Finance Committee

Meeting date: Wednesday, June 13, 2012

Official Report 478KB pdf

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Employability

Under item 2, we will take evidence from Angela Constance, the Minister for Youth Employment, on the need to improve the employability of individuals who are experiencing high levels of multiple deprivation, as a prerequisite to increasing sustainable growth. This is our final evidence session on the theme. The minister is accompanied by Hugh McAloon, who is head of youth employability and skills at the Scottish Government.

I welcome the minister and invite her to make a short opening statement.

Thank you, convener. I am grateful for the opportunity to attend the committee this morning and to contribute to your sessions on the need to improve the employability of people in Scotland. I am sure that we all want Scotland to be a successful country and one in which people want to live and work. I am determined that we should be ambitious for all our people, because we know that all our people, including our young people, have talents and have a desire to use those talents to achieve their ambitions in life and work.

As I am sure you will appreciate, given my post as Minister for Youth Employment, I have a particular interest, although not an exclusive one, in the employability and work readiness of our young people. We want to ensure that all our young people have the best start in their adult life and the best start to their working lives so that they can become confident individuals and play an important part in the life and future of Scotland. It is clear to me that giving young people the best start in adult life needs to start as soon as possible. This has seen the introduction of the early years strategy, the implementation of the curriculum for excellence and the review of post-16 education, “Putting Learners at the Centre—Delivering our Ambitions for Post-16 Education”.

I know that there has been much talk of attributes such as work readiness at the committee’s earlier evidence sessions. Employability and work readiness are not traits that people learn overnight. They reflect a confidence in our ability that is built up over time. We are therefore committed to ensuring that Scotland’s education and learning systems support people to make positive transitions on their path into the labour market. Ultimately, the issue must be a core priority for all parts of government, and we are now better at linking public sector investment through public procurement to improved skills and training opportunities.

The economic challenges that we have experienced have resulted in changes to the demographics of our young unemployed people. Although we still have a significant number of young people with complex barriers to employment, we also have a group that, in better times, would have good job prospects. We have to ensure that we continue to support those who are furthest from the labour market to re-engage in learning and training and, at the same time, we have to work to ensure that those who are closer to the labour market do not move into long-term unemployment. As a result, we need to ensure that individuals can access a range of targeted employability services that are responsive to people’s needs and to local and national labour markets.

I turn to some examples of recent activity. As part of the programme for government, the First Minister announced the opportunities for all programme, which is an unprecedented offer of a place in learning or training for every 16 to 19-year-old who is not engaged in work, education or training and who requires one. That means that there is support for those who are at risk of disengaging and support for those who have already disengaged. It also means a much greater focus in the post-16 education system on moving young people towards and into employment.

As committee members will be aware, at the end of last year we announced an additional £30 million to back up opportunities for all. Other funding has already been committed: there is £1.5 million over the next three years to help up to 1,000 disadvantaged young people, including care leavers and young carers, on their road to employment; £6 million has been targeted to support the continuation of community jobs Scotland; there is a £2.5 million challenge fund to support social enterprise and third sector organisations, which are well placed to provide strong support for young people, particularly those who are experiencing considerable disadvantage or who are quite far away from the labour market; and £9 million has been awarded to six local authorities for 2012-13 to help them to tackle youth unemployment. The councils that were identified have particularly acute challenges of youth unemployment—they are local and national hotspots, if you like. They are also areas with high levels of multiple deprivation.

Other strands of funding include £5 million to support up to 2,500 young people into opportunities linked to the major cultural and sporting events that are being hosted in Scotland in the coming years. Also, members will be aware of Alex Neil’s recent announcement that £25 million of European structural funds will be used to support young people into work.

I will continue to engage directly with employers of all sizes across all sectors to make them fully aware of what our young people can achieve and to take forward ways of supporting employers to make it easier for them to recruit our young people. In the coming months I am running a series of action forums targeted at employers throughout Scotland. The first one was in Lanarkshire and the second one was in Glasgow yesterday. Other events are arranged in Dumfries and Galloway and the Lothians in the coming weeks. I will certainly try to get round all of Scotland.

We have to endeavour to provide opportunities to help those young people who can work to get work, regardless of any barriers they face. On that note, I am delighted to take questions.

Thank you for that opening statement. In time-honoured fashion, I will ask you a few questions to start us off before I open up the session to the rest of the committee.

As you will know, we have had a number of evidence sessions already, some in round-table format, including one that involved a number of employers. One of the issues that was raised was the flexibility in support for employers. For example, on the issue of training, according to the Federation of Small Businesses,

“nothing that they wanted to do actually fitted with what was available”.—[Official Report, Finance Committee, 23 May 2012; c 1198.]

In its submission, the FSB said that

“unemployed individuals without a degree are significantly more likely to make transition to employment with small employers”

and that

“Small businesses are more likely to employ people with low or no qualifications than large businesses”,

yet, according to the FSB,

“only 8 per cent”

of SMEs

“had taken on an apprentice.”—[Official Report, Finance Committee, 23 May 2012; c 1198.]

Another submission to the committee said:

“There is often a disconnection between the nationally articulated employer support needs and those which exist at a local level.”

Skills Development Scotland said last week that some of the issues raised by the FSB, such as the possibility of sharing an apprentice, would be taken on board. Given what I have just said and the comments of the FSB, what steps will the Scottish Government take to ensure that the employability measures that are delivered by the Scottish Government are more focused towards small and medium-sized enterprises?

