Welcome to our second panel today. First, please could I ask you to introduce yourselves, starting with the Minister?

I am the deputy director at the Department for Work and Pensions for the growth and skills levy strategy.

I am co-CEO of Skills England.

I am the deputy director for advanced manufacturing at the Department for Business and Trade.

Thank you for attending, and thank you for coming from different Departments. When we do a cross-cutting inquiry such as this, it is really welcome that the Departments are able to work together and come as witnesses. Thank you, Lilian, for ensuring that happened as well. Starting with you, Minister, to what extent does it matter to your Department whether we use British-built transport on our roads and networks? Is this a goal, or is the Department agnostic about where vehicles and equipment are manufactured?

Yes, do you want to just specifically answer that point?

We definitely agree that public procurement is a critical growth lever to bolster domestic competitiveness. We have looked to build on recent initiatives. The Procurement Act 2023 came into force only in February. The “National Procurement Policy Statement” really emphasises that it can be a tool to look at how we can drive domestic competitiveness, while being really cognisant of the international trading rules landscape that we are bound by on procurement policy. We are consulting at the moment on how we can potentially go further in this space, but really all the reforms are centred around ensuring that there is national capability, small business and supply chain resilience, and good quality jobs across the country in regional hubs. Those sorts of matters are going to be fed into procurement processes.

We are going to come back to some issues.

I am actually quite proud of the work the Government have done to encourage people to buy British cars and support the automotive sector in the UK. But the state is one of the biggest purchasers of cars from outside the UK. That comes in a lot of shapes and forms, but in particular, I am thinking about the Motability scheme, which is one of the biggest car importers in the UK, perhaps the biggest car importer in the UK. Those cars are bought using money from the state. Is there more we can do through procurement to encourage it to support the British automotive sector?

I am sure that as part of these procurement amendments that it is being looked into. I do not know specifically about that scheme, but I can follow up if that is something that would be helpful.

There is significant purchasing power there. If people see more British cars on the road, perhaps they are more likely to buy them. Does that also extend to buses? I know manufacturing in the bus industry in the UK is under a lot of stress. Often Chinese vehicles are more tempting. In some parts of the UK, particularly in Scotland, we have been buying Chinese buses using state money. Is there more the state can do to make sure that where state money is involved, we are buying British-made buses? Sorry, I am looking at you.

Just very briefly on that, I hear what you are saying and that sounds like it answers Scott’s question. However, because it is this devolved transport system, are the procurement rules actually going to be telling the devolved areas what they should be doing as well, or is that just an aspiration that it would just be included? It sounded a little vague that yes, that would definitely be happening, but what mechanism are you using to ensure that those devolved transport authorities are looking to do British? Because ultimately, they are not allowed to make a profit, so they are going to be looking for the cheapest, best value. Is that just a nice aspiration, or are you actually going to do something practical to ensure it happens?

The consultation that is out at the moment is to really garner as many ideas as possible on how to direct this system, so it gets the result that it drives British competitiveness locally. All those devolved areas will use the Procurement Act as a guide to do that. It is a balance because we have to sit within that international trading remit, and we benefit from that international trading remit. We export £1.3 trillion for contracts related to British procurement. It has to be constructed in a way that has that balance attached, while acknowledging the goal is local growth. We are trying to do that.

On that, the challenge is you are consulting at the moment, but most of those strategic mayoral authorities do not yet exist. It is important to make sure you are getting the voices of not the big city mayoralties, but the slightly smaller ones that are going to exist, because ultimately, they are going to get delivered with a package of procurement rules that they have no opportunity to implement.

Thank you to the panel for coming to speak to us today. What is the Government’s assessment of the most pressing skills need for the transport manufacturing sectors? How does that differ from other forms of manufacturing?

From a Skills England perspective, our role is really in understanding the national, regional and local pictures and how they connect. There is really important work to try to have a good grip on that. One of the things that we are doing is pulling together the data, evidence and insight to enable us to really get under the bonnet, if you like, of some questions because as we know, the skills landscape is a complex thing. There are a lot of players within it. Skills England’s role in bringing that together to help people find the right way through the skills system to access skills provision, whether they are an employee, an employer, or a training provider, is really critical. We have been up and running in full form only since June, so we are still quite new but have managed to produce quite a lot, I am very proud to say. What we know from the data we have published already is that across advanced manufacturing generally, there are 49,000 manufacturing vacancies across sectors. That is not just in transport, but as the Minister was saying, there is some commonality across different advanced manufacturing roles. We know where those vacancies are. We have a local skills dashboard, which is published. If you want to click on a map and see what it looks like in your area, you can do that and see in real time where the shortages are. Layering on top of that, we have published a sector needs assessment looking at advanced manufacturing. A lot of the themes from that relate very closely to the questions that you have around transport manufacturing. For example, automation and industrial digitalisation—that is hard to say, and even harder to effect—adoption of AI. What does robotics mean in this sector? Data-driven production systems are reshaping every level. The impact of AI is great, and it is fast, so we need to move quickly as this develops. There are also themes around environmental sustainability and, of course, those core engineering craft skills, the hands-on craft skills of welding, fabrication, electrical and mechanical maintenance, which we must not forget because they are really critical too. It is about understanding the whole landscape for skills and how people can access the right bit.

