Economy, Energy and Fair Work Committee

Meeting date: Tuesday, October 6, 2020

Official Report 739KB pdf

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Pre-Budget Scrutiny 2021-22

Agenda item 2 is pre-budget scrutiny 2021-22, including the impact of Covid-19 on businesses, workers and the economy. We have with us in the committee room Jamie Hepburn, the Minister for Business, Fair Work and Skills, and Gavin Gray, who is deputy director of the young person guarantee. Online, we have Colin Robertson, who is head of the skills development unit, and Norman MacLeod, who is senior principal—my apologies, I jumped ahead to the wrong sheet. That was my mistake. We have Amy Stuart of the employability division.

I welcome you all and invite the minister to make a brief opening statement.

Thank you for inviting me to attend today. I am sure that we all know that the global pandemic has created unprecedented challenges for businesses and individuals throughout Scotland. We acted quickly and put in place a comprehensive package of measures worth more than £2.3 billion to help to sustain businesses. We are acutely aware of the disproportionate impact that the pandemic could have on key priority groups, which is why our response has a key focus on supporting young people and those who face unemployment.

We have a strong infrastructure already in place, including our developing the young workforce network, and a range of programmes already delivering for people who need it most. It is on those foundations that we must build as we steer our way through the difficult times to come.

We have already commissioned an additional £100 million for employment support and training. Of that, £60 million has been committed to the young person guarantee, delivering the recommendations set out by Sandy Begbie in September, and £10 million has been invested in apprenticeships, to help modern and graduate apprentices who are facing redundancy to get back into work. We will increase support through our partnership action for continuing employment scheme and we will create a £25 million national transition training fund, launching in autumn, to provide rapid, high-quality and targeted support to those people facing redundancy or unemployment in the sectors and regions that are most exposed to the current economic downturn. We will also increase funding for the flexible workforce development fund, from £10 million to £20 million for the coming academic year, to help apprenticeship levy training employers to upskill and reskill their existing workforce. We continue to provide support for those who are unemployed or in work on incomes of £20,000 or less to access new skills, focused on labour market progression, through individual training accounts.

I am sure that all committee members appreciate the scale of the challenge that we face. We are keen to work collaboratively with all parties and partners in our response to the pandemic. That will be important, if we are to ultimately build back our economy in a fairer, greener and more sustainable way.

With that, I am happy to field any questions that the committee may have.

Thank you. If you wish to bring in either of your officials who are online—Amy Stuart and Colin Robertson—please name them, to let broadcasting staff bring them in. It would perhaps be easier to bring in your other official, who is in the room, as might be required.

We now go to the deputy convener, Willie Coffey, who is online.

Good morning. A good place to start might be to talk about youth employment and unemployment in Scotland, which is of interest to the whole committee.

After the previous comparable shock to the economy—the 2008 recession—it took several years for youth unemployment to drop to pre-recession levels. Given that the United Kingdom Government does not have a budget this year with any specific methods to tackle youth unemployment, is there a danger that the same thing could happen again and we might see a peak in youth unemployment levels in Scotland?

The first thing that I would reflect on is that it is inevitable that—as in any economic downturn—the effects might be felt for some time to come. That was particularly the case after the previous economic downturn, which came about as a result of the crisis in the banks, the availability of capital for businesses to draw upon and the business uncertainty that arose from that. We do not know whether the economic response will be quite the same in this circumstance because a very different factor is driving it; this time it is the global pandemic.

In 2008-09 we had to create much of the infrastructure to respond to that economic crisis. Skills Development Scotland was just forming, we created the developing the young workforce initiative and we put in a raft of different types of training and employability provisions, such as the employability fund. The good place that we are in this time, in comparison, is that that infrastructure already exists. Therefore, I go back to the point that I made in my opening remarks about us building on what we have now. That places us in a stronger position.

Undoubtedly, the UK Government’s decision to delay its budget once again poses a not-insignificant challenge for the Government in pulling together its budget proposition and a not-insignificant challenge for the Parliament to then consider that budget proposition. However, that is the position that we are in, unfortunately, and we need to cope with it. Through the UK Government’s budget, we are looking for significant investment through an economic stimulus to support people through this time.

In speaking about our approach, it is important to go back to the point that I made about building on what we have in place. We seek to learn from the past, and that is why we undertook a full review of our employability services in 2018. That has informed our approach to the no one left behind agenda.

We have asked Education Scotland to review the experiences of young people who are undertaking foundation apprenticeships, which are one of the other comparatively new elements of our system.

We also seek to be informed by the practical experience of what went before so that we can continue to finesse and improve it. However, my estimation is that we are in a better place to respond than we were in 2008-09. I am hopeful that it will not take the same intervening period of time to get back to where we want to be.

Youth unemployment in Scotland has been consistently lower than in the rest of the UK and Europe. Do you put that down to some of the interventions that you mentioned, and looking ahead do you see us continuing with those types of intervention? What new measures do you foresee being required to assist to offer more opportunities, particularly for those in the 16-to-24 age group?