The very strong impression that I have formed from my engagement with employers large and small is that there is a huge untapped potential, particularly in our small and medium-sized enterprises. I often meet large employers who are already doing great things to support young people into work or to employ them, but that is undoubtedly more challenging for small to medium-sized companies because of the current economic climate and the difficulties in accessing affordable finance. However, there is a huge opportunity to get more young people into small to medium-sized enterprises. Part of the debate that we will have in Parliament tomorrow will involve articulating the positive business case for employing young, energetic and talented Scots.

With regard to specific provision, I draw the committee’s attention to the flexible training opportunities, which have been very popular. They are an ideal opportunity for small to medium-sized employers in particular to receive up to 50 per cent of training costs up to a capped limit for an existing member of their workforce.

The point about small to medium-sized companies being more likely to take on people with low or no qualifications is interesting. However, we need to look at opportunities within those businesses for all young people, ranging from those with entry-level qualifications to those with degrees.

I will start with young graduates. The Scottish Further and Higher Education Funding Council is undertaking a lot of work to link more graduates—and more students while they are studying—with work placements, particularly in SMEs. That is important for the growth of those small businesses and for our economy.

We are looking at opportunities to share or pool modern apprentices. That is complex and there is no quick and easy solution, because the success of our modern apprenticeship scheme ultimately hinges on employed status, so apprentices must always be employed. However, there are good examples out there in which larger employers, such as Balfour Beatty, act as the host and then utilise their supply chain.

I will ask Hugh McAloon to speak about some of the specifics around the sharing or pooling of modern apprentices.

The convener is right that 8 per cent of SMEs take on an apprentice. However, we need to think about how many SMEs there are. When we look at which companies employ the 25,000 MAs, we see that the proportion of them that are SMEs is much higher. We will provide the committee with that information—I have a number in my head, but I am not sure that it is right and I do not want to misquote it.

More generally, we have been exploring the potential for big companies to work with the supply chains to support smaller businesses to take on more young people in general and apprentices in particular. That was part of the review of training that we carried out at the end of last year. We are looking at how we can make that model work well for small businesses, and for larger businesses in terms of their relationship with the supply chain, which is quite an important driver for getting them involved. We are developing that in conjunction with SDS, and we will bring forward some proposals soon.

10:15

Another issue that was raised was the amount of bureaucracy that businesses face. I realise that that is not all to do with the Scottish Government—for example, Europe was mentioned in the evidence. Kelso Graphics said:

“You have to empathise with us and understand the pressures that we are under and the amount of bureaucracy that we face”.

Minerva People said that

“Micro/SME businesses are unlikely to have an HR department or specialist ... and this can put them off being involved”

and pointed out that

“the number of websites, initiatives and programmes out there for micro SMEs is causing confusion.”—[Official Report, Finance Committee, 23 May 2010; c 1210.]

During this difficult economic time, a lot of businesses are fighting to stay in business. Many of them have a lot of good will towards young people and would like to help the Scottish Government to meet its employability targets, not least because they see themselves as part of the community and want to take on local people. However, there are only so many hours in the day and they are confronted with a lot of bureaucracy and are often bewildered by some of the information that they get. Indeed, the witness from Menzies Hotels told us that, since January, he had been approached 20 times by various officials from different organisations associated with local government, the Scottish Government and even the United Kingdom Government, asking him to take someone on. Given that those who wish to assist are often put off by the difficulties that I have highlighted, what can be done to improve the effectiveness and efficiency of delivery in this area?

I have huge sympathy with your point. We have to strike a balance between ensuring that we get outcomes for public investment and being mindful of the need to simplify any bureaucracy in and around all that and to ensure that we do not have repetition for repetition’s sake. We certainly need to strive for minimum bureaucracy; indeed, as part of the “Making Training Work Better” review, Skills Development Scotland has recently reviewed some of its own processes with a view to streamlining its engagement with employers and training providers.

Your point about alignment is well made. An array of offers is available to employers from the Scottish Government and, indeed, local government, which is involved in a wealth of good local activity. In that respect, I should highlight a piece of work entitled better alignment of Scottish employability services—or BASES—which has two strands: first, the client or the young person seeking employment, which is very much tied in with the post-16 review and learner outcomes; and, secondly, employers. I often say that, apart from young people, employers are the most important group of people here and Skills Development Scotland, along with all our other partners, is heavily involved in this work and finding out how to make it easier for employers to recruit young people and give them opportunities. In September, Skills Development Scotland will launch our skills force, which is an online facility offering a single point of contact and a one-stop resource with all the information that an employer needs about what is available to them both nationally and locally. For example, it will allow someone sitting in, say, West Lothian, Falkirk or North Ayrshire to see at a glance the offers that are available not only from the Government but, crucially, in their local area.

With that in mind, we are working towards the introduction of a local employability fund. That work is still in its early stages, but the point is that SDS, Jobcentre Plus, local authorities and colleges will need to work together, where possible, to align employability funds.

A number of witnesses, including Who Cares? Scotland, have highlighted the role of the public sector. The sector itself makes up about a quarter of the Scottish economy, but there is a widespread view that it might not do its bit in taking on apprentices or young people at the edge of the jobs market. What is the Scottish Government doing to persuade local government, the national health service and so on to fulfil their duty and reach out to people with employability difficulties?

I agree absolutely that the public sector needs to lead by example. Of course we want to appeal to private industry by talking about corporate social responsibility as well as the positive business case for recruiting young people, but we must be clear that, if we in the public sector marshal that argument, we need to lead by example. The Government will finalise its youth employability strategy in the coming weeks, but an important piece of work on the ground is that on the youth employability plans that are produced at local level between Skills Development Scotland and local authorities.

