Institute of Grocery Distribution, Skills Summit 2012
Speech by the Rt Hon Iain Duncan Smith MP, Secretary of State for Work and Pension.
Introduction
It is a pleasure to be here today.
It’s a little known fact that Britain’s food and grocery sector employs over 3.5 million people - some 13% of the national total.
Adam Smith declared it in _The Wealth of Nations _back in 1776, but we are still “a nation of shopkeepers”.
The food sector is a crucial part of UK industry, and it is businesses such as those gathered here today that will drive this country’s financial recovery.
Though the overall economic outlook is still poor, last month’s jobs figures at least showed some encouraging signs of stability, particularly stronger than expected growth in jobs from the private sector.
Latest statistics show that even with a 37,000 fall in public sector employment…
… private sector employment was up 45,000 on the latest quarter.
Indeed there are currently 370,000 more people in work than in there were in 2010.
What’s more, the total number on out-of-work benefits is down by nearly 70,000 over the same period - because of the changes we have introduced to move more people off inactive benefits and into the labour market.
We are reassessing claimants on incapacity benefit at a rate of 11,000 people a week, and of the first 129,200 outcomes, 37% - some 47,400 people - were found fit for work.
And with a further reduction in the age limit for single parents with young children claiming income support, almost 100,000 lone parents have moved off inactive benefits since 2010.
These are important signs that that our welfare reforms are beginning to impact…
… because if we are serious about transforming both our economy and our society, we have to be focussed on getting welfare inactivity down…
… tackling what I call the problem of the ‘residual unemployed’ - reducing the number of people who been more or less permanently out of work, even throughout the years of growth.
Entrenched worklessness
This is a task I have been committed to for many years, even before coming into office.
Back in 2004 I set up an organisation called the Centre for Social Justice.
Spending time in Britain’s most disadvantaged neighbourhoods, I saw whole communities blighted by worklessness - even before the recession started.
All too often, generations of the same family were stuck in a vicious cycle.
Growing up in dysfunctional homes where no one had ever held a job…
… attending underperforming schools… too many even abandoning school in their early teens or dropping out aged 16 without any qualifications.
Finally, young people ended up in the jobcentre aged 18, too often set to live the same failed lives as their parents - out of work even when job opportunities were being created.
Employment was up by some 3 million in the decade before the recession, yet between 1996 and 2010, the number of UK household where no one had ever worked doubled…
… and we continued to pay for almost 5 million working-age people to sit on out of work benefits.
In fact more than half of the rise in employment under the previous Government was accounted for by foreign nationals - businesses were forced to look elsewhere because they couldn’t find what they needed at home.
A lack of incentives and a culture of welfare dependency played a part…
… but in too many cases, the potential workforce just didn’t have the skills for the job.
Institutional failure
This isn’t just bad news for growth and productivity. It’s also a real waste of people’s potential.
There are currently 954,000 NEETs in England - young people aged 16-24 ‘not in employment, education, or training’.
Yet many of the young people who are out of work and on the dole are harbouring a range of skills that could well be put to use in growing our economy.
These young people aren’t stupid.
But their potential is left unrealised, sometimes perverted by the wrong peer group to criminal ends.
All because, too often, their dysfunctional families have failed to give them a proper start…
… then their schools have failed them…
… and finally the welfare system has just parked them unwanted and unready for the world beyond the jobcentre.
Academic versus vocational
A big part of the problem is that as a society, we have majored on academic achievement as a measure of young people’s success.
What’s gone missing is the understanding that there should be another route - a way of gaining top qualifications that doesn’t involve going to university.
Our technical education remains weaker than most other developed nations - particularly in contrast to other European countries.
Take the example of Germany, where the ‘dual system’ allows pupils to combine on-the-job experience with career-specific lessons.
Or the example of the Netherlands, where all 16-year-olds are assessed in foreign languages, arts, sciences, maths and history…
… but where children can move onto a technical route from as young as 12.
Research by the think tank Demos suggests that in England, of those in employment 11 out of every 1,000 people completed an apprenticeship, compared with 40 out of every 1,000 in Germany and 43 in Switzerland.
The same trend is found in business too, with under a third of big UK companies offering apprenticeships compared with 100 per cent of big companies in Germany.
So it’s no coincidence that our international competitors also boast more robust manufacturing industries - Europe’s most competitive export economies are built on valuing practical skills alongside academic ones.
Holland
It was on a visit to the Netherlands as Conservative Party leader, that I realised what was meant by giving academic and vocational learning equal weight.
I met a headmaster who had worked in both English and Dutch schools.
He pointed out the similarities between the UK and the Netherlands - both advocates of the free market, with a strong financial sector and opportunities for smart graduates.
But he also pointed out a crucial difference.
