Category Archives: Policy review
‘Ending the gap between classroom and career: Labour’s next steps in skills and higher education reform’ – my speech at the City of Westminster College – 7 July 2014
This morning I gave a speech to the City of Westminster College entitled; ‘Ending the gap between classroom and career: Labour’s next steps in skills and higher education reform’.
See the full text below:
Ending the gap between classroom and career: Labour’s next steps in skills and higher education reform
Speech by Liam Byrne MP, Labour’s Shadow Minister for Universities, Science and Skills
Monday 7 July 2014, City of Westminster College
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It’s a huge privilege to be here at the City of Westminster College’s Paddington Green campus.
As the grandson of a college principal I feel very much at home.
It’s a privilege to be with those who share my grandfather’s passion for learning that changes lives.
And it’s a privilege to tell the story of someone who shows us just what that change can mean.
Catherine was homeless when she enrolled here.
She’d leave a nearby shelter each and every morning, making the daily trip to and from this very campus.
By night, she’d study under torchlight, dreaming of a way out, dreaming of a way in which she could make her life better.
And she did just that.
Ladies and gentlemen, Catherine graduated in 2011.
She’s can now pay rent, support a family and live the sort of comfortable life that so many of us take for granted.
Her energy, her commitment, her belief were the driving forces behind her remarkable achievement… but without the values and virtues of this College, the City of
Westminster College, there would have been no ladder to climb.
So Catherine has a lesson for us:
We have to ensure that everyone, regardless of their circumstances, has a real choice to change their lives with education.
Without that real choice, we’ll hear less stories of lives changed – less stories like Catherine’s.
And that’s what I want to talk about today.
With under a year to go until the next election, the battle of ideas is taking shape.
The Tory-led government’s script is already clear.
And so are its flaws.
As I said last week they might boast of a recovery – but it’s not a recovery for the many.
Families will be £974 a year worse off in 2015 than they were back in 2010
What does that mean in practice?
It means we have to work harder – it’s an extra fortnight every year at the moment – just to stand still.
Why? Because that old curse, the ‘British Disease’ is back.
That crisis of low productivity that haunts industry and makes it ever harder to give your staff a pay rise.
Since the last election, output for every hour worked hasn’t gone up.
It’s gone down.
Output per worker?
Not up, but down.
Did you know that today’s crisis in productivity is actually far worse than it was the end of the 1970s?
The damage to our global position is huge.
We’re now 21% less productive than the G7 average.
What countries in the G7 finish making on a Thursday, takes us till the end of Friday to complete.
If there is a global race, we are well and truly losing.
We can’t go on like this;
Thankfully, over the last fortnight you heard the voices now calling for a change of course.
The IPPR’s ground-breaking condition of Britain report sets out a path back to full employment, especially for our young people and our parents.
Mike Wright’s review of manufacturing and the supply chain is making clear the role of government in bringing together sectors to plan long term to boost skills and lower our cost base
Lord Adonis’ breakthrough report arguing for a radical devolution of powers and resources to our city regions.
John Armitt’s call for a new approach to infrastructure.
Our own launch of a review into science and innovation policy.
And tomorrow Ed Miliband is speaking at the Sutton Trust’s conference on the importance of high quality vocational education
When you boil it down, our argument is simple:
Big reform, not big spending
An inclusive prosperity for this century
As Ed Balls puts it: “more good jobs, boosting skills and long-term investment as we restore the broken link between the wealth of the nation and family finances.”
Now the sharp-eyed amongst you will have noticed that running through every single report, every single major statement of the last month, running like a golden thread is the challenge of skills.
And that is why you are so important.
Your country needs you like never before.
The years ahead should become a golden age for educators.
When your passion for learning and your mission of service put our country on a new and better path.
It’s now very clear that skills are the key to a Britain that grows more, firms that employ more, and workers who earn more,
How much evidence do we need?
The inextricable trends in trade and technology, discussed so eloquently in books like the ‘Second Machine Age’, sound the death-knell of ‘routine’ jobs
The Migration Advisory Committee has added 117 high-skilled roles to the shortage occupation list.
British business has had to sponsor over 282,000 skilled people into Britain – that’s the same size of Newcastle – because they couldn’t find the skills here.
But look at the future and the skills crisis looms larger still.
In the UK, between 2012 and 2022, it is projected that we’ll need:
Over a million more people in professional occupations
Nearly 600,000 new managers, directors & senior officials
The Royal Society of Engineering tells us that we’re delivering 36,000 too few engineering graduates every year.
Mike Wright says that the country’s automotive and aerospace industries will suffer if there isn’t a greater focus on improving the level of domestic engineering skills in the
Andrew Adonis describes the skills shortage as the “single most important impediment” to British businesses
How many more times do we need to hear it?
The tragedy is that great firms want to bring back work to Britain.
I can understand why.
When I left Business School in America, there was only one place I’d consider to build any business.
Here is Britain.
It’s one of the best places in the world to build a business.
And lots of people want to do more.
In fact, PWC says that ‘re-shoring’ could create 100-200,000 extra jobs over the next decade, adding £6-12billion onto GDP.
What’s standing in the way?
A lack of skills.
This is what KPMG said is stopping too many jobs coming here.
And here’s the tragedy for workers.
Extra skill means extra pay.
Analysis for BIS shows the difference in earnings between a high quality level three apprenticeship and a GCSEs, is £117,000 over a lifetime.
But for most it’s a degree that’s the key to a middle-class life.
Economists may disagree on what technically constitutes ‘middle-class’, but the marketeers tell us it’s the difference between earning £37,000 and £47,000 a year.
That’s the kind of earning power a degree level qualification gives you.
On average, degree holders earn more than £100,000 more than someone with only two A-Levels.
Shifting more people into ‘top gear’ with a degree is one of the best things we can do to earn our way out of this cost-of-living-crisis.
But, right now it’s too hard for students to shift into ‘top gear’
There’s the traditional degree route which is well-established and open to half of our young people, thanks to changes that Labour made in office.
But what about everyone else?
More and more want an earn-while-you-learn route into higher-level skills.
Yet look at the figures: the number of under-25s starting on an apprenticeship isn’t rising, it’s falling under this Government.
In the last year alone, we’ve seen 11,400 fewer young people starting an apprenticeship.
That’s why Ed Miliband has made it a central mission to change the future for the forgotten 50% who today do not have a good enough or clear enough choice of high
quality vocational education.
They do not have enough apprenticeships and there’s no real vocational route to degree level technical and professional qualifications.
Right now a vocational route to higher-level skills is like navigating rapids: risky, a bit haphazard with a high risk of drowning.
First up, it’s very hard to get your foot on the ladder.
Last year, there were 11 applications for every apprenticeship vacancy.
That means it’s now twice as hard to get on an apprenticeship as it is getting into University.
High-quality apprenticeships, where firms are prepared to sponsor you to degree level skills are even harder to win.
It’s almost three times more difficult to enrol on a Rolls Royce apprenticeship than going to Oxford.
For BAE it’s 2.5 times harder than getting into Cambridge
So we have frustrated companies and we have frustrated workers
We need a new way forward.
A path that’s pro-company and pro-worker.
So today I want to out some principles for change.
First we have to accept the big, bold principle of devolution for skills that Andrew Adonis has set out.
Today I want to say more about how that might work in practice, and as I do I want to say a huge thank you to my advisory group, co-chaired by the Rt Hon Stephen Timms, Rushanara Ali, and advised by, amongst others, Cllr Keith Wakefield, Leader of Leeds and Cllr Sue Murphy, Deputy Leader of Manchester City Council.
Let me say at the outset that as we give employers and LEPs and Combined Local Authorities more say over how skills funding is spent, no-one is advocating for the proliferation of funding agencies, handling cash or contracts or countering fraud.
Second: We think the role of employer-led sector bodies, built on reformed SSCs and their industrial partnerships, are critical to fostering a ‘something-for-something’ deal with big employers and their supply chains to drive up apprenticeship numbers.