Just to really quickly follow up, I am guest sitting from the Work and Pensions Committee. We have just published the inquiry on “Get Britain Working” this morning. The big element of that was good jobs for people who need them. What work is being done? We have a skills shortage, and we have lots of individuals who are not in the employment market. What work is being done to match those things off?

Following the recent machinery of government change, I am sure you are aware that Skills England and all policy relating to adult skills is now with DWP. At Skills England, we report into DWP, which makes a lot of sense since our strapline is, “Better skills for better jobs.” Joining that together even more effectively is a real opportunity for us. To your question about how we actually do that on the ground and how we make sure that people can see those pathways into jobs, join-up across Government on skills is very good and Skills England provides a focal point for that now. But sitting next to colleagues who are working on NEET policy and the youth guarantee, it is much easier to do that faster and more effectively. Things like our new foundation apprenticeships—the Minister already mentioned one in engineering—are really good. They were launched only in August, so it is early days, but we are seeing how those come through as entry-level apprenticeships for people interested in engineering and manufacturing, in particular. We also work locally with mayoral and other strategic authorities on what is working on the ground. There is a local flavour to skills provision, and there are specific local needs depending on the manufacturing in a particular area. Looking at those employability programmes and industrial placements, so that employers and young people can meet each other and see that this person is really enthused by a career in manufacturing or engineering, is the on-the-ground real difference that we can make through those kinds of join-ups.

For Sarah, if I may, following up, some criticisms of Skills England have been that it does not have the directive power that it needs to actually push the findings from your insight work. I have been impressed by some insight work that I have seen so far. As you say, I know you have been set up only since June. The issue is, can you be really directive towards local areas that they should follow the insight work and the skills gaps that you have identified, rather than just going off and doing their own thing? Do you think Skills England has the power that it needs to make people follow the insights set out in its work and in the industrial strategy from the Government, or are we just going to see more hairdressing courses?

I could do with some hairdressing at the moment.

Me too, for sure.

It is a really important question. Skills England is already seen as the authoritative voice on the data and the evidence. People are quoting our figures and insight and using them locally already, which is really pleasing to see. At a session yesterday, for example, Make UK was making great use of our data and evidence to help its work, which is really fantastic to see. We are really proud of that. Because the skills system is complicated, big and messy, having a single source of data, information and insight that people can use and rely on, where they can talk the same language and use the same terms and definitions of things, is really helping already. It also helps that we have such an enthusiastic and energetic board and chair in Phil Smith—whom many of you will have already met or know—formerly of Cisco, with really strong experience and a passionate advocate for digital and AI innovation. We are well connected through our board to a huge range of sectors and industry. The proof will be in the pudding, but so far it feels pretty good.

It is important that we remember what Skills England is but also what, quite clearly, it is not.

In terms of some teeth in the system, there are local skills improvement plans, which have to exist in every area.

We will come on to that in more detail.

But providers, particularly FE colleges, are under a statutory duty to adhere to and have regard to those plans, which in turn need to go through a Secretary of State and Education Secretary sign-off. That is one mechanism whereby there are some teeth in the system, in terms of providers having to have regard to the findings of these plans. Indeed, Ofsted then has a role in assessing how providers are meeting local skills needs as well. Again, this is a relatively newish bit of the picture, but it has been around for a few years now. That is another lever that can be used to try to push provision of skills training in the right direction.

Now we are going to move on to the impact of the skills shortages in transport manufacturing.

Quite a lot of this has been covered actually, but I would like to just go back to Amanda’s point on NEETs and economic inactivity. I have met with The Purpose Coalition employers in my constituency recently, Rebecca, and what they bring up is that these employers want to do this, but how do we encourage employers to do more through the social element of contracts? Is there something in that?