The Cabinet has agreed to ensure that all Scottish Government agencies and non-departmental public bodies have youth employment plans in which the issues are addressed. There are great examples out there. For example, Perth and Kinross Council, despite the difficult economic and financial climate that we are living through, has made a public commitment to a threefold increase in its young workforce in the next three years. Scottish Enterprise has set itself the objective of doubling its young workforce. However, we need that approach more comprehensively in the public sector, so that we are clear about what we are doing for young people.

I know that colleges are dear to your heart, as a former minister in that area. In evidence to us, Scotland’s Colleges stated:

“we generally need about two years to enable the young person to gather the skills to fit in with teamwork and the social norms, and to gain the skills that prepare them for employment.”—[Official Report, Finance Committee, 16 May 2012; c 1158.]

You will be aware of the fairly controversial evidence that Arnold Clark submitted, in which it said that it considered that about 81 per cent of the people who come to it are not fit for work. It was also highly critical of colleges. How confident are you that colleges are aligned with the employability agenda?

A lot of people said to us in evidence that many training courses—although not MA courses—are not of sufficient duration or quality to make a serious impact. Who Cares? Scotland and other organisations talked about the revolving door of people going on to one course for a few weeks and then another for a couple of months, but without a real impact. Will you touch on the alignment of colleges with the employability agenda and the duration and quality of training courses that are provided, other than MA courses?

It is hard to generalise about the length that courses should be without considering specific courses and who they are aimed at. The drive towards post-16 reform is about upskilling young people and getting connectivity between college provision and local labour markets. I am a big advocate of learning for learning’s sake and lifelong learning, but our provision, from schools through colleges to universities, must focus on the needs of our economy. In that context, we have to look at employability and how best we meet young people’s needs.

There is an issue to do with progression. I am happy to try to answer questions about specific courses. As someone who has worked with disadvantaged groups and young people—although it was in relation to offending behaviour rather than employability issues—I believe that we have to be careful about creep. It is sometimes convenient for providers to expand and extend courses, but we need a balance.

There is evidence about the effectiveness of shorter, sharper input. However, it is difficult to generalise when, through both post-16 reform and curriculum for excellence, we are moving towards a more personalised approach for young people. Ultimately, the issue for me is progression. We do not want a revolving door but, at the same time, if a young person starts on an activity agreement that leads to them going on a get-ready-for-work course that enables them to get a modern apprenticeship, that is a good series of stepping stones that I would consider a success story. If we start a disadvantaged young person on an activity agreement that looks at their specific issues, then get them on a get-ready-for-work course, then a modern apprenticeship, that is a good story.

Thanks. I do not want to hog the evidence session, as colleagues want to come in, but there are millions of questions that I could ask. I realise that there is a dichotomy between ensuring that people are on good-quality courses and what Who Cares? Scotland wants. However, you have just reiterated that the programme should fit the person rather than the person fitting the course and that the person-centred approach is important.

The deputy convener, John Mason, will be followed by Gavin Brown.

First, I apologise to everybody for being slightly late. It shows that I am on time when I come by train but not when I come by car.

The convener referred to local government involvement and the minister mentioned the programmes that Perth and Kinross Council and Scottish Enterprise have. It strikes me that local government and other parts of the public sector are perhaps very good at the big programmes, but are they as good at getting to the youngster who is far from their job market? The local joiner in a small town, for example, might know somebody who needs a bit of help and take them under their wing. Is it inevitable that local councils cannot do that kind of thing because they do not go through all the right hoops?

It is always difficult to generalise about local government, given that we have 32 local authorities. However, from my experience of and exposure to local government, I think that councillors are getting far better at—forgive my language—getting into the guts of things.

An example is the City of Edinburgh Council’s guarantee, which is its local equivalent of the opportunities for all programme. The council did some fairly rudimentary stuff that is not rocket science. Some of it is cultural in that it stopped talking about percentages of young people who are not in employment and education and started talking about hard numbers. It was looking at a cohort of 500 young people in the city who were not progressing from the schools in the sense of making the transition from school to work or to college. The council systematically went through all its departments and asked how many young people they could offer an opportunity, and it has undertaken extensive engagement, which is on-going, with small and big businesses in the city in that regard. Some councils have their eye on the detail.

We must get to where we need to be at a local level—we are on the road to it—through the data collection that Skills Development Scotland does and through the 16+ learning choices work that is related to the positive destinations of school leavers. We need to track and monitor young people, and such work should expand to cover opportunities for all.

My experience is that local authorities are getting a better handle on who their young people are, where they are and who is engaged and who is not. That is the result of good collaboration between SDS and local authorities.

Have I missed anything out, Hugh?

10:30

Another aspect of that work, which probably began in better economic times as part of the more choices, more chances agenda to deal with a core group of kids facing multiple disadvantage, was the real enthusiasm among the professionals working in councils and professionals from other agencies working with councils to focus on this agenda in the kind of way that the minister has described with the example of Edinburgh—that happens in all parts of Scotland—and to work with and learn from each other. People in other parts of the country will be very interested in and willing to learn from what is going on in Edinburgh and I am sure that such interest will be reciprocated.