So we’ll give employers, working collectively through reformed sector bodies, more control over the standards and assessment criteria for training in their sectors, and enable them to broker a significant share of the £1.4bn apprenticeship budget to address their skills needs.
In return, we will ask them to work to drive up the number of high quality apprenticeships in their sectors and supply chains – and we’ll use the power of public procurement to help.
Large firms will need more apprenticeship to win big government contracts. Full stop.
Third: Combined Local Authorities and Local Enterprise Partnerships should shape the broad goals for adult skills in their neck of the woods.
To win this freedom, these authorities will have to show us that they are up to the job and Andrew Adonis has set out some tests for quality governance.
But I think these broad plans will have some important things in common.
First, they should include what Lord Adonis calls Business Hubs – and what I’ve described in this post as City Apprenticeship Agencies.
One stop shops that provide information and advice in particular to small and medium businesses with a real focus on support for apprenticeship recruitment.
It’s a model like we’ve seen in Leeds – a solution that’s seen apprenticeship numbers doubling in the city.
In an age where SMEs are creating jobs five times faster than big business, we need solutions that works for all firms, regardless of their size.
So in the future, if I run an SME in Birmingham I will have on my doorstep, a hub that can offer me advice on how to set up a high quality apprenticeship with a choice of apprenticeship arrangements: some put in place by sectors nationally; or as a service delivered locally.
Second, we want LEPs and combined local authorities (CLA) to shape some goals for the adults’ skills in their area.
Back in December 2006, Sandy Leitch set down an important principle: “The skills system must meet the needs of individuals and employers. Vocational-skills must be demand-led rather than centrally planned”
This is an important principle.
But for the £2.4bn 19+ Adult Skills budget we need to bring a better balance to the ambitions of learners on the one hand, and the ambitions of business to employ them.
So: we desperately need better information and guidance so ‘demand’ is better informed.
We need a different relationship with DWP, as you see work so well in Germany, where students are far better informed about the local world of of opportunity.
But I think we also need LEPs/CLAs and providers together to forge the kind of ‘Outcome Agreements’ that are tried and tested in Scotland and over the medium term, aim to eliminate the skills gaps in a demand-led system.
Third, I think there is a need for the CLAs/LEPs to directly commission what you might call a strategic core of skills, where serious local skills gaps have been identified.
This flexibility is absolutely critical in a world where we envisage Combined Local Authorities and LEPs are taking a much bigger role in co-commissioning Work Programme contracts.
This will – for the first time ever – ensure that skills provision meets the needs of local areas, balancing social and economic demands with identified areas for growth.
Many parts of Britain, including my own constituency, have very high-levels of unemployment alongside firms crying out for skills.
Mike Wright of JLR has spoken about JLR’s challenges.
Yet on the south side of the M6, half a mile from the Castle Bromwich gates is my constituency with the highest youth unemployment in Britain. The balance between the ‘commissioned core’ and the ‘market margin’ will obviously look different in different places.
Giving local areas the flexibility and freedom to commission against local labour market priorities will help us join up the skills system and the welfare to work system for the first time.
Naturally, there is still a great deal for us to work through, and I look forward to those discussions ahead.
Already clear is that two funding systems, split between the adult and young people’s skills budget, is a complex set-up.
So we’ll want your advice on whether to move post-19 funding to a per-student, not per-qualification basis, as works for under-19s and in Scotland.
The changes we propose offer the chance of a creating a far stronger ‘triple track’ for skills, for young and old alike.
Some will want to take the well-established academic route from A-Levels through to University
Others will want to progress through the vocational track, with opportunities to move through colleges specialising in delivering technical and provisional skills, on courses better aligned to the needs of local employers.
And we hope many more will secure high-quality apprenticeships with high-quality training ahead.
But every track will need to offer something more.
A surer route to higher-level skills.
Back in 2006, Sandy Leitch advised an increased focus on L5 and above skills.
Yet today it’s incredibly difficult to take an apprenticeship or college route to degree level professional and technical skills.
Just 2% of apprentices are given the chance to study to degree level each year.
None of our competitors are making the same mistakes.
Back at the end of the 19th Century, the huge explosion of our university system was in part driven by the need to equip a new generation of businesses and a new generation of workers with the skills to shift into ‘top gear’ with the qualifications that can unlock a middle class life.
Beginning with the creation of my alma mater, Owens Colleges, Manchester in 1851, eleven universities were opened over the course of fifty years with a clear empathy for the German model, pioneered by the University of Berlin in 1810, and what Rev. J Percival described as:
“Teaching [the people] things which would help them in their occupations”
In the years that followed, science and engineering expanded whilst classics declined until finally under the pressure of World War One, a modern relationship was finally forged between government, academia and business.
This was a spirit and a purpose which Harold Wilson rediscovered in his famous ‘white heat’ speech.
Before the 1964 election, Labour’s Higher Education Study group concluded:
‘Economic expansion is only possible if university and technological education expands rapidly and continuously to provide the necessary brain power and skill’.
This was the analysis that inspired the great explosion of Polytechnics.
Today, we want colleges, universities and business to come together in a new alliance as they did in the 1960s.
Not in two different worlds. But in one, world-class system.
We want to open many routes – not just one road – to a degree and the better life degree level skills can open.
When we were last in office, we began the job of reform.
Bill Rammell gave colleges the right to apply for powers to award foundation degrees.
John Denham pioneered the Workforce Development Programme.
But the truth is today there are many rocks in the path of building the vocational path to degree level professional and technical skills.
Over the months ahead, we want your advice on turning this ambition into action.
Every so often in British politics, we arrive at this point where we see the skills challenge in a stark and profound way.
Back in 1944, Lord Percy, Rector of the Newcastle Division of Durham University put it like this: ‘the position of Great Britain as a leading industrial nation is being endangered by a failure to secure the fullest possible application of science to industry; and second that this failure is partly due to deficiencies in education’
I couldn’t put it better myself. And we are determined to change it.
There is no other way to a prosperity that is inclusive.
And a recovery for the many and not the few.
Thank you very much.
My speech to Parliamentary Links Day 2014 – Launching Labour’s Green Paper on Science – 24 June 2014
It was an honour to launch Labour’s Science Green Paper, entitled: Agenda 2030: One Nation Labour’s Plan for Science and Innovation, this morning at the annual Parliamentary Links Day 2014.
You can read the paper here.
My speech is in full below:
Strengthen British Science and Strengthen Britain
Launch of Labour’s Green Paper, Agenda 2030: One Nation Labour’s Plan for Science and Innovation
Rt Hon Liam Byrne MP
Speech to [Parliamentary Links Day], House of Commons, London. Tuesday, 24th June 2014
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It is a tremendous honour to help mark the greatest day of the year for science in parliament.
I want to pay an enormous tribute to Dr Stephen Benn and the Society of Biology for helping bring the day together.
I want to commend you all for the way so many people and so many organisations have come together from across the worlds of science and engineering to talk, debate, speculate and lobby and leave us here in parliament with fresh impressions, fresh analysis and fresh evidence of how important both science and engineering are to the future of our world.
I want to thank you above all for the inspiration of your example.
I count myself as very lucky to have known an extraordinary scientist from a very young age.
She was a biologist and a teacher and a head of science at comprehensive schools including my own.
She was someone who inspired in me a lifelong wonder for science, a curiosity, and an admiration.
Ruth Byrne was not only my teacher, she was my mother.
And when she died at the age of 52 from cancer of the pancreas, she left me not only with a sense of scientific possibility but a sense of how much work still lies ahead.
Science and Parliament
Your theme this year is about Parliamentary links to Science and Engineering. I want to offer you a view about how we cement science and engineering centre-stage in the run-up to the General Election. As we are in Parliament I thought it would be apposite to reflect on the way science and engineering, industry and politics come together today and the relationship that lies ahead.