I refer to my point about building on what is in place. The prism through which we want to do that is the young person guarantee. Our commitment to the guarantee was made in response to the report of the advisory group on economic recovery and was informed by the report of the enterprise and skills strategic board sub-group, which considered the skills and employability interventions that we might need in the current and coming period.

The young person guarantee will ensure that every young person aged between 16 and 24 is guaranteed the opportunity of work, education or training. Yes, we will certainly use the services and programmes that are in place, but we need to enhance that provision, which is why we have leveraged in some £60 million of investment, specifically for the guarantee, which will be delivered through our partners.

Of that investment, £30 million will go to local authorities, to support the existing local partnerships that deliver employability support, £10 million will go to colleges and £10 million will support pre-apprenticeship activity, to try to support young people into apprenticeships.

The critical element, in the context of Sandy Begbie’s involvement in the report on developing the young workforce, is the £10 million to try to better embed developing the young workforce activity in the school environment, through the provision of school co-ordinators. That is a significant investment.

We are also working with other provision, of course. The UK Government has put in place its kickstart scheme. It would have been better if we had had some involvement before the scheme was announced, so that it could have been more aligned and co-ordinated with what we are doing in Scotland. Nevertheless, the UK Government has put the scheme in place and it is important that we recognise it and try to factor it into the equation, albeit through the prism of our ambitions for fair work and seeing people paid the real living wage—the kickstart scheme does not envisage that, so we must think about how we enhance provision in that regard.

Thank you.

Willie Coffey suggested that the UK Government has no schemes that focus on youth unemployment, but, as the minister just said, the kickstart scheme will create job placements for 16 to 24-year-olds. Has the Scottish Government conducted analysis of the impact of the scheme on young people in Scotland?

We have no analysis at this stage, but although the kickstart scheme does not look quite like it would look if it was in our hands, it is a reality and we will seek to ensure that it is as aligned and integrated as it can be—given that it is not our scheme—with the youth guarantee that we have established, as I said.

That is an important point. The young person guarantee covers a range of activity, including the developing the young workforce activity, apprenticeships activity, other employability interventions, college and university activity and the kickstart scheme. The kickstart scheme is not our scheme, as I said, but it is there and we will need to work with it. We are engaged with the Department for Work and Pensions to make sure that it is aligned as much as possible with our wider young person guarantee, so that employers engage with it and all the activity that we want to be taken forward through the prism of the guarantee.

We all know the stress of finding our first job after leaving school, college or university. Have the Scottish Government’s statisticians produced any estimates of how many 16 to 24-year-olds could be unemployed by the end of this year? If so, do the statistics show how different areas and sectors in Scotland are being impacted? Is there more that we could be doing to help, on top of what we are doing, or are we doing enough?

09:15  

We are already starting to see the impact of youth unemployment in Scotland. The most recent labour market statistics showed that that was around 4 per cent higher than at the same time last year.

We have had a range of estimates of where that figure might end up and of the likely impact on overall employment levels. The most recent published analysis that I saw—which came from the office of the chief economic advisor—suggested that unemployment could be in the realms of 8 per cent by the end of the year, which is not in line with the worst initial estimate of around 13 per cent. That figure is for the whole labour market and all age groups, but we know that young people are disproportionately impacted whenever there is an economic downturn.

The estimate that we have suggests that an additional 60,000 young people may be unemployed. It behoves us to intervene, which is why we have responded and put in place the young person guarantee that I have already discussed.

We have also acted quickly through our developing the young workforce groups. There has been a range of targeted activity for this year’s cohort of summer leavers. We had to respond immediately to engage with those young people who were leaving school this summer. They undertook a range of activities. We have information from the SDS data hub that helps us to track those who have left school and to see where 16 to 19-years olds are with their employability, education and training. We can then intervene through the young person guarantee to assist those young people who require direct assistance.

How confident are you that young people who left education during the summer are now in work or training? Are there any gaps? Have we left anyone behind?

I have already made the point that youth unemployment, according to the most recent labour market statistics, is now 4 per cent higher than it was at the equivalent point last year. That is a consequence of the economic difficulties that we face because of the pandemic. That is why we have to intervene quickly. That is why we have put the youth guarantee—the young person guarantee, as it is now called—in place. We will make more information about that available soon. It will be built on the strong foundations that we have already.

Are we predicting how many young people could be unemployed in the next six months? Are we sure that the money that we have committed and all the good projects that you have announced today and previously will reduce youth unemployment?

I go back to the point that I made about the estimated numbers of young people who might be unemployed.

When we look at the quantum that we are investing through the young person guarantee, it is important not to think of that as a budget allocation per young person who might be unemployed. It is designed to grease the wheels of the system that we have already. It is designed to try to ensure that employers are properly engaged with the system that we have in place and to ensure that we maximise private sector investment.