We do quite a lot of work through the national delivery group on employability, which now covers both adult and youth employment and brings together the leads of community planning partnerships, local authorities and so on not only to allow them to learn from each other but to inform what we do. Local authorities are engaging a lot, but I take your point that, when big public bodies get involved, it is not the same kind of thing as the joiner in Brechin, say, who takes a kid with a few rough edges under his wing. However, a lot of the kind of work that the minister described, with local authorities trying to find employers to match with those kids, is happening in places such as Edinburgh. Although it is challenging, there is a lot of enthusiasm and collaboration and, as some of these school leaver destination statistics demonstrate, there has been a lot of progress.

The minister talked about young, energetic, talented Scots. I think that we accept that we have many young Scots; that many if not all of them are talented, although we might have to dig to find those talents; and that some appear not to be very energetic. I do not think that it is anything like the size suggested in the Arnold Clark submission, but there might be a core of young people who come from families where no one works, who are not as used to seeing people go out to work as some of us were or who have to stay at home to look after a family member who is not well. How can we break into that situation and change it?

I am not going to stop talking about young, energetic, talented Scots who have a lot to offer this country and businesses large and small. Of course, that does not mean that I do not recognise that some young people have had to live through considerable disadvantage and that that is reflected in their skills, confidence and abilities at a particular time. We need to be focused not only on young people who are near to the labour market but on those who are far away from it, and some of that has to begin with our systemic work on the early years and the curriculum for excellence.

As for the here and now, I am clear that opportunities for all must cover all young people, including the harder-to-reach ones whom we will have to go the extra mile to get to and engage with. I do not know whether people are familiar with the concept of the skills pipeline, but I often use it to demonstrate a certain type of thinking and policy coherence and make it clear that, irrespective of one’s distance from the labour market, suitable interventions are available. Sometimes, however, we will have to go the extra mile with some young people, which is where the tracking and monitoring that build on the school leaver destination figures come in. After all, those figures are only a six-monthly, twice-a-year snapshot. We need a more live information system that can tell us how many young people are or are not engaged at any point in time and to be able to bore down to the local level to ensure that we know who those young people are.

I have a final question. At yesterday’s event, somebody—I think they were from Jobcentre Plus—said something about finding it difficult because there are differences between Scotland and England and between different local authorities. They suggested that they would find it easier if everybody did exactly the same as everybody else. Do you feel that Jobcentre Plus is engaged enough? Is it flexible enough to deal with rural and urban areas and with different situations?

The key word is “alignment”. I do not think that we need to be prescriptive and state that every area of Scotland should do everything in the same way, but we all need to be able to work together. In that sense, we must get the mechanics right.

I have views about Jobcentre Plus. I would much rather that it were devolved, as that would give me more scope to do what I want to do. Notwithstanding that, the Government aims to work closely with Jobcentre Plus. I have had constructive and helpful dialogue with the Department for Work and Pensions at a senior level and with Jobcentre Plus, and I know that Skills Development Scotland and Jobcentre Plus aim to get on with things at a local level. They are often co-located. I am not going to criticise Jobcentre Plus for being inflexible. I just think that we all need to take a mature, adult approach. We should show flexibility where we can, but it is about ensuring that all the bits of the jigsaw fit together.

You said that you would like Jobcentre Plus to be devolved because that would give you scope to do what you want to do. What things do you want to do that you cannot do at the moment?

I would like Jobcentre Plus to be devolved in order to create far better integration between Skills Development Scotland and Jobcentre Plus. They do a lot through co-location—considerable effort has gone into that. If the DWP part of it were devolved, I would want to look seriously at things such as national insurance holidays, particularly for small and medium-sized companies.

In your opening statement, you talked about Alex Neil’s announcement on European structural funds. Will you tell us what control you, as Minister for Youth Employment, have over that money? What is the timescale for the £25 million?

We take an all-Government approach to youth employment. Although I lead the response, the Government has always made it clear that the youth employment agenda must be core to everybody—it is not going to sit out there on the periphery.

Alex Neil and I were agreed from the outset that the focus of the £25 million must be on getting young people into jobs as well as on any additional training. By and large, we have a comprehensive training and skills system, but we need to get more young people into jobs. We also want to do more work with small and medium-sized enterprises and we will consider how we can incentivise recruitment and link young people up with business to support business growth.

The money is for a two-year period and it gives us great opportunities because, in order to be utilised, it will have to be match funded, which will grow the pot. It has initially been through a programme board in terms of the broad direction about the focus on business and getting young people into work, but we need to do more work with our stakeholders and my officials will do that in July. There are real opportunities ahead through that additional resource.

Have I forgotten anything, Hugh?

No. On the point about how much control we have over the money that was mentioned, obviously there are rules about the use of European funding. The direction that we have wanted to follow and have followed—to use residual resources from the programme to focus on youth employment—is very much in line with what the European Commission has said.

We work with partners. The programme management committee includes representatives from a range of organisations, including local councils and the Scottish Trades Union Congress, and it is involved in the overall strategic direction that we set. The Scottish Government is the managing authority for the money, which gives us a responsibility to ensure that its use fits in with the European rules. It also gives us some ability to set the strategic direction, which we tend to do.

Let us say that there is a proposal to do something with a slice of the money but the minister does not believe that it represents a good use of money to help with youth employment. Is there control to prevent money from being spent in a certain way or to have it spent in a different way if, in the minister’s opinion, the best use of public money is not going to be made?

As I said, the Government sets the strategic direction and the programme management committee reinforces that. It will tend to look within the strategic parameters that are set and make recommendations to ministers about how things will go. Ultimately, ministers can make decisions on those recommendations, but in general everybody is trying to pull in one direction. The area is not contentious.

I am confident that we will make good use of the resource.