We have discussed the procurement changes that are going on at the moment, or have gone on, and the consultation that has been looked at. When you have such skill shortages across the piece, the wider challenge is ensuring that we are directing our attention to reskill the current workforce to the jobs of the future that are really going to help those industries be future-facing. That is certainly what the industrial strategy and advanced manufacturing sector plan, which look at some of this stuff, are really trying to do.

But there is a shortage of people overall. Surely getting people who are inactive into skilled positions is a good thing to be doing, and procurement is a valuable tool in doing that?

It’s about training, isn’t it? It is about bringing people in through various different levels, be that entry or reskilling, for different professions within the system, to plug those gaps as much as we can.

Sarah, you spoke quite well about what the Government are doing in terms of meeting the skills gap. Employers are partners in this. Is there more employers can do alone, or is it always going to have to be a partnership with the state to get this right? Because employers like Airbus and the automotive sector came in last time and spoke at length about the challenges they face. Is there more they can do, or do we really need state intervention to solve this problem?

There is a huge amount that employers are already doing and could continue to do to go further, in terms of their own learning and development. There are some fantastic examples of the training they put on in-house, and I am sure you have seen and heard from industry about those. What is interesting is the slightly grey area where Government responsibility ends and industrial responsibility starts, if you like. Where do we meet in the middle, and how do we come together to work out what the problems are? Our chair, Phil Smith, has described it in the past as Government pointing at industry saying, “You need to do more,” and industry pointing at Government and saying, “No, no. You need to do more.” What Skills England is doing is bringing employers and Government together and saying, “Okay, what actually is the problem here? What is the gap? What is the problem? What’s wrong with the current system that is not meeting a need? Which apprenticeship is not quite working as it should? Where is there a need for a new short course?” Those sorts of questions. What are the solutions that are needed? Then they sit down around a table and say, “Okay, so which part of this problem can be fixed by Government, by strategic authority, by employer?” They then come together and work out exactly how to overcome those obstacles. Already we are seeing some benefits in those sessions, or roundtables, bringing people together to pinpoint what the problem actually is, and then finding the solution to resolve it.

Lilian, Sarah talked about a fantastic website that told us where all the skill gaps were. I am sure it is quite gloomy in some places, but there is lots of opportunity, I guess. Is that a challenge for the Department then, just to make sure that you are keeping an eye on both the skills we need now, but also the future skills? We were talking earlier in the previous session about hydrogen-powered cars, which to me still seem quite futuristic. It is about meeting the skills gaps just now but also looking forward. Is that something the Department is on top of?

It feels like right across this conversation, a lot of things are coming into alignment. There is still lots to do, of course, but it feels like we have identified a problem. But what we have not really spoken about is universities. I come from the university sector, so I can be a little critical of it. Are they aligned with this correctly, or are they too focused on what students want to study rather than what the sector needs, in terms of being able to meet these gaps? Because it is driven by what students want to do at university, rather than necessarily what industry needs graduates to do. I know the two things are not completely separate, but it is very much a market, is it not, when it comes to universities?

Yes, definitely. Alan mentioned LSIPs. That is another way in which universities are really engaging well through a local planning system. I was at a meeting last month in Bedfordshire, where universities, colleges and local employers were all sitting down together going, “Okay, what are we going to need? Who’s delivering what? Let’s carve it up between us and make sure that what we’re planning to do over the next few years makes sense for this particular patch.” There is also something really interesting for universities in thinking about how to connect in that way, not just nationally but locally, because universities are such an important part of local economies themselves. It is important to see that and see how that planning locally can really have a big impact.

The next question is going to focus on local.

Obviously, one of the things that we have been talking about quite a lot in these inquiries is the challenge that we have around transport manufacturing and manufacturing in other sectors. Obviously, there is a huge push on the industrial strategy. In my constituency down in the south-west, defence is the main hub, so the vast majority of businesses down there want to be focusing on defence. But there are other key areas further up the country where you might have manufacturing for transport and defence going on. Our question is: how are you planning on striking the right balance between addressing the skill shortages at a national level but also in those local areas? In a sense, Alan has already described this with his local plans, but when there is a drive from that industrial strategy coming from the top, how do we relate to what is going on locally? There is just a sub-question particularly around SMEs. I am assuming you get SME groups that come and speak to you, Sarah. But ultimately, particularly around FE colleges, it is the big players that dictate what is taught in an FE college usually, rather than upskilling those smaller manufacturing pipelines. We know that is something that is key for transport, but also there are other areas. We would like a sense of how we can address that challenge of the different demands, but also, specifically, how are you looking at the big players versus SMEs?