I go back to the point that I made earlier. We are in an economic downturn that is very different from the one that we were in last time. We face economic uncertainty, but there are still employers with a raft of investment plans that they want to take forward, and we are trying to engage with them through the young person guarantee to ensure that young people can benefit from those opportunities.

The quantum of funding that we have allocated to the young person guarantee is not, of course, the sum total of what will be invested in young people. There is already our investment through the tertiary education system, Skills Development Scotland and the developing the young workforce strategy, albeit that we are seeking to enhance all those things in different ways. We also want to work with the private sector to ensure that it is investing in young people, too.

The positive thing to report back is that, despite the difficulties that we face right now, there are many employers across all sectors—the private, public and third sectors—that are really up for responding to that challenge and want to make a positive contribution to ensuring that young people can get into and get ahead in the labour market.

On your last point, you talked about many businesses. Can you give us an idea of the numbers; the scale of that; the number of young people who have come into the workforce since March, when the current situation began in earnest; and how things have been working out in employment and training?

We know that young people are still entering the labour market, but I go back to the point that there is no escaping the fact that we are seeing a higher level of youth unemployment just now. We would need to look back and see whether we can get an assessment of some of the specific information that you are seeking through the information that Skills Development Scotland has. I am happy to commit to doing that and providing that to the committee, if we can.

So you are not in a position to give the committee a rough indication of the figures today.

On young people who have entered the labour market over the past period?

Can you say how the numbers coming into the workforce, the number of those who may have ceased to be employed, the number of those who have gone into training and so on all fit together? I appreciate that you will have to come back to us on exact numbers, but I wondered whether you could give us any—

I would rather come back with exact and precise figures, convener. I am happy to commit to doing that.

All right. We look forward to receiving those.

It has been suggested to us that young people are having difficulties getting work experience. Work experience can happen in different ways—through part-time work or voluntary work, for example. Do you think that there is a problem with young people getting work experience? If so, can you suggest anything to address that?

Historically, that has been a challenge, and the challenge may well be exacerbated in the current period. We have had concerns about the provision of good-quality and meaningful work-based learning and work experience for young people who are still in the school environment or who are not long out of that environment. That is what the developing the young workforce strategy has been about in many ways. We task our developing the young workforce regional groups with continuing to build their partnerships with employers in their local areas to ensure that they provide opportunities for young people.

I have been fortunate—not so much in the recent period but over the past years—to be able to get out and about and meet many employers who have provided young people with such opportunities. We want to enhance the ability of the developing the young workforce infrastructure and our schools to engage with employers. That is why we have responded positively to the suggestion that we provide DYW school co-ordinators in every secondary school in Scotland to build on the experience of having such an approach piloted in Glasgow and Fife and better embed that experience.

Over the past period, that will inevitably have become somewhat disrupted. Businesses in the immediate period have, of course, had to turn their attention to their sustainability. By virtue of the restrictions that have had to be put in place on a raft of economic and social activity, with which we are still having to grapple, an employer’s ability to give a young person work experience has probably been somewhat limited compared with their ability to do so in ordinary times. As we move forward, we want to ensure that we work with employers so that they can continue to provide such opportunities.

You have mentioned school co-ordinators. How does the funding for those work? Are the co-ordinators additional to schools’ existing staff? Do schools have to find some of the funding for them?

As I have understood it, traditionally, in secondary 4 or at some other point, young people get a week out of school to get work experience. We have taken young people in my office, and I know that other MSPs have done the same. Is that enough? I feel that a week is quite short.

I agree. There is still a place for that, but what you have said reflects my point about the substantial nature of a young person’s experience of work experience. To be candid, I do not think that a week of work experience is as meaningful as we could otherwise make it. It is about engaging with employers to get them to commit to providing something more meaningful over a longer period. Many employers have committed to doing that through the developing the young workforce programme.

A lot of employers engage on the basis that they want to give something back and to provide young people with the opportunity, because they recognise that it is important to do so. However, the positive thing is that, in many cases, through the provision of work experience, young people have impressed the business and the business has gone on to offer them paid employment. I have met a raft of businesses and young people for whom that has been the case. We can enhance the raft of opportunities by having dedicated resource within our school environment to ensure that such connections are better embedded.

The initial idea behind the developing the young workforce programme was very much that each school would dedicate resource from existing staff to co-ordinate some of the activity. That has happened and made a difference, but we have concluded that we have to try to take it to the next level. We have been informed by the experience in Glasgow and Fife. Bob Garmory, who is the chair of the DYW board in Fife, has raved about, and pressed me on the necessity of, the step that we are taking in having school co-ordinators in our school environment. To answer the initial part of Mr Mason’s question, we are providing additional and dedicated resource for that purpose.

We have seen evidence that, even before Covid, employers were taking fewer young people directly from education, presumably because they also want experience. Are you concerned about that? Is that inevitable, or can we tackle that issue?

That is more of a concern in the current period. If I recall correctly—I could be corrected on this—the last progress report on developing the young workforce set out that the level of recruitment directly from education has remained broadly stable at the 2014 baseline.