In your opening statement, you talked about how the money has been allocated thus far for 2012-13. Some £9 million of it has been allocated across six local authorities. Everybody accepts that money is tight, and the committee has considered how to analyse the best use of the money and evaluate whether it has worked. I suppose that the sum is half of your budget for the year. Why was a decision taken to allocate £9 million to local authorities? Will you talk us through the process?

I have always been clear that our general approach is to marshal efforts across local and national Government. The voluntary sector and the social enterprise sector also have quite a unique contribution to make, particularly in relation to disadvantaged young people. It is important to get a balanced approach between public sector and non-public sector bodies—in this case, those in the voluntary or third sector—and a balance between universal and targeted provision.

You are right that the £9 million is targeted towards six local authorities and it is half of the opportunities for all funding for year 1. We looked carefully at what local authorities were doing across the piece. A wealth of work is going on at the local level, there are lots of wage subsidies, and many local authorities made extra political commitments to young people, particularly in the lead-up to the local authority elections. Things were quite simple in some regards.

I know that it is always hard if some people get and some do not, but the six local authority areas were local and national hotspots. We looked at the statistics for the previous years and saw that those six local authority areas were in the top 10 in both their numbers and their percentage rates of young unemployed Scots. That correlated with other issues to do with long-term employment and multiple disadvantage. In many ways, that is quite a simple but fair criterion.

The other chunk of this year’s money has gone to a range of initiatives in the third sector for the continuation of community jobs Scotland and the challenge fund for social enterprise as well as the funds that specifically target young care leavers and young carers.

10:45

On the specifics, you have said that there will be £1.5 million over three years to create up to 1,000 opportunities for particularly vulnerable young people such as those who have been in care, and they will be aimed at 16 to 24-year-olds who come from disadvantaged backgrounds. That is a quite specific and clear outline of what you are hoping to achieve, and I presume that you will be able to evaluate that at the end of the three years.

You have also decided to give £9 million to six local authorities, and I understand your reasoning for choosing the six that you chose; it is fairly clear. My question is about the step before that. Why was the decision taken that the £9 million should go only to local authorities? It is not at all clear to me what you hope to get out of it. The local authorities seem to have quite a lot of flexibility, and I have not been able to find evidence of any tracking of what the money is going to do.

My officials have been in dialogue with the six local authorities since the announcement was made. You will appreciate that it is important to get money out there for this year because of the decisions that had to be made earlier in the year. There is close working between my officials and the individual local authorities. Hugh McAloon has been personally involved in that.

I have spoken to five of the six local authorities. We have asked each of them to tell us what it is going to do with the 16 to 19 years cohort and what support it will provide. We will ask them for quarterly reports on progress, and we will be able to provide Parliament with that information as we go. It is not just a case of giving £9 million to six local authorities and hoping that they spend it on youth employment. From the outset, we will track what they do with it. Those that I have spoken to are largely looking at supporting young people into employment through initiatives such as the wage incentive and a little bit of work on youth entrepreneurship, along with some support for those who are further back.

What is being done will vary across the local authorities, but that is the general shape of what they are doing. They are being asked to provide numbers. We are finalising that just now; we will track it as we go and report back throughout the year.

I do not want to put words into your mouth, but would it be fair to say that the announcement was made and the money was awarded before you had worked out what the local authorities were going to do with it?

It was made clear at the time that we would work with them after the announcement on what they are going to do with the money.

There is a lot of need out there that is waiting to be addressed. In making decisions about the allocation of funds, discussions about the overall direction of travel take place at a higher level. Local and national Government spend time thereafter in boring down to the detail and being clear about reporting.

I agree with that entirely, which is why I think that it is important that every pound is spent wisely. I am concerned that the money was announced without clarity about what it will achieve.

It is for assisting areas that have the most acute need. In that regard, having 6,500 young people between the ages of 18 and 24 claiming unemployment benefit in Glasgow speaks for itself. I have every confidence that the local authorities, in partnership with the Scottish Government, will use every penny wisely.

Did you consider spending money whereby you would leverage in additional money from, say, the private sector if it agreed to co-fund certain initiatives, so that more than £18 million would be available during the year? Did you explore such opportunities?

We certainly have an on-going dialogue with the various aspects of the private sector. In the weeks ahead, I hope to say a bit more about the work that we will be doing in relation to the private sector. I cannot underestimate how important it is for us. Certainly in the longer term, if we look at how much private industry spends on training—for Scotland alone it is £4 billion—there are opportunities there.

I have two areas that I want to cover. The first area has not been focused on today, but it was noted in the briefing paper for this meeting. It is to do with rurality, but I suppose that the message could apply equally to urban areas where there is a lack of job opportunities.

A number of witnesses—particularly SURF—identified the fact that youth unemployment is about not just skills issues, but lack of job opportunities. The wider economic conditions underlie the peak in youth unemployment that we face at the moment. However, there are particular communities across Scotland—not just the six that have been identified for funding—with certain shared characteristics. The type of employment that there is locally has a low skills demand and therefore there is a low demand for training and a low opportunity for things such as modern apprenticeships and other skilled training opportunities.

In our private session last week with the Joseph Rowntree Foundation, it pointed out that even before the start of the recession a trend was emerging of young people facing increased competition. Due to the baby boom, there was a large pool of people who were older and more experienced, had skills and were in the labour force. The young people were finding it tougher to compete because they did not have the experience or the skills. That problem is particularly acute when there is a lack of skilled job opportunities as well. Do you have any general thoughts about how to tackle the somewhat intractable problems in rural communities—and some urban areas—where that trend emerges?

