My Lords, I am grateful to noble Lords for their contributions. I am optimistic about persuading the noble Baroness, Lady Morris, once again of the merit of the employer representative bodies being in charge of the local skills improvement plans.
I am grateful to my noble friend Lord Baker for his challenge, which was an important one. I can confirm to him that, particularly in my role as Minister for Women, I have heard from many unemployed women. I think I am not alone in your Lordships’ House in this: through such a thing as a pandemic, many of us do not just listen to the voices of unemployed people but in fact know unemployed people who are claiming universal credit. My noble friend raises an important challenge for us always to keep in mind.
I shall deal with one or two themes before I deal with the detail of the amendment, particularly the question asked by the noble Baroness, Lady Morris. It is an interesting position to be in to be putting forward legislation for the Secretary of State to designate the power for an employer representative body to produce the local skills improvement plan. Clause 1(6) outlines that an LSIP
“draws on the views of employers operating within the specified area, and any other evidence, to summarise the skills, capabilities or expertise that are, or may in the future be, required in the specified area”.
That is the language that we have seen in technical education and occupational requirements for apprenticeships. The local skills improvement plans will set out the key changes needed for post-16 technical education training, as I have emphasised, and make it more responsive to employers’ needs, but this is not a complete economic plan nor a complete local strategy. In some ways it is a compliment that noble Lords have viewed this as more expansive than it actually is, but it merely sets out what the employer needs are in relation to technical education and, as I say, puts the duty of co-operation on relevant providers so that there is a dynamic relationship on the ground.
Relationships are the theme of employers and employer engagement. It is true that in the recent changes much has been asked of employers in relation to apprenticeships, and then we introduced T-levels; we had engagement from 250 employers on T-levels, and we should not underestimate that. I have to tweak the language of the noble Lord, Lord Watson: they are not always looking to their own needs. That is why we have gone for an employer representative body rather than, say, simply asking BAE Systems to do it for the local area around Barrow. There has to be a representative function, a point that the noble Lord, Lord Addington, referred to. It is important that these are representative bodies of employers, not just collaborations.
My noble friend Lord Baker does down his own work. On my visit to Ron Dearing UTC, I thought I was passing a shopping centre because the employers that pay to be part of that UTC are advertised around the side of the building. I met the CEOs of the businesses involved and they were solving their skills needs by getting directly involved in the UTC.
Obviously, we have heard from many employers about productivity and about the skills gaps that we have. There is good evidence on which we can base the fact that employer representative bodies—it will not always be a chamber of commerce, but that might be one of the bodies that puts itself forward—do want to solve these skills needs, and there is significant good will in relation to their involvement.
The noble Lord, Lord Bradley, and my noble friend Lady Neville-Rolfe, raised the question of what the local area is. There is no agreed defined local government geography. I mean by that that there is no agreed defined standard across our country, and there is no single functional economic area—so we have allowed areas to define themselves. Having lived in Greater Manchester, I know that sometimes a whole area will want to define itself, but the freedom has been given. The areas for the trailblazers have not been dictated from the centre. We will publish their plans when they produce them, and they are informing the guidance.
Another noble Lord asked that question. There is that freedom from the centre that says, “Tell us what your functional economic area is for the employer representative body and the local skills improvement plans”. As I outlined, most of the applications came with a letter—so we have not encountered the resistance from the mayoral combined authorities or local authorities in relation to the trailblazers that we have embarked on.
On the point about providers made by the noble Lord, Lord Storey, I would say that providers often have different perspectives, from FE colleges to higher education institutions to the ITPs. That is why we want all providers of post-16 training to be involved, but I fear, from some of the comments that noble Lords have made, that we will be back to what the noble Baroness, Lady Morris, mentioned at Second Reading: having a cast of thousands.
On Amendments 5, 13, 14, 16, 23, 28, 29, 37 and 38, the relevant providers will play an important role, working with the employer representative bodies to develop these plans. We have not taken them out of the picture; the duty is there to co-operate. To answer the point from the noble Lord, Lord Bradley, we made it clear in the Skills for Jobs White Paper that mayoral combined authorities will be engaged in the development of local skills plans where they have a presence in the area. We expect employer representative bodies to engage with and build on the good skills-related work that local authorities and mayoral combined authorities are currently doing, including skills advisory panels. We will build on that work, but ERBs will be independent of government. If I am correct in the definition of LEPs, that is not their role—but there is currently a review and we will make clear the plans for that.
I emphasise again the limit of the LSIP—hence it is complemented in the Bill by the duty under Clause 5 for providers to look at their entire provision for local needs. I do not want to underplay it completely, but it has rather been taken to a level that it will not actually have in the Bill. It is to ensure that the skills are closely aligned to local labour markets, and employers are best placed to know that. Noble Lords will be encouraged to hear that this is not an amendment on which I will say that everything will be in the guidance and should not be in the Bill. We have a point of principle here that is the DNA running through our technical education changes about employers being the body that can assess needs. They will play a leading role and there will be duties on providers to engage with them. The premium we place on the ongoing direct and dynamic engagement between providers and employers is what we are trying to set up in this legislation.
