Meeting of the Parliament (Hybrid)

Meeting date: Thursday, September 22, 2022

Official Report 1052KB pdf

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Skills Delivery Landscape

The next item of business is a statement by Jamie Hepburn on an independent review of the skills delivery landscape. The minister will take questions on the issues raised at the end of the statement, so there should be no interventions or interruptions.

14:53  

There are few areas in Government that are as important as equipping people with the knowledge and skills that they need to thrive in life and in the world of work. It is key to our vision for delivering a strong, resilient economy and a society that has people and their wellbeing at its heart.

Today, I am announcing our intention to initiate an independent review of the skills delivery landscape. Scotland performs well in post-school education. The most recent available data show that, compared to European Union countries, Scotland has the highest share of population aged 25 to 64 with at least tertiary education. The Scottish employer perspectives survey shows that the majority of employers are satisfied with the skill levels of those moving to work from education.

In 2021, of the employers who were surveyed, 68 per cent found school leavers that they recruited to be well or very well prepared. The figure rose to 78 per cent for college leavers and 80 per cent for those transitioning from university. That speaks to the fact that the foundations of our system are strong; to the work of our universities, colleges, training providers and community and learning development sectors; to the dedication of those who are in training and post-school education and the educators and trainers who support them; and to the commitment and partnership working of our skills agencies: Skills Development Scotland and the Scottish Funding Council.

However, we all know that the challenges that lie ahead of us are significant. Demographic change, digital transformation and automation, shifts in sectors of our economy and the need to work towards net zero all speak to the need for a skills system that must meet the demands of an ever-changing world. We need a system that is simple and people-focused, and which is built on effective collaboration across sectors and regions, between the public sector and business and across our public bodies. Members will be aware of the work that is under way to improve Scotland’s school education landscape and, following the Scottish Funding Council’s review of coherent provision and sustainability, the development of the purpose and principles for post-school education, research and skills development.

Before I move on to the details, I will explain why it is necessary that we complete the picture with a review of the skills delivery landscape. The national strategy for economic transformation gives us a real opportunity to put in place an economic system that works for people and places across Scotland. Priority projects will adapt the education and skills system to make it more agile and responsive to our economic needs, support and incentivise people and their employers to invest in skills and training throughout their working lives, and expand Scotland’s available talent pool to give employers the skills pipeline that they need.

Our system needs to respond to the increasing numbers of people whom we expect will require upskilling and reskilling. As I have laid out, it needs to adapt to shifts in our economy and workplaces as a result of digital transformation, the demographic challenge of an ageing population and an ageing workforce, and the imperative to respond to the climate emergency and work towards net zero. We must also support employers who have welcomed EU workers and are now struggling, post-Brexit, to fill vacancies. That is having a disproportionate impact on sectors such as health and social care, tourism and hospitality, agriculture and food and drink.

The report by the Auditor General for Scotland in January this year on “Planning for Skills” focused on progress in better aligning skills and education provision to the needs of the economy, now and in the future. The report laid out how Government and our partners could do better in collaboration. We have heard, we have reflected and we have acted. We have published the “Shared Outcomes Framework”, which sets out the detail of the collaborative projects that are being undertaken by SDS and the SFC and, along with my regular engagements with both agencies, bilaterally and collectively, I have established a shared outcomes assurance group to oversee progress on implementation. That has helped to identify areas where we believe that further clarification of roles and responsibilities would be desirable to ensure that duplication and unnecessary complexity in the landscape are removed, ensure that we create the right conditions for collaboration, and ensure that we create a system that is more straightforward for people and employers to access.

I am acutely aware that Government must provide the leadership to ensure that our skills delivery public body landscape remains effective and efficient. I embrace that role, and I am committed to driving it forward. I am also aware of the importance of making decisions based on evidence. That is why I am asking for independent advice on how the landscape could be adapted to deliver maximum benefit for Scotland’s employers, places and communities and, above all, for Scotland’s people.

I want to make it clear from the outset that those who work in our agencies can be assured. This is a review about what we need in the future; it is not a review of performance to date, and nor it is about seeking to remove or replace SDS or the SFC. SDS was established in 2008, and over the past 14 years it has delivered key Government priorities in relation to Scotland’s apprenticeship programmes, national training and employability initiatives, sector and regional skills planning, and the national careers service. I greatly value the work that it does.

My recent visit to Inverness showed the strength of the partnership work that SDS undertakes at the local and national levels. Taking the specific problem of skill shortages in the hospitality sector, SDS has worked with industry, the local developing the young workforce group and local schools to put in place training support for young people to enable them to move into jobs. That is exactly the type of activity that we need to see more of.

