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Perhaps I can leave the Minister with a second and final question, which is about real challenge that we face in deprived rural areas, of which Newton Abbot is undoubtedly one. The cost of living in Newton Abbot is very high, partly because of the distances involved in getting around the constituency and, as hon. Members are well aware, because of the huge water bills. However, we also have very low salary levels. The challenges that my hon. Friend has mentioned are particularly acute in rural areas. I appreciate that we are in difficult times and that we must be careful to get value for every penny we spend, but I wonder whether particular consideration can be given to helping youngsters in rural communities access the apprenticeships and training that they need.
In my interventions, I stressed the critical importance of engaging employers, and I hope that the Minister will tell us how we will do that. It would also be helpful if he were to say in his concluding remarks how he sees the skills strategy in the context of the local economic partnerships and what scope there will be to take a strategic overview of local needs. Given the nature of my constituency, I have always been interested in that. The hon. Member for Newton Abbot (Anne Marie Morris) has mentioned the status of technicians, and their status in our world-leading universities in Oxford and in related scientific research institutions in Oxfordshire is critical. There are concerns whether there will be a supply of suitably qualified people to fill the vacancies when a lump of people retire at a particular time in the future. That is precisely the sort of issue on which a local economic partnership should be able to take a strategic view on an area basis.
I want to mention something that has not been touched on so far. The proposal that those on inactive benefits will no longer receive reductions in their course fees was not included in the skills consultation document published last summer. As I understand it, such people will have to meet 50% of the cost of courses, other than on courses for basic literacy and numeracy. Colleges are worried at the effect that that will have on participation among lone parents, those on incapacity benefit and others.
I have particular concerns about Ruskin college in my constituency. The college runs a number of short courses that attract a significant number of people who are presently in receipt of inactive benefits. Many are older learners, lone parents, carers, people on disability benefits, people who have suffered alcohol and drug dependency problems or mental ill health, and homeless people with no registered address. Most such students on short courses are unlikely to be in a position to pay fees.
For many of these students, going on a course is a step in re-establishing their self-esteem and acquiring useful skills that will enable them to progress further. Ruskin college has mentioned to me an example involving a woman who had a total mid-life crisis and mental breakdown. She saw the Ruskin college brochure in hospital and did free short courses with the college, benefiting from the full fee remission. She went on to
get two degrees and she is now a college lecturer, probably helping with the skills drive that we are all so keen to sustain.
How does the Minister see the configuration that is coming forward addressing the needs of such people? Given that it will take time to put the Government's new proposals in place, does it really make sense to end fee remission for those in receipt of benefits before other provision is put in place? This issue will affect a lot of people across the country, as well as at Ruskin and other colleges in my constituency. I would be grateful if the Minister were specifically to address that point.
Mr Gordon Marsden (Blackpool South) (Lab): I, too, congratulate the hon. Member for Harlow (Robert Halfon) on securing the debate. I also congratulate him on his clear and evident pride in his local college and on the work that he is already doing in Parliament to promote issues relating to apprenticeships. We have had a thoughtful and inclusive debate, which has not been rabidly partisan. I want to continue in that way, but I nevertheless want to pick out some of the implications and unintended consequences of the Government's skills strategy, which gives Labour Members real concern.
I want briefly to comment on what the hon. Gentleman has said. He has discussed skills deficits, particularly in construction, and the NEETs problem. It is fair to say that none of us in any party and, for that matter, none of the experts has a magic wand to deal with that problem. We can argue about the rights and wrongs and about the needs behind the Government's current economic policies, and we will, but I merely say-I invite the Minister to touch on this-that it is inevitable that those policies will sharpen the challenge that we face and increase the number of people in the category that we are talking about, at least in the short term. For example, we have seen that with some of the rises in unemployment. We also need to be careful that changes in administration within skills policy, and related issues in the Minister's portfolio, do not, however well-intentioned, unintentionally exacerbate the problems of NEETs, because of their speed and the lack of a proper transition period.
It is particularly interesting that the hon. Member for Harlow has discussed access to loans, which other hon. Members have also mentioned. I want to touch on how the process will pan out, and put one or two questions to the Minister. At this point, all I want to say is that some people who have been mentioned, such as older people and single mothers, are, because of their backgrounds, precisely the ones who will need most nurturing and support in entering the process. As I have said before and will continue to say, the Government, or certain people in the Government-not least Business, Innovation and Skills Ministers-are keen on the concept of nudging people. We all nudge people, sometimes inadvertently on the tube, but it is highly relevant to the debate on the Government's skills strategy to point out that sometimes-again, I am not imputing malevolence of plan or thought-the net effect of policies is to nudge people away from things, as well as to nudge people towards them.
It is interesting that the hon. Members for Harlow and for Newton Abbot (Anne Marie Morris) have raised concerns about the EMA. I congratulate them on
referring to practicalities such as transport and support equipment. Those issues have, of course, been taken up by individuals and colleges. The same concerns have been expressed to me at the colleges in my constituency, Blackpool sixth-form college and Blackpool and the Fylde college, and they also show up in surveys conducted by the Association of Colleges and the 157 Group. If the Minister and I were not here in delightful surroundings under your chairmanship, Mr Hood, we would undoubtedly be in the main Chamber listening to the arguments about the Government's current position on the EMA. What I took from the remarks of the hon. Members for Harlow and for Newton Abbot, as well as from other interventions, were concerns not only about the change itself, but about the process of change and the transition period. The Minister will want to comment and reflect on those remarks.
The hon. Member for Harlow has discussed university technical colleges, a concept with which I, like him, am familiar. Lord Baker bent my ear on the subject in my previous incarnation as chair of the all-party parliamentary group on skills, as he has successfully bent the ears of many others. Lord Baker is, like me, a historian, and he feels strongly that it is a matter of completing unfulfilled business from the Education Act 1944. The only thing that I say-again, I invite the Minister to make observations on this point-is that it is laudable and entirely desirable that there is a renewed emphasis on how best to provide vocational education to the 14-to-19 range and on the mechanisms for doing so. However, the problem is that the field is now getting crowded. There are proposals for university technical colleges, and there are long-standing proposals for studio schools, which the Secretary of State for Education warmly endorsed at the recent launch of the first tranche. I declare an interest in the sense that the local authority in Blackpool is strongly bidding for a studio school. Of course, the Prime Minister also made observations only a few days ago about the concept of free schools for 16 to 19-year-olds.
I make no comment on some of the ideological conflicts that may arise in that context; I merely point out that if there is a market including UTCs, studio schools and free schools for 16 to 19-year-olds, there will have to be a lot of careful adjustment and thought about the implications for sixth-form and further education colleges. I hesitate to use the words "Maoist and chaotic" in that context, because they have, of course, already been used, rather tellingly, to describe the way in which the Government-sadly, this involves the Minister's Department-are proceeding with local enterprise partnerships. However, I want to stress the importance of not getting into a mess over a plethora of options in the relevant area. The last thing that any of us wants is for the new-found enthusiasm in all parties for the strengthening of vocational education to be dissipated by arguments about structure.
Mr Andrew Smith: I want to reinforce my hon. Friend's argument. Is it not crucial that the core mission and function of further education colleges, and their ability to deliver it, should be buttressed, supported and enhanced? That should include such issues as inequality in funding per student, as between FE and schools. The previous Government started to narrow that discrepancy, but it should be removed altogether.
Mr Marsden: My right hon. Friend is right on that point. I shall spare the Minister's blushes, but he has committed to continuing that process. Indeed, he emphasised that point from the floor when questions were raised about it at the conference of the Association of Colleges in Birmingham in November. The devil is in the detail, and the questions of how the aim is to be achieved within funding regimes through the Skills Funding Agency and how it relates to other possible views within the Government must be resolved. I have no doubt about the Minister's personal commitment to proceeding with that aim, but my right hon. Friend has made a valid and important point.
The hon. Members for East Londonderry (Mr Campbell) and for Upper Bann (David Simpson) have made valuable interventions. They both made the important point that we should view apprenticeships, training and outreach work not only as economic activity but as a vital activity for social cohesion. I am particularly interested and impressed by what the hon. Member for Newton Abbot has said about the activities of her college in going out on to the street and trying, in the words of the Good Book, to compel them to come in.