That is great. It is really important because it is a complicated picture in trying to do that national, regional, local join-up. When we look at what the economy needs in terms of the occupations that are in demand, the job vacancies that we know exist now, how does that look? You can look at it in a national picture. You can see job vacancies, data, labour market information, and what that is telling us regionally and then locally. The planning and the join-up—the joining the dots, as I call it—are really, really important. There is that local lens through LSIPs, which Alan has described. Skills England has oversight of those 39 LSIPs, those local skills improvement plans. Our team checks and makes sure, in fact, sometimes using AI ourselves to analyse them and check the themes that are coming through from them. A really strong element of those LSIPs is also that co-design with local partners, as I have mentioned, with employers, universities, colleges, making sure that they stack up to a sensible whole. The south-west is a really great example. A couple of weeks ago, we hosted a roundtable with employers, in which we thought about the skills needed for EV battery production. We talked to a local college about the new provision that is coming there, and how we make sure that that pipeline of people comes through for those up to 4,000 jobs in Somerset. It is really, really important that we have that pipeline in time for the jobs when they hit and they are needed. Careful planning is required at that level. Also, through understanding regional need, and particularly through conversations with SMEs and umbrella organisations for SMEs, certain aspects and job skills gaps have come to light. They coalesce, and we see them at the local and regional level. For example, there is a real need for more welders, and skilled welders, as you all know. One of our board members convened a meeting of all the key players around what is missing, what the gap is. Is it about a passport? Is it about a short course that is needed? What is it that is missing, and how can we pull people together to fill that gap? I hope that gives a bit of an explanation of how it works on the ground, through those examples. It is really, really critical to get that regional planning right.

We heard in a previous session that the skills that people need for making biscuits can overlap with the skills needed to make batteries for electric vehicles. What is the Government doing to make the best use of those overlapping skills, ideally without causing a shortage of custard creams?

We have heard that qualification requirements can sometimes hamper movement between different manufacturing sectors. Do you think this is something where, basically, the job adverts and the expectations of the company need to change, or is it that we need to change the qualifications themselves so that they, in essence, become more cross-sector?

Skills England is the custodian of occupational standards. Those are the standards that relate to particular jobs. From those occupational standards, apprenticeships, T-levels, other technical qualifications—in future V-levels—will all relate. It is the skeleton, or the bedrock, for all technical and vocational courses and training. Having a more common language and a better understanding of those key skills and occupational standards across the piece, will help employers to either describe things in those ways or talk to us about why the occupational standards need to be updated, because things have moved on or technology has changed. Therefore, that conversation will help the underpinning of the system relate more effectively to what employers need.

Might I just add to that? We are quite an outlier when it comes to apprenticeship standards. We have over 700 in England, which is really very high compared to other countries. We are increasingly looking at whether we need to have them all. Some have never even been used. Also, where there is a demand for something new, can an existing standard be adapted, rather than just creating something new and adding to this really big breadth of offer?

Just to add to that further, where there are new things coming on stream, where we are looking at automation, AI, digital, which are much more cross-sector and have that transferability, can we be signposting to something that can be common for multiple sectors to use?

I would just add to that. One of the things that needs to be taken into account is the frequent review of the standards. We heard at the last session that the automotive technician T-level standard has not been updated for six years, and obviously things are moving on in that field. The people I worry about particularly are those currently employed in internal combustion engine manufacture, or in repair and sales of motorcars, who are in the workforce now and are going to still be in the workforce in 20 years, when we do not need internal combustion engines or the repair functionality that we have at the moment. Lilian, I appreciated you setting out our offer to career changers. I worry that the lifelong learning entitlement starts at too high a skills level and that there is a gap, particularly for people who do not have formal qualifications but have skills. I would be very interested to hear what Government intend to do across the Departments to ensure those career changers get to the next good job, which may well be in transport manufacturing in some parts of the country like mine.

We would completely agree with you. Those existing employees are the lifeblood of manufacturing. We cannot afford to lose them, simply because of the number of shortages we have, but also because we want to honour the fact they have been in these companies for a long time. They have so much expertise. We need to just grow that and pivot that into new areas of functions for those companies. Through the consultation that we did through the industrial strategy, employers told us that very loudly and clearly. As part of the thinking on what to do about that, we have created and announced the upskilling and reskilling programme. Really the goal is to provide a nationally consistent and quality-assured approach to the development of short courses for advanced manufacturing, with a real focus on what industry needs in that particular period of time and looking specifically at tech transformations and SME training needs. The goal is really to enable businesses to find that quality training quite easily. There will be a website, and there will be clear demand signals from the industry on what it needs and who the providers are locally; we can put some sort of map system on how we can provide it. We will also provide courses that are shorter duration so that they can be done around a working schedule, which we know is really important for current employers.

