Scottish Apprenticeship Week: interview with skills minister Jamie Hepburn

Jamie Hepburn became Scotland’s minister for employability and training in May 2016, and so this year’s Scottish Apprenticeship Week will be his second as the relevant government minister. It’s an event he says he enjoys.

“It’s really uplifting to go round and speak to folk who are doing a Modern Apprenticeship and see how much they value the experience, what they’ve drawn from it,” he tells Holyrood.
We are at the halfway point of the seven-year youth employment strategy ‘Developing the Young Workforce’, which aims to improve routes into the workplace through practical work-based training.

The strategy grew out of a review led by oil and gas tycoon Sir Ian Wood. It recommended vocational learning should be given the same respect and status as academia, and the barriers between school, college, university and the workplace be broken down.

That is what the Scottish Government has tried to do, and its approach has been supported, broadly, by the other parties in the Scottish Parliament. This is because, on the surface at least, the approach seems to have worked.

The target to reduce youth unemployment by 40 per cent by 2021 has already been reached, and is now the lowest in the UK. Targets for new apprenticeship starts have been exceeded and the numbers continue to grow.

And yet, despite these objectives being met, both economic and wage growth in the Scottish economy has been stubbornly low throughout, while the numbers of those living in poverty is on the rise.

In this context, is it time to ask what the ‘Developing the Young Workforce’ strategy is for, if not to tackle the problems with the economy and society?

Hepburn tells Holyrood the heart of the strategy is to deal with such issues, because those in employment, broadly, can “participate in the economy better”, despite in-work poverty persisting.

The slump in economic and wage growth has continued since the financial crash, though. Shouldn’t labour market strategies be building a path out of the slump, a workforce for tomorrow?
Hepburn says there is more to the strategy than economic growth.

“Irrespective of the shape of the economy, what’s important is that people come out of the formal educational environment better equipped for the world of work, whatever that may be, and the lives they have ahead of them in their entirety, so they come out of school confident, capable and ready to adapt to whatever may come their way. 

“That’s essentially what’s behind the ‘Developing the Young Workforce’ strategy. It is a youth employment strategy, that is its clear objective, but in a wider sense, it’s about making sure young people are coming out of the school environment more resilient and ready for life in its wider sense.”

Part of that readiness, of course, is about preparing for future jobs, but Scotland is already experiencing significant skills gaps, including the teachers of some subjects, software engineers and mental health nurses, among many others.

With Scotland spending approximately £7bn on skills, shouldn’t the country be better at keeping up? 

Hepburn points to the high employment figures and suggests the gaps may partly be down to a competitive job market. The pace of change in technology, too, has been a driver. But he says industry must link better with the education system to highlight emerging skills gaps at an early stage.

Hepburn attends a group established by the labour market strategy with the specific task of identifying emerging skills gaps.

“I recall at one of our meetings – I can’t remember who it was – the point was made that employers themselves aren’t always on the front foot in terms of saying ‘these are going to be the requirements for the future’.

“People are leading busy lives. They’re getting on with the here and now, but we absolutely need to be thinking about what we need in the future.”

This is easier said than done. Holyrood points out that the government’s definition of post-school ‘positive destinations’ includes insecure work such as zero-hours contracts.

Hepburn is quick to say that zero-hours contracts are less prevalent in Scotland than elsewhere in the UK, but stresses the difference between those that are exploitative and those that suit people who want more flexible working.

“Where they are being used in a manner which doesn’t allow people to have fulfilling, steady, well-remunerated employment, then that’s something we need to deal with.” 

Another UK-wide programme with which Scotland is negotiating is the apprenticeship levy. Having come into effect in April last year, the levy is a tax on large companies with a payroll of over £3m which is supposed to fund more training places.

As skills policy is a devolved matter, Scotland has its own ways of distributing the funds raised via the Barnett formula.

Interestingly, since the levy same into force, there has been a sharp fall in the number of apprentices across the UK. In contrast, the number in Scotland has increased.

