by Ofsted to be "outstanding". The Ofsted inspection also found that there is "consistently good teaching", "strong strategic leadership" and "strong financial management" at the college. That is praise indeed.

I am concerned that a range of the college's courses is at risk because the national funding priority does not take full account of Liverpool's needs; similar problems are also found in respect of other urban areas. I wish to draw attention to the future of the long-standing course, "Second chance to learn", which is now in jeopardy. That stand-alone course is provided at the college's new city centre, Duke street premises, and attended by 180 students. It has run for 30 years, originally through the Workers Educational Association and the Liverpool university Institute of Extension Studies. During that time, 3,000 students have participated.

Although there are exceptions, most students are aged over 50, have limited formal educational qualifications—many have none—and do not progress to higher education. They do not fit employment-oriented priorities. Yet the course is highly valued. Recently, I met students who attend the course. They described their experience as "life transforming" and explained how it had given them new confidence, encouraging them to be active citizens fully engaged in the regeneration of local communities. They recounted how they had influenced younger members of their families, who otherwise would not have been so influenced, to become interested in education. That demonstrates how second chance learning has helped individual development and community cohesion.

The college, under the pressure of its funding constraints, now proposes to disband that stand-alone course in the city centre. It plans to provide the individual subject options in the course through local drop-in study centres or DISCs. Those would become part of foundation programmes that address basic skills needs and work towards level 2 entitlement. The proposal has been met with consternation. It means the end of the stand-alone "Second chance to learn" course, which will no longer remain an entity in its own right and no longer be held in the city centre.

Students have told me how coming to a stand-alone course has made them feel part of something important and given them a feeling of belonging. They have explained how meeting in the city centre is stimulating and enables them to join students from other parts of the city whom they would not otherwise have met. They talk about how misconceptions have been broken down and how prejudice has been addressed. They talk avidly and enthusiastically about how going to a course in the city centre brings them into contact with younger students. They find that to be part of an important learning process for themselves as individuals. One student who had no formal qualifications told me:

"I have a thirst for knowledge. A light has been switched on; now it is to be switched off."

Another said:

"The course should stay city centre-based so that students like me, who have never wandered out of my own neighbourhood, can meet other students from across the city."

The students on the course are predominantly older people with few formal qualifications, who had a gross lack of self-confidence but found a new sense of well-being and optimism by attending the course. The local newspaper, the Liverpool Echo, has drawn attention to the city centre, stand-alone course. Numerous students, some of whom progressed to employment and others who found a new sense of confidence, praised its worth. They stressed its value in making them more aware and active citizens as an essential part of the widespread regeneration in Liverpool.

I appreciate the context in which the decision is being made. The Government's stress on employability is commendable, and certainly highly relevant to Liverpool, but it has led to a reduction in funds for confidence-building courses that develop and educate individuals, which are also required. Such courses might be the gateway to qualifications, but they are also important in their own right in encouraging active citizenship, awareness and confidence, and are part of urban renewal and local need.

More joined-up thinking at Government level is required. Civic engagement and social cohesion are important parts of the Department for Communities and Local Government's strategy on urban regeneration. Liverpool has benefited greatly from those regeneration strategies, with significant funds coming to the city, particularly into my constituency, to develop local neighbourhoods, improve housing and employment prospects and develop a sense of civic renewal.

In 2001, the Department of Health launched the national service framework for older people. That identified the importance of lifelong learning. The Centre for Educational Research and Innovation atthe Organisation for Economic Co-operation and Development highlights the link between learningand health for older people. It seems perverse to jeopardise courses that have such a positive effect on both of those areas.

The Government's national priority of increasing employability is extremely important to Liverpool, but so is the need to build confidence and develop the individual. The facts that I have recounted today about the long-term deprivation in Liverpool, the need to upgrade basic skills, and the long-seated deprivation that leads to too many people feeling that education is not for them, emphasise the importance of courses that boost self-confidence and self-awareness. Those issues are being addressed successfully by Liverpool community college, which is an outstanding institution, but they are being put at risk by changes in funding priorities decided nationally.

Liverpool community college is renowned for its work with under-achievers. It has already secured, from its initial application, additional funding from Greater Merseyside LSC, which is aware of local needs, but is constrained by national priorities. A significant funding gap remains, and I urge the three players—the Government, the LSC and Liverpool community college—to ensure that those important parts of adult education do not fall victim to the schools-based priority. I urge both the Government and the LSC to make funding available so that both local priorities can be addressed.