Around 300 years ago, a very great writer left London on his travels around the country to write a book, which is today one of our finest records of Britain on the eve of the industrial Revolution.
Daniel Defoe’s ‘A plan of the English commerce, being a complete prospect of the trade of this nation’ paints a portrait of a country amidst tremendous change.
‘The most flourishing and opulent country in the world,’ he called it and the cause he said was clear; ‘Trade’ and its two daughters, ‘Manufacture and Navigation’
Defoe suspected that for all the advance he saw, something bigger was coming.
And he was right.
By the time ’A Plan’ was published in 1728, the Royal Society, founded in Gresham College, was 50 years old. Sir Isaac Newton, its great master, had died the year before and in Birmingham, one of founders of the industrial revolution, Matthew Boulton was born.
Over the next six decades, Boulton, together with his friends in the Lunar Society in a story wonderfully told by Jenny Uglow, took the traditions and methods of those great founders of the Royal Society and fused them to industrial method, helping trigger the industrial revolution.
A nation of explorers and traders quickly became a nation of inventors and industrialists. The worlds of science and industry were irrevocably connected.
Back in the early days of the Enlightenment, the French writer Diderot had observed that uniquely in Britain:
‘philosophers are honoured, respected; they rise to public offices, they are buried with kings’.
Well, it wasn’t long before we were putting great inventors and industrialists like James Watt alongside our philosophers and our kings.
But it was to take another century before science and industry were really fused with the dirty and difficult business of politics.
From the 1850s and 1890s, concern with the state of our science base, and the state of our schools gathered pace until under the burning pressure of world war one a real partnership came together;
- The Department of Scientific and Industrial Research was founded in 1915.
- Universities came to play a mission critical role in the work effort and crucially a new alliance between science, industry and government was hard-wired together.
And we’ve been trying to get the relationship right ever since.
Now that alliance has never been more important.
The scale of the problems, which I realise are merely solutions in disguise and which we are tackling today, are simply too big for one scientist, one university, one company, or one government to tackle alone.
The new partnerships that you see in such spectacular collaborations like the Gaia One Billion Star Surveyor, or the Hadron Collider are gigantic incarnations of the same ethos and approach that drove the Lunar Society, but they are global in scale.
These journeys of curiosity, exploring the endless frontier, are rightly your principal concern.
But there is a second reason the alliance is so vital.
Your country needs you.
Searching for some inspiring words for today’s speech, I stumbled across these in the House of Commons library last week;
‘the position of Great Britain as a leading industrial nation is being endangered by a failure to secure the fullest possible application of science to industry; and second that this failure is partly due to deficiencies in education’
Those were the words of Lord Percy, Rector of the Newcastle Division of Durham University, reporting to the government in 1944.
They could have been written last week.
Two years later, Lord Barlow agreed;
‘If we are to maintain our position in the world and restore and improve our standard of living’ he wrote ‘we have no alternative but to strive for that scientific achievement without which our trade will wither’.
What was true back in 1945 is true again today.
The Challenge Today
Our old enemy, ‘British disease’ is back with a vengeance.
That traditional crisis, of extremely low productivity while other nations streak ahead, now scars the recovery and haunts industry, making it even harder to escape today’s cost-of-living crisis.
Producing more with less, as every business owner knows, is the key to doing well and the fastest way to give your workers a pay rise.
But look at the figures today.
Since the last election, output for every hour worked has not gone up; it’s actually gone down. Equally, output per worker has not gone up. It’s gone down. We’re actually less productive than we were four years ago.
This appalling record is far worse than the last years of the 1970s, long deemed the moment when ‘British disease’ reached its peak but a period when output per worker, and output per hour worked actually rose by over 5%.
Worse, we’re now falling rapidly behind our competitors. The gap in productivity per hour between the UK economy and G7 average is now 21 per cent – the widest gap there has been since 1992.
This is absolutely fatal for any escape from the cost of living crisis. If companies can’t produce more then it’s not easy for firms to give their staff a pay rise.
As someone who started work behind a fry station in McDonalds, I know that any job is better than no job.
But I also know that a good job is better than a bad one and right now we’re simply not producing enough good jobs.
Today, the average full-time worker has to work an extra one hour and 52 minutes a week in 2013 to earn what they earned in real terms in 2010.
Look at our ‘knowledge economy’ and it becomes clear what is going wrong.
Economists and scientists now know that science and research is the key to growing productivity.
As the breakthrough report from Research Councils UK put it;
‘The greatest long-term productivity advances come through breakthroughs in basic knowledge’.
In the US, the authors of the Gathering Storm remind us that 85% of growth in wealth per capita is driven by innovation.
The knowledge economy is the powerhouse of productivity growth, creating better jobs with better wages.
Yet, with the honourable exception of automotive and aerospace, which Labour did so much to save during the global crash, the story isn’t good.
Getting innovation policy right is not actually rocket science. It is about people, ideas and money. You need great people, great institutions and strategic investment.
Yet, look at what is happening in the UK.
In 2012, the last year data is available, UK investment in R&D by government and business together has fallen by nearly £1 billion – (£923M) – the largest annual fall since consistent records began in the mid-1980s.
Amongst advanced Western nations, Britain now ranks 23rd out of 33 in the league table of R&D spenders.
In our most important research industry – pharmaceuticals – which accounts for a quarter of all UK R&D spending, research budgets have fallen by a huge £467 million since 2010, that’s a 10% fall.
In telecoms, one of our other leading R&D sectors, budgets have fallen by 20% – that’s £240M.
Look at our great institutions.
In our universities, the great epicentres of science and knowledge, we have the world’s best thinkers.
But their labs and classrooms now rest on a mountain of debt. University borrowing will reach £7.3bn worth of debt by 2015, an increase of £1.8 billion from 2012. That’s £45.6 million for every university in the UK.
Vice-chancellors tell me that falling research budgets now mean that the brain drain has been gathering pace for at least the last 18 months.
And that’s nothing when we consider the black hole that’s been created in the finances of the Department for Business, Innovation and Skills by the Government’s unsustainable funding system.
The Public Accounts Committee now estimates that at current rates, students will be borrowing nearly £200 billion over the next twenty years to fund their studies and 45 per cent of this will be written off. It’s universities and our researchers of the future who will be paying the price.
And let’s not forget that other great institution that is important here.
The European Union.
European policy makers now understand that innovation is the only way out of austerity.
And the creation of the Horizon 2020 programme is proving crucial for the strength of British science, as UK universities, research centres and businesses can expect to receive £2bn in the first two years of the new funding round.
Leaving the EU, as some propose, would be absolutely catastrophic for science funding.
Third we must address human capital. The skills gap across the country grows worse. A fortnight ago, KPMG reported that skills shortages are bringing to a halt the plans of manufacturing firms to ‘re-shore’ work.
Since 2010, the number of people working in ‘Scientific research and development’ has fallen by over 12,000.
The Migration Advisory Committee has now added 117 high skilled roles to the shortage occupation list, which employers can fast track onto visas, because there are not enough skills in Britain.
The Royal Academy of Engineering estimates that we’re currently 36,000 short and at the rate we’re going there will still be big gaps to fill.
In our schools, Michael Gove’s disastrous School Direct scheme for teacher training has produced a huge shortage of physics teachers.
Half of state schools now send not one girl to do A Level physics.
Practical experiments have been taken out of the exam curriculum. The careers service has been destroyed. Apprenticeships for the under 24s are actually falling.
We cannot go on like this.
That’s why today I am pleased to be launching our green paper on science and innovation.
Our message is simple.
We need to strengthen British science – because British science will strengthen Britain.
We want to start a big debate on how business and government come together to grow the strength of science.
We want to work with the science and engineering community, in all parts of Britain to get the answers right.
We want to work across parties – because wherever we can maximise cross-party consensus we will.
We know that predictability and certainty are important; that they help make your work easier.
We want a new culture of science and evidence in public policy.
We want stronger universities with a bigger share of global science budgets and a bigger role in their regional economies.