My concern is more about the current period and whether, without any intervention, that position might weaken. That is why we have put in place our response through the youth guarantee, and it is why the developing the young workforce activity remains important. Those who work on the DYW programme have been active over the recent period. Over the summer, the DYW skills academy programme ran for five weeks to provide inside skills and knowledge in order to help young people build their industry readiness. The first-ever virtual parents events were held—we know that having informed parents or carers is critical in making sure that young people are informed about their options. DYW Up2U also took place, which was a virtual careers week involving employers and young people, to let them know about the range of opportunities that are available.

09:30  

Those events would normally happen on the ground and, ordinarily, a raft of impressive activity happens in each area led by the DYW groups. However, the groups have continued their work, even in these difficult times and in more constrained circumstances, which have inhibited their ability to do things in the usual fashion.

We have responded with the youth guarantee. We are responding by ensuring that there is investment to create pathways into apprenticeships for young people and to try to retain existing apprenticeships and the people who give their time through developing the young workforce. Incidentally, most of them volunteer their time, and I am eternally grateful that they give that time. Those people involved in DYW are also undertaking activity as an immediate response to Covid-19.

Colin Beattie joins us remotely.

I want to focus a little bit on modern apprenticeships. We have seen a fairly dramatic drop of about 80 per cent in the number of people starting apprenticeships during the past seven months. What is the Scottish Government doing to impact directly on that worrying figure?

First, I think that we would all be worried about the quarter 1 figures, when there was a dramatic decline in the number of new apprenticeship starts. That goes back to the point that I just made to John Mason. Just as it would be difficult for employers to facilitate work experience in the work environment, there was the challenge of facilitating formal work-based learning through apprenticeships. In addition, we should not forget that an apprentice is an employee and it is a paid position. In the immediate period, businesses’ priorities shifted and they were recruiting fewer people into apprenticeships, which the figures clearly demonstrate.

That is the position on the quarter 1 figure. We will get a clearer picture when the quarter 2 statistics are published, which will be next month. I will be candid: I am expecting the figure to improve, but I am not expecting it to match where we were at quarter 2 last year. If I was to make that claim, I do not think anyone would believe me, so I will not do so. There is significant disruption to apprenticeships and apprenticeship starts at this time.

We have asked Skills Development Scotland to undertake detailed modelling on what we can expect. It is obviously difficult for it to do that, because apprenticeships are a demand-led programme that requires employers to want to employ apprentices. That is not to say that we sit back and are passive. Through SDS and our network of training providers, we are promoting the benefits of apprenticeships, and I have already referred to some of the activity that we are undertaking to support better pathways into apprenticeships.

Apprenticeships remain an important part of our offer, but there is no doubting that we have seen disruption to the number of starts that we might have expected if we had not faced a global pandemic. That is disappointing.

Since 2007, the Government has delivered or supported through public funding more than 300,000 apprenticeships. Since I took on policy responsibility for this area, we have met our target each and every year. We set ourselves a target of 29,000 apprenticeship starts last year. We surpassed that target. This year, we set ourselves a target of 30,000. We are doing everything that we can to get as close to that as possible, but it is safe to say that, in the current situation, it will be difficult to achieve it. I have every confidence that, if we had not been in this situation, we would have done it, just as we did it last year, the year before that, the year before that and the year before that.

You have touched on targets for modern apprenticeships, but I take it from what you say that, at this point, there is no revised target for modern apprenticeship starts.

That is correct—we have not revised our target. I am being candid and open with the committee, given the disruption that we saw in quarter 1. As I say, we will have a clearer picture on where we are when the quarter 2 figures are published next month. To be candid and open with the committee, the achievement of 30,000 this year is unlikely. However, we have not revised our target at this stage. I cannot say whether we will set a formal revision of any target, but we have asked SDS to undertake work on what might be a more realistic proposition for this year.

I do not want the committee to get the sense that apprenticeships do not remain of fundamental importance to the Scottish Government and SDS—they absolutely do, and we are making every effort to continue to promote their benefits to employers and to encourage as many employers as possible to take on as many apprentices as possible. However, to be realistic, given the interruption that we had in quarter 1, there is no pretending that we will not face challenges.

Some current apprentices might have concerns about the future of their apprenticeships. Can you give them any reassurance that those apprenticeships will not suddenly be terminated in the middle of the process?

We already have an effective system in place for that through our adopt an apprentice scheme. Even before the current period, it was not unknown for apprentices to be made redundant by an individual employer, although, thankfully, that was not usual. In that situation, through the interaction of that apprentice’s training provider with SDS, the adopt an apprentice programme is triggered. The scheme provides a one-off financial incentive to another employer and is designed to ensure that the apprentice can complete their apprenticeship. The last thing that we want or anyone wants is a person having to give up their apprenticeship halfway through the period of training because they have lost their employment.

