John Denham - London Skills

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I'd like to thank the Mayor, the LDA and the London Business Board for this chance to say a few words about the relatively new Department for Innovation, Universities and Skills, and the contribution that we - working with you - can make to London's future success.

The DIUS story

The Department was created by Gordon Brown on his first full day as Prime Minister. What he wanted to do was bring together three strands of activity that had been spread across government, but which - taken together - are going to be crucial to our society and country in the future.

Those three activities were the development of the skills of all our people - everything from basic numeracy and literacy to the highest level of research skills. The work we do to make sure we have a world-class research and scholarship base in this country. And thirdly our work to create the conditions in which this country and this city become the best place to run an innovative business - drawing on that research, drawing on those skills.

Our challenge in the new department is to make sure that those different strands of government policy work together effectively at the local as well as the national level.

Our success in that activity depends firstly on whether we are a competitive and prosperous country, and on whether all our citizens can participate in that prosperity because they have the skills to get the jobs that will be available in future.

There are many way in which the work of our department is going to be relevant to London's future. I'll concentrate largely on skills this morning, but let me stress that our commitment is to meeting the challenges and opportunities facing London across the board.

London's strengths

We want to make our contribution to ensuring that you retain your primary position as a financial centre, handling one half of Europe's entire investment banking activity.

To ensuring that London retains its global lead in creative industries, everything from advertising to publishing.

We want to make sure that London derives the full value from the greatest concentration of higher education institutions in Europe.

And we want to make our contribution to ensuring that London thrives as a multicultural city, where schoolchildren speak more than 300 different languages.

For example, it's because of our commitment to London - and to the success of this country - that we're moving ahead with plans for a UK Centre for Medical Research and Innovation, which would accommodate 1,500 scientists at a purpose-built site in St Pancras. With a consortium comprising the Medical Research Council, the Wellcome Trust, Cancer Research UK and UCL, the centre has enormous potential to deliver advances in the understanding and treatment of disease. It also has enormous significance in terms of job creation, spin-off enterprises and the training of scientists.

It's because of our commitment to ensuring that London succeeds that we recognise it is essential to work with you to make sure that we have sufficient mathematicians, accountants and actuaries to work in the city, enough computer scientists, software engineers and technicians to grow London's IT sector.

So let me say a little more about skills.

The challenges

It's very clear that an ever increasing proportion of jobs in London will require higher level skills - to help companies design and deliver innovative products and services.

Yet we know that while London's population is already more highly skilled than the rest of the country, that status is somewhat misleading. It depends on London's attractiveness to talent from around the UK and the world - and, of course, there are some 700,000 commuters each day.

There is a mismatch between the demand for employees trained to degree level, and a shortage of Londoners trained to that level. November's London Business Survey found that two out of three firms in the capital face imminent skills shortages, with a majority already recruiting from overseas to fill those gaps.

So my focus today, in part, is on how we meet the demand for skills in London that really should - and could - be fulfilled by people already living in London but simply isn't right now. Jobs in the construction. In retail. In public services and other parts of the economy.

With more than 600,000 adults in London having no recognised formal qualifications, this city experiences some of the highest levels of worklessness in the country - a situation which has obvious consequences for families, communities, welfare expenditure and the prospects for economic growth.

It is essential that we unlock the talents of all Londoners, enabling local people to demonstrate their potential to local employers.

This challenge is particularly marked because London now has a series of opportunities to bring about substantial community regeneration, improvements to infrastructure, and economic growth.

The preparations for the 2012 Olympics and Paralympics, for Crossrail and the Thames Gateway must be accompanied by a signal improvement in skills among London residents. By a larger workforce that's trained here in London.

Of course, London benefits in many ways from being a magnet for skilled migrants, but the next phase of growth in the capital must involve many more of London's own working towards a brighter future.

A joined-up approach to skills

DIUS is working with the Mayor and businesses; with universities, colleges and training providers; and with the people of London themselves to improve skills across the board - from basic literacy and numeracy all the way to postdoctoral programmes.

The creation of London Skills and Employment Board in 2006 represented a major step forward in addressing the capital's social and economic needs. It means that, together with the Mayor, major employers set the overall direction on training.

For example, the Board helps to ensure that the Learning and Skills Council's activities - investing around £560m this year in London - will genuinely meet London's needs, and that specific policies tackle the requirements of particular business sectors.

The London Skills and Employment Board also supports the Mayor's policies for economic growth, greater social inclusion and a healthier environment in London.

As Secretary of State, I am grateful to Ken for the commitment he has shown to raising the profile of skills and training in the capital.

The Skills and Employment Board is a unique arrangement. Nothing like it exists elsewhere in England for dealing with skills and working with employers. I look forward to working with Ken and the Board, and with the LSC, in coordinating and simplifying services for London's learners and for London's employers.

That work must ensure that the skills and training system is genuinely demand-led. That it meets the business imperatives of employers and the personal aspirations of Londoners.

Local Employment Partnerships

It's this approach that informs Local Employment Partnerships, where the local Jobcentre Plus understands the needs of employers and then undertakes to prepare jobless people from disadvantaged backgrounds to fill the vacancies that are there. We then become involved with employers to ensure that people continue in work and gain new skills.

There are already 170 London employers committed to LEPs, of which 125 are now operational. Companies like Travelodge, Marks & Spencer, Transport for London and NHS Trusts all are involved, helping to get people onto the first rung of the job ladder in both the private and public sector.

Adult Advancement and Careers Service

The challenge