And crucially we want to strengthen every rung on the ladder up into a science and engineering career for our young people.
As NESTA argued two weeks ago, the debate around science and engineering is seen by the public as vitally important.
In part, that’s because the public knows science, engineering and the business of innovation is key to the development of new cures for diseases, earlier diagnosis, greener, cheaper energy and crucially the jobs of the future.
The public knows that if we are not the pioneers then others will be.
If we don’t develop the jobs of the future, then others will.
And that will irreparably damage the opportunities of our children and our grand-children.
After all they are the very people for whom we want better chances than the chances that we enjoyed.
I think we know how futures are really built.
I think we learned that lesson a long time ago.
And now is not the time to ignore the lessons of history.
  http://www.nap.edu/openbook.php?record_id=11463&page=1. The 85% refers to the work of Robert Solow and Moses Abramovitz published in the middle 1950s demonstrated that as much as 85% of measured growth in US income per capita during the 1890-1950 period could not be explained by increases in the capital stock or other measurable inputs. The unexplained portion, referred to alternatively as the “residual” or “the measure of ignorance,” has been widely attributed to the effects of technological change
This morning I will be sharing our Green Paper on Science entitled – ‘Agenda 2030: One Nation Labour’s Plan for Science.’
If we are to build an opportunity economy with high skilled jobs and the wages to go with them then science and innovation have to be central to our strategy. Britain needs a long-term vision for science and this paper intends to start a discussion about what that vision should look like.
Please do read the document here and share your views.
With all best wishes
This morning Shabana Mahmood and I have written to the Bishop of Birmingham on the subject of a inter-faith panel on education in Birmingham.
You can see the text of the letter below:
Inter-faith Panel on Education in Birmingham
Further to conversations on Friday with yourself and Mark Rogers, we write to ask whether the Birmingham Inter-faith panel might consider creating a special task-group to advise the city’s education leaders, at all levels, on how excellence in standards and strength of faith can be coupled better in our state schools.
We believe that faith can play a crucial role in educating the children in our city for whom faith is an essential element of their lives. The divisive nature of the debate around the so-called Trojan Horse allegations risks damage to this view, damage which must not be allowed to go un-checked.
In particular, thousands of Muslim parents feel under seige. Values and practices associated with their faith are being incorrectly defined, in our view, as extremist.
This cannot be right.
The Birmingham Inter-faith panel is a unique group with a unique capability to offer advice and crucially set about the task with a spirit of unity that is desperately needed.
We stand ready to offer whatever support we can to such crucial work.
Yours, in hope and solidarity.
Liam Byrne MP
Shabana Mahmood MP
Download PDF here
View my slides here
Watch my speech on YouTube here
Inclusive Growth: How New Ambitions and New Alliances Can Rebuild the Opportunity Economy
Speech to Oxford Martin School
Rt Hon Liam Byrne MP
Thursday 5th June 2014
It’s a real pleasure to speak here at the Oxford Martin School today.
In a short space of time you’ve put yourselves on the map as a place of people thinking deeply about the most important questions of our day.
We admire you not just for your search for truth, but your search for action.
You not just looking for ideas. You’re looking for answers.
And in politics right now we all need more answers.
You’ve quickly acquired a leading role in the chorus line that shaped up in the last four years, chanting for change
All crises expose the flaws in the political economy of the day.
And this one is no different.
But if we’re serious about answers then we need to recognise that change can only come from renewing an alliance that is now a century old.
This year we mark the hundredth anniversary of the Great War in which so many of our young men and women lost their lives.
The war was not simply an appalling human conflict – it was a crisis that revealed profound weakness in the British economy – a weakness that forced business and government to work together in radical new ways to first win the war, and then the peace.
When Queen Victoria came home from the Great Exhibition in 1851, she confided to her diary that her belief that ‘we are capable of doing anything’.
In 1897, hundreds of thousands had gathered in London to mark Queen Victoria’s Diamond Jubilee.
‘I remember the atmosphere’ said the young historian Arnold Toynbee;
‘It was ‘Well, here we are on top of the world, and we have arrived at this peak to stay there forever’.
Yet within two decades, World War One exposed Britain’s comprehensive failure to master the key technologies of the second industrial revolution.
As Correlli Barnett put it
“… British manufacturers were behind other countries in research, plant and method.”
We lacked machine tools, fuses, a coal-tar industry, ball-bearings, magentos, aero-engines, industrial gauges and optical glass.
Before the war, many had been calling for change, not least the appliance of science.
From the 1850s, scientists and engineers were agitating for reform; the ‘Cambridge network’ of scientists pleaded for more science on university curricula; Parliamentary committees were formed, the magazine Nature was founded in 1869, and a National Association for the Promotion of Technical Education (1887).
Some nineteen enquiries were undertaken into the state of elementary schooling, public schools, secondary schools, universities, scientific instruction and technical instruction.
Others made the argument free trade reform; Joe Chamberlain’s pronouncement in 1902, that
“The weary Titan staggers under the too vast orb of his fate”
sparked nationwide debate about free trade reform – an argument ultimately defeated by the Liberal landslide of 1906.
And the fiscal crisis that followed the South African war, coupled with rising domestic spending provoked a fundamental reappraisal of Britain’s global defence strategy, acquiescence in the Munro doctrine in the Americas and the Anglo-Japanese alliance (of 1901) – in essence, a retreat from the both the Western and Eastern hemispheres.
With the exception of the gold standard, the basic nostrums of the Edwardian political economy – the night watchman state, free trade, ‘splendid isolation’ – were all acute pressure in the years before World War I.
But it took the crisis of the war to fuse together government and business into a new alliance to drive Britain into the modern, industrial era where, as Alfred Chandler memorably argued, scope, scale, science and skill were the keys to success.
Back in the 1895, the Conservative prime minister, Lord Salisbury was all too clear that he;
‘detested the new plutocracy of industrial and financial wealth’.
Thus, there was only one man with an industry background – Joe Chamberlain – in the Cabinet; and only one industrialist – Vickers – on the board of the Bank of England between 1890-1914.
World War One changed all that.
It was the moment when Britain realised that business and government had to become partners if the country was to fulfil its promise, not waste its potential.
And for the last century we’ve trying to get that partnership right.
Today’s crisis is very different to the crisis of a century ago.
A century ago, we were debating how business and government could together build a different kind of economy.
Then we sought to make the second industrial revolution work in Britain.
Today, we’re trying to make the digital revolution work for Britain’s people.
A model of inclusive growth.
Since the short, sharp financial crash and the long, deep ‘wage crash’ that has led to a cost-of-living crisis, consensus has grown about the need to re-connect wealth creation and social justice.
Both the IMF and the OECD have now warned of the economic risk of big, new inequalities.
In February, the IMF reported;
‘We find that inequality is bad for growth…in and of itself. And we can say that redistribution by itself doesn’t seem to be bad for growth unless its very large’
Last week, Christine Lagarde argued that:
“[only] by making capitalism more inclusive [can] we make capitalism more effective”.
Business schools and academics, like my old teacher, Michael Porter at the Harvard Business School are making the case for ‘shared value’.
Business leaders like the Blueprint for Better Business group are arguing for reform to foster both a renewal of trust and new, long term horizons.
Around the G20, both business and labour organisations are now hammering out an agenda for reform.
Business finds its echo amongst faith leaders and trade unionists.
Both the Archbishop of Canterbury and Cardinal Vincent Nichols have called for a revived sense of the ‘common good’ between business and society.
Trade unionists like Frances O’Grady are arguing for a re-discovery of the inspiration of ‘progressive change’.
It’s the principle at the heart of Labour’s ‘Agenda 2030’ as set out by Chuka Umunna – our plan for long-term balanced and sustainable growth which works for all.
Rebuilding the Opportunity Economy:
In essence, when you boil down what everyone is saying: one challenge looms large.
How do we rebuild the opportunity economy, not just for some but for all?
The bald facts for families here in Britain are well known.