We have that system in place. Incidentally, we have extended that scheme to graduate apprentices from February of this year, so they are eligible alongside modern apprentices. However, in the current period, we recognise that we need to do more, so we have leveraged in and repurposed some funding that was in SDS to ensure that we make every effort to work with employers so that they see the benefits of retaining the apprentices that are employed with them. If that cannot happen, the adopt an apprentice scheme kicks in, which involves doing everything possible to ensure that the apprentice is placed with an alternative employer and can finish their apprenticeship. That scheme has a high success rate. If the committee wants, we can provide figures to demonstrate that.

It would be interesting to see those figures. Obviously, there is a great concern as to the number of modern apprentices who might have lost the opportunity to complete their apprenticeship with their current employer. Are there enough resources to be able to pick up those people and ensure that they get through to the end of what is an important part of their training?

On the latter point, yes there is. I hope that I have demonstrated that and we are leveraging in more. In response to the convener I committed to seeing what specific information we can provide on the impact on young people and I will make sure that we do that. I do not have the figure to hand, but we can probably more readily establish how many apprentices have been made redundant in the current period.

From my engagement with employers, my estimation is that, more often than not, they seek to protect their apprentices, not least because they take them on as part of their succession planning. Employers recognise that a cohort of their workforce will leave at some stage and they must have a new pipeline of talent for future years. Therefore, they make every effort to protect apprentices. Again, we can provide figures if that will be helpful to the committee.

It would be helpful to have those figures. People will also be interested to know what you would say is the key thing that you are doing in this area, in light of the drastic measures that have been imposed as a result of Covid regulations and their effects on businesses and apprenticeships.

That goes back to the point that I have just made. We have leveraged in significant additional resource for Skills Development Scotland to work with employers to make sure that apprentices who are currently employed remain in employment. For any apprentices who are impacted by redundancy, for whatever reason, the adopt an apprentice scheme kicks in. Action on recruitment more generally will be a core part of the youth guarantee. It is the process of engaging with employers to work out what their plans are for recruitment and ensuring that apprenticeships are embedded as part of that.

That activity is a key focus of the youth guarantee and it continues to be taken forward through the various elements that I have spoken about—developing the young workforce, SDS’s core activity and the variety of means of engagement that we have with employers. For example, Scottish Enterprise has a role to play. When it is interacting with individual account-managed companies, it will also talk about the range of opportunities that may be available through the public purse to support the training of people in the workplace including apprentices. A whole-system approach is in place and we are seeking to enhance that through the additional resource that we have deployed.

Good morning. I want to look at the modern apprenticeship programme. Due to the 80 per cent drop in starts, less money is being spent on the training element. Where will that budget be allocated—where will it move to?

That goes back to our work with Skills Development Scotland to respond to the current circumstances. In effect, it has been deployed in the adopt an apprentice transition programme for redundant apprentices. I have mentioned the pathways to apprenticeships programme, which works with specific sectors. We have been working with the construction sector and with other sectors including business services, engineering, childcare, and information technology—including digital software and hardware. If the core question is whether the money will stay in the realms of apprenticeships and training provision, the short answer is yes, that is what we are seeking to do.

It has to be responsive to the circumstances that we are in. If there are fewer opportunities in the labour market for people to be taken on as apprentices, we have to ask what alternative we have to utilise the expertise of Skills Development Scotland to work with our training providers and educational institutions to support people in a different way. That is a core part of the youth guarantee.

09:45  

There are other things that we have not touched on yet, such as the national transition training fund, which is designed for those who are aged 25 and over, who might be affected by the difficulties in the labour market, to support them back into employment as quickly as possible through meaningful and purposeful skills and training interventions.

We are looking at where we are and responding accordingly. That is what we have sought to do through the work that has been undertaken by the advisory group on economic recovery and by the enterprise and skills strategic board sub-group, which considered skills and employability and made a raft of recommendations that we are now articulating in practical action. The youth guarantee and the national transition training fund are two examples of that. Much of that is predicated on considering that we have budgeted for certain types of activity—for example, through Skills Development Scotland—and, given that much of that activity cannot be realised, asking how we can use that resource differently and more flexibly. We are committed to doing that.

Will an expansion of college capacity be a priority for the forthcoming budget?

Through the prism of my area of responsibility, I mentioned the increase to the flexible workforce development fund. That has already led to additional resource for the college sector, which has demonstrated that it has responded to the challenge of supporting those who pay the UK Government’s apprenticeship levy to ensure that the current workforce can get some form of training that suits their requirements. We are also thinking through how we might build on the success of that programme and make it more flexible still.

I also go back to the young person guarantee. Some £10 million of that money will be directed towards colleges. We will be working closely with the Scottish Funding Council and the colleges on how they might utilise that money to respond to the current challenges.

On the question in the round, in the context of the budget, we will be looking carefully at what our college system can do in response to the coming period, and we will allocate resource accordingly.

Minister, we heard from businesses that some of them are not in a position to take on new people this year. Are you factoring that in? I appreciate that the situation regarding the rules and regulations that we all face is changing, but do you have any comment on that particular point? Businesses are saying that, given the way things look at the minute, they do not have the facilities, ability, need or option to take on new apprentices in addition to those that are already employed.