Liverpool's needs require a combination of employment-related courses following the national priority and others that develop citizens as individuals. Those two objectives might well go together, but do not necessarily do so. This is an essential part of adult education in the area of under-achievement. Both aspects are important and a part of regeneration. "Second chance to learn" should remain a stand-alone, city centre course, and I call on Liverpool community college to review its proposal. I ask the Government to look again at the implementation of the strategy and to increase flexibility, so that national Government policy can bring the maximum benefit to areas such as Liverpool.

I congratulate my hon. Friend Mrs. Ellman on securing the debate. I am aware of the level of interest that people in Liverpool are showing in the proposals of Liverpool community college to reorganise its "Second chance to learn" programme. I have also had representations from my hon. Friends the Members for Liverpool, Garston (Maria Eagle), for Wallasey (Angela Eagle), and for Wirral, West (Stephen Hesford) and from my right hon. Friend Mr. Howarth. I appreciate the opportunity to explain the Government's and the Learning and Skills Council's strategy in this context.

In response to my hon. Friend's opening remarks, I want to outline the Department's overall strategy for dealing with the nation's skills needs, and then to consider local issues in Liverpool and describe our commitment to providing learning to all those who missed out earlier in life, as she described, and to those who want to update their skills or to continue learning.

The Government have developed what I believe is a strong and coherent strategy. To meet our future skills needs, we shall ensure that people realise their potential through learning, both as individuals and as members of an adaptable and changing work force. We shall reinforce the priorities for the public funding of adult learning and we want to find the right balance between the state, employers and individuals for the costs of adult learning. We are reforming the further education sector to make it much more responsive to the needs of the economy, employers and individuals.

My hon. Friend described the situation in Liverpool in graphic terms, and I think that we all know that the global economy presents some unique new challenges. We live in a world where new markets, productivity and new skilled work forces are emerging with extraordinary speed. However, as my hon. Friend probably knows, our productivity levels are still among the poorest in western Europe, so boosting our productivity will be a key factor in our long-term future economic success; that is true for the whole of the UK, and for Liverpool in particular. Our skills gap—the gap between our skills and those of other countries—is one of the main reasons for our productivity being poorer than it should be in comparison to those countries. That is the challenge that faces us, and it is a stark one.

The Chancellor said in a recent Budget statement:

"It is because education is the 21st century road to prosperity that Britain must become the best educated, best trained, best skilled country in the world. ... Unleashing the potential of every individual in the country is key to the economic success of the future of our country."—[Hansard, 16 March 2005;Vol. 432, c. 267-8.]

The Government's skills strategy is essential.

I want to give some figures to bring home the scale of the skills gap. There are 12 million adults who lack a full level 2 qualification—the basic school-leaving qualification, the equivalent of five good GCSEs. Some 6 million adults lack basic literacy skills and 17 million adults lack basic numeracy skills. It is true that our plans to transform the fortunes of young people will improve those figures over time, as young people leave school better equipped with skills. However, as Lord Leitch demonstrated in his report, that is not enough.

Today more than 70 per cent. of what will be the 2020 work force has completed compulsory education, so if we are to tackle the figures that I have just given we shall have to transform the fortunes of our adult population at all levels. It is not only an economic imperative that we face; we know that adults with low skills have lower than average levels of employment and lower earnings. That is a point that my hon. Friend made. We have a stretching public service agreement target for 2010, which is to reduce by 40 per cent. the proportion of the work force without a level 2 qualification. However, as many as 25 per cent. of the work force lack that level 2 qualification today. Those with level 2 qualifications are three times more likely to receive further training than those without qualifications. It is a key to unlocking future individual success.

How do we match funding with those priorities? We have records of public funding for adult learning. Our planned funding for the Learning and Skills Council's major adult programmes is nearly £3 billion for both of the next two years. However, we cannot transform skills at every level through public funding alone. We have to prioritise where public funding is targeted. We have made it clear that our priority is to give help to those adults who need it most. We have prioritised for free provision those without functional literacy and numeracy and those without the foundation of employability skills, as represented by a first full level 2 qualification.

To support that shift, there must be a new balance of responsibilities between the state, employers and learners. We do not accept that the withdrawal of LSC funding—where that happens—means that a course automatically has to close. If employers will benefit, it is only fair that they share the cost. Where learners and employers are prepared to pay more, we expect providers to provide courses on a full cost-recovery basis.

We need a cultural shift that will lead to new and better targeted investment by employers in their work force and to individuals investing in themselves. There is a lot of evidence that individuals accept the case for investing in their own learning. MORI polling and recent research by the National Institute of Adult Continuing Education show wide acceptance that adults should make a contribution to the costs of learning.