As he described it, in the UK, we consider bankers, IT consultants and businessmen to be most important people in the world.
What we in this country don’t value is the fact that when someone goes home from their city job, they need a home to go to - and one that has been built with some skill.
They need to be able to open the front door without it falling down.
To turn on the lights without electrocuting themselves.
To run the bath without it flooding.
In the Netherlands, the headteacher told me, people want those jobs done properly, by someone with qualifications - rather than by a cowboy.
So the builder, the electrician, the plumber - the grocer, any tradesmen in fact…
… all of them are as valuable as the city worker, and qualifications gained through school and college lift the status of those who occupy these positions.
Here in the UK, however, our education system has long failed to reflect that value.
Action for change
On coming into Government, I was not alone in thinking we had to put this right.
The Coalition Agreement confirmed the Government’s intention to improve the quality of vocational education - making sure it was no longer second best to academic study.
One of the first steps we took was to commission an independent review led by Professor Alison Wolf.
Published in March 2011, the Wolf Report made 27 recommendations to improve the quality of vocational education for young people aged 14 to 19.
Michael Gove accepted them all - and across different Departments we are now beginning to see progress being made.
Schools
At the Department for Education, Michael Gove is doing a great deal to develop a more diverse schools provision.
The first 6 studio schools are already open - offering 14-19 year olds the opportunity to split their time between work placements and project-based learning.
And just two weeks ago, the Department for Education gave the go-ahead for 15 new University Technical Colleges, which will work in partnership with local universities and employers.
From Southwark to Stoke-on-Trent, Norfolk to Newcastle, a total of 12 studio schools and 24 University Technical Colleges are set to open in the coming years…
… providing young people with the technical knowledge and skills that industry demands.
Apprenticeships
There has also been a real push on apprenticeships as a practical route into employment.
This not only means delivering at least 250,000 more apprenticeships than the previous Government had planned. …
… but also taking steps to make it as simple and rewarding as possible for employers to take on an apprentice…
… reducing bureaucracy around the process and introducing 40,000 incentive payments worth £1,500 for small employers who take on their first new apprentice aged 16-24.
I am keen to see apprenticeships being offered, not only in technical fields such as engineering and manufacturing - but also in other industries, I hope such as market trading.
After all, what better way to teach a young person about commerce than to get them into the marketplace, experiencing the roar of business on a stall?
By developing apprenticeship programmes in different trades, we can ensure young people are equipped with the skills that Britain’s businesses need to prosper.
DWP measures
Finally, in my own Department, we’re doing more to try and help young people address particular barriers they face in moving into work.
We know that a lack of experience often proves a problem.
So we are working with employers to provide an extra 250,000 work experience places over the next three years.
These places will last up to 8 weeks - some with pre-employment training and guaranteed interviews - and we’ll provide funding for another month where places are linked to an offer of an apprenticeship or a job.
We know that for businesses, employing a young person comes with both a cost and a risk attached.
That’s why we’re introducing 160,000 new wage incentives, worth up to £2,275 each to encourage employers to take on young people from the Work Programme. By easing the costs a bit, it becomes much more straightforward to give young people a chance.
Across the board, from the £30 million Innovation Fund where a proportion of funding is specifically targeted at supporting disadvantaged young people to turn their lives around…
… to an almost £1 billion investment in the Youth Contract, providing intensive support to those who do end up on the unemployment register…
… and to the Work Programme, where we are paying private and voluntary sector providers for the results they achieve in moving disengaged young people into work and keeping them there…
… all of this is about trying to make sure young people don’t end up stuck on the margins of society - intervening before worklessness becomes entrenched.
Feeding Britain’s future
It’s great to see British businesses - both large and small - pledging their support for these initiatives.
These employers have not just committed to a Government programme - they have committed to saving our nation’s youth, and we should be immensely proud of them.
In return, I would like to take this opportunity to express my support for ‘Feeding Britain’s Future’, an event which we’re looking forward to seeing more of in the Autumn.
With businesses showcasing the diversity of jobs available and giving young people an insight into the skills needed to succeed…
… I hope this event will inspire young people to put their talents to use in the food and grocery sector.
Conclusion
That is the message today.
Work is a vital component in our daily lives.
It is about more than money - it shapes us, develops us, helps us create friends and contacts.
The money we earn gives us choices, and the work we do helps us to develop so we can make the most of those choices.
This industry is all about that…
… for it is an industry with a great enterprising spirit - nothing illustrates this better than Margaret Thatcher, famously the daughter of a grocer.
As she said: “pennies don’t fall from heaven, they have to be earned here on earth”.
The money we earn is always more powerful than the money we are given.
My reforms are about changing our system so that young people can feel the satisfaction of a day’s pay for a day’s work.