As I said, we are deploying resource and engaging to incentivise and support employers to take on young people and give them opportunities in work. We are looking at a variety of things that we can do in that respect. One recommendation was for a specific recruitment incentive for employers. We are considering carefully how that might be deployed.

That approach is not entirely new. Support has previously been provided through Scotland’s employer recruitment incentive, which is now part of the no one left behind strategy. Many local authorities still operate a financial incentive for employers to recruit young people. There is also a similar incentive through the community jobs Scotland programme, which is continuing. We are looking more widely at how we could potentially adopt that approach for the recruitment of apprentices. That was recommended by the advisory group on economic recovery, and Sandy Begbie looked at it through his activity on framing what a young person guarantee might look like. We are discussing with Skills Development Scotland precisely what such an approach might look like.

We need to be careful, because we do not want any such approach to replace recruitment that might have happened anyway. Recruitment is still happening; there are still opportunities out there. As I mentioned earlier, we need to engage with employers to ensure that, where they are taking people on, they are actively considering that some of those opportunities could be provided through apprenticeships.

In general, I engage with businesses regularly and I have an open dialogue about some of the challenges that they might be facing. I am always willing to listen to them on what we can do differently and how we can be creative in working with them to ensure that they provide more opportunities for young people. We have a weekly call with business organisations—it usually involves Scottish Government officials, but I take part in it regularly—so that we can discuss those matters. Sandy Begbie has spoken to that group.

As the committee would expect, given that I am the minister for business, I speak with business organisations regularly. Over the past weeks and months, I have been engaging directly with individual chambers of commerce, members of the Institute of Directors Scotland and members of the Federation of Small Businesses Scotland to discuss a raft of matters, and the area that the convener mentioned falls within that territory.

Can you highlight some of the learning from the previous transition training fund?

As I said, we have not yet properly discussed the national transition training fund that we are currently seeking to put in place. It is important that we learn from the previous transition training fund, which was specific to the oil and gas sector. Approximately 4,000 applications were approved for that fund, and the overwhelming majority of those who took part reported that the support that they received had helped them to get a job and had improved their job security.

We can learn a lot of positive things from that fund. It enabled people to transition to other sectors such as skilled trades and the renewables sector—as the committee might expect, a lot of people transitioned to that sector. However, there were also elements that did not work quite as well as we had hoped. We face an on-going challenge in logistics, which I have discussed with hauliers and the Road Haulage Association—a specific element of the previous transition fund was designed to recruit people to that sector, but it did not work so well. We need to be prepared to learn from what has not worked so well.

We are informed by the previous experience, although what we are seeking to do with the new fund is in many ways much wider than the approach that we took to the downturn in oil and gas—it could not be anything but that, given that we know that the current crisis will impact a much wider range of sectors across a much wider geography.

We are therefore leveraging more resource into the training fund, and we are thinking about the specific types of sector that should be supported, taking into account our ambitions for improved energy efficiency and looking through the prism of digital skills. The Cabinet Secretary for Finance commissioned Mark Logan to publish his report, a significant element of which concerned the skills base in the technology sector. We are also looking at nature and land-based jobs and skills. Tourism has, of course, been hard hit during the current period, and it is incumbent on us to think about how we can support people to transition from that sector—but also into the sector, looking ahead. Social care is an important area for us, too.

We are carefully considering where it is a key priority to get people into certain types of sectors. That is an important point to make, not just regarding the transition training fund but more generally in relation to our employability and skills system. We had already set our task to that, through the future skills action plan, trying to ensure that, where any person interacts with the employability and skills system, that interaction is very much directed to the outcome of a form of skills intervention that will put them in a good position to get ahead in the labour market when they come out the other end. There is no use in providing people with a skills set that has no relevance to the future economy—I think we would all agree with that: our efforts should be fixed on our future society and economy. That is what we are trying to achieve through the national transition training fund that we have established, and it is very much informed by the previous transition training fund.

Thinking about the greener recovery more generally, how much of an issue is the hollowing out of the labour market?

It is a challenge. Whenever anyone falls out of the labour market and remains out of it for a significant period, it can be more difficult to get them back into employment. That is a general point. We are committed to having a green recovery, and, as I have said, we have a clear focus on that as an element of activity through the national transition training fund. We need to get people back into employment as quickly as possible.

It is, of course, a concern, so we are seeking to respond quickly, putting in place initiatives that are designed to get people back into employment as quickly as possible while focusing on our needs. The activity of the just transition commission has had a significant focus on the labour market and the provision of the types of skills that will be required.

We have also committed to publishing a skills action plan that is focused on climate change, in which I will be involved. I should say candidly that, as with so much Government activity, that work has been disrupted by our responding to the current situation, but the action plan will be an important part of my focus.