There is a broader underlying issue, with which all of us have fought in recent years. It concerns not only the fundamental mission of further education colleges or apprenticeships, but how and where that mission is carried out. Some of the most valuable work that has been done via the splendid Blackpool and the Fylde college in my constituency has been done not on the main campus sites but in a city learning centre adjacent to one of the main housing estates. In reality, particularly in areas where people may be juggling two or three different types of job or responsibility, which is particularly true of women, the siting of, and immediacy of access to, training and further education matter a great deal. The hon. Member for Newton Abbot has discussed her constituency, and I am sure that what I have described is as true in rural constituencies as some urban ones, if not more so. Even in my constituency, some people on the estate who benefited from outreach courses would not have found it easy to get on a bus and travel 2 or 3 miles to take standard college classes. I entirely agree with what the hon. Lady has said, and I hope that the Minister will take that on board in developing future policy with colleges.
My right hon. Friend the Member for Oxford East (Mr Smith) has made valid and crucial points about how the skills strategy will fit with local enterprise partnerships, and I will return to that issue later. He made other key points that the Minister needs to respond to. The first is the concern that he expressed about skills shortages. That concern might seem perverse at a time when-let me put it bluntly-the demand for skills in the current economic situation is certainly not uniformly high. However, the truth is that even with modest growth generally and in certain areas in particular, because of the reasons that he gave, demographic changes will affect particular skill groups. We know from the Leitch report and various other things that we face a significant demographic challenge in the next five to 10 years, because the cohort of younger people available for skills training will reduce sharply. Of course, that will put even more emphasis on some of the points to which my right hon. Friend has referred. The comments that we have heard about skills shortages are significant.
I turn, with some gravity, to the Government's skills strategy, on which I want the Minister to comment. Picking up my previous point about my right hon. Friend's speech, the introduction of tuition fee-style loans for all those taking level 3 qualifications and the part-funding for a first level 2 qualification will seriously hit the strategy for retraining and reskilling older workers, if they are not handled carefully.
Questions have been put to the Department for Education and Skills and to the Minister himself about how much, under the current circumstances, colleges can be expected to charge when they increase fees for courses. I accept that we do not live, pace one or two things that have been said about the Secretary of State for Communities and Local Government, in a Stalinist "plan and provide" world. However, we need to have a little more assurance about the sums of money that people will have to borrow to fulfil a mainstream apprenticeship course. In an article in The Guardian at the end of last year, the Minister referred to a sum of about £9,000 over that period of study, but it would be helpful if he were to comment on the modelling by which the Government made that assessment.
Of course, if there is a potential impact of increasing fees, in terms of reducing enrolment, it will come at a time when colleges face a 25% reduction in the further education resource grant from the Department for Business, Innovation and Skills during the spending review period. Ministers have said that that reduction is nowhere near the "grim reaper" that has descended on the higher education sector, which is perfectly true. Nevertheless, that reduction and the potential impact of axing the EMA-both the Association of Colleges and the 157 Group have said that axing the EMA will have a significant impact on the number of people applying to college-mean that FE colleges may find themselves under real pressure as a result of Government decisions.
The Government have said that they want to get people back into work-how could we not want to get people back into work? However, the issue of how the Government expect to do that if they are going to remove the support for course fees from anyone who is not on active benefits is a live one. Even those claiming active benefits over the age of 24 will have to take out tuition fee-style loans to take level 3 courses. I have an open question, not a rhetorical one, about that issue; what incentive will there be for those people to take out a sizeable loan when there is no guaranteed income stream to repay it?
As has already been said and as-I am afraid-is the case with so many things that this Government are doing, they are in danger of wielding several sticks before offering a number of carrots. The fees for some level 2 and level 3 courses will be introduced as early as 2011-12 and the fees for the majority of those courses will be introduced in 2012-13. However, the Government say in their own statistics, which accompany the skills strategy, that they do not envisage the new loan structure being in place in full until 2013-14. That is one of the points that the Association of Colleges has raised in its briefing note to Members for today's debate. However, the Association of Colleges has also raised the separate issue of the impact of the restrictions relating to benefits entitlement, which my right hon. Friend the Member for Oxford East has also raised. The Minister will know, because it was the subject of a question and answer
session that he participated in at the Association of Colleges conference in Birmingham in November, that that issue is of great concern to colleges.
We support the Government's aim to help more people off welfare and into work, and we understand the desire to focus efforts on those receiving active benefits. However, I remind the Minister that on a number of occasions he and I have talked about the importance of enabling skills to the life chances of people. There are real concerns, particularly in relation to some of the impacts of the restrictions on employment and support allowance, that, as I said earlier, people might find themselves being "nudged" away from participation in education and training rather than being "nudged" towards it.
Like me, hon. Members may find it curious that the Government preach localism, but that their new skills strategy effectively gives the power to set these plans nationally to the Skills Funding Agency. When we were in government, we talked about the crucial role that regional development agencies can play in this field. I also note, having heard the favourable comments that the hon. Member for Harlow made about the college in his own constituency, that Harlow recently opened a new £9.3 million university centre for higher education. Of course, that project, like the project in my constituency at Blackpool and the Fylde college, was partially funded by grants from the RDA. I am not here to argue the case for RDAs, but now that they have gone there appears to many people, including myself, to be a black hole in the connectivity of support for the successor bodies to the RDAs, including local enterprise partnerships.
Many business groups, including the British Chambers of Commerce, have commented on that lack of co-ordination between those in charge of skills policy and local enterprise partnerships. I remind the Minister that his colleagues in the Department for Communities and Local Government did not even put local enterprise partnerships in the Localism Bill when they introduced it, and they have resolutely refused, or at least been unwilling, to talk about establishing links in that respect.
Robert Halfon: I thank the hon. Gentleman for his measured and thoughtful remarks. Regarding RDAs, although it was welcome that part of the money for the college in my constituency came from the local RDA, at the end of the day that money is taxpayers' money. That money does not necessarily have to pass through the RDA to reach Harlow college or Harlow; it could easily go through local councils or through the other mechanisms that he has mentioned. The support that Harlow college received is not necessarily a case for the RDA.
Mr Marsden: I was merely making an observation, and I was not saying that the RDA is the only mechanism by which this money can be redistributed. Of course, there were also other grants that contributed to the college. I was making the point that the RDA is a mechanism that supported that type of college development. Not only is the current level of economic activity across the country failing to replicate that support, but we do not even have secure promises about how local enterprise partnerships themselves will be supported and funded, so that they can provide similar support or access funding from the private sector. That is one of my concerns.
Finally and briefly, I turn to the issue of apprenticeships. The Government have been keen to trumpet the success of apprenticeships and their ambitions for them. I yield to no one in my delight that the Minister has made so many strong points about apprenticeships. However, we must remember that the pledge that there will be an extra 75,000 apprenticeship places applies only to adult apprenticeships. At a time when youth unemployment remains high and the Government have chosen to end schemes such as the future jobs fund and our September guarantee of a college place, training or a job for all those aged between 18 and 24, one must wonder what capacity there will be in business to provide these extra apprenticeship opportunities. Indeed, Members have touched on that issue in the debate today. Just as one can nudge people away from things as well as nudging them towards them, we need to take into account push and pull factors. It seems to me that no amount of ministerial criticism of Train to Gain can take away from the fact that axing the scheme leaves a serious gap in work-based training provision.
Finally, the Government are rightly putting an emphasis on level 3 money going in, but there is still a massive demand across the country for level 2 apprenticeships in leisure, tourism, catering and other applied service industries, and it is vitally important that they are not neglected. They need to ensure that they provide what employers want from apprenticeships, as opposed to what might fit their own agenda for the sector, however noble their intentions.
The Minister for Further Education, Skills and Lifelong Learning (Mr John Hayes): It is a pleasure, Mr Hood, to serve under your chairmanship, even more so as it is the first time, and it is always a pleasure to follow the hon. Member for Blackpool South (Mr Marsden). While the right hon. Member for Oxford East (Mr Smith) was making his erudite interventions, I was thinking about what Chesterton said about Oxford:
"a place for humanising those who might otherwise be tyrants or even experts."