In our last panel just before, we heard how there were cleaners working on trains. Is it an issue that our policy does not talk to people like that? In the sense that we have policies that talk to people who are furthest away from the labour market, but what about those people who have a job already, they are in work, but they are really thinking, “I’m only going to clean this train for ever. I might not be able to fix it”? Do we have policies that speak to those people?

We have mentioned some initiatives before, like the skills bootcamps, which start at level 2 to 5. They are shorter—up to about 16 weeks—to help people reskill and move. There are some in relation to electric vehicles, related to the point you mentioned about combustion engines just a moment ago. Obviously, there is also the Adult Skills Fund, which is mainstream funding for adults covering a variety of levels, right from the very lowest levels and upwards. That is increasingly being devolved through mayors to bring to bear on their specific local priorities. Those are some other elements of the skills package that help with that reskilling.

I would just add, we came in at the end, but the word that struck me that was said was, “Aspiration.” How do you have aspiration within this sector? If people really understood what was going on in terms of the transformation, in terms of dealing with some of the biggest challenges of today such as net zero or electrification—how innovative the technology and the production that needs to adapt around that are—they would find it exciting. It definitely suffers from a bit of a brand issue. It is the challenge for us as the Government, but also for employers, to really think about how to market that, so that the aspirational element really pulls through.

Is anyone doing it right, in terms of getting people to aspire and then transition?

Some big OEMs have wonderful apprenticeship programmes, and they have a really—

They have great apprenticeship programmes, but are they particularly good at getting people—particularly older people, young people or more diverse people—actually to join those apprenticeships?

I have not looked at the stats. I would not want to mislead, but I am pretty sure the purpose of those apprenticeships is to widen the diversity pool, to bring different people into those organisations.

It is a question I often ask. We are always discussing skills, not just in this Committee.

We have all been at schools, colleges and so on and seen some great initiatives with employers and industry coming in and doing a lovely workshop. But I am never quite sure how systematised that is and how much measurement there is that those events actually get those young people or returners to work, or those middle-aged people shifting into whatever the target post, training programme or apprenticeship is that that employer is looking for.

We know that, but it is about getting that messaging.

Good. Okay, now we are going to move on to modern industrial strategy.

This is a question directly for the Minister, if I may. The rail manufacturing sector does not currently feature on the Government’s list of priority sectors in the industrial strategy. You have probably seen the Rail Industry Association’s written evidence to this inquiry stating, “This leaves the industry in an uncertain position within the strategy.” What is the reason for that, and is there scope for that to change?

There were choices made. It was done on a data-led approach, on which areas had the highest potential for growth. Auto and aero were two transport-related areas that showed that potential, as did batteries, which is why we put that front and centre. But rail is mentioned within the advanced manufacturing plan, and it is noted as an enabler within the industrial strategy. No one would disagree on its value and purpose within a wider manufacturing ecosystem. Indeed, lots of the interventions and measures—both in the industrial strategy white paper, but also specifically within the sector plan that I lead on—will benefit the rail sector, whether those are the cross-cutting skills measures, the broader trading environment, or the supply chain resilience. Those are things we are looking at, and they have a spillover effect to the other sectors that are within the wider manufacturing umbrella.

Just to get under the skin of it a little more, it would be good to understand why you think the rail manufacturing sector might be concerned about this. What difference do you think being a priority sector might make for the rail manufacturing sector, versus other transport manufacturing sectors, for example?

It will be about prioritisation, right? Government will be prioritising resources and spend accordingly. The frontier industries: aero, auto, batteries, space, agri-tech and advanced materials, which are in the advanced manufacturing plan, all received, for example, very big R&D-focused investment, which is brilliant. We are going to be able to drive forward innovation of the future in those areas. That was a conscious choice. We see the growth potential in those areas, and we are choosing to back them and invest. That is one way that there is a clear differentiation. As I said, there are lots of cross-cutting measures that will benefit rail and other sectors that are not specifically highlighted as a frontier industry.

I would like to draw the Committee’s attention to the fact that I worked for the Minister between 2012 and 2016. It is a question for the Minister, and Sarah, you may wish to comment. We have heard throughout this inquiry that there are generalised skills requirements within the transport sector that are subject to competition from other sectors, but then there are also very specific skills needs within transport. Skills England’s assessment of advanced manufacturing was, if you like, across the piece, but the Department’s evidence to us said that the Department, “Will consider the merits of conducting a transport manufacturing skills assessment, if it becomes clear that the Skills England assessment for advanced manufacturing more broadly is insufficient.” What criteria will you apply when you are considering whether that Skills England piece of work requires further elaboration?