The great wage crash is now almost proving as damaging to workers’ livelihoods as the global financial crisis caused by the banks.
The wage crash has now destroyed 8 times more real income since 2008 than the financial crash.
Average earnings are now £1,600 lower per year than they were at the last election.
The average family has to work two hours extra each week, just to make what they did four years ago.
All these gains in productivity and creativity haven’t been fairly shared.
They’ve gone to those at the top.
At this rate, most households won’t win back their pre-recession living standards until 2020.
Now we can debate why:
The economics of super-star earnings are now much better understood.
Others argue that a global digital marketplace gives successful entrepreneurs the ability to sell in a multi-billion big market at almost zero marginal cost.
Thomas Pinketty argues that over the long term, returns on assets always outstrips the rate of economic growth.
But while we can debate the causes, the results are pretty clear:
Last month, the OECD confirmed that here in Britain, we’re now one of three countries in the OECD where the majority of wealth created goes to the tiny minority of people; an honour we share with the United States, Canada and Australia.
Back in 1981, just over 6% of pre-tax income went to the top 1% -
Now the top 1% has more doubled their share.
90% of Britons now only enjoy just over half [54%] of total income – this means that 44% of the country’s total wealth is owned by just 10% of people.
If this is not fixed, we will confront not just a political crisis but a moral crisis.
Hard work isn’t just vital to the economics of our country, it’s vital to the ethos of our country.
The spirit and habit of hard work is deeply engrained
Not for nothing is Rudyard Kipling’s ‘If’, the nation’s favourite poem, with its call to
‘fill the unforgiving minute, with sixty seconds worth of distance run’
Today people feel like their run is like a hamster, sprinting on a wheel.
No matter how fast they run, they don’t get any further forward.
A few weeks ago, the Daily Mirror’s leader column had two stories; one about the record number of billionaires in Britain and the second about loan sharks preying on mums at school gates.
In cities like mine child poverty is spiralling.
I’ve just finished a major enquiry into child poverty in the city of Birmingham; the birth-place of the industrial revolution.
The stories I’ve heard are horrifying;
- We’ve heard NHS leaders in the city tell us more children are presenting in A&E having tried to take their own lives, driven by the pressure of poverty and stress at home
- We’ve heard how school secretaries ring the city’s food banks for mums in floods of tears who’ve dropped their children off at school without breakfast – and no food in the cupboards for dinner
- We’ve heard how many families face ‘scrounge week’ at the end of every month as they beg and borrow from friends and families in order to make ends meet
- We’ve heard of households where there are 3 or 4 people sharing a bed or a parent having to sleep on the sofa so that their child could sleep in the bed. Children going to school exhausted because there is no space for peace and quiet at home.
Yet most of the parents of these children are in work.
And, up the road, in Britain’s corporate bank accounts is sitting £440 billion in cash.
I ask you:
How did we create a country where corporate bank accounts are full – and childrens’ stomachs are empty?
Is it any wonder people feel ‘the deal has broken down’?
Peoples’ worries for their children and grandchildren are even more profound.
Young people today leave college with higher debts, take longer to find work, need to save more to buy an home, and then face longer to work before they retire.
The lack of good jobs today means that it is harder than ever to make a living by working hard.
Nearly 80% of the jobs created since the election are in low skilled sectors.
We’re becoming a low pay, low skilled, low value added economy, out-paced and out-boxed by new powers, rising around the world and old nations who, unlike us, have got their act together.
We can’t go on like this. We have to change course.
Our challenge is enormous: to rebuild the opportunity economy so that hard work gets you on in life once more.
The challenge of the future
If you are in any doubt about the need to get this done, then simply take a causal glance at the future….
Let me start with where you start; the future of work.
It’s no secret that there are some big forces at play.
Technology has now automated huge numbers of what were once, reasonably skilled, reasonably paid jobs.
And sometimes it feels like what technology hasn’t killed, trade has moved to those parts of the world where workers are cheaper.
In America, economists Autor & Dorn are amongst many who’ve reported there’s been massive substitution of those
‘low skill workers performing routine tasks – such as book-keeping, clerical work and repetitive production and monitoring activities – which are readily computerized because they follow precise, well-defined procedures’.
It’s created what some call the hour-glass; high skill jobs, and low skill jobs and very little in between.
This is exactly what is happening here in the UK.
Indeed, the Resolution Foundation tells us that jobs in sectors with a high concentration of routine tasks fell by 5% between 2007 and 2012.
But guess what: there may be an awful lot worse to come.
A book that a lot of people are reading right now is the Second Machine Age.
It’s a positive book and its argument is simple:
Our ability to combine technology – processing power, cheap sensors, robotics, networks, social media, big data, means we’re now at an inflection point in our ability to combine and recombine technologies to do new things, revolutionising technology from Google’s driverless cars to better diagnosis of diseases.
- There’s now enough technology in a Nissan LEAF to render the car a fly-by-wire robot, the kind of technology that could revolutionise the logistics industry.
- GE already makes robots that can climb and repair wind turbines.
- Future Advisor already uses Artificial Intelligence that’s strong enough to offer personalised financial advice.
- Algorithms are taking on tasks once performed by para-legals, contract and patent lawyers.
- Oncologists at Memorial Sloan-Kettering Cancer Care use IBM’s Watson computer to provide chronic care and cancer treatment diagnostics.
What’s does this mean for jobs?
Well, here at the Oxford Martin School, you estimate that as many of 47 per cent of the jobs in our economy today may be automated.
First technology took the blue collar jobs. Now it’s the white collar jobs as well. The challenge of building an economy of inclusive growth is about to get immeasurably harder.
As someone who spent has spent half a career in business and half in politics, I happen to think business and government need to solve this together – with an awful lot of help from you.
What we need is enlightened self-interest from business – and determination from government to use it.
We need a new alliance between business, government, unions and civil society, to rebuild the opportunity economy so that it works for working people once more.
Once upon a time, this was a common place – especially for those non-conformist entrepreneurs who transformed Victorian Britain.
In my home city, the Cadbury brothers helped show the way.
And in the years before World War One, it was the founder of Britain’s first great multinational, William Lever, who took up the challenge; putting in place the 8 hour day, profit sharing, secondary and technical education, pensions, homes in Port Sunlight, health insurance, and half pay sickness allowance.
In his biography, William Lever’s son quotes his father:
‘The truest and highest form of enlightened self interest requires that we pay the fullest regard to the interest and welfare of those around us, whose welfare we must bind up with our own, and with whom we must share our prosperity’.
The expression said his son ‘crystallises his business philosophy’
Putting ‘inclusive growth’ back at the heart of the opportunity economy can’t simply be left to business.
And it can’t simply be delivered by governments.
But together: we stand a fighting chance.
So the task of policy makers and profit makers today is to zero in the win-wins to build a settlement that is genuinely ‘pro-company, pro-worker’ (to use a phrase from my colleague Maurice Glasman).
So, to help the debate, I want to propose today five big win-wins we have to get right.
First: We all have to recognise that inclusive growth is hard without growth.
So raising growth and raising productivity has got to be the first step.
Here, we’ve got to boost demand and supply-side measures that boost the markets we sell to, and second, boost the supply of science and technology which we know is good for productivity.
Countries that trade more grow faster.
So in this post-Doha world, we should set our sights on new, ambitious trade deals.
The EU-US free trade agreement could add an increase in UK national income of between £4-10 billion annually, or up to £100 billion over a ten-year period.
The EU-China Investment Agreement could up to £1.8 billion in growth every year to the UK economy.
And here in Europe, we need to be realistic that countries running big trade surpluses like Germany, do not need to suppress demand, they need to do more to reform their domestic services industry so there is truly an level playing field.
In short, we need to finish creating the Single Market, as writers like Charles Grant at the CER, have been arguing for years.
Now, if we’re to trade more, then we need trade-enhancing infrastructure; roads, ports, high speed railway lines.
Here in the UK, our infrastructure investment rate still lags the OECD average.