Yet there is no doubt the levy remains unpopular with businesses north of the border. CBI Scotland has identified it as one of the main challenges facing business. 

As well as using the money to expand its Modern Apprenticeships programme, the Scottish Government also launched a £10m Flexible Workforce Development Fund in September, where individual organisations can apply for up to £10,000 for upskilling and reskilling existing employees.

Five months on, Holyrood asks if the fund has been popular, and how many businesses have signed up.

“That is still at the stage of us having to assess and analyse, so I can’t give you a precise figure, but again, that’s a very useful illustration of the different approach we’ve taken,” says Hepburn. 

The fund, he says, grew out of consultation with business, something he says didn’t happen when the UK Government introduced the levy in the first place.

Everything the Scottish Government has put in place in response to the levy has come out of the consultation, according to Hepburn. These include not extending the target for Modern Apprenticeship numbers and having a more flexible approach so funds are not just targeted at apprentices.

There is also a commitment to increase the number of Foundation Apprenticeships, which see secondary school pupils undertake apprenticeships within school time as part of their Highers portfolio. 

If the aim is to provide secure, rewarding careers for young people, then the recent collapse of Carillion shows how quickly the rug can be pulled out from under. Hepburn says his role has meant he is focused on providing a “continuity of opportunity” for the over 120 apprentices employed at the firm. Several, he says, have already found alternative employers.

But the episode does illustrate a workplace insecurity which has been evident since the financial crash. 

“There are clearly issues about individual employers, the sustainability of their business model and the finance they’ve accessed,” says Hepburn.

“That’s something for them, and they should always be encouraged to be cognisant of that, because they have a responsibility to their workforce, to their supply chain and to their customers. 

“That can sometimes be influenced by the wider economic landscape, but even when we’ve had a buoyant economy there have been big employers that have gone under because of some of these issues. They’ve maybe not quite looked at their own sustainability.”

The Scottish Government’s role, he suggests, is to minimise the risks and respond quickly when things go wrong, pointing to examples of where the administration has “stepped up to the plate very quickly” at Carillion, BiFab, Kwik Fit in North Lanarkshire and others.

But isn’t there an inevitability about future job losses? The World Economic Forum predicts net jobs will decline as part of what is known as ‘Industry 4.0’ where automation will take on many traditional jobs.

Hepburn says ministers take such evidence “very carefully and seriously” but a resilient workforce and taking advantage of technology should be the priority.

“I would also say that whenever you have seen a technological advance, we have seen these predictions and they haven’t always come to pass. They often have not come to pass.”

So the rise of the robots is a myth, then?

“I’m going to be cautious about what I say here. There is this evidence before us, and we need to look at it seriously, but I think we also need to caution against a position where we talk ourselves into a situation where people believe they have absolutely no opportunities ahead of them.”

However, recent examples such as the closure of Royal Bank of Scotland branches show that business models are adapting, and jobs are being lost.

“There’s an employer I would certainly encourage to think long term, in terms of how their brand might be impacted without a physical presence in a community, and what other things they might be able to do as an institution,” says Hepburn.

There is an optimism about Hepburn which suggests he has no fears about a robot taking over his own job. 

“I’d leave it for other people to decide. If they believe that to be the case, then they are welcome to posit this theory,” he smiles. “I’m sure many cynics would believe that.”

The life of a minister is a busy one. He says he has to make “a concerted effort” to protect his family life.

But the work/life balance is something all families struggle with, he suggests. Despite the rise of automation, there is some evidence employees are working harder and for longer hours than they are paid.

Hepburn points to the promotion of family-friendly working as part of the Scottish Government’s fair work agenda, and adds that “sometimes it requires the stick of legislative revision to make the change”.

But while employment law is reserved to Westminster, Hepburn’s time is taken up convincing businesses it is in their own “enlightened self-interest” to embrace the fair work agenda, because the evidence shows their staff will be more productive. 

Whether industry recognises the ‘virtuous circle’ remains to be seen.