Additionally, to discharge this new role effectively, the designated employer representative will need and want to work closely with MCAs and individual local authorities. There is a question of practicality as there will be a large number of providers and stakeholders, and indeed a number of local authorities, in any given local area with different perspectives on the key priorities. Giving them all a statutory role in developing the LSIP is much less practical than having a single designated employer representative body that can engage with all the relevant providers in a way that minimises burdens and brokers a plan.
This set of amendments includes placing a new duty on the designated ERBs to co-operate with relevant providers. However, that is not necessary since a designated body cannot discharge its role, as already set out in the legislation, without the co-operation of those providers.
Looking beyond the providers and employers, I think there is broad agreement that the views and priorities of key local stakeholders should be considered in developing these plans. That is why we want employer representative bodies to engage meaningfully with key local stakeholders, and we have made this clear with the trailblazers we are running this year. However, a rigid process—as my noble friend Lady Neville-Rolfe mentioned—with a fixed set of local stakeholders could make it difficult to effectively plan, keep under review and keep up-to-date in an agile way within a timescale that is reasonably responsive to employers’ skills needs. Therefore, at this point we will use statutory guidance to set out the clear expectations on key stakeholders that employer representative bodies will need to engage. As I have said to noble Lords before, this will be informed by the trailblazers. If the designated employer representative body does not have regard to the guidance, the Secretary of State could decide not to approve and publish the plan and actually has a power to remove the designation.
On Amendment 31, the noble Lord, Lord Watson, challenged how representative the ERBs are. Again, they will be informed by a range of employer views. That is clear on the face of the Bill. The Secretary of State can designate a representative body only when satisfied that it is reasonably representative of employers operating within a specified area. I know there has been some interchange about reasonableness between the two Front Benches opposite, but that is obviously an objective criterion that is assessable on evidence. The Bill requires designated employer representative bodies to draw on the views of employers in the area and other evidence, so it is a very wide scope. To do this, they would need to talk to employers outside the body itself and other bodies present in the area, and we would put that in the guidance. A balanced judgment of what constitutes a “reasonably representative” employer representative body will be informed by suitable evidence, including, for instance, the extent to which characteristics of an employer representative body’s membership compares to the overall population of employers in the local area.
On the concerns of the noble Lords, Lord Watson, Lord Patel and Lord Curry, about SMEs, public sector employers and voluntary sector employers, of course MCAs are an employer, but they are not an employer representative body. They may also be a member of the chamber of commerce, like the local hospital might be. That is the distinction we have made. The term “employer” in Clause 4 is defined particularly widely as any
“person that engages, or intends to engage, an individual under … a contract of service or apprenticeship, or … a contract for services … for the purposes of a business, trade or profession”.
Therefore, it includes employers of all sizes, and public authorities and charitable institutions are also specifically mentioned. Of course, when the Secretary of State is designating the ERB, he is bound by the normal
principles of public law to act rationally and fairly, and he will need to take into account a range of relevant, reliable and accurate information.
Amendment 36, in the name of the noble Lord, Lord Watson, would require LSIPs to have due regard to national and regional strategies, particularly in respect of decarbonisation. I think I have outlined a number of times to noble Lords that these will be expected to take into account various national strategies, particularly around the net-zero target, and that this will be within the guidance. Obviously, it is important to have regard to that in terms of the green workforce that we need in the future. But they should also draw on other evidence, and we expect that to include regional strategies.
To deal with the points raised by the noble Lords, Lord Curry and Lord Patel, the Skills for Jobs White Paper has already made clear that we expect the local skills improvement plans to be informed by, and in turn inform, national skills priorities as highlighted by the Skills and Productivity Board. Specific strategies and associated priorities are likely to change and evolve over time, so we believe that describing them in guidance that can be regularly updated, rather than legislation, is the best way of future-proofing the Bill.
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The point about accountability that came up in the first group of amendments was raised by the noble Lord under Amendment 40. We of course agree that the ERBs need to be accountable for their leadership of local skills improvement plans, and the Bill provides a framework for that. The Secretary of State must be satisfied that an eligible body is capable of developing a local skills improvement plan in an impartial manner before they can be designated; we have not mentioned this before, but I think it is very important that that is on the face of the Bill. Then the Secretary of State must publish a notice of the designation of an employer representative body. He must name the body and the specified area for the designation, along with the effective date and any terms and conditions that the designation is subject to. On previous groups of amendments, I have said that the Secretary of State can set the terms and conditions; in relation to trailblazers, there is public money and that, of course, is always spent in accordance with appropriate transparency.
In its role, the designated employer representative body will be accountable to the Secretary of State and the department will monitor and review its performance. Importantly, Clause 3 gives the Secretary of State the power to remove the designation. If that designation is removed, the Secretary of State is under an obligation to publish that notice as well. Again, it can be subject to terms and conditions, a point raised by the noble Lord, Lord Aberdare.
I hope that my remarks have reassured noble Lords that the Bill already contains a number of important safeguards to ensure that the right organisations are involved in the process of drawing up an evidence-based and actionable local skills improvement plan. In the light of what I have said, therefore, I hope that the noble Lord, Lord Storey, will feel able to withdraw his amendment and that other noble Lords will not wish to press theirs.