John Hutton – 2007 Speech on Skills, Employability and Immigration

Below is the text of the speech made by John Hutton, the then Work and Pensions Secretary, on 14th June 2007.

Earlier today we launched the new Employer Skills Pledge. A public and voluntary commitment made by 150 leading employers to train all their staff to at least level 2 in the workplace. Recommended by Lord Leitch in his report last December, the pledge – backed by Government and including all central Government departments – will guarantee employers access to a skills broker through Train to Gain and embed a new partnership with business for improving skills in the workplace.

It will pave the way for the full Government Response to Lord Leitch’s report later this Summer – and mark the beginning of a radical step-up in the investment made in the skills of the British workforce.

If we are to reach our goals of a record 80% employment rate and the eradication of child poverty in Britain, it simply can not be done without taking action to raise the skills base of an economy where today there are 4.6 million people without qualifications and a further 1.5 million with qualifications below level 2; and where Leitch predicted that the demand for low skills is likely to continue falling with some 850,000 fewer low skilled jobs by 2020.

But in an increasingly globalised labour market, we can not conduct the debate about skills in a vacuum; we have to consider it also in the context of the dramatic changes in demography and in the global economy of which we are a part.

To consider the implications for our skills base of an ageing society – where in the UK today there are now more people over State Pension Age than children. And the question of how we develop a managed approach to migration – that will allow us to reap the benefits from the skills which migrants can bring, but which also helps more of our own people compete successfully for the growing number of jobs in the British economy.

Certainly our country is changing. New figures from the Office for National Statistics last week showed that foreign-born mothers accounted for 1 in 5 babies born in England and Wales last year, helping to put the birth rate at its highest for 26 years.

The debate around migration is often polarised and stark. The prospect of migration can provoke uncertainty and sometimes fear. People want security – and rightly so.

But deep down they know, too, that our future as a successful economy will depend on our ability to work through these changes, not turn away from them. We must be an open not a closed society. The same is true for our economy.

At a point when the integration of our communities has perhaps never been more important, it is absolutely right that we recognise the significance of the changes in our society.

But we also need to keep these changes in perspective. To be rational and clear in our assessment of the challenges facing both our society and our economy; and above all to find a way forward that promotes our values; that asks how we can best support every single Briton – regardless of background or origin – to make the greatest possible contribution to our society.

In doing this we first need to overcome a number of popular myths and misconceptions about migration. I think there are four that stand out.

First we need to be clear that migration is not a new phenomenon. As Europe boomed in the post-war era, so major European countries looked to migrants to satisfy unquenchable labour demand – first within what were to become EU countries, then in former colonies.

While immigration slowed in the 1970s and 1980s, it has subsequently increased dramatically – from half a million in 1998 to over 1.5 million a year in each of the three years up to 2005.

So migration is a long-standing global phenomenon. And Britain is no particular magnet for migrants. Between 1990 and 2005, the USA gained 15 million migrants. By contrast Spain and Germany each gained 4 million; the UK just 1.6 million.

Secondly, we should acknowledge that migration is actually a two-way process. Today an estimated 5.5 million UK nationals are taking advantage of the opportunities to live and work abroad – with the largest groups in Australia, Spain, USA, Canada and Ireland.

Thirdly, that Britain is not being populated by large numbers of migrating families. Rather this current wave of migration into Britain is markedly different from anything we have seen before. Unlike the migration to America at the beginning of the 20th Century, or to the UK in the middle of the 20th Century, this early 21st century migration is in essence transient – in that it is often characterised by people coming to work in the UK for short periods before they return home.

Since 2004, around 450,000 people have come from A8 accession countries to work in the UK. But rather than bringing their families to settle, as many as half of those economic migrants did not stay. They came to work and save money for themselves and their families.

Fourth and perhaps most significant of all is the myth that this temporary economic opportunism is a threat to British jobs. As the TUC acknowledged at their conference last year:

“If migrant workers are treated fairly and paid a decent wage, they represent no threat to the livelihoods of people who are already living and working in the UK.”

The economic benefits of migration are clear. Recent migration has had a positive impact on our economy – accounting for up to a fifth of economic growth between 2001 and 2005. With independent research showing that migrants are contributing more than their share of taxes, migrant workers are in fact making a net contribution to the exchequer. And the Bank of England concluded that overseas workers have played a significant role in boosting the pool of available labour and helping to ease labour shortages.

The Government’s decision to introduce a new points-based system is a radical and progressive approach to manage the flow of migrants coming to the UK. A case-by-case system to attract the brightest and best from across the world while being robust against attempted abuse.