Not hugely. I would just say that at the moment, it feels as though this is the right approach for looking at skills across advanced manufacturing. The way in which we gather the insight about what is working well and what is not, by talking to employers and stakeholders, will tell us if we need to adjust that, and we can feed that back to the Minister. It is a watching brief at the moment. It feels like it is working for now, but we will keep reviewing that situation.

Presumably the Department itself also receives a good deal of information about skills requirements and skills shortages; some that are perhaps systematic and some that are anecdotal. How does the information flow between Skills England and the Departments? Are those systems set up at this point, or is it a work in progress?

Do you want me to answer?

Since Skills England has been set up, we have seen a bit of a step change in Departments wanting to come and talk to us about skills, rather than going around trying to engage people on the skills agenda. The join-up is good across Government. In terms of the industrial strategy itself, there is excellent join-up at official level, but also our chair, Phil Smith, sits on the Industrial Strategy Advisory Council. There is great join-up at that level. The structures and the governance are in place, and the conversations are happening, but we are just also very open to conversations as things arise because sometimes things happen out of time sequence, in terms of formal meetings. That happens through conversations at regular intervals.

The advanced manufacturing sector plan includes a target of 35 by 35—that has nothing to do with my age—which is aiming to increase women’s representation to 35% by 2035. What are the Government’s plans to meet this target, and is transport a priority area in this?

It will be nice when they say, “It was my mum.”

Sarah, just on the general perception issue of jobs in manufacturing and advanced manufacturing, what more do you think your organisation could do?

As the Minister has already outlined, there are a number of things in train, but something Skills England takes really seriously are role models and positive stories of young women who have gone into apprenticeships in engineering. There are some great examples through Aerospace and Rolls-Royce; a number of companies have done pretty well on this agenda. Getting that out and promoting those stories and role models, is really, really critical. We will be doing that too.

Brilliant. Just to highlight, last week I was visiting Alstom with the Secretary of State, and we met a former apprentice, a young girl called Chloe, who had done a four-year apprenticeship and is now working as a process engineer at Alstom and had recently bought her first house. These have transformative impacts on people’s lives.

The industrial strategy says that Skills England has a crucial role in simplifying the skills landscape. Do you think that will make the impact that we want it to? How will simplification increase the number of people taking up training in transport manufacturing roles, rather than just manufacturing overall?

Yes, sure. The skills system is complicated, as I was saying earlier. The simplification that Skills England can bring is helping people to see a clearer route map into particular occupations, whether they are entering the labour market for the first time or they are progressing through their careers. Some is about hiding the wiring, so you do not have to look at the whole thing. You can look at the bit that relates to you as an individual, whether you are in work or wanting to join a particular occupational route. That is something that Skills England is actively working on now. In our conversations with employers, we are also trying to understand where, over time, systems and processes and things have been layered upon, and where there are things that we can strip away and help to simplify. One of the things we are looking at currently with Alan and colleagues is simplification of assessment for apprenticeships. That is another area where, if we can make that more straightforward, people will complete an apprenticeship quickly, for example, and be able to progress even faster. In terms of simplifying and understanding the system and understanding those routes through, from skills training into jobs and up through career progression, that is where Skills England can really help provide clarity.

Olly, you are going to take us on to training and qualifications.

Yes, indeed. Thank you, new Chair.

I should probably just explain that because of all the new MPs on the Committee, I was the first one to sign the oath. That is the only reason why I ended up being the vice-Chair.

Yes, it is one of many excellent and logical ways of deciding things here. Very good to see you in the Chair. Pleasure to serve under your chairship, we might say in a different place, Ms Smith. The Government have announced that they intend to remove funding for level 7 apprenticeships for people over the age of 21. Now, the consensus in our last oral evidence session was that that will lead to a reduction in the number of people with the advanced skills needed for transport manufacturing. What would your response to that be?

There are a few things I would add. As well as the 40% decline in young people starting, which is a real concern across Government, we also have excessively high numbers of young people who are NEET now: nearly one in seven. That is about 800,000 young people who are not in education, employment, or training. That coupled with a fixed pot of money for the apprenticeship budget and growth and skills levy means that choices need to be made. Some of that funding that will not now be directed at level 7 will be recycled into the new foundation apprenticeships that were mentioned earlier, which started just a few months ago, designed for younger people to help them on their first steps in. The other thing I would add is that quite a lot of work was done by Skills England ahead of those decisions to look at level 7, what was offered, and whether there were appropriate substitutes or alternatives elsewhere. The consensus was—this was put out in the recent ministerial statement—that in most areas there are adequate other opportunities for people to progress at level 7, just not through the growth and skills levy or apprenticeship offer, because those courses are very expensive through the levy.