The World Economic Forum ranks the UK twenty-eighth in the world on overall quality of infrastructure.
Congestion on our roads will add some £10 billion of business costs by 2025
Our rail network is overcrowded at peak hours, especially in the south-east and north-west.
Demand for shipping is forecast to outstrip port capacity.
If we want to trade more, then quite simply we need not just trade deals but a new deal on infrastructure.
To these demand side reforms, we need to add some supply side changes.
Crucially, we need a bolder plan to boost the supply of innovation and science.
Let’s be blunt.
Innovation is the only way out of austerity.
The best way to raise average wages here in Britain is to grow the knowledge economy, the home of those jobs that pay on average £161 per week more than the national average.
And so, when we set out our policies for science and higher education a little later this year, you will see one lode-star: an ambition to build here in Britain a bigger knowledge economy.
That’s not something you can deliver by passing a law or raising a budget.
It can only be delivered by business and government working together in new ways. It is therefore a win-win that we have to work out together.
My third win-win is ‘Patient Capital’.
Reform of financial markets is widely regarded as critical to creation of inclusive growth.
On the one hand, the thirst for short term profits drives dysfunctional corporate behaviour which damages growth and jobs in the long term, and on the other limits the supply of capital for longer term investment in both infrastructure and innovation.
PWC recently forecast that globally assets under management will top by 2020, over $100 trillion. But as Michael Lewes’ recent book, Flash Boys, makes clear, predatory behaviour is still alive and well.
So how do change investor behaviour?
If anything, argue Dominic Barton and Mark Wiseman;
‘the shadow of short-termism has continued to advance’
In their survey of 1,000 board members, they found that nearly two-thirds reported that pressure to generate short-term results had increased over the last five years.
Nearly 4/5 said they were especially pressured to demonstrate strong financial performance over just two years or less – yet almost all said that a longer term horizon would be better for performance, innovation and financial returns.
It echoes the findings of John Kay here in Britain:
“We conclude’ wrote John, “that short-termism is a problem in UK equity markets, and that the principal causes are the decline of trust and the misalignment of incentives throughout the equity investment chain.”
The key reform, argue both Barton and Wiseman, is to change the behaviour of the asset owners – pension funds, insurance firms, SWFs, and mutual funds – who in the US own 73% of the top 1,000 companies (in 1973, they owned 47%).
There’s a range of changes that make sense; defining long term strategy; allocating more to illiquid assets like infrastructure and housing; taking a bigger role in companies when things head off track, and crucially they need to start measuring different things – the kind of corporate performance that drives long term gain like staff turnover…
Now public policy has a part to play.
Ed Balls has called for:
A shift in the culture and professional standards in the banking sector; imposing duty of care across all financial services, and reform of remuneration practices.
That’s why Labour will call an end to mandatory quarterly company reporting, because we know this will curb short-termism in the City.
And Gregg McClymont has argued for a change in the rules of the game for our pension funds:
“If we want financial services that prioritise the savers’ interest, fiduciary obligations deliver these. Fiduciary obligations will most effectively be delivered in pensions where pension schemes are managed by independent trustees.”
Labour is also leading the drive for a British Investment Bank, supported by a network of regional banks, which will become a key source of investment for long-term innovation.
Our fourth win-win has to be around productive workers – and the restoration of a very simple deal: where workers do more to boost corporate profitability, then boards need to give them a pay-rise.
Work is key to inclusive growth – and skill is key to raising productivity and therefore wages.
The goal of full employment now has cross-party support and there is a widespread view that reform of the education and vocational education system is critical to closing the gap between the class-room and the successful career – in work.
Here in the UK, that means action to stop people falling too far from the labour market. That’s why we propose a jobs guarantee. We want more people to enjoy the right to go to university. But critically, we know that we have to build a vocational track to higher level skills.
All over the OECD, countries are modernising their apprenticeship system to help apprentices train to higher level skills.
Here in Britain, we send just 6% of our apprentices to degree level skills. That isn’t good enough and it’s why we’ll propose reforms of our higher education system to fix it, adding to the proposals we have already announced to boost quality apprenticeship opportunities.
More productive workers however, need to be better paid workers. And if they’re not then we have to ask ourselves whether corporate governance is in the right place.
Around the world, campaigners are fighting for a pay rise. In China, last year. In Seattle. In Switzerland. In Germany. And here Ed Miliband is leading the charge with plans to strengthen the national minimum wage.
When productivity and profitability is rising – but wages are falling, then something is going wrong; and that’s why arguments for a Living Wage have such resonance.
I’m very proud that my home city of Birmingham is determined to become Britain’s first living wage city
If we can do it in Birmingham, then we can do it in Britain, and Alan Buckle’s report has shown the steps we can take to spread the idea nation-wide.
Fifth, we obviously have to look at the competitive intensity of markets, and the ease with which new high growth market entrants can challenge the status quo
Broken markets are markets that foster oligopoly.
They’re bad for prices, bad for consumers, bad for suppliers – and we have to fix them.
Sometimes that means upsetting incumbents – but competition is good for business – especially the new businesses which create jobs.
Competition and enterprise are good for jobs. That’s why we need a competition health check on all markets and that is why Labour have promised to act on the broken energy market.
Indeed, policy-makers are now much clearer about the huge impact that high performing entrepreneurial firms can have on jobs.
Not too long ago, in fact NESTA argued that ‘the vital 6%’ of new firms may account for upto half of net new jobs.
That is a very powerful case for supporting that handful of new challenger firms that can change the way we do business and employ an awful lot of people along the way.
There are then two further big issues which are key to inclusive growth.
First, we have to make sure that no place is left behind.
And second, we have to make sure that the burden of paying for all this is fairly shared.
Finally, there are two fields of policy where politicians are perhaps more important – but where companies have a big stake to getting the policy right.
Here in Britain, poverty is now more spatially concentrated than ever before.
We cannot create a country of inclusive growth if swathes of our country are left behind.
Fostering a better balance between rich and poor areas is critical to creating a country where wealth is better shared.
There are no signs that this too may be a matter of cross-party consensus – at least on paper.
Lord Heseltine’s review of growth was an admirable attempt to sketch out a practical plan for re-balancing growth across the United Kingdom by letting local areas take control of their own destiny.
It was simply a shame that the government which commissioned Lord Heseltine then did their best to ignore him.
I can assure you that when Lord Adonis presents his plan on many of the same issues, we won’t ignore him. We will turn his ideas into action.
Finally, we cannot ignore the question of tax.
As the OECD recognised in their survey of top incomes, tax policy absolutely plays a role in determining who profits from growth.
Quite simply, government cannot support policies for more inclusive growth – like good education systems, or tax credits, or regional economic development – unless people pay their taxes.
And business leaders know that a good level playing field on tax policy, where tax avoidance is not used to undercut competitors – is key to good business, and higher levels of public trust.
Writing in 1926, JM Keynes in the End of Laissez Faire wrote:
‘Devotees of capitalism are often unduly conservative and reject reforms in its technique which might really strengthen and preserve it for fear that they may prove to be the first steps away from capitalism itself’.
A century ago, society, government and business came together to win the war.
And for all the mistakes, a very different kind of economy was born – and a very different kind of partnership between business and government.
It wasn’t strong enough to defeat old prejudices like protectionism or old ideas like the gold standard – that took the hard work of the policy makers at Bretton Woods.
Today, the debate about a new economy, a more inclusive capitalism, where work once again commands it’s just reward now has the potential to unite us, not divide us.
It’s time to get round the table and talk.
 IFS ‘Living Standards’ 2013 – http://www.ifs.org.uk/budgets/as2013/as2013_david.pdf
 OECD, Top Incomes and Taxation in OECD Countries: Was the crisis a game changer’ May 2014
 Distribution of Total Wealth, ONS May 2014
 Lord Leverhulme, p243.