I am conscious of the rural dimension. Although eight out of 10 young unemployed Scots are in urban areas, we have to pay attention to the vibrancy and sustainability of rural economies and I am interested in that issue.

One of the reasons for embarking on action forums was to try to address some of the issues that are specific to a particular community—as well as to develop our understanding of challenges for young people at a local level. I am certainly looking forward to the action forum in Dumfries and Galloway—it is either next week or the week after—and I have visited companies in Paul Wheelhouse’s region. We have to remember that rural communities need to be sustainable and that the economic challenges are quite different.

In terms of the challenge fund for social enterprises, I am keen to encourage as much as I can—I am not sure that that is the right phrase; as a minister I do not want to get into hot water in terms of codes of practice and so on. The challenge fund for social enterprises has been set up so that there are opportunities for social enterprises possibly to get into consortia to try to address some of the issues in rural Scotland.

That was helpful—I was going to raise the issue of social enterprise, but you dealt with that. You mentioned that you have visited the south of Scotland—I know that you visited Hawick to meet the Scottish Borders knitwear group training association.

The interesting thing about that model is that, historically, the Borders has not punched above its weight in generating modern apprenticeships. Instead of having 2 per cent of the total number of modern apprenticeships—which would equate to 500—It has typically had 250 to 300 apprenticeships a year, which is perhaps well below what it should have been getting. However, the pooling of opportunities among the knitwear group training association is providing a stream of up to 100 modern apprenticeships.

I am sure that the minister will remember that the anecdotal evidence was that about 60 to 80 per cent of the people she spoke to seemed to be candidates referred from Jobcentre Plus—people who are, obviously, more distant from the labour market.

What lessons can we learn from that model about overcoming the risk perceived by employers that somebody they train will be poached? The textiles sector has always had that characteristic: it is a highly skilled manual occupation and if one employer trains somebody there is always a risk that a neighbouring employer will pinch them and the full investment that the employer has made will be lost.

Also, is this textiles model replicable in other sectors? What other sectors—if you have had a chance to think about the issue—might be suitable for the model?

The key point about what I witnessed in the Borders in terms of pooling resources was that it was an industry-led solution. The knitwear companies had realised the futility of their cautiousness in training people in case they would be lost to their competitors. They got together to overcome that, because it was holding back the industry. That said to me that Government most certainly does not have all the answers, and that many of the solutions to upskilling and getting more people in training and work will come from the industry.

There are good examples of industry leadership. The oil and gas sector is coming up with interesting industry-led solutions to its particular issues. We often hear about the oil sector’s difficulties associated with berth space on rigs. It is getting together as an industry to look at flotels, and at what training can be done onshore, as opposed to offshore, to change the balance a bit to overcome difficulties that are specific to its sector. My job—which is also the job of other ministers—is to have an acute ear for industry-led solutions, to contribute to those solutions where we have a role to do that, and to make life easier for employers.

The textiles and oil and gas sectors are obviously fairly buoyant at the moment. People do not normally associate textiles with buoyancy, but, in a previous session we heard Dr Lena Wilson, from Scottish Enterprise, highlight it as a sector that has had a bit of recovery in its growth. Even for sectors that have flat or declined trading conditions, there is a huge issue about what is termed replacement demand, because there is an ageing workforce and there is, obviously, a strategic need for employers to ensure that they have a steady stream of people coming through to fill those vacancies as they emerge, even if their companies are not growing.

Are there any messages that we can help to get out to employers? Even though conditions are tough and money is tight, they have a strategic need to ensure, for their viability and future sustainability, that they have enough people coming through to meet the emerging skills gap when times recover. That was clearly the trigger in the case of textiles—the sector realised that it was up against a wall. It had a workforce skewed towards people who were in their 40s and 50s, who were very skilled, but employers were obviously running out of time in which to make the best use of those skills, before they were lost, in training the next generation.

11:00

Absolutely. The example that you gave about an ageing workforce is an issue that employers and particular industries need to be acutely aware of. It is very short-sighted not to look at the next generation. That needs to be a constant factor in every sector, because time stands still for no man. We all get older. Albeit that people are working longer and retiring later, an ageing workforce is a particular issue in particular sectors. A lot of the work on that is encapsulated by the sector skills councils and industry leadership groups, which cannot have their eye just on today but must have their eye on tomorrow. As a Government, we are focused on not just where the jobs are today, but where they will be tomorrow.

Do you have anything to add to that, Hugh?

I will give an example of a sector that is doing the kind of thing that Paul Wheelhouse is talking about. I have worked in this area for about three and a half years, since the start of the recession. A sector that has impressed me hugely with its attitude has been the construction sector, which has been pretty badly hit by the recession. It is a notoriously cyclical sector that is badly hit by most recessions.

The response from construction companies across Scotland to the issue of redundant apprentices has been fantastic. The Scottish Government, with Skills Development Scotland, introduced the adopt an apprentice scheme fairly early on in the recession. I have been impressed time and again by the response of companies that, in tough times, are stepping forward and helping apprentices to finish their apprenticeships. I think that that is because that sector has ingrained in its history, over hundreds of years, an understanding of what Paul Wheelhouse is talking about, which is that for a sector to be sustainable, it is necessary to bring people into it and to work on their skills. The response from the construction sector on redundant apprentices is a fantastic example of that and one that I will never tire of telling people about. The conditions were not good for the scheme to be as successful as it was. It is true that there was public support for it, but the sector drove its delivery.