I am grateful to all staff for their work and commitment, and to the leadership of the board and the senior management teams at both SDS and the SFC for the work that they do day in, day out to support the many successes of our skills system. They have my sincere thanks.

We know that we face significant challenges in the economic, social and institutional context, which have emphasised the need for our approach to skills planning and workforce development to be more clearly embedded in and aligned to our wider education system. We recognise the need to ensure that our post-school skills and education provision is part of a single, holistic ecosystem that can respond effectively to the needs of industry and learners, while delivering wider societal benefits.

The purpose and principles for post-school education and skills will help to drive that vision. That applies equally to the need to support the transitions that learners make through the senior phase. On-going work on education reform and the career review will help to deliver such alignment. To achieve that end, we must have the right structures, governance, responsibilities and balance of capacity across our public bodies.

With the ambition of joining up resource to best effect, I am initiating the independent review. Its purpose is to make recommendations on how the skills delivery public body landscape can be adapted to drive forward our ambitions in the national strategy for economic transformation and our response to the SFC review.

The review will not focus exclusively on Skills Development Scotland, but it will give particular consideration to SDS’s interface with and role in the wider skills system. The review’s terms of reference are being published today and will be freely available for all members and anyone else who is interested to see.

The review starts with no preconceived notions or predetermined outcomes. It will be independently led, to ensure that the exercise is robust and is informed by the evidence that it gathers. I am pleased to set out today that I have appointed James Withers to lead the review. He is known to many of us, as he was until recently the chief executive of Scotland Food & Drink. He has a wealth of experience in industry that will bring objectivity, creativity and rigour to the review. His remit will be to engage widely with stakeholders across the skills and education landscape—including, of course, the staff of our agencies—to inform his recommendations and to report to ministers by spring 2023.

James Withers is not being asked to revisit work that has already been done. The review will take account of, and not seek to duplicate, wider reform recommendations and review work that is under way, including the outcomes of the Muir report and those that arise from the Hayward review. The review will not revisit the steps that we previously set out for taking forward the recommendations of the SFC review of coherence and sustainability and the career review that Grahame Smith has been leading on.

James Withers will focus on areas such as the design and delivery of apprenticeship programmes, regional and sectoral skills planning, employer engagement and how SDS and the SFC interface with each other to ensure that we achieve a more aligned skills system. He will look across the public body and related advisory landscape, to deliver recommendations that ensure that the wider skills delivery public body and advisory landscape is equipped to respond to the needs of our society and economy.

We start from strong foundations but, as we look ahead, there is more to do if we continue to aspire to deliver world-class support and interventions across the wider skills landscape. The skills delivery review will be an important step in ensuring that we have in place a public body landscape that supports an agile, people-centred system that helps individuals to improve their skills and reach their potential and ensures that employers can access the skills that they need to flourish.

The minister will now take questions on the issues that were raised in his statement. I intend to allow about 20 minutes for that, after which we will move on to the next item of business. I ask members who wish to ask a question to press their request-to-speak buttons as soon as possible, if they have not already done so.

I thank the minister for the advance sight of his statement. It is vital to ensure that Scotland’s young people are equipped with the skills that our changing economy will need in the coming years. In June, the Enterprise and Skills Strategic Board called existing skills structures “too complicated”. Of Scotland’s working-age population, 10 per cent have a low level of, or no, qualifications, and 23 per cent are economically inactive. Businesses are increasingly short of skills. On top of that, there has been a £53 million cut to employability spending.

Given all that, I hoped that the statement would outline bold reforms to the Scottish Government’s approach to skills delivery. Instead, we are looking at a mere rearranging of the deckchairs. The review needs to bring about real structural changes to produce genuine improvements.

The independent adviser will not report to ministers before next spring, so what is the Scottish Government putting in place now to address the array of skills shortages that employers are already struggling with? Will the minister ensure that the review finally tidies up the confusing array of bodies that currently make up Scotland’s skills sector?

I thank Pam Gosal for her questions and I agree with much of what she had to say. Of course, she referred to the comments of the Enterprise and Skills Strategic Board, and part of the rationale of the review is to take head on and consider some of the complications that people report around the system that we have in place now. The purpose of the review is to come forward with recommendations.

However, I am surprised that she has suggested that it is, in some way, a timid approach and that it is about rearranging the deckchairs. As far as I am aware—and I appointed him—I am not yet aware of having received the recommendations from James Withers. Therefore, I am not going to second-guess what he recommends to us before I see his comments.

Some of the points that Ms Gosal made around attainment are, of course, issues of concern. We want to make sure that we are doing more to support those who have not achieved the level of qualification that they require in order to get ahead in life.