It would be altogether more convenient if the person shadowing me were a tyrant or a fool, but unfortunately the hon. Gentleman is neither, which actually, on balance is a cause more of joy than sorrow.
It is also a pleasure to congratulate my hon. Friend the Member for Harlow (Robert Halfon) on securing the debate. I know how enthusiastic he is about the subject, and he rightly championed the work of Harlow college, kindly mentioning that I visited the college with him. He has illustrated his commitment to apprenticeships by taking on an apprentice himself, and I invite many other colleagues, including Ministers and shadow Ministers, to follow his example.
An even greater pleasure than serving under you, Mr Hood-and that pleasure is almost inestimable-is to be able to discuss the Government's skills strategy, albeit in a short debate. I will endeavour both to talk about that, and to pick up the points that have been made by a variety of speakers today.
The skills strategy had its inception shortly after we came to government. As soon as I became Minister, we ran a considerable consultation-over the summer-and we engaged providers, employers and learners, with
colleges obviously central to the process. We have now published the strategy, and I have copies here for anyone who would like one-shorter summaries for those with less patience and longer versions for those with more.
The genesis of the strategy dates to when, in opposition, I was able to study these matters over many years, and I had many discussions with the hon. Member for Blackpool South when he was running the all-party group on skills. I do not think that there is much of a gap between our views on the issues. It would be wrong to exaggerate the consensus, but I do go with Wilde in that arguments
"are always vulgar, and often convincing."
So we do not want to have more of an argument than we need to, and there is certainly some unity of view as to the aim. I suppose that that is because we both broadly buy the analysis of the Leitch report, that an advanced economy needs ever-advancing skills, and that we are falling short in that regard. I shall say more about that in a moment or so.
The report mentions many other things, including, as has been mentioned, the need to upskill and reskill the existing work force as well as to train young people who enter the labour market. It makes particular recommendations on intermediate and higher-level skills, an area in which we are failing to do as well as we must if we are to maintain competitiveness. I am pleased to say-confirm, perhaps-that what is at the heart of that analysis is also very much the Government's view, which is that skills have a direct relationship with productivity and therefore competitiveness. That is, I suppose, a matter of opinion, but I take it almost as an a priori assumption. I say that as though the case must be made only because some people would still argue a counter-view that labour-market flexibility and a much more fluid system for skills can work in a modern economy, but I take the contrary view that as we invest in skills the economy shapes around that investment. My perspective is, I think, reflected in the previous Government's assumptions, and largely by Leitch.
It would be remiss of me not to say, as the hon. Member for Blackpool South was kind enough to point out, that we debate all of this in very difficult circumstances, but what is interesting about the strategy is that it would have been necessary irrespective of the changed and challenging financial situation. It had its genesis long before we came to government, long before we knew quite what size of deficit we would face and, indeed, long before we had devised a method for dealing with that deficit. The strategic change-the rethink about the skills we need and about how we will deliver them-preceded the advent of the economic strategy, which the hon. Gentleman mentioned, and the consultation that I described earlier preceded the comprehensive spending review negotiations which, of course, shaped the amount of money that the two Departments in which I am a Minister have to spend.
Without wanting to be unnecessarily partisan, I must say just a little about the previous Government's record. I know that the hon. Gentleman will not mind a short partisan section in a speech that will otherwise be wonderfully and refreshingly non-partisan. The previous Government did get some of this badly wrong, not in ambition-as I have described-and not even in their analysis of the problem, but in the solution. There were
two fundamental problems with their approach. Although they spoke the language of a demand-driven system, it was just that-mere words. The system that was constructed was centrally driven, built around targets and extraordinarily byzantine in structure. It was hard to navigate and inaccessible, bamboozling learners and demoralising employers. The result-a centrally driven, target-orientated, micro-managed system for the funding and management of skills-could never be sufficiently dynamic, or sufficiently responsive to the changing needs of a changing economy. Lord Leitch drew our attention to that, and Members on both sides have reflected an understanding of it in what they have said today.
I could say things that were altogether more colourful-in fact, I have such things in front of me-but why would I do that? I have said enough about the previous Government's strategy, except for this suffix: the best thing that they did was to appoint the hon. Member for Blackpool South as the shadow spokesman on this matter when they came into opposition. There the flattery stops. Actually, it was meant as a compliment, not as flattery.
Perhaps partly as a result of the previous Government's strategy, we remain mediocre on skills compared with other OECD countries, ranking 17th out of the 30 member countries on the proportion of our population qualified to level 2 or above. To any impartial observer, and by any independent analysis, it is absolutely clear that our further education and skills system requires not merely reform but rebirth, the effects of which would need to be felt by employers, individuals and training providers. The change that is most needed is one of perspective, as identified by my hon. Friend the Member for Harlow, when he spoke in elegiac terms about the need to elevate practical learning, a point supported by my hon. Friend the Member for Newton Abbot (Anne Marie Morris), the hon. Member for Upper Bann (David Simpson) and other Members. We have to understand that practical accomplishment can afford the same kind of status as academic achievement, because it confers both worth and purpose, which has economic value, and also because it changes lives by changing life chances.
The pride that people take in the practical skills that they acquire makes them stand tall. As they do so, they gain a different kind of recognition among their fellows. That was once widely understood. The case was richly argued by Ruskin-who was referred to in a different context; I will return to that-and William Morris, but it had scarcely been made with elegance and conviction until I started to make it a few years ago, when it gained some elegance and a lot of conviction. Changing the perception of practical learning is critical to encouraging people to acquire the skills that we need to drive our economy forward. It is a social and cultural matter as well as an economic one, being about aesthetics as well as utility. Rather apologetically, we usually debate skills as a matter of utility. I suppose that that is understandable-they are partly about utility, after all-but let us debate them differently, making the change in perception that I described.
I will now deal with the essence of the skills strategy and its many aims, which we published it on 16 November last year. Its main premise is that skills are essential if we are to return to sustainable growth, build more inclusive communities and achieve greater social mobility. To do so, the Government must be prepared to devolve
real power, along with the objective information that will allow people to use the system, to those who can benefit most from it, and especially to employers and individuals. We want to give them authority and power to drive the system. We want a more learner-driven, employer-focused, demand-driven skills system.
I will discuss the three critical elements of that and deal with some of the points that hon. Members have raised. First, we must ensure that colleges and training providers have the freedom and flexibility to respond to learner demand and employer need. The coherence that must accompany that requires a proper settlement in respect of relationships with other agencies, including local enterprise partnerships. I will take away the points that have been made about that and consider them. It certainly requires consistency and coherence in respect of school provision. As hon. Members will know, Professor Alison Wolf is carrying out a review of vocational education, which must marry with the strategy if it is to make a useful contribution to Government thinking.
The hon. Member for Blackpool South was right that there must be some consistency in the narrative about studio schools and university technical colleges. I am an enthusiast of UTCs. I think that Kenneth Baker has hit on an idea for which time has come; it is the completion of the unfinished work of Rab Butler. I see it in those ambitious terms. UTCs can play a valuable role in providing a vocational pathway that matches in clarity and progressive quality the academic route that many of us took.
I acknowledge the questions and points raised by hon. Members, and I accept the need for consistency and coherence, but central to what we will do is freeing providers and colleges from much of the bureaucracy that has hampered them and prevented them from being as good as they can be. There is immense human capital in the further education sector; it is the unheralded triumph of our education system. Both learners and teachers in FE deserve more praise than they have ever received. I am proud to put that on record. In the education Bill that we will be introducing shortly as a continuation of what I have announced in Government, we will strip away some of what the previous Government did-I am trying to use gentle words-to confuse the system and burden FE providers.
Secondly, there must be a changed role for individuals. Individual learners need more information, which is why we will introduce an all-ages careers service to provide them with good, empirical and independent information about the results of the courses that they choose and the subsequent careers to which they are likely to lead. As well, it was right that we began to ask who pays for what. Such questions are challenging, but I was determined that there should be no question of abridging people's entitlement to basic skills in any way.