What would you describe as being the primary purpose of the modern apprenticeship scheme? Is it to bring unemployed young people into work, or is it to reskill people once they are in work?

It is and always has been about both those things. We have increased the priority that we attach to young people. We have a particular focus on 16 to 19-year-olds, as well as a focus on the larger cohort of 16 to 24-year-olds. The modern apprenticeship scheme is the same scheme that has existed since 1994. I have frequently been asked—by Labour MSPs, primarily, and John Park, in particular—about the importance of all-age apprenticeships. It was always a balanced approach, but we have increased the number of modern apprenticeships that are available, which is to the benefit of adults and young people alike. Young people between the ages of 16 and 24 have always been the first priority.

Is the primary focus of the modern apprenticeship scheme to bring unemployed people into work?

To my mind, the employed status of modern apprentices has always been key to the programme’s success, because it links an apprenticeship opportunity with a real job, which means that the skills that a young person learns are relevant to that job, to the needs of the employer and to the economy.

Under this Administration, an increasing number of young and adult apprentices have been employed for less than six months, so the modern apprenticeship programme has an important contribution to make on the youth employment agenda. That is not the only part of the jigsaw, but it is an extremely important part of it.

Do you see that changing because we currently have high youth unemployment? Will there be a greater focus on bringing people who are currently unemployed into work rather than on upskilling people who already have work?

At a simplistic level, it would be tempting to say that, given the extremity of the economic climate for young people, all of the 25,000 modern apprenticeships should go to young people, but that misses a really important point that the STUC has made. I chair a trade union working party on lifelong learning and that group has marshalled arguments to show that, in the context of youth employment, you cannot ignore older workers and broader issues of workforce development, because you need older people in the workforce to progress, move on and develop, which creates space and opportunities for young people.

I think that we have got the balance right, but I am always open to suggestions. I have not heard it being suggested that we should change the balance.

Older workers might not come from the unemployment register but might be older adults who are in work and are being trained further, and you intend to recruit young people to undertake the jobs that they used to do.

A positive development is that a third of the older workers are new to the specific job—35 per cent of them have been employed for less than six months. In 2006, the proportion of, if you like, adult apprentices—the over-25s—that had been employed for less than six months was only 9 per cent. Indeed, in 2006, 20 per cent of the over-25s on modern apprenticeships had been employed for 10 years or more, so there has been significant improvement in that regard when it comes to apprenticeships for adults. Crucially, in respect of apprenticeships for young people, in the 16 to 19-year-old age group, 81 per cent of apprentices had started their job within the previous six months.

But since 2006 there has been a significant increase in the unemployment level. We are in a very different economic situation from that which existed in 2006, so the response has to be different.

Indeed. That is why there are now 67 per cent more modern apprenticeships.

Hugh McAloon referred to the adopt an apprentice scheme. Can you explain what its current status is? Is it still running? It was due to run out at the end of March. Has it been rolled over?

Yes. It is still going.

I made that announcement about six weeks ago. I can check my diary to get the exact date.

You referred to the youth employment forums. You are actually coming to Dumfries a week tomorrow. Thank you for your invitation to that event, which coincides with the Olympic torch coming to Dumfries.

I apologise to Elaine Murray. You have to forgive me, as I am not immersed in important local events in Dumfries and Galloway.

It is a happy coincidence.

Absolutely not.

You have said that you will hold a number of events across the country. What is the overall purpose of the events? What do you hope will come out of them? Are they seeking to identify local solutions to local unemployment problems? Do you hope that there will be opportunities to spread good practice?

All those things. The local action forums are not called action forums by accident. When I open the forums, we are looking for actions and additional activity as well as bringing people together at a local level.

This course of action was prompted by the success of the national economic forum on 1 February. I believed that there was a good opportunity to try and replicate that at a local level. The involvement of local employers in those events is key.

I presume that you will invite people from small businesses in the Dumfries and Galloway area, where microbusinesses are particularly important.

Yes. If there are people who you would like to ensure are invited, Ms Murray, you are more than welcome to tell me. Suggestions from MSPs in that regard are always welcome. My instruction to officials and SDS is to try as hard as possible to ensure that we get good representation from local employers.

The two issues of stigma and role models have come up in our evidence sessions. Can you comment on the difficulties faced by care leavers—people who were looked-after children—when trying to access the job market? Often, when a care leaver is up for a job against individuals who have not been in care, there is the feeling that a stigma can be attached, which makes it difficult for care leavers to have parity of opportunity. Can you also comment on the role that the public sector can play for looked-after children? You spoke about the Edinburgh opportunity. In Aberdeen City Council, there has been a move to give work experience to some of the city’s looked-after children. As corporate parents, should local authorities do more to improve employment opportunities for looked-after children in their care?

I am a former social worker and a former children’s minister, so it is perhaps no surprise that the first announcement that I made as the Minister for Youth Employment was on the allocation of funds specifically geared towards young carers and care leavers. You cannot be a children’s minister or be exposed to the plight of looked-after children without always carrying that with you. I have a personal commitment to that agenda, as do many MSPs. Those who are former councillors always articulate well the responsibility that we all have as corporate parents.

There were two parts to the announcement that I made. One was about the employer recruitment incentive to actively support young care leavers into work. There is also an aftercare work coaching element. I recognise that small to medium-sized businesses have a lot to contend with—the convener touched on that earlier—and may not necessarily have large human resources departments to organise things such as mentoring. It is important that we get young care leavers into not just training, but work, because their life chances are considerably and shockingly poorer than those of their peers. That is a matter in which the Parliament takes great interest, and into which the Education and Culture Committee has had a recent inquiry.