However, let us also reflect on the successes of our system. Let us reflect on the fact that, in 2021, 95.5 per cent of school leavers were in education, employment or training three months after the end of the school year. That is a record high since consistent records began in 2009-10. Let us reflect on the fact that the level of tertiary education qualification in Scotland is the highest of any European country—ahead of the rate of the United Kingdom overall. Let us reflect on the fact that we have the fourth lowest youth unemployment rate in Europe—ahead of the United Kingdom position. Let us not talk down where we are, but recognise that there is more to be done. That is the purpose of the review. I look forward to seeing what it recommends, and we will consider how to move forward from there.

At a time when we are experiencing labour shortages and real wage suppression, measures that look at how we maximise the talents and capacities of our people—and, most importantly, maximise their wages—are critically important. There are long-standing and enduring criticisms about the flexibility and responsiveness of the skills regime in Scotland. Indeed, in January, Audit Scotland stated that there needed to be “urgent action”. Above all else, my one criticism is about whether the review represents the “urgent action” that Audit Scotland was calling for.

I have three key questions. First, I would like some clarity on the scope of the review. Although the minister applauds the performance of SDS and the SFC, there is certainly an implication that their scope and footprint will be looked at. Is that a precursor to a merger of institutions in the education and skills sector?

Secondly, I welcome the appointment of James Withers, who has a depth of experience in food and drink and agriculture. However, how will those who have experience in the skills and education sectors, as well as other industrial sectors, be drawn into the review?

Finally, how will flexibility be looked at in the review? Many businesses report that they find it difficult to access skills, that there is often a one-size-fits-all approach and that adopting and implementing new apprenticeship frameworks can take three years. How will flexibility be reviewed and looked at in the scope of that work?

Those areas are within the scope of the work but, as I have just said to Ms Gosal, I am not going to second-guess what James Withers will come forward with and recommend. Within the parameters of the terms of reference that we have established, he will look at those areas and set out recommendations to ministers to consider how we can make improvements in the system.

I have heard and know that there are concerns about the flexibility and adaptability of a system. Again, that is part of the rationale for having the review. Candidly, yes, the Audit Scotland report was also one the catalysts for taking forward the review. I do not want Mr Johnson to be under the illusion that this is the first piece of work that we have undertaken in respect of the review. I already referred to the shared outcomes assurance group that we set up. That group is working to a shared outcomes framework, which is designed to make sure that Skills Development Scotland and the Scottish Funding Council work much more collaboratively. A lot of good work is under way, and we will be happy to share more information about that.

It will absolutely be incumbent on James Withers to draw on others with experience of industry and so on, but given that it is an independent review—as I think members would expect it to be—it will be for him to determine how to do that. Of course, I expect that he will reach out to all those who have an interest in these matters.

Perhaps the most fundamental question that the member asked was whether this is a precursor to a merger. I can give a very straightforward and simple answer—no.

During the summer, I visited many businesses in East Lothian, and the thing that came up all the time was labour shortages. The Office for National Statistics recently estimated that 1.3 million people had left the UK workforce due to Brexit. Scotland’s percentage share would be between around 105,000 and 125,000 people. In context, that would mean that about 2,500 people have left the workforce in East Lothian. How much analysis of that issue will be carried out with regard to labour shortages and the skills delivery outlook in Scotland?

That will form part of the consideration. Indeed, that already informs our consideration of skills delivery. We already discuss and look very closely at what labour market information is telling us about trends, as well as understanding the wider social and demographic changes that are taking place. Things such as the Scottish employer skills survey and the sectoral and regional skills assessments from SDS are important in that regard. That can help to inform the review that James Withers will take forward.

I make the point again that we have not rested on our laurels and that there is other work under way. We are establishing a group, which I will chair, with various ministers who have skills in their remit, to ensure that we take a cross-Government approach to these matters. That group will carefully consider any findings from the review.

A recent Audit Scotland report highlighted the Scottish Government’s inability to settle differences between the Scottish Funding Council and Skills Development Scotland. At the Education, Children and Young People Committee yesterday, it was even suggested that the two organisations might be merged, yet the minister has stated that it is not about seeking to remove or replace SDS or the SFC, and the independent review appears to focus very much on the interface between the organisations.

Not wanting to prejudge the outcome of the review, does the minister agree that the skills landscape is currently confusing, with an array of different agencies that fail to properly integrate with one another? Will he ensure that the review changes that and, indeed, if James Withers recommends wholesale change, will the minister ensure that that will be implemented?

You will hear me repeatedly say that I am not going to pre-empt what the recommendations might be. We will need to see what they are, reflect on them and move forward from there.