However, in higher skills, beyond the age of 24, individuals should make some contribution, on a par with what we expect of higher education students. They
will be able to take out income-contingent loans on the same no up-front cost basis as HE students, at highly competitive rates. The hon. Member for Blackpool South asked about numbers and mentioned the figure of £9,000. He will know that it is difficult to come to a definitive answer, as apprenticeship frameworks cost different amounts. However, I do not think that it is unreasonable to mention an average of about £7,500. Compared with a degree, given what my hon. Friend the Member for Newton Abbot said about the income premium likely to result from an apprenticeship-it is roughly equivalent to a degree-an apprenticeship represents pretty good value for money.
Thirdly, on apprenticeships, we have allocated £250 million for 75,000 more apprenticeships during the spending review period. The hon. Member for Blackpool South asked about apprenticeships for 16 to 18-year-olds. I confirm that the Department for Education will provide extra investment to grow their numbers substantially too. It is my ambition while I am Minister to top 350,000 apprenticeships in this country, and the longer I am the Minister, the more apprenticeships we will have. Records are hard to compare because historically, the way that we have counted apprenticeships has been somewhat different, but it is probably true to say that the most that we have ever had in Britain was 400,000.
Mr Hayes: That is the trouble with people associated with Oxford; they are just clever. That was the expression not of a target but of an ambition. How could my ambitions ever be described as anything so crude as a target?
The final element of the strategy is a link to employers. As well as being learner-driven, the system must be sensitive to the role of employers in ensuring that what is taught and tested matches employer need, therefore making people more employable and feeding the growth that we all want. To do so, we must move away from what I described as the slightly confused spatial arrangements made by the previous Government with regional development agencies and others-some of them did perfectly good work, of course, but they were heading in basically the wrong direction-towards a more sectorally driven system. I have asked the UK Commission for Employment and Skills, under the chairmanship of Charlie Mayfield, to consider becoming employer-facing, so that we can engage employers in ensuring that the system delivers what we want.
I believe that we can build a skills system that makes Britain prosperous, delivers individual opportunity on an unprecedented scale and contributes to social mobility, social cohesion and justice. As the Minister, I will do all that I can to make that so, for it is what is right for our people, our nation and our future.
Mr Graham Stuart (Beverley and Holderness) (Con): It is a pleasure to have secured this debate, which follows another education-related one. As I speak, hon. Members in the main Chamber are debating the education maintenance allowance, so Ministers, like the rest of us, are trying to be in two places at once.
This debate is about Government policy on the employment of further education lecturers as school teachers in schools. I am delighted to see present my predecessor as Chair of the Education Committee in its previous guise as the Children, Schools and Families Committee, the hon. Member for Huddersfield (Mr Sheerman). I hope that he will participate. The subject is important because the importance of vocational and practical education within our education system is too often underplayed. There is also an artificial chasm between those who teach in further education and those who teach in schools at a time when we are trying to create a system such as that in health, which tries to build pathways in relation to the patient so that, instead of providing health services on the basis of institutional convenience, everything is built in relation to the patient. In exactly the same way, institutions that serve young people in education should bend and shape themselves to suit the young people's needs, rather than the other way around.
Further education lecturers are required to work through a four-tier qualification system, culminating in qualified teacher learning and skills status. FE lecturers with QTLS accreditation may then work in schools not as teachers, but as instructors, and only as a last resort. Even though they perform essentially the same functions, instructors have a lower professional status and, usually, a lower salary than schoolteachers. The equality of esteem and the need to ensure good vocational learning are undermined by that artificial divide.
Primary and secondary teachers, on the other hand, have a qualification known as qualified teacher status. Teachers with a QTS are currently eligible to teach in the FE sector. If the potential of the Government's schools policy is to be realised, we need the best possible teachers in the classroom providing education at any one time. The Government's schools White Paper rightly identifies teacher quality as the most important ingredient in improving the quality of education in this country, thus encouraging social mobility and other issues of social justice that hon. Members on both sides of the House devoutly desire. The White Paper states:
"All the evidence from different education systems around the world shows that the most important factor in determining how well children do is the quality of teachers and teaching."
Many FE lecturers are dual professionals with expertise both in their vocational subject area and in pedagogy. That expertise needs to be used in schools on an equal and fair basis in the same way as that of teachers. I hope that the Government will look to overcome the obstacles and create a single teaching qualification, effectively moving the barriers that constrain the best use of FE lecturers.
The Government's skills strategy shows that they are committed to the promotion of technical as well as academic qualifications-I believe that that issue has
just been debated in the main Chamber-to promote a variety of routes to improved employment opportunities to students. My hon. Friend the Minister for Further Education, Skills and Lifelong Learning has just left the Chamber and, given his passionate espousal of the importance of craft and vocational learning, we must ensure that we make best use of our teaching work force. The skills strategy states:
"Skills are vital to our future and improving skills is essential to building sustainable growth and stronger communities. A skilled workforce is necessary to stimulate the private-sector growth that will bring new jobs and new prosperity for people all over this country.
And a strong further education and skills system is fundamental to social mobility, re-opening routes for people from wherever they begin to succeed in work, become confident through becoming accomplished and play a full part in civil society."
The reality, however, is that there has been a lack of expansion of vocational expertise in the school work force, which fails to match the expansion of vocational curricula in schools. Schools too often do not have the appropriately experienced teachers to inspire students to excel in vocational courses.
The Children, Schools and Families Committee carried out an inquiry into teacher training in the 2009-10 Session and its report, "The Training of Teachers", was published in January 2010. The Committee called for
"greater fluidity-and shared development opportunities-across the school and further education sectors."
"At the very least, teachers with Qualified Teacher Learning and Skills status should immediately be able to work as a qualified teacher in schools if they are teaching post-16, even post-14, pupils."
Mr Barry Sheerman (Huddersfield) (Lab/Co-op): Like the hon. Gentleman, I rushed from the main Chamber where we have both been speaking. We are a regular double act. The recommendations of the inquiry under discussion were made by a former Select Committee-the Children, Schools and Families Committee. It was one of our later inquiries and it was very much an eye-opener for all members of the Committee. We made recommendations on improvements to teacher education and asked why we had an artificial divide whereby a schoolteacher could not teach in FE and many people teaching in FE could not teach in schools. It seems a crazy divide.
Mr Stuart: I now know-if I did not already-that my predecessor would like to speak in this debate, so his intervention served that purpose. The report's recommendations, under the hon. Gentleman's august chairmanship, also stated:
"In the context of the 14-19 reforms, the Department should put in place a mechanism for assessing vocational or professional qualifications as equivalent to degree status."
"Over the longer term we recommend that the training of early years teachers, school teachers and further education teachers become harmonised through generic standards."
Those recommendations seem to have been overlooked, with FE lecturers remaining on the sidelines. Despite their obvious expertise in the vocational pathway, we are clearly ignoring the opportunity to utilise their talents in our secondary schools. My Committee is currently conducting an inquiry into behaviour and discipline in schools, and wants to ensure that we have the best possible teachers to engage with young people who perhaps find their academic studies less inspiring. Having the best possible vocational teachers is a great way of getting people re-engaged in learning to the benefit of both academic and vocational skills.
"If we are to successfully establish and maintain a vocational pathway through 14-19 education and on to higher education, we need professionals with recent and relevant vocational knowledge and skills"
"the system as it now stands is biased towards academic education and its teachers, and fails to recognise the crucial role that vocational education and its teachers play in 14-19 education... For vocational instructors employed in schools their conditions of service are inferior to those employed as school teachers."
"We cannot continue to perceive vocational education to be second class and inferior to academic education. In turn, we cannot continue to label teachers of vocational education as a 'semi-profession'... The Commission believes that, in the short-term, greater transferability between the two professional statuses must be achieved in order to realise high quality academic and vocational provision throughout 14-19 education-getting the right skills in the right place of our education system must be a priority for policymakers."
"To realise this, the Commission believes that convergence courses should be developed to facilitate transferability between QTS and QTLS. The principle of this convergence would be central to the Skills Commission's vision for 14-19 education, and to establishing a high quality route through the 14-19 phase... The two regimes should be replaced by a unified training system and a 'universal teaching status'."