 D Barton and M Wiseman, Focusing Capital on the Long Term, Harvard Business Review, February 2014
 JM Keynes, The end of laissez-faire, 1926
News from Liam Byrne MP
Birmingham Steps Up Fight against Child Poverty
Liam Byrne MP and Cllr John Cotton are stepping up Birmingham’s battle against child poverty on Friday by bringing together experts from across Britain to plan the city’s fight back.
The conference, which will be opened by the Bishop of Birmingham, will convene experts from Forward Thinking Development, Birmingham City Council, Unison, Citizens Advice Bureau, Child Poverty Action Group, Re-Source Central Foodbank, South and City College, DWP, Midland Heart Housing Association, St Basils, Castle Vale Community Housing Association, Ashram Housing, NHS England and others.
The conference will review the state of deepening child poverty in the city and pin down what the Council, schools, the NHS, charities and business can do together to fight back.
Liam Byrne MP said:
“This conference is a watershed in our fight-back against child poverty. Our belief is simple. Every child in Birmingham is equal and deserves a flying start in life. Yet if some are trapped in a child-hood of poverty, it will hurt them for life.
“My ten years as a Birmingham MP has taught me that this is a city of good neighbours – and good neighbours cannot stand by and watch the next generation suffer.
“This conference gives us the chance to bring together some of the world’s leading experts in tackling child poverty to help answer a simple question: what can good people in our city, from all walks of life, do to help.”
Cllr John Cotton said:
“A third of Birmingham’s children are growing up in poverty and in some neighbourhoods the number is even higher still. This is unacceptable.
We are already working hard as a Labour Council to try and lift families out of poverty through initiatives like the Living Wage. We’re also taking action to try and protect people from the impact of unfair Government policies like the Bedroom Tax and their savage cuts to Birmingham’s budgets.
But we have to do much more if we are going to ensure that every child gets the best start in life. This conference brings together the allies we need in the on-going battle to ensure that every child in this city gets the fair start they deserve.”
Operational use only:
1. The Birmingham Child Poverty Conference will take place this Friday 11 April from 10:00 – 12:00 at the Unison offices, Livery Street, B3 2PA.
Notes to editors
1. In February 2014 Birmingham Labour launched a policy taskforce into Child Poverty in Birmingham, its causes and what can be done to eradicate it. The taskforce is headed by Liam Byrne MP and Cllrs John Cotton and Tim Evans
2. Across the city over 84,000 children— almost a third of young Brummies—are now growing up on the breadline with the figure rising to almost half in some wards. Child Poverty Action Group figures show the estimated cost of Child Poverty to the city in 2013 was £914 million in extra services such as education, healthcare and benefits, as well as, lost tax receipts and lost earnings.
Agenda 2030 and Britain’s Higher Education Speech to Business in the Community: Role of Universities in Fostering Leaders
Tuesday 1st April 2014
Thank you very much.
It’s a great pleasure to speak to Business in the Community today.
I had to come and speak today in part to say thank you for everything you’ve done to help me in Hodge Hill, enjoining our fight against youth unemployment.
Over the years, and never more than today, you brought the enterprise, power and creativity of business to tackling problems we share in common, and today I want to draw on that tradition to talk about how we can work ever closer together in the field of higher education, preparing our young people and preparing our country for a very different world taking shape around us.
Let me start with where the country now finds itself.
You might say: what a difference a fortnight makes.
Last weekend saw much speculation about Labour’s position on how we pay for higher education. In due course, we will set out our plans. But Ed Miliband has made clear our direction of travel.
We have to reduce down the huge levels of debt write-off that make the today’s system unsustainable.
That’s the lesson from the revelations of the last two weeks;
Revelations which have driven a coach and horses through the government’s higher education policy.
Revelations that have raised huge concerns for students, for taxpayers and for Vice Chancellors.
They are revelations which have comprehensively changing the terms of the debate.
First, there was the admission to me in a parliamentary answer that the government now expects the write off of student loans to rise so high, that the new system of tripling student fees might not save the tax payer any money.
A surge of speculation that student fees might have to rise even higher quickly followed. In the Commons, Nick Clegg said there was no case for such a rise, but in the TV studio, David Willetts was telling a different story.
After her interview with the Universities Minister, Cathy Newman of Channel 4 News reported:
“As David Willetts was leaving the studio, I suggested it sounded like another tuition fees rise was on the way… ‘Could be’ was his response.”
Mr Clegg tried to defend himself by arguing that the amount students would pay back each month was less than under the old system.
He somehow forgot to mention that the average student today won’t pay their loans back for 27 years. That means students today will approaching 50 before they are free from the debt burden.
In stark contrast, it was estimated that for students starting after 2006/07 the average Student Loan would take 11 years to repay for men and 16 years for women.
This last week, we got the story’s latest instalment, when a fresh batch of answers arrived to the parliamentary questions I tabled on the scale of private providers now enjoying hundreds of millions of pounds of support funded by the taxpayer.
The sheer scale of the subsidy surprised everyone.
Nearly £1 billion of publicly funded loans and maintenance grants are now flowing through students to private providers.
That, as the Guardian pointed out, is a 2100 per cent increase in recent years.
But what really surprised me, is that government has no idea about the level of profit these private providers are now making.
In a parliamentary answer to me, David Willetts said, “The Department has not made an assessment of the level of profits made by for-profit alternative providers with courses of higher education that are designated for student support”.
But, worse, it turns out that the government doesn’t even check whether a college is profit making or charitable before it agrees loan support.
A further answer confessed; ‘In assessing students’ eligibility for student loans, the Department does not distinguish between those alternative learning providers that operate on a commercial for-profit basis, and those that do not. The information requested is not available.”
Just to round it off, Mr Willetts underlined; “The Department has no plans to regulate the profitability of alternative providers with courses of higher education designated for student support.”
You heard it.
Together these revelations have profound implications for the future.
Not so long ago, many in the university sector set out to me how uncapping students into the next parliament was a vote winner for the Tories.
But now it’s clear that what is proposed is a system that combines the worst aspects of a free for all and a money pit.
Call me old fashioned, but I happen to believe that public universities do a brilliant job.
The national system of higher education that emerged in the 1960s, with a national admissions system and a national grant regime ensured that today we enjoy not only world class universities, but a world class university system.
It’s diverse, it’s competitive in a way that encourages innovation in research and teaching and it deliver high standards.
It’s also highly efficient.
I happen to think we should be very proud of it.
What is not clear to me is how it is good for public universities to maintain a system where half of the new money earmarked for expansion is locked up in an escrow account to provide for loan write-offs, and where there is zero control of how much is creamed off in profit by a hungry private sector. I look forward to hearing the arguments in favour.
With this is mind, it’s very welcome that Universities UK is grasping the nettle and seeking to maximise cross party consensus on a new way forward.
I very much look forward to joining those talks, and to help get the conversation going I want to set out today the principles which I think should guide us.
These are principles deeply rooted in our history and academic traditions, but more importantly a sense of the future, in a world turning east, where technology is moving faster than ever, and where we in Britain need new answers to help us, collectively, earn our way to a better standard of living.
It’s not so much Robbins Revisited. Its Robbins Rebooted.
The starting point for our principles is the speech Chuka Umunna made to the Engineering Employers Federation a few weeks ago.
In that speech, Chuka set out the basic truth in politics today.
In a country, where living standards are under such acute pressure and where the deficit still looms so large, innovation is the only way out of austerity.
As Chuka Umunna put it; “We, the Labour Party, are clear about our goal: a high-productivity, high-skilled, innovation-led economy.”
That is why our universities are so important. They are the power-houses of the knowledge economy. They need to be bigger, stronger, more central to our economy in the years to come.
As the Royal Society put it so simply, so eloquently in 2010, Britain need to put science and innovation at the heart of a strategy for long-term economic growth.
Unless we grow smarter, we will grow poorer.
Over the last five months, I’ve travelled all over Britain talking to hundreds of students and teachers, scientists, innovators, business leaders large and small, sixth-formers and their parents, and most of the nation’s vice chancellors.