On the points that Ms Webber makes about the failure of the system to integrate, I would not say that there is a failure, but I would say that it could be done better. We have recognised that across a range of initiatives that we have taken forward. Part of the purpose of the review is to consider precisely that question: how can we continue to improve the alignment of provision between different agencies and players? Fundamentally, I think that we will get more for our economy, for our society and, above all, for our people if we can achieve that aim.

As the minister will be aware, one of the Auditor General’s key recommendations in the skills planning report was the provision of clarity on the governance and oversight arrangements for skills alignment activity. How will the review achieve that?

That goes to the very heart of what the review will look at; it is at the core of what it is trying to do. As I have said, we have already taken steps to address governance and oversight issues at ministerial and official levels. I have referred to the shared outcomes framework that we have established for both agencies to work towards and the shared outcomes assurance group that is making sure that that work continues in a positive direction. That is work that is happening but, of course, the review can look at how we can build on and further support that work. My ambition for the review is that the recommendations that it makes will help to further clarify the delivery landscape, and I look forward to receiving them from James Withers in due course.

When the Government’s enterprise and skills review reported, it recommended the creation of a new vehicle to meet the enterprise and skills needs of the south of Scotland. However, when the enterprise body was delivered, the skills element was largely dropped and instead remained with Skills Development Scotland. Will this review properly recognise the regional variations that often exist when it comes to our gaping skills gap and look at whether the roles of our agencies should be strengthened to deliver skills programmes in local areas that meet the needs of the local businesses and workforce?

On Mr Smyth’s latter question, that will be for James Withers to consider in any recommendations that he wants to make, working to the terms of reference that we have published. He will also be able to draw on the strength of information that already exists; indeed, one of Skills Development Scotland’s great areas of work is its regional skills planning.

Of course—and this is very much in line with the alignment agenda—one of the Scottish Funding Council’s pathfinder projects, which look across the range of academic institutions, is in the south of Scotland with the full involvement of South of Scotland Enterprise in the process. The direction of travel is one that I very much agree with, and it tallies neatly with our alignment agenda. As for any recommendations that James Withers wants to make, that will be for him as part of the review. As I have said, we look forward to seeing what he has to say.

How will the independent review assess the progress of green skills development in schools and higher education as we move towards transforming our economy and society? Given that those things have been set out in the climate emergency skills action plan, we must ensure that we achieve the mix of skills and job specifications needed to thrive in a net zero economy.

With regard to assessing progress, of course there needs to be an assessment of how best to go about fulfilling the mission of ensuring that people are provided with the skill set that they need to contribute to the move towards net zero. The climate emergency skills action plan is very much a part of that, but as far as assessing progress is concerned, it is important to be clear that this review is not about measuring performance or progress to date; instead, it looks ahead at ensuring that we have the right structures, governance, responsibilities and balance of resources across the system to deliver our ambitions. Of course, one of our key ambitions is achieving net zero, and we have to take people with us in that regard and ensure that they have the skills for the task.

We support this review, which we think is needed, but it should not have taken an Audit Scotland report that was heavily critical of the minister’s lack of leadership in this area to stimulate some action. We are five years on from when it was agreed that the agencies and the Government would work together to sort out this agenda, so we need urgent action.

Yesterday, college principals delivered a stark message of real-terms cuts to college budgets, with drastic cuts to staff numbers. How does the Government deliver any skills agenda with that dark future for colleges?

With regard to Mr Rennie’s point that it should not have taken an Audit Scotland report to prompt us into action, I say, first of all, that that is not the only thing that has prompted us to consider this review, which I am very glad that he welcomes. However, if we had not done this, I would imagine that Mr Rennie would have been saying that we were not responding to the Audit Scotland report.

As for the recommendations that were made five years ago, I am sure that Mr Rennie is aware of the fundamental challenges that we have all faced—and the Government has been no different in that regard—in gearing our attention towards responding to other situations such as Covid-19. The work continues, and there is good work under way, and this review is fundamentally about enhancing that and ensuring that we have before us the flexible and responsive system that Mr Johnson talked about and which I think we all want to see. Colleges are going to be a key part of that.

As the minister knows, the renewables opportunities in the north-east will require a workforce with a wide spectrum of skills and qualifications, including science, technology, engineering and mathematics—or STEM—skills, and I welcome the forthcoming review’s focus on sectoral and regional skills planning. Historically, however, girls and women have been underrepresented in STEM courses and careers, so what consideration will the review give to the issue and to ensuring that the STEM and energy sectors are diverse and prosperous?

Of course, that is an outcome that we all agree is fundamental. Those are important sectors that require skilled labour, and no sector can afford to overlook a cohort of the population.