So why have neither the recommendations of the former Children, Schools and Families Committee nor those of the Skills Commission been implemented by the Government? It seems that there are a number of possible objections to a unified teacher status. First, teaching young adults is considered a different playing field to teaching 11 to 16-year-olds. Therefore, an individual who is teaching in further education might not have the skills and pedagogical background necessary to teach younger children. That was one of the fears before the increased flexibility pilots were started seven years ago-I
am sure that the Minister is familiar with them-when the national curriculum was made more flexible, so that it included a wider variety of settings in which students could study. In practice, FE staff found that teaching groups of 14 and 15-year-olds was not so very different from teaching 16 and 17-year-olds. The skills are fundamentally the same-good lesson planning, varying the pace, involving students and so on.
A second argument is that schoolteachers might have a better grounding in the theory of teaching and pedagogy than FE teachers. Teaching degrees and the PGCE provide a grounding in the theory of teaching and pedagogy, but so does the four-stage approach to the QTLS. FE lecturers are required to gain QTLS status by successfully going through professional formation, which is, according to the Institute for Learning,
"the post-qualification process by which a teacher demonstrates through professional practice the ability to use effectively the skills and knowledge acquired whilst training to be a teacher; and the capacity to meet the occupational standards required of a teacher."
By contrast, there are strong arguments in favour of a universal teacher status. Academic and vocational education are both important and require equally rigorous teaching. It is simply unreasonable, not to mention unfair, that FE teachers cannot go into the school environment. As I have said, it is crucial that highly skilled and experienced professionals can use that skill wherever it is most needed. The current system of teacher qualification is over-complicated and should be simplified to allow high-quality professionals to teach in both sectors.
My predecessor as Chair of the Select Committee wishes to speak, so I will bring my remarks to an early close. I have made the key points that I wanted to make, and I hope that the Minister will be able to respond positively. We need to ensure that we have a rich curriculum that regards vocational and practical learning as equally important, equally valid and equally useful as academic learning. There should be a system through which we increase academic rigour, while ensuring that the whole work force and every type of learning are treated according to their merits and that every child can access the best possible teaching whatever course they are doing at whatever time.
Mr Jim Hood (in the Chair): Order. The hon. Gentleman who has secured the Adjournment debate has agreed to the hon. Member for Huddersfield (Mr Sheerman) saying a few words, as has the Minister, but I ask him to give the Minister adequate time to respond to the debate.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op): I apologise, Mr Hood. In the communication that I had with the Chairman of the Select Committee on Education, the hon. Member for Beverley and Holderness (Mr Stuart), there was obviously confusion about which debate we were talking in. We have contributed to the debates here and in the main Chamber, so sorry for the communication difficulty and thank you, Mr Hood, for the opportunity to speak briefly. I am also grateful to the Minister for agreeing to let me contribute. I only want to speak for two minutes.
I care passionately about the matter. If we are to have a system with increasingly diverse post-14 routes-apprenticeships, people staying on in FE, people doing diplomas and more conventional vocational routes and being able to switch across from those-we need a profession that can teach across the piece post-14. I make a plea for the recommendations of the former Children, Schools and Families Committee, of which I was Chair, to be considered. I also co-chair the Skills Commission, so I wear both those hats today. I should put on the record that Baroness Sharp in the other place played a significant role in the recommendations that came out of the Skills Commission. She is a very knowledgeable person in this area. We also had great help from Policy Connect in organising that inquiry.
I am here to support the Chairman of the Select Committee. I hope that the Minister will say that there can be some positive movement on the matter. He knows that we tried to be helpful when we did our inquiry into the training of teachers, and many of the people who have read that report think that it was balanced. The report had cross-party support, and it gives people in the Department the opportunity to consider how the future of the teaching profession can get even better than it is today.
The Parliamentary Under-Secretary of State for Education (Tim Loughton): It is a pleasure to serve under your chairmanship, Mr Hood. I congratulate my hon. Friend the Member for Beverley and Holderness (Mr Stuart) not only on securing the debate but on being part of the dynamic duo that is now performing in this Chamber, having dual-tasked and performed just a few minutes ago in the main Chamber.
This is an important issue. I recognise the particular interest in the subject that the hon. Member for Huddersfield (Mr Sheerman) has and his background in the work that his Committee did before the election. It is therefore appropriate that he was able to contribute. My hon. Friend the Member for Beverley and Holderness made some positive and constructive points, and I wholeheartedly agree with the sentiment of his comments. He asked me to be sympathetic, constructive and positive in my response; as he well knows, I always endeavour to do so. Whether I can give him the detail of that sympathy, constructiveness and positivity remains to be seen, given that the Minister of State, Department for Education, my hon. Friend the Member for Bognor Regis and Littlehampton (Mr Gibb) would normally be responding to the debate. Of course, he is involved in the debate in the main Chamber.
Mr Graham Stuart: I am grateful to the Minister for responding to the debate, given the pressures on the Department. I understand why he finds himself in that position. As he is helping out the Minister with responsibility for schools, perhaps he will ask whether my predecessor as Chair of the Select Committee, Baroness Sharp-if she wishes to join us-and I can meet the Minister with responsibility for schools to discuss the matter further after having heard the Minister's remarks.
I will be delighted to pass on that invitation for a meeting. I am sure that the Minister with responsibility for schools will be sympathetic, positive
and constructive in his response to it. Notwithstanding what is going on this afternoon, the timing of the debate is also appropriate given the review of vocational education that the Secretary of State has asked Professor Alison Wolf to carry out-her name was mentioned in the main Chamber a little while ago.
The Government attach great importance to improving vocational teaching in schools. In response to my hon. Friend's point, it is certainly not a question of being second class to academic education or treating vocational sector teachers as second class; it is a question of appropriateness and horses for courses, in the same way as perhaps primary school teachers do not readily transfer to become secondary school teachers and vice versa. I want to make it clear that all aspects of teaching those different areas are absolutely valued, but that they will be more appropriate for certain people in certain areas than in others.
My hon. Friend made a point at the beginning with which I wholeheartedly concur: we need to shape institutions around children and young people to ensure that they are getting the most appropriate support, education and training of whatever type, rather than trying to pigeonhole people into particular structures. The coalition agreement for the new Government included a commitment to better vocational education in England, and the Secretary of State's speech to the Edge Foundation last year on 9 September set out the need for radical reform to address long-term weaknesses in practical learning. That is why we have asked Professor Wolf to carry out what is proving to be a major review and to make recommendations about how vocational education can be improved.
Professor Wolf's review is considering how we can ensure that vocational education for 14 to 19-year-olds supports valuable participation and progression into the labour market and into higher level education. The final report will include practical recommendations on how vocational education will be improved in line with the public commitment that we have made. I know that Professor Wolf has made very good progress with the report. She has met teachers, heads and college principals to inform her review, and she has been considering submissions made as part of the call for evidence. We look forward to receiving her full report later in the spring, as the hon. Member for Huddersfield has mentioned.
Mr Graham Stuart: If I recall, the original timetable was that an interim report would be presented by Professor Wolf before Christmas. Has such a report been presented to Ministers? If so, can it be published?
Tim Loughton: I am not aware that a full-blown interim report has been presented to Ministers. I am aware that there have been preliminary discussions between Professor Wolf and Ministers about her initial findings. I do not think that an exact date has been set for publication so far, but when my hon. Friend has the meeting with the Minister with responsibility for schools I am sure he will be able to elaborate further on the exact details.
Mr Sheerman: When Professor Wolf, who used to be on the Skills Commission with us, was appointed by the Secretary of State, was she told that half way through her report, the rug of the EMA was going to be pulled from under her feet, or was she oblivious to that fact?
Tim Loughton: I cannot answer for any discussions my right hon. Friend the Secretary of State and other Ministers have had with Professor Wolf on her appointment. I am not in a position to answer that. Again, that is a question that the hon. Gentleman can address to the Minister with responsibility for schools. I am sure that the Minister will grant an audience to him, his dynamic duo partner and the noble Baroness Sharp at a later date.