Thanks for that answer, but I was focusing mainly on the potential hollowing out of the labour market. You have articulated some points about getting people into work more generally, but I am concerned about the hollowing out of the labour market going into the future, with increased digitisation. How much of a concern is that, and what might you be doing to address it?

What we are doing to address that is the raft of provision that I have laid out. Candidly, I think that my answer to the previous question is, in effect, the answer to the question that you have just asked. If you think there is something missing, please feel free to be more specific, and I will do my best to respond.

I am thinking more specifically about middle-management jobs, for want of a better way of putting it. The issue around the labour market is a global one. We have been discussing how people can get into the labour market at entry level, but I was looking for more about how much of an issue you feel it is for the Scottish economy.

10:00  

It is an issue for the Scottish economy. As Maurice Golden rightly points out, it is an issue across all developed economies. Perhaps I have not been clear enough: when I refer to people transitioning to other sectors, that would not necessarily be at entry level. People might have an established skill set, and it is about ensuring that those transferable elements can be deployed. If someone has a good managerial skill set in one sector, it may be applicable in another sector; they would just have to acquire some of the understanding and knowledge around that particular area.

The activity that we are seeking to take forward is not all about entry-level jobs—particularly the new national transition training fund, which will be for people aged 25 and over. We have not mentioned them so far, but our individual training accounts are designed for a similar purpose in that they are about progression in the labour market, albeit that there is a much smaller quantum of funding for them. The overwhelming majority of people who take part in those are aged 35 or over. Those people are established in the labour market and have reached a certain level in an organisation. If they then find themselves displaced and out of employment, we want to engage with them quickly and make sure that they can access a short, sharp skills intervention without forgetting all the skills, talents and attributes that they have built up throughout their working lives. Increasingly, the term—which I do not particularly like, but which is getting bandied about—for the transferable skill set around adaptability and applied learning in the workplace is “metaskills”. People take those skills with them into their new workplace.

I am not saying that we can guarantee that every person will be able to get an equivalent managerial-level role in another organisation. However, if someone has been a manager in one organisation, they should be able to take their skill set and apply it in a new workplace, supplementing it with sector-specific skills through the provision of new training. That is my ambition.

The next questions are from Rhoda Grant, who joins us remotely.

Thank you, convener. What engagement has the minister had with businesses, local government and the third sector on how the youth guarantee scheme will be delivered? What is the timeframe for that, and has he decided who will deliver it?

Could Ms Grant repeat the last few words? I did not hear the last part of her sentence.

Did you hear the bit about discussions with local government, the third sector and business?

Yes.

What discussions have you had with them? Have you decided who will deliver the youth guarantee scheme and when it will be delivered? What is the timeframe?

I did not hear the part about who will deliver it. I have already made the point that my engagement with business is extensive. We discuss a number of matters, but, of late, as you can imagine, the young person guarantee has been the priority. I have discussed it collectively and on a one-to-one basis with business organisations. I have also discussed it with businesses at a local level through the network of chambers of commerce.

I also engage regularly with the Scottish Council for Voluntary Organisations, which is a critical partner in engaging with young people who might already feel disenfranchised in the labour market, to get them into employment. I have spoken with Anna Fowlie, SCVO’s chief executive, on more than one occasion about the implications of the young person guarantee and, more widely, our no one left behind agenda. I also meet Councillor Kelly Parry, who is the Convention of Scottish Local Authorities spokesperson for that area of activity, to discuss that agenda.

Sandy Begbie, who has been instrumental in developing the concept of the young person guarantee and what it might look like, has engaged with a host of different partners, including every political party that is represented in the Scottish Parliament. He has engaged with those—I will come to delivery partners in a moment, which was the last element of Ms Grant’s question—who deliver the elements of the young person guarantee, and he has engaged with employers and unions; he has had wide engagement on those matters.

In relation to who will deliver the young person guarantee, I hope that I was clear at the outset, in response to some of the earlier questioning, that the youth guarantee effectively encompasses and builds on the wide range of activity that already exists, while seeking to enhance that activity and act as a portal for people into existing provision. A range of different parties are involved: local government, our college sector, our developing the young workforce network and Skills Development Scotland have clear roles, and we are working with our network of training providers, all of whom have to engage with employers to make sure that we are actively engaged with those who will provide the opportunities.

Although the kickstart scheme is not a creature of our creation, and although it might not look exactly as it might have done if we had been involved earlier or if it was our programme, we are seeking to make sure that that scheme can interact appropriately and effectively with our ambitions for the young person guarantee.

I will push you on that slightly. The way you were speaking makes me think that the youth guarantee will be an extension of current schemes rather than a new scheme in its own right. Is that right? If so, given that we have heard that the number of apprenticeships and current schemes is falling, how do you get businesses involved? We have heard from businesses that they need financial incentives and schemes that last long enough to be worth their while. If the youth guarantee is simply an extension of current schemes, does it need a name of its own at all?

I disagree with the last point, because I frequently hear from employers that the landscape of provision can be quite complex, so having something that is obviously branded as the young person guarantee can go a long way in helping in that regard.