Can I probe that just a little further? Because I understand what you are saying, there is a fixed budget, choices have to be made and so on. If we had £1 for every time we had heard that one, we would be very rich. But the worry is that in light of some things we have been discussing—AI, robotics, data, all this high-tech stuff—in the future it is going to need a very, very different skillset from what has come before. Is there not a risk here that that decision makes it look like we are prioritising training younger people, versus upskilling older people? Does that not run real risks, in terms of future productivity from that existing workforce?

I agree with that.

You are nodding vigorously as well, Rebecca.

There are other routes for that higher training that are embedded within manufacturing and schemes. Looking at the frontier industries that we prioritise within the sector plan, I will take batteries, for example: we have a £452 million investment in the battery sector. We know we are going to need some pretty highly qualified people within that sector. There is going to be money available for PhDs and funding for academia within that space. We are looking at what more we can do to ensure that that skills pipeline is really robust. We might not be able to support it through the levy, but it is looking at what other options there are across the board, as we said, to keep the people who are in work, in work. But as the Minister said, one in seven is quite a shocking statistic that needs addressing.

The only thing I would add is we have what we call the missing middle—the qualifications at level 4 and level 5—where we are so light and low in numbers compared with other countries. Yes, maybe not a level 7 unless you are 21 or under, but in those other levels, which are high levels, that remains a priority.

This is to Sarah. The Government are introducing more short courses in England, which are going to be funded through the growth and skills levy, and Skills England has a role in advising the Department for Education on that and which ones should be prioritised. How do you feel that these short courses are going to improve skills across the country and the industry that we are talking about today?

That is a really important question about the role of short courses. Alan might want to contribute on this. The policy around apprenticeships, and what we are now terming apprenticeship units, is really critical. In the past, maybe a whole apprenticeship may have been the right choice for somebody to get trained up in something. But as technology moves on—as we have been hearing—something shorter and sharper that allows the training provider to keep up with the rapid changes in technology, and top up or add to somebody’s skillset in a more agile way, might be more useful. That is a theme that we are hearing right across actually all the industrial strategy sectors, and from you, and the evidence that you have already heard. Short courses, or apprenticeship units, are going to be really critical, particularly in upskilling those already in work, so topping up skills and allowing really cutting-edge training to happen at pace. Obviously, engineering is one of the areas that we are looking at for short courses. That work is happening in real time, so we can watch this space and see where we come out on the specifics for those short courses. But they have a really, really critical role to play, and employers are telling us that that is what they need.

I would add that this is a direct response to the calls over a long period of time for more flexibility in how you can spend the levy. This is something that the Government have committed to, and we are looking to roll them out from 1 April starting in some specific areas. In terms of what next, decisions have not yet been made obviously. They will be fund-independent. The Secretary of State for Work and Pensions is also very keen to have a process of engagement with business, so that when we are making decisions around where we can go with short courses and what other types of things we might want to look at in terms of the levy, they are informed by a proper engagement with business. That is something we are looking at doing very soon.

Sarah, you mentioned the changing technology landscape. How are you going to ensure that these short courses keep pace with the change and with what industry needs?

The same way in which we do that insight and data gathering already for everything that we do. But it is really through conversations with stakeholders and employers, in particular, in those specific areas where technology is advancing quickly. This month, we published a report into the impact of AI on all the industrial strategy sectors in collaboration with Royal Holloway, University of London, looking sector by sector at what the impact of AI and technological change is. Obviously, for manufacturing and engineering, it is huge. There is real need to speed up and look ahead. We have to future-proof what we are doing. We cannot rest and look back, we really need to look forward, and we can do that only in partnership and collaboration with industry.

Just on technology, if I may, in addition to the short courses, one of the interventions we announced as part of the sector plan was an increased budget. Now we are expanding England-wide for the Made Smarter adoption programme, which is looking to go into businesses—it is specifically tailored to SMEs—to think about what technology they need and to help them adopt and be more future-facing. As part of that programme, there is a skills element to train employers on how to use that technology and how to work with it, which is a really useful thing for on-the-ground businesses.