An expert, experienced work force with the right training is, of course, essential to a successful future for vocational education. The Government have therefore asked Professor Wolf, as part of her review, to look at work force issues in particular. I know that Professor Wolf has identified many of the issues raised by hon. Members today, and that her report will consider further education teachers' eligibility to teach in schools, and in particular the question of why FE-trained teachers, who have already achieved Qualified Teacher Learning and Skills status, also need to gain Qualified Teacher Status to be able to teach as qualified teachers in schools, which is the essence of my hon. Friend's argument.
Pending Professor Wolf's independent report, it would not be right for the Government to reach a definite conclusion on some of the issues that we have debated here today, and I am sure that hon. Members understand that. However, I can set out the simple ambitions that should guide us in reviewing this policy: getting the best people into schools and colleges, relevant to the demands of the particular curriculum or subject, whether academic or vocational; and fairness in dealing with the teachers who dedicate so much to providing excellent education, both academic and vocational. I include in "teachers" the experts from industry and professions who want to pass on their expertise to the next generation by supporting vocational education.
We do not think the current policy goes far enough in meeting those ambitions, which is why Professor Wolf is looking at this area so carefully. It is vital that schools have the flexibility to employ the staff they need to offer excellent vocational education to their particular set of students. It is also vital that the contribution that teachers with a further education background can make to schools is fully recognised by schools.
I want to address the specific proposal that the solution to the problems identified here today is simply to bring the professional statuses for further education and schools together into one status. I am aware of the conclusion of the Skills Commission inquiry into teacher training in vocational education, which was published last year and to which both hon. Members have alluded. It concluded by stating the need to achieve convergence of the two separate teacher training regimes that currently exist for teachers of academic subjects in schools, and those of vocational subjects in FE and the post-compulsory sector. The former Children, Schools and Families Committee reached a similar conclusion when it looked into teacher training and reported early in 2010, under the chairmanship of the hon. Member for Huddersfield, that there should be harmonisation of training programmes.
The Government accept the issues highlighted in those reports. There are clearly problems that we need to look at carefully and address, but in addressing those issues, and those raised in debate today, we must also be careful to take a balanced approach. That means that we must not remove the safeguards that guarantee to
pupils and parents the standard of teachers that they expect in the schools that their children attend. We should remind ourselves of what we have at the moment: a wholly graduate teaching profession with expertise in teaching the national curriculum; teachers trained to deal with the particular challenges of providing a stimulating education to children; and a profession where individual teachers have the flexibility to teach across all school age ranges from five to 18. That is a foundation that the Government will build on to create an outstanding teaching profession, as set out in the schools White Paper, "The Importance of Teaching".
I recognise the logic of convergence. There are, of course, many similarities between the jobs done by teachers in schools and in FE colleges. However, we must also be clear that QTLS status has been designed for the distinct requirements of the further education sector, with a focus on vocational learning and teaching over-16s. That does not prepare teachers to carry out the full range of work that is required of a qualified teacher in a school, as set down in the standards for qualified teacher status. Those include a degree, usually in the subject being taught, knowledge of the national curriculum, which it is the basic duty of schools to offer, and experience of teaching in two age ranges and capabilities around safeguarding and behaviour management that are different for younger children. Simply allowing anyone with QTLS to teach in schools would mean that we were not able to guarantee the rigorous academic expertise of teachers to pupils and parents. Whatever the recommendations, results and the way ahead, a good deal of work will need to be done to offer appropriate teaching to children and young people in those different educational environments. It cannot just happen simply because the rules have changed.
There are ways that the Government can address the need for reform in this area without undermining our plans to build a graduate teaching work force to create an outstanding, high status profession. For example, we have already consulted publicly on an assessment-only route to obtaining QTS for those who have substantial experience of working in schools or further education, and who have a degree. That will offer a more flexible route to QTS accreditation with minimal teacher training.
In the wake of Professor Wolf's recommendations, I expect that we will be able to bring forward further proposals. For example, one such proposal might be to support teachers without degrees who wish to teach the vocational subjects in schools that they are already able to teach in colleges.
I hope, without being able to go into go into an enormous detail, pending the report and given the limitations on my own presence here and my particular brief in the Department for Education, that I have at least signalled to the satisfaction of my hon. Friend and the hon. Member for Huddersfield that this is a matter to which the Government are giving considerable and urgent attention in order to improve the current policy.
Mr Graham Stuart:
I appreciate the tone and quality of the Minister's remarks. The Government are backing university technical colleges, which swill provide education for young people from the age of 14. Those young people will sometimes come in, dressed in a boiler suit at the age of 14, and have a spanner in their hand at 8.30 am or 8.45 am. If the Government are going to
consider, following the Wolf review, greater flexibilities, the age at which young people start must be 14. That would fit with the university technical colleges and the wider Government programme. I just wanted to make that point on the record to the Minister today.
Tim Loughton: I hear what my hon. Friend has said. Those comments might have been as appropriate in the previous debate in this Chamber, which involved the Minister for Further Education, Skills and Lifelong Learning, who is a Minister in both my Department and the Department for Business, Innovation and Skills, but I have heard what he has said and will pass those comments on along with all the comments from hon. Members this afternoon.
I am confident that the decisions that we will take in the light of Professor Wolf's review will result in a more logical position than we have at present-we all readily acknowledge that-which will continue to improve the quality of the school teaching work force, allow schools to make the best use of teachers with experience and expertise from outside the classroom and is fair to all those who play a role in the education of young people.
May I reiterate my gratitude to my hon. Friend the Chair of the Select Committee for the balanced, measured and informed way in which he put his comments? I undertake to pass on the points that both hon. Members have made and to urge my hon. Friend the Minister with responsibility for schools, in his greatly uncluttered diary, to find time to have a more detailed meeting with them.
Mr Sheerman: I remind the Minister that tens of thousands of young people who are 14 years old are presently being taught-not all week, but two or three days a week-in the FE sector. Studio schools, the first of which has opened in Huddersfield, will also be taking young people working in a work environment from the age of 14. It is a fact that 14-year-olds are being taught by highly qualified staff in the FE sector.
Tim Loughton: The hon. Gentleman can be duly contented that I am suitably reminded of the points that he has made and that I will pass them on to my hon. Friends as well. I thank him for his contribution.
I am extremely grateful for the opportunity to introduce this debate. The stimulus for requesting it came from a report published in November 2010 by Citizens Advice Scotland-the umbrella group for citizens advice bureaux in Scotland-called, "Banking on the basics". It was based on a survey that it carried out and the experiences of the many bureaux in the country. Many of the points and recommendations in the report are echoed in the report of the Financial Inclusion Taskforce, "Banking services and poorer households", which was published in December 2010. It addressed the subject on a UK-wide level. Clearly, the issues are similar north and south of the border.
One of the relatively unsung but important pieces of work done by the Labour Government after 1997 was the detailed research, analysis and, most important, development of action plans to tackle poverty, deprivation and social exclusion. Outwith some of the political knockabout that sometimes takes place, I hope that we can all agree that it is only long-term, painstaking work of that kind that will make a real difference. It has to be sustained over a long period-we will not necessarily get instant results.
One of the strengths of the work was how it was spread across Government Departments, including the Treasury. It was not simply sidelined into the kind of Department that normally deals with poverty and deprivation. In 1999, Treasury policy action team 14 made its report on access to financial services, and from that flowed, among many other things, the basic bank account proposal.
Why is access to banking so important in this context? First, it helps people to manage their budgets more effectively and cheaply. Operating in cash is extremely expensive; for example, those who cannot pay fuel bills by direct debit pay a higher tariff, especially if they use prepayment meters. Buying essential household goods through catalogues, and mechanisms such as rent to buy are also extremely expensive. A useful report which highlights some of the issues for poorer families came out just this week from Save the Children.
Basic bank accounts also serve as a gateway to other mainstream financial services, including savings, insurance and credit, so people can make the journey from the basic bank account to other elements of financial inclusion in due course. Increasingly, many employers want to pay wages into a bank account. A number of bureaux survey respondents in the CAS report had encountered difficulties entering employment because of that. They could not get a bank account, or, if they got cheques, they encountered high bank charges to have them cashed.