I would describe our approach as accentuating and building on the system that we have, under the badge of the young person guarantee. We are actively considering some of the points that the business committee has raised as areas of concern or opportunities, as I indicated. Ms Grant mentioned the idea of incentives to recruit young people; we are looking at that right now. A young person guarantee is important because that additional resource will enable us to be in a better place to realise some of those ambitions.

You are saying that there is no new scheme, but the youth guarantee looks at incentivising current schemes, to try to increase the take-up that has dropped off.

To an extent, that is correct. The landscape that we are in has changed drastically, so schemes will have to operate flexibly and be responsive to our circumstances.

Some elements are new. As I said earlier, kickstart is now in place. That is a new scheme—okay, it is not ours, but it is there, and we had better make sure that it pulls in the same direction as the rest of the provision that we have on the ground.

To an extent, I concur with the points that you are making, Ms Grant. However, we are putting in additional resource so that we can build on what we have, accentuate it, and drive participation in the programmes that are in place.

For example, it should not be a surprise that apprenticeships are part of the young person guarantee. Apprenticeships are not new, and we are not creating an entirely new system for their delivery, but they are nonetheless wrapped up in, and part of, the young person guarantee. That is core.

The purpose of the young person guarantee is to do exactly what it says—to guarantee a young person experience of employment, education or training. That requires us not to create an entire new system but to think about how we maximise the benefit of our existing system. I think that approaching it through the prism of its being designed and badged as a young person guarantee is an important step.

I follow on a little from what Rhoda Grant was saying. As you might be aware, the committee has been engaging with young people on how they see their future in the context of the pandemic. They have told us, for example, that they want to see student accommodation being made cheaper, they want national programmes for gaining practical skills, and they want debt relief for students who are out of work over the summer—quite a lot of stuff. What struck us was the extent to which young people are interested and engaged in how to shape their futures.

How much engagement are you having with young people on the design of the scheme? As you said, it is a guarantee, and existing programmes are being wrapped up in it. However, there is a lot more to what young people have said about their economic prospects than just education, work or training.

I note that Sandy Begbie said, in his report, “Youth Guarantee—No-one Left Behind”, that, among the “next steps”, it is important to

“Continue to engage and re-engage with key stakeholders to test the recommendations.”

However, the stakeholders that he talks about in appendix 1 are just a lot of institutions. What is the Government doing to maintain an on-going engagement with young people, in order to maximise the chances of success for the guarantee and for the Government’s other work?

That is of the utmost importance. The approach is not new to us. In taking forward the development of the young workforce initiative, we have continued to articulate the importance of each regional group directly involving young people. In the learner journey review, we have worked with a range of young people, to hear directly from them what their experience of the education system has been. In taking forward the young person guarantee, Sandy Begbie and Fiona Hyslop met directly a panel of young people to hear from them what their experience had been and what they would expect from any young person guarantee.

That continues to be important, so we have provided funding to Young Scot—which, in my estimation and, I think, in that of most people, is very effective and good at ensuring that we engage with a wide range of young people from a host of different backgrounds—to work with young people so that they can directly inform the development of the young person guarantee.

10:15  

There have also been a number of questions about our hearing the voice of business, which, of course, is of paramount importance, as businesses will provide the opportunities. We have to hear about the practical implications for them and what practical support we can put in place for them. Equally, we have to hear from young people about what they think would be helpful. A number of suggestions have arisen out of conversations with young people, and we will always take those away to consider. The purpose of the funding to Young Scot is to have that type of meaningful engagement, so that young people’s voices can be at the core of what we do.

It is not just Young Scot that we have engaged with; the Prince’s Trust and Barnardo’s have equally been able to facilitate engagement with young people, including those who might be thought to have experienced a range of challenges in their lives that we must consider if we are to ensure that every young person benefits from our approach.

Are you saying that the main route for engaging young people is through those intermediaries? I do not doubt that that is a valuable approach, but I am seeking reassurance that you are satisfied and doing all that you can to ensure that the approaches that they adopt are capturing the whole range of experiences—you mentioned, for example, care-experienced young people, which is a very important group—which is needed to ensure that the job guarantee continues to be designed, on an on-going basis, in a way that reflects young people’s priorities.

That is the eternal challenge that all policymakers face—to reach out to as wide a range of people as possible. I think that, inevitably, we have to work with the intermediaries and organisations who have the most direct contact with the people who we want to speak with—in this case, young people, including specific cohorts of young people. In so far as I can be, I am satisfied that we are talking to the right intermediaries.

Will we reach every single young person or a representative of every cohort of young person? It would be remiss of me to guarantee that we will. That is the eternal challenge in taking forward any area of policy. Who are we not speaking to? Sometimes it can be difficult to know. However, the ambition is to engage with as wide a range of young people as possible.

Thanks.

As there are no further questions from committee members, I thank the minister and his team for coming in today.

10:17 Meeting suspended.  

10:30 On resuming—