This is absolutely the right decision for our economy. Together with the new Migration Advisory Committee – which will advise on skills and labour market shortages – we will help to ensure that migrants continue to fill the gaps in the labour market – increasing investment, innovation and entrepreneurship in the UK.

But we also know that migration brings real challenges too. First and foremost, we have to know who is coming and going in Britain. Managed migration has to mean exactly that. Next week the Government will be publishing its strategy to build stronger international alliances to manage migration. It will focus on strengthening our borders, ensuring and enforcing compliance with our immigration laws and facilitating quicker and easier legal migration for those we seek to attract.

Migration also creates new pressures on local services, on local schools, on hospitals and housing. Challenges for active labour market policies and welfare systems. For communities experiencing immigration for the first time.

As today’s report from the independent Commission for Integration and Cohesion highlights, we must go further in helping these communities to adapt to such change and in promoting and supporting local solutions to improving the integration of migrants within strong, resilient and cohesive local communities.

We can not make decisions on managing migration in isolation from these social factors.

Two years ago, when we made the decision on the 8 European Accession countries, business leaders were calling for us to open the labour market.

At the end of last year, when considering the question for Bulgaria and Romania, the economic imperative was not as strong while it was ever more important that we ensured our local authorities and public services could continue to manage the existing A8 migration. It is critical that we continue to balance these factors as we continue to make decisions on the best way to manage migration.

We know that many migrants are today working in what are traditionally seen as “hard to fill” – but predominantly low-skilled jobs. The question is – why are many of these jobs so hard to fill?

With 4.5 million people still on out-of-work benefits in the UK, the right response is not to get defensive; to retreat – or talk of pulling up the drawbridge on migrants. But rather to ask how we can raise our game in helping UK citizens to compete in today’s labour market?

We’ve made tremendous progress in helping people into work over the past decade. Yesterday’s labour market statistics marked ten years of progress – with a reduction in the claimant count of three quarters of a million and employment up by over 2.5 million; the best performance in the G8.

Helping individuals to acquire the skills, confidence and ambition to progress up the career ladder has to be a core ambition of a dynamic welfare system. The old “Labour Exchange” of the past – where labour seeking work met employers anxious to hire – must now become the skills exchange of the future.

Achieving this will mean finding a new place for skills at the heart of a renewed welfare contract for the 21st Century. A new approach to skills, based on a simpler, clearer and more coherent system of delivery – that meets the needs of both businesses and individuals.

The new Commission for Employment and Skills – led by Sir Michael Rake – will be at the forefront of this new approach. A demand-led skills system that will ensure that the skills employees develop are economically valuable – not just to get into work – but also, critically, to support sustained employment and progression through the workplace.

I want Jobcentre Plus to play a crucial new role in helping to ensure the maximum possible employer engagement at local level. That is why we will be establishing a series of Local Employment Partnerships whereby people claiming long-term benefits will receive job trials and mentoring from sponsoring employers – and at the end of the programme will be guaranteed a job interview.

Our ambition is for this to go sector-wide. And in a world where the premium on high skills is only set to increase, this must not be simply about helping people into low-skilled jobs.

It must also then be about the way that employers are helped to access and deliver the support that will enable employees to progress to middle and higher levels within their organisations.

Our welfare to work system must therefore raise its game. Training British workers for British jobs will be crucial not just for our future economic prosperity but also for our ambition of a fair society.

The growth in world trade presents all of our economies with huge opportunities, if we are prepared to take them. But to do so will mean we have to invest in all our people – in their skills and talents.

One part of this must be an earlier and more focused assessment of the skills needs of those out of work. The need to get action on early skills assessments is highlighted by the evidence on basic language training. A study of over 500 learners and 40 teachers carried out by the National Research and Development Centre found that the longer someone lives in the UK before taking ESOL courses, the slower their progress in learning the language.

And at the Centre for Employment, Language Training and Integration in Copenhagen, language training as part of Denmark’s Adult Vocational Training Programme combines modules of basic language training in the morning with vocational training in the afternoon. So in addition to a foundation of basic language skills, trainees also learn the sector specific vocabulary that will enable them to develop their trade.

With language skills so crucial to the integration of our society – and with a persistent ethnic minority employment rate gap of 14% – such interaction between skills and employment support could play a crucial role in helping us to build a fairer and more inclusive society, with employment opportunity for all and prosperity for Britain in a world of global opportunity.

To achieve our goal, we must stay true to our shared values – of solidarity and social justice – of security but liberty – with tolerance, understanding and respect of others. To embed the social partnership that says we are not merely individuals fighting in isolation from each other, but members of a community who depend on each other; who benefit from each other’s help; who recognise their obligations to each other.

There is no greater challenge facing us today. But equally, I believe, no greater prize within our grasp.