Clearly, becoming "banked" will not in itself overcome poverty and deprivation, but it forms an important part of the jigsaw of policies and actions that are needed. There has been considerable progress. The goal of halving the number of the "unbanked" was met by 2009. Treasury figures for the UK in December 2010 show that the proportion of adults living in a household without access to a current, basic or savings account reduced
from 4% in 2002-03 to 2% in 2008-09. The corresponding figures for Scotland show a fall from 6% to 3% over the same period.
The unbanked remain largely concentrated in the most deprived areas, and among certain groups: the retired, those who are of working age but in poor health and lone parents. Fairly significantly, in terms of access routes, 54% of the unbanked were council or housing association tenants. Only 16% of those with bank accounts fall into that category. I mention that partly because I think that that is a way in which some of the access routes could be enabled.
That still leaves a substantial number of unbanked adults. The CAS survey showed that two thirds of those who did not have access to a bank account had tried to open one. It is sometimes argued that the remaining unbanked do not want bank accounts.
Chris Evans (Islwyn) (Lab/Co-op): I have listened to my hon. Friend. From my experience working in a bank-I worked for a bank 10 years ago, when the basic bank account was introduced-I have to say that the attitude of some bank workers was appalling. The basic bank account does not credit score, so they could not sell products, and they treated many people with basic bank accounts as second-class citizens. Does she agree that that is an absolute scandal in this day and age?
There are several main reasons why people cannot access basic bank accounts, of which that may well be one. Another is having a poor credit history or, indeed, no credit history. I shall quote one example from the CAS survey:
"I had a full driving licence but never had a bill in my name as I live with my mum and dad. I am 28 years old and can't get a bank account."
Anas Sarwar (Glasgow Central) (Lab): I congratulate my hon. Friend on securing this debate. I was a dentist in a previous life-I am a glutton for punishment, perhaps. I have a similar story. We employed a new dental nurse who had no credit history at all. She did not have a driving licence-she was straight out of school-or her birth certificate, which had been lost in her parents' messy separation, so she was not able to open a bank account. Instead, every week she had to take her cheques to one of the local pawnshops and pay £3.50 to get her money. That is a simple story, but the situation affects thousands of people across the UK.
On the inability to meet some of the identity requirements, the Financial Services Authority permits use of a wide range of identification, but local advice agencies in my constituency have told me that meeting the requirements can be problematic. Not all banks operate to the FSA guidelines. They demand either a passport or a driving licence, which not everyone has.
Such things as a letter from a housing association or benefit entitlement documents are not accepted, so the whole process takes a long time.
Other people are in a situation where they owe money to a bank. Sometimes it is appropriate that they open up a basic bank account elsewhere to enable them to function while they are dealing with previous debts. There is a growing difficulty with the consolidation of banks, in that there are too few banks in many places. In some small towns in Scotland, there is very little choice.
Katy Clark (North Ayrshire and Arran) (Lab): My hon. Friend will be aware that an increasing number of people are being made bankrupt in Scotland because of the operation of legislation that allows people to be made voluntarily bankrupt because of their financial situation. That group in particular has a great deal of difficulty in opening bank accounts. Does she think that that issue also needs to be addressed?
Sheila Gilmore: I very much do. At present, only two of the mainstream banks allow undischarged bankrupts to open a basic bank account, and that creates a difficulty in Scotland in particular. One is the Co-operative bank, but it has few branches in Scotland, even with the merger with Britannia; the other is Barclays, which does not operate in many places in Scotland. In Edinburgh, there are only two Barclays branches. They are near each other in the centre of the city, so it is difficult for people to access any bank in Edinburgh that would enable them to have a basic bank account if they are an undischarged bankrupt.
There are also issues around high bank charges, which can lead people to abandon their bank accounts. For instance, a direct debit comes in at a time when there is no money in the account. They are unaware of that, and a bank charge is levied. Ironically, some people found that doorstep lenders who would be more expensive in the long term were more sympathetic and easier to use. They would allow a payment to be missed occasionally. We know that that is an expensive way of working, but the inflexibility of banks and an automatic bank charge when one is on a marginal income anyway put people off.
Yvonne Fovargue (Makerfield) (Lab): Recent research has found that 60% of people go to the high-cost pay-day lenders to consolidate their borrowing. Does my hon. Friend agree that access to a bank account may prevent some of that from happening?
How can we make further progress? My submission is that banks should be legally required to offer a basic bank account when an application for a current account has been refused. That was proposed in the March 2010 Budget and was a commitment in Labour's 2010 election manifesto.
The Government also have a role in encouraging mainstream banks to use all the best practice and not to introduce obstacles such as those that several of my hon. Friends and I have discussed. That includes ensuring that undischarged bankrupts are allowed to open bank accounts and that people with no credit history are
given access. Banks should market such basic accounts fully, and staff should be trained and encouraged to do so. The ID requirement should be reviewed and, again, staff should be clear about what is necessary; they should not over-ask, which puts people off. If, even with such changes, banks have to or feel that they have to refuse an application, they should at least be obliged to give people information about alternatives.
The Government need to support alternative providers for people on low incomes, including credit unions and community development financial institutions such as Scotcash in Glasgow, which not only offers loans but has been giving people assistance with basic bank accounts. In its second year of operation, Scotcash assisted 553 individuals to open a basic bank account. However, such organisations depend on a relatively high degree of public support, and it is important to consider ways of helping those institutions to grow further. Many were able to get started because of the previous Government's £100 million growth fund. If that fund does not continue, many will have to reduce their operations in future years. Reforming community interest tax relief would assist them, as would keeping mainstream banks to their previous commitment to help such community financial institutions-most have not kept that commitment. The debate is not primarily about savings or credit, but such points illustrate how all the issues are linked and how the Government need to have an overall financial inclusion strategy and to act upon it.
I have some specific questions for the Minister. First, will the Government commit to establishing a universal right to a basic bank account? Secondly, will they continue the work of the Treasury's Financial Inclusion Taskforce after the end of the current financial year, because it has been behind so many measures? Thirdly, how will they encourage banks to remove current obstacles to securing a basic bank account, as outlined? Fourthly, how will they support alternative mechanisms for those for whom a bank account may still be impossible or undesirable?
I have a couple of specific proposals for the Minister. What practical and financial support can be given to enable post offices and credit unions to enter partnerships? In the short time that I have been in the House, there has been much discussion but no specific action allowing that to happen. If post offices do that, there is a cost, which the post office network perhaps feels is difficult to meet at this stage in its operations, but the Government could assist.
Has my hon. Friend shared my experience of young people in particular having difficulties? In my constituency, Save the Children has given compelling evidence about young people who have left the family home-they are put out of it-being denied the means to get a bank account and, therefore, the means to set up proper financial arrangements, further pushing them into poverty. The issue is a key plank in tackling poverty and helping people back on to their feet.
I thank my hon. Friend for making that point. The issue is important for young people. Many people talk about financial education being
important-indeed, it is-but if someone does not even have the mechanisms in place to act on such financial information, which was perhaps got through school, participating fully in society, getting employment, having wages paid into banks and so on will be difficult. Many young people in that situation are setting up home for the first time, so it would be helpful if they could access facilities that, for example, allow them to make fuel payments cheaply.
Finally, and specifically, I am interested in the Government's view on reforming the community investment tax relief to assist community development financial institutions, so that they can expand their business without necessarily being wholly dependent on grant assistance. That would enable such an important strand of financial inclusion to continue.
The Financial Secretary to the Treasury (Mr Mark Hoban): I congratulate the hon. Member for Edinburgh East (Sheila Gilmore) on securing this important debate tracking progress on basic bank accounts and on what more needs to be done to encourage financial inclusion.
I confirm the coalition Government's commitment to improving levels of financial inclusion. I have been involved and interested in the issue for some time. We believe that banks should serve the economy and that they should be committed to improving access to banking and the transparency of financial products for consumers.
Tackling unnecessary exclusion from banking services can help to alleviate some of the problems faced by low-income families who are currently unable to access mainstream banking services. As the hon. Lady has said, the benefits include being able to receive payments through different channels, having a more secure place to keep money and reducing the cost of household bills.