Building on the points about the responsibilities of employers and Government to ensure that our existing workforce are upskilled, I would appreciate any further thoughts on what more the Government can do to encourage employers to provide more training. I am particularly interested in what we can do to get SMEs providing more training. On that point, I have a particular question. Whenever I talk to any of the supply chains of the large OEMs, they say to me that obviously, there is an apprenticeship scheme at the OEM. The OEM and the supply chain would love to take part in a shared apprenticeship scheme together, which would take some burden off the small SMEs, for which it will be a big deal to take an apprentice and manage the bureaucracy. But at the moment, the system is not set up to help the up-and-down supply chain apprenticeships. Are there are any thoughts on that specifically, and more widely, any thoughts on what more the Government need to do to encourage employers to take responsibility for training?

I just have a few thoughts. There is obviously the levy transfer, which helps the money side, but your point is that it is difficult to access. One thing we do—it is not a silver bullet—is we invest in something called the Apprenticeship Ambassador Network, which is made up of both apprentices themselves and employers. We grant fund nine regional entities across the country. One of its specific objectives is to get out and do outreach work with SMEs. We have a target to try to hit 3,000 SMEs by the spring. I know there are a lot more than that. That is actually employers going out and explaining, trying to demystify a bit, and actually handholding and helping SMEs to go through those steps: how do you hire your first apprentice? What do you need to do? That is one thing that we are doing, and that network is always growing. Just looking at our list of top 100 apprenticeship employers, there is a good number from the sector in question today, like Go-Ahead, TFL, British Airways and the AA. They are all represented in that list of top 100 employers, which is really good to see. There is work there. I am not saying there is not more that would need to be done. I can certainly take your point about the shared nature, and whether there is anything more we can do about that, away to talk to the team about it.

That will be great, thank you very much. We all think that there probably is some funding that is being lost or not able to be used, which could be better used if it were able to be shared down the supply chains. I have heard that from SMEs and from OEMs. There is something we can do there, and it would be good if you would, thank you very much. I am absolutely obsessed with career changers and adult skills, as opposed to young people. The final question I wanted to ask was about whether we are seeing too much emphasis on the younger learners and not enough on the older learners? That may be a more difficult question for some to answer, but perhaps the Minister would like to comment?

I just want to ask one further question while we are on this upskilling piece. I have alluded to it already in my comment about the challenge that SMEs have with apprenticeships. I know they have a name, and I cannot think what it is, but you have the Babcocks of the world that basically go to a college and say, “We need a full-time apprenticeship to skill up our workforce.” Then you have neighbouring SMEs that are part of the wider—in this instance—marine engineering space, which have to send their young people to a town an hour away because that is the only place that offers the apprenticeships. What are you thinking through, in terms of making sure that you do not end up with the big beasts, which we need, controlling the apprenticeship market at our FE colleges? Because that is definitely what we have seen down in Plymouth, where I am based. Obviously, we want to keep the local people in our towns and cities rather than them going to Paignton—in this case—on a bus from home. It is almost saying to them, “You can’t do what you want to do in this city. You’re going to have to go somewhere else,” which is perhaps not the narrative we want to be giving to them. What is the DWP, in particular, doing?

Yes, it is a really interesting one. Of course, they have some excellent colleges down there, I know. The apprenticeship scheme is employer led, so there is that key element of it. Part of the reason for the local skills improvement plans and to have employer representative bodies was to give a greater voice to all employers and businesses within that. When a local area sends its skills plan to the Education Secretary, one of the things that she would check is whether a proper process has been followed. By that I mean, has there actually been some effort to reach out and talk to a real breadth and range of employers? That is one thing. The other point is it is not all just about FE colleges. About 90% of the provision—I think that is the right figure—of apprenticeships is delivered by the independent training provider market, which tends to follow the money a bit more quickly than colleges. Actually, they often will be the ones which, if they can spot an opportunity, will grab it and take it. You have some very strong colleges down where you are, but across the country the ITPs are really the mainstay of the apprenticeship provider market.

Brilliant, that is really helpful. That just takes me on to the final question, if I may. This is to the Minister. We are not going to be doing prayers in here, but we will just wait for the bell to finish, and then you can answer in the gap before the next bell. If we do not get this right, what do you feel is the potential impact on transport users? I am just bringing it back to the focus of this Committee.

Great, thank you so much. Thank you very much to you all for your evidence today. We really appreciate the time you have taken to work collaboratively with us to engage with the terms of our inquiry. The evidence we have heard this morning from both our panels has been really helpful. If there is anything you did not get a chance to cover, please feel free to write to us after this meeting today. We look forward to considering our recommendations to you on this topic. That concludes today’s meeting.