There is a long backdrop to the moves by Liverpool community college to restructure its provision to meet the priorities that I have outlined. I mentioned earlier the national figures for adults without a level 2 qualification or with basic literacy and numeracy needs. My figures—I hope that these are in accord with the ones that my hon. Friend mentioned—show that 120,000 adults in Liverpool are without a level 2 qualification. That is 44 per cent. of the working population in Liverpool, as compared with 27 per cent. in England. That is a major gap that we have to fill. Some 80,000 adults in Liverpool are without basic literacy and 89,000 are without basic numeracy. My hon. Friend was right to highlight that need, and I am highlighting it too. It is because we have identified that need that we have no choice but to prioritise our resources to address the demand for learning. That is what Liverpool community college is doing.

Liverpool community college's "Second chance to learn" programme has been part of adult education in Liverpool for nearly 30 years. The programme currently helps 180 individuals, out of the college's 17,000 adult learners. Many of those 180 learners have been attending courses for a number of years—I have received correspondence from hon. Friends on that. Some of those learners travel into the city from the Wirral and elsewhere. However, the college has decided that the programme no longer meets the needs of many learners, mainly because it does not encourage progression to higher qualifications.

Will my hon. Friend give way?

If I may say a little more but do not address my hon. Friend's concern, she may intervene on me.

The college recognises that the "Second chance" curriculum is an ideal base to support the recently established foundation programmes. The "Second chance" subjects have been tried and tested throughout the course's long history. They will attract a wider range of students if they are delivered in the college's local drop-in study centres, which my hon. Friend mentioned. The college will retain the best aspects of "Second chance" as part of a foundation programme for students that addresses their basic skills needs and works towards level 2. The broad range of subjects available through the programme will continue. That includes courses such as "Introduction to history", women's studies, creative writing, citizenship and sociology. Many students will have the opportunity of a second chance to learn when those subjects are delivered in local communities.

My hon. Friend mentioned the need for joined-up government and neighbourhood renewal programmes being funded through the former Office of the Deputy Prime Minister—the Department for Communities and Local Government, or the DCLG, as I shall get used to calling it. By delivering those courses in drop-in centres in local communities, we shall see a greater joining up between the needs of local communities and the courses that the college offers, because they will be provided where more students can access them.

I thank the Minister for his comments, which give a full explanation of how the Government see their policies unfolding. As I have said, I support a policy of creating greater employability, but my concern is that the needs of people who may not progress to further qualifications but who nevertheless get a sense of self-confidence and of becoming active citizens—another part of the Government's programme—are being put to one side in the search for greater employability.

It gets complicated, in that there is a strand of funding that we call PCDL—personal, community and development learning—which funds learning for its own sake; it does not have to lead on to a qualification. That fund covers some of the themes that my hon. Friend described. We have protected the budget for PCDL at £210 million across the country, but the way in which that money is spent in different parts of the country is patchy. That is why I have asked the learning and skills councils to bring together the local partnerships, including themselves, providers, local authorities, the health service—which often provides education for health reasons—and voluntary, third-sector organisations, and to consider how the money allocated to PCDL is spent in their area, who goes on what courses, and how PCDL can be developed further. We are alive to, and committed to, that concept of learning for its own sake, but we are mindful that the ways in which budgets are spent locally do not necessarily meet all the needs or cover all the gaps.

As the hon. Lady mentioned, Liverpool community college recently received recognition from a number of sources for being a place of high-quality learning. It has two centres of vocational excellence and is involved in another, too. It has had good inspection results, and is a beacon college. It will receive extra funding for personal and community development learning in recognition of that excellence. This year, Liverpool community college received some £32.7 million—that is 61 per cent. more than five years ago. My hon. Friend mentioned £1.2 million that had been brought back to help the college. I can tell her that the Learning and Skills Council has now agreed to give the college an additional £450,000 to support adult learning, so there has been recognition of the local priorities and needs, and of how the college can respond to those needs.

We have mentioned further education, adult learning, particular courses and so on, but on the wider policy area and the direct funding that we are giving, we expect colleges to focus on meeting people's needs at work. Particularly for employers, there is the "train to gain" stream of funding, which is rolling out nationally from 1 August this year. That is a £230 million programme to help employees who do not have basic skills and level 2 qualifications.

Finally, on the worry about focus on level 2 leading to the withdrawal of adult courses, it is not our policy to lose good courses that lead demonstrably to progression and to level 2; we make that clear in our grant letter to the Learning and Skills Council. I say to my hon. Friend that too much of the kind of provision that is called "First Steps" or "Return to Learn" is not so much a pathway as a revolving door; people go round and round on courses and do not move on. That is why we announced our new development value, the foundation learning tier, in the White Paper.

Question put and agreed to.

Adjourned accordingly at one minute to Two o'clock.