I’ve been struck how our debate is in sore need of a few basic principles.
You can take as read, my sympathy with some fundamentals, set out with characteristic eloquence by Nigel Thrift in his recent speech: British Higher Education: Where Next?
In particular I want to double underline what Nigel said about the importance of universities as ‘disinterested producers of knowledge for its own sake’ and that ‘universities must remain as conscious moulders of sceptical and informed subjects’, ‘focused on being public goods’.
Today, however, I want to step out further, and having reflected both on the IPPR’s seminal Commission on Higher Education, and Mr Willetts own contribution to the debate, Robbins Revisited, I want to set out five tests that I think should help us judge what good university reform looks like.
First, obviously, is financial sustainability. Good research, good teaching, needs good and sure foundations.
And what is now clear is the Tories’ student loan system that pays for our universities, voted through by the Lib Dems, is a time-bomb.
According to the Public Accounts Committee, its storing up perhaps £70-80 billion of debts that may never be repaid.
Today’s system with tripled fees and big debts for graduates is now as expensive as the system where students were charged a third as much. It has become an indefensible system. So people should now stop trying to defend it. Or relying on it for the future.
The second test, must be: what is good for our science base, our store of knowledge and wisdom. Whatever is proposed for the future must pass one simple judgement: is it good or bad for the science base?
Today, while other powers emerging and established are investing in science like never before, we are cutting science spending across government according to the Campaign for Science and Engineering, to the tune of over £800 million.
Nationally, research and development as a percentage of GDP is at its lowest level since the turn of the century. Last year it fell for the first time since 1985.
Test number three, is student choice. Are we offering students a real choice of pathways through to higher level skills?
Today, while we do a decent job of getting A level students or those on an academic route to university, we do a terrible job of lifting apprentices up to the same standard.
While great firms, like Rolls Royce train fifty per cent of their apprentices to degree level skills, as a country we manage just six per cent. That’s right, six per cent. The grand total of 6,000 people. It’s not good enough. Its not good enough for the future.
As if I needed persuading, this was a point rammed home for me in Paris yesterday by OECD economists and policy advisors.
Fourth, we need to do far more to fix Britain’s skills base; when regional skills gaps are opening wide all over Britain, then I’m afraid we do need a deeper conversation between business and universities about the graduates we’re educating.
I’m a firm believer in education for education’s sake.
But I know too that a good job is fundamental to the way we flourish and right now half of graduates are not in graduate level jobs.
Finally, Labour will always demand faster progress when it comes to social mobility.
The shutdown of Aim Higher was obviously foolish. The IPPR is amongst others who have proposed new ideas like a ‘student premium’.
NUS has consistently argued for better hardship funds to help poor students stay the course.
It’s time these arguments were taken seriously.
These are the tests that should shape the way we think about the future. The government’s proposal to pour more money into ‘more of the same’ has now been exposed as impossible.
What’s proposed isn’t sustainable, it does nothing to boost the science base, diversify student choice, or bring universities and business together, or deliver fast enough progress towards social mobility.
Half the new money proposed in the next parliament bleeds straight out to provide for debt write-off – and much of what’s left will go straight to the hundreds of private providers whose students now consume north of £850 million a year in public subsidy, while zero control on their profitability.
I put it to you that this is not a system that is fit for purpose.
This year we celebrate an important anniversary in the Labour calendar. The 50th anniversary of Harold Wilson’s election – a moment when a party relentlessly focused on the future swept away an old boy network lost in the modern world.
Higher education was central to our offer then.
And so it is today.
The Tory ways have failed.
It’s time for a new way forward.
Labour’s Shadow Pensions Minister Gregg McClymont and I, are today publishing “Pensions people can trust” as Labour sets out its ambition to end private pension rip offs and create the world’s best private pension system for British pensioners.
The Policy Review document, developed over months of consultation, sets out Labour’s new policy agenda highlighted by Ed Miliband, who talked about taking on private pensions rip-offs at this week Press Gallery Lunch, and just months ahead of the October launch of the ‘auto-enrolment’ system which will see an extra 10 million automatically brought in to private pension schemes in the coming years.
Labour legislated for the new system of private pensions for all with cross party support following the Turner Report. The new “something for something” pensions see workers’ contributions equally matched by government and employers.
Labour is determined to be the party of hard-working savers. That’s why I’m saying very clearly today that I want to see the best private pensions system, working for people who do the right thing and save for the long term.
Right now, a worst case scenario could see a pensions saver lose up to half of their pension thanks to hidden costs and charges. That’s wrong and it shouldn’t be allowed.
We all know we need to save more for the future. That means we need a system that builds your pensions pot, not eats your pension pot.
We’ve got some great pensions companies in Britain. But with an extra 10 million about to be brought into private pensions we’re determined to make sure savers are served by every pensions company playing to the standards of the best.”
Gregg McClymont MP, Labour’s shadow Pension’s Minister added:
“We’ve set out where we think the current system does not work for pension savers. The government should deal with these issues as a matter of urgency. In the coming months we’ll be talking to people up and down the country to see how we can get this right, because with the introduction of auto-enrolment just round the corner, we’ve got to get this right.”
The Policy Review document;
∙ Spells out the costs and charges savers can face, and the problems in the system – hidden charges, rip-offs in the annuities market, and penalty charges for people who change jobs and exit charges for savers switching schemes.
∙ Looks to the Australian system where the implementation of the Cooper Review is set to create a simpler and more cost effective system from 2013 by opening up the scheme to new levels of transparency
∙ Addresses the root causes of the problem from – lack of simplicity, transparency, accountability, scale and restrictions placed on the low cost high quality national not for profit Trust – NEST
∙ Includes comments from across the industry including representatives of; The Pensions Specialist, The True and Fair Campaign, The Saga Group, First Actuarial and Hargreaves Lansdown PLC, as well as Lord McFall, the former Chair of the Workplace Retirement Income Commission.
Notes to Editors
Attached below is the document “Pensions people can trust.”
Selected Comments from the document:
“If the pension is to re-engage the trust of consumers then transparency of costs, charges and restrictions is an absolute requirement. This transparency must cover all costs and charges, not only those directly paid by each individual member but any charges which will reduce the return on their investments. As an industry these charges are known as they contribute greatly to the profitability of pension providers and fund managers and their shareholders. This information should be freely available as it clearly is in the public interest. A pension plan is a long term commitment for both parties and long term relationships must be based on trust and honesty.”
Douglas R.G. Baillie, Senior Partner of The Pension Specialist
“It is vital that customer interest is looked after better by the annuity market. Currently, most people are at risk of buying the wrong kind of annuity and obtaining a poor rate, with nobody obliged to advise them of what they need to consider before buying this irreversible, once-in-a-lifetime product. Anyone in poor health, or who has a partner, or who wants inflation protection may not realise that they need a special type of annuity until it is too late. Commission is dedicated from the pension fund to cover advice, even if no advice is given. This is not in the customer’s interest.”
Dr Ros Altman, Director-General of the Saga Group.
“ Hargreaves Lansdown believes that the pensions industry should always look to the best interests of investors. The special restrictions imposed on NEST simply make pensions more complicated and for this reason we support the proposal that the restrictions should be lifted. NEST will serve a useful purpose as an underpin for auto-enrolment, and any commercial company that fears its own offering is not competitive should look to the quality of their own product or service, not seek to restrict NEST”.
Ian Gorham, Chief Executive of Hargreaves Lansdown PLC.
The Comments provided by stakeholders in the attached document illustrate their view on a particular policy issue. Their Comments do not necessarily imply that they support all the views expressed in this document and they do not imply that they support the Labour Party.
At conference this year we published four reports which draw together what we heard from the public over the last year, and some of the emerging conclusions and findings from the shadow cabinet-led policy groups. These documents will now form the foundations of our policy work over the next year. If you’d like to debate these in your local Labour Party of CLP or trade union, let me know!