Mark McDonald is absolutely right. The notion of a family firm—which came up at the Glasgow event yesterday, as Mr Mason will recall—is sometimes an important one. These are our children and young people. They may not be biologically ours, but they are ours. Like any other parent, we must make exceptional effort on their behalf.

11:15

Do you think that those who have been in care and are now holding down steady employment might play a role in offering advice and guidance from their own perspective to young people who are about to leave the care system?

Forgive me, Mr McDonald—I omitted to answer that question.

I absolutely agree with you. We have some brand spanking new young people who have had to cope with horrendous circumstances that would be our worst nightmare and have come through the other end to make a considerable success of their lives. Of course, not everyone wants to wear their heart on the sleeve and talk about the past, but if there are young people—now, of course, adults or older people—who want to speak about their past difficulties and provide encouragement or something for others to aspire to, that will be very important.

Another area of stigma that I have touched on over the piece is that, during the good times and in the past, certain jobs have for whatever reason been viewed as undesirable. They are the kind of jobs that people who do not stick in at school are told, “If you don’t stick in, you’re going to end up doing job X or job Y”, with the result that people tend not to gravitate towards them. Are we doing enough to tackle that stigma by, for example, making it clear to people that such jobs should not be viewed as any less desirable?

There is always room for improvement. A number of sectors have huge perception issues that we will have to overcome. For example, the problem with the number of young women entering engineering or science-related industries is about perception, and some of the barriers to young disabled people seeking work are to do with a lack of awareness or understanding on both sides about particular sectors. We could be doing an awful lot more to get better connectivity between the realities of the world of work in particular sectors and our education system, and we certainly need far closer collaboration and working with employers.

The witness from Asda told us that the company’s chief executive started as a shelf stacker with one O-level and moved up through the company. Can we use as role models such individuals and people like Jim McColl who, although they had no formal further or higher education qualifications when they first left school, have still been successful, to show students who, for whatever reason, are not going on to further and higher education that even if they go into a company at entry level they can go on to achieve great things and have a significant career?

Absolutely. I am often quite irked by comparisons that are drawn between academic pursuits and vocational education and believe that we need a far more integrated approach. Some skills and opportunities should be for everyone; indeed, in a core sense, vocational education should be for everyone. It should not be an either/or. If there are any role models who can connect with young people, we should be making more of them. Certainly Skills Development Scotland’s my world of work website has thousands and thousands of YouTube clips featuring young people working in particular industries. As adults in a privileged position ourselves, we must become more acutely sensitive to those who can make connections with the young people we want to inspire.

The issue of soft skills has also been raised. Although it is great that we are doing what we can to train and educate young people, one of the difficulties is the acquisition of soft skills such as confidence and, indeed, self-confidence. How can we tackle what I appreciate is a difficult issue and develop some of those soft skills? Should we look at, for example, Young Enterprise Scotland’s work, which, by letting young people work as part of what is in effect a small business in their school, can give them a bit of confidence?

I do not really like the term “soft skills” because it implies that they are inferior. Instead, I prefer to talk about core skills; after all, confidence is pretty core to how a person operates in life as well as work.

This work needs to begin with very young children. I might end up in hot water again, but I think that happy, healthy, strident, opinionated children are something to be encouraged. I have certainly never believed that children should be seen and not heard—that will probably get me into the Daily Mail—and I know that some people will say that it is just as well I hold that view, given my own rather opinionated and strident four-year-old.

In all seriousness, though, our perception and view of young people has to change from the early years upwards. The aim of bolstering core skills such as confidence, communicating with other people, working in a team, numeracy and literacy must be ingrained in everything we do in our education system and beyond and is, in fact, core to curriculum for excellence.

With regard to your final comment, I had last night the privilege of speaking at the Young Enterprise Scotland awards and that organisation is one of many good examples of how we might be able to upskill and boost young people.

I will be brief, convener, because most of my points have been covered. However, I want to return to the earlier comment that training should be fitted to the person, not the person to the training. In evidence, Social Enterprise Scotland talked about

“the programme needing to fit the young person rather than the young person fitting the programme”—[Official Report, Finance Committee, 16 May 2012; c 1161.]

and Who Cares? Scotland referred to the “tightrope” that these young people were on and the need to turn it into “a plank”. What is being done to ensure that young people have that plank? What is being built in to those programmes and how adaptable are they? After all, there are a number of very big and very small organisations involved in this work, but the very small ones might find it more difficult to put that plank under the young person.

Absolutely. Given the trend towards a more personalised approach to learning—I am thinking, in particular, of the senior phase of curriculum for excellence—we really need to follow that up with the post-16 reform and take all that forward into the work that we have commenced on the employability fund. In the fullness of time, we will have to challenge ourselves on our national training programmes. It is good to have such programmes, particularly in this climate, but the important question is how we tailor them more to individuals’ needs. Much of that work needs to be carried out at local level with local partners.

The part of the jigsaw that I omitted earlier relates to community planning partnerships, which are currently the subject of a review by Derek Mackay. Moreover, the single outcome agreements will, one would hope, give us better alignment at local level. Getting all the players better aligned will unleash an opportunity for far more flexible and imaginative provision that is utterly geared to the needs of young people and employers.

I thank the minister and Mr McAloon for their evidence in what has been a very interesting and worthwhile session.

11:25 Meeting suspended.

11:33 On resuming—