The issues that Ms Nicoll has identified are important. As I set out in my statement, the context of the review is about adapting to the challenges of the future labour market. It will consider how we can better ensure that we have in place a public body landscape that supports an agile people-centred system that helps individuals to improve their skills and reach their potential. In that regard, the review must ensure that groups that are underrepresented in areas of our labour market are properly supported.

I would not want it to be thought that there is not work already under way. Education Scotland is considering the matter, SDS is working to an equalities action plan for apprenticeships and the Scottish apprenticeship advisory board is alert to the issue. As we move forward, it will continue to be of the utmost importance.

It is a welcome review. I particularly welcome the emphasis on meeting the skills needs of the net zero agenda. How will that be taken forward in the review? For example, will environmental non-government organisations and think tanks that might have substantial amounts to contribute in this area but which have not been the usual suspects in skills consultations in the past be involved and have the ability to contribute?

I am not going to set out to James Withers how he takes forward the review or steer him on that. However, I made explicit reference to the imperative to respond to the climate emergency and fulfil our ambitions in respect of our net zero targets, and we must ensure that people have the skill set to achieve that. There might well be organisations that James Withers reaches out to. I am sure that he will be watching this statement and the questions that have been asked and that he will be taking on board what each member has contributed.

Will the review look at improving skills support for small and large businesses? Will the Scottish Government consider introducing an export monitoring scheme, as we have previously proposed?

On the latter point, I am happy to consider a proposition, although I must be clear that that will not form part of the review.

The needs of small employers are of the utmost importance. There has already been reference to the complexities in the system that are sometimes reported. Small businesses, in particular, often report that, and I am alert to and acutely aware of that. That will be part of James Withers’s considerations as he undertakes the review, because we need a skills system that is geared towards supporting our social and economic ambitions, supporting employer need and, above all, supporting the needs of our people.

The minister recognised the great progress that has been achieved by our skills agencies, SDS and the SFC. What assurances can the minister provide that the review that has been announced today will not impact on the excellent service delivery of our skills agencies?

That is an important question and I am glad that Kaukab Stewart has raised it. I hope that I have been clear that I am enormously grateful to the leaders and staff of SDS, the SFC and organisations in our wider skills system.

The review is about how things could look in the future and how we can make improvements. However, people out there can be assured that, when it comes to the work of the agencies, it is business as usual. They will continue the good work that they do. The work of the agencies will not stop. They will continue what they do day in, day out, which is delivering for people in Scotland.

We are running a little ahead of schedule. There is a lot of interest in the statement, so I intend to invite to speak each member who has pressed their request-to-speak button. However, they will need to do so briefly and the responses will need to be brief, too.

The minister has stated that the review will not look at the performance of Skills Development Scotland and the Scottish Funding Council. Why has he chosen to exclude those agencies from the scope of the review, as the evidence shows that skills development has been a disaster in Scotland for the past decade and, in the past year alone—

Minister.

Maybe I was not clear enough. The agencies are not outwith the scope of the review. The fundamental point that I have made is that it is not a performance review—it will not review the performance of the agencies. There are other mechanisms by which we can review how they have performed, and we can hold them to account for that purpose. Fundamentally, this is about looking ahead to ensure that we consider how we can have better interaction between the agencies and improve our skills system. It is not about looking at what has gone before—it is about looking ahead at what we will need in the future.

The minister will know that Scotland’s employers want transparency on how the apprenticeship levy is spent in Scotland. Will the review include that element? Will that be part of it? Will the voices of business—small, medium and large businesses—and the college sector be heard in relation to the apprenticeship levy in the review?

Those voices will be an essential part of James Withers’s consideration. He may well look for clarity on the apprenticeship levy; I would simply like clarity on how it is raised. The levy was, of course, implemented without any form of consultation or any form of interaction unilaterally by the UK Government. Frankly, right now, as I stand before Stephen Kerr, I could not tell him who pays the apprenticeship levy in Scotland. If we want more transparency, maybe that should start with the UK Government letting us know who pays that. We can then get on to the—

Michael Marra should be brief.

Audit Scotland’s report was very clear that this is about lack of leadership from ministers. Why does it fall to Mr Withers to provide the leadership? What are we paying the ministers for?

I thank Mr Marra for that very constructive question, which I will turn on its head. If I were to stand up here and unilaterally announce what we might be doing, I think that the very first question that Mr Marra would ask me would be: what evidence did we take to make those decisions? James Withers is working to make a series of recommendations for ministers. Ultimately, it will be for ministers to make the decisions and for Parliament to hold us to account for them.