That is why the Government are committed to improving access to basic banking services and to helping people to use those services responsibly. That can only be achieved through collaboration between a number of parties, including the Government and the financial services industry, as well as a range of local partners, such as the devolved Governments, local authorities, social landlords, advice agencies, credit unions and others.
It is important to acknowledge, as the hon. Lady did, the real progress towards financial inclusion in recent years, and to note that such progress is due to the openness and support of many in the financial services sector. In her speech, the hon. Lady highlighted the reduction in the unbanked over the course of the past few years. Since 2002-03, the number of adults living in households without a transactional bank account has decreased from 3.57 million to 1.54 million in 2008-09. That number continued to fall in the last year for which we have information, with 200,000 fewer adults living in households without access to a transactional bank account. However, we cannot afford to be complacent. There is still scope to bring more households into banking services and to encourage the banks to maintain strong standards of customer service for poorer households.
Chris Evans: Before the Minister moves on, what does he believe that banks can do to manage people who are currently running their basic bank accounts very well on to mainstream banking, so that they can have credit facilities? What action can move people on to mainstream banking?
Mr Hoban: That is an important point. Banks should see the opportunity to encourage and enable people to get greater access to mainstream services, moving them from a basic bank account to a more fully functioning current account.
I will touch on the issue later, but we need to go with the grain of how people want to live their lives. Many people are comfortable with access to a bank account without an overdraft facility, for example. A challenge for policy makers is that we think of things that we might like as a function, even though sections of the community might not want such functionality in their accounts. We need to think carefully about that, although we should be clear that moving to a fully functioning current account ought to be open to those with basic bank accounts. Banks need to look at credit histories and how people manage their accounts as part of that process.
At the request of the financial inclusion taskforce, eight of the major retail bank account providers have collaborated to provide management data on their basic bank accounts. That allows us to look at levels of take-up in different local authority areas and wards across the country. At local level, there are financial inclusion champions, such as the group in Scotland funded by the Department for Work and Pensions. They are looking at how best to work in deprived areas to raise awareness and encourage more people to open bank accounts. We can continue to make effective use of up-to-date regional data to help tackle the issue in areas of financial exclusion.
The hon. Lady referred to the financial inclusion taskforce report that was published in December. That is a timely piece of work that gives us the opportunity to take stock of where we are. It raises a number of issues referred to by the hon. Lady and her colleagues, and I encourage hon. Members to read the report on the Treasury website.
The taskforce found that the experience of banking services for poorer households has been mixed. Many households have made savings on services and retail purchases, but some have lost money through bank charges. The taskforce found that the remaining unbanked are generally the poorest and most deprived people, and it recommended a number of minor changes to existing basic bank accounts to make them more accessible and easier for poorer households to use. It also highlighted the scale of the challenge of extending bank accounts to those who currently do not have them.
The research found significant indicators of relative disadvantage among the unbanked: eight out of 10 of the unbanked are in receipt of income-related benefits; more than a third have major health conditions; and a quarter have numeracy or literacy problems. As more people open bank accounts, we see the unbanked becoming concentrated in hard-to-reach, more deprived groups. We must think carefully about how to work closely with those groups to get people to open bank accounts and access the benefits that they bring.
Interestingly, we should not assume that those who do not have a bank account have not previously held one. Six out of 10 unbanked people have previously held a bank account. The research does not give reasons why those people do not currently have a bank account, but some may have had issues with managing their account and decided not to keep it open, or the account may have been closed. We are not necessarily talking about people with no experience of bank accounts. Some people may have opted not to have an account for a particular reason.
Let me reiterate the point about going with the grain of how people run their lives. Many unbanked consumers express a preference for managing their finances in cash. Some low-income households employ a number of strategies to ensure that money is available for essential living expenses, which include not withdrawing all their benefit payments at once, leaving a small amount of money as a buffer, or perhaps putting cash towards a particular purpose. We are well aware of the number of people who join holiday clubs or Christmas clubs to try to keep money in a defined account that is kept for a specific purpose, and a lot of people on low incomes find that to be a more effective way of having control over their money. They want direct control over their spending and feel that a bank account takes that away from them. Unbanked people are more concentrated in particular groups, but not having a bank account could be a conscious decision as much as a matter of exclusion, and we must therefore have a more flexible approach.
In the long term, the taskforce believes that the introduction of new models and channels for the delivery of financial services may be necessary to address the difficulties that poorer households can experience with banking. It has called on the Government to engage further with banks, e-money service providers, bill payment organisations, retailers and post offices to pursue new ways to improve the opportunities for low-income households to make the most of their money. We are in danger of getting stuck by thinking about a model of banking based around bank accounts. Increasingly, people are turning to prepayment cards or e-money as a way of controlling their finances or paying bills online.
Sheila Gilmore: The Minister has correctly identified one concern of the financial inclusion taskforce-that of bank charges that are very high in relation to the sums of money that people are dealing with. Does the Minister have any proposals to address the banks on that issue, given that by definition, people cannot run up unnecessary debt on those accounts? Perhaps bank charges should be reduced for that customer group.
I want to respond to a couple of specific points. Hon. Members have discussed bankrupts not being able to open bank accounts, and the hon. Lady was right to say that Barclays and the Co-operative bank allow undischarged bankrupts to open accounts. A number of banks are currently reviewing their policies and, in response to a call by the Government in July for banks to reconsider
the issue and recognise the problem, the Insolvency Service is working with the British Bankers Association to decide how to address the issue.
The guidelines in law on identification are high level, and banks and financial services institutions have a great deal of flexibility in deciding how to prove someone's identity. It is not only about having a driving licence or a passport, because there are other ways of doing it. In one of my constituency cases, a letter from the local council addressed to the person who was seeking to open a bank account was deemed to be sufficient proof of identity. I encourage banks to make their staff more aware of the rules and flexibility, and we will continue to raise that matter with the banks and the BBA.
The hon. Member for Islwyn (Chris Evans) asked whether banks are open to people opening basic bank accounts. The work of the financial inclusion taskforce, which sent mystery shoppers into banks, demonstrated that 80% of bank managers are much more open to people opening basic bank accounts. That issue has been a problem in the past, and we must maintain pressure on the banks to ensure that they offer basic bank accounts and do not turn customers away. We must tackle the barriers to people opening bank accounts.
Community investment tax relief is an important way of providing support. That tax is due for review shortly, and we will work with a full range of stakeholders to consider the options available for reform.
Thank you, Mr Hood. I will get used to the conventions of this place eventually. The Minister has responded to my hon. Friend the Member for Edinburgh East (Sheila Gilmore) on the subject of basic bank accounts. One point that I regularly heard from the BBA, the Royal Bank of Scotland and HBOS, as it was at the time, was that if the staff in local branches were not able to offer a full bank account to potential customers, they did not then offer a basic bank account. Will the Government consider issuing
guidance on that through the BBA to ensure that people who do not meet the criteria for a full bank account are automatically offered a basic bank account?
Mr Hoban: I do not want to get bogged down in what banks should or should not do. Through its mystery shopping exercise, the taskforce looked at the offering of basic bank accounts, and it will publish a more detailed report this year that will help inform those processes. Obviously, the Banking Code Standards Board will also have an interest in how such accounts are offered.
The hon. Member for Edinburgh East also asked about support for credit unions and post offices working together. There has been much discussion about that in recent months, and there is already a lot of co-operation between post offices and credit unions. For example, credit union current account holders can access their accounts through the post office, and more thought is being applied to that area.
We take financial inclusion seriously, and we want to ensure that more people have access to a bank account and the benefits that that brings. It is important to ensure that bank accounts and financial services work with the grain of how people live their lives. We must look at new technological approaches and the barriers to opening bank accounts. Together, we will take forward the work of the financial inclusion taskforce in conjunction with our partners not only in government but in the financial services sector. If I have not replied to any of the hon. Lady's points I will happily respond to them by letter.
Mr Hoban: The previous Government committed the financial inclusion taskforce to a five-year life. The problem is ensuring that inclusion becomes a mainstream financial services issue and is not seen as something on the margins. That is why I will work closely with the financial services sector and other interested parties to see how we can best take forward the work of the financial inclusion taskforce. It is not an issue for those on the margins; it is an issue that should be taken seriously from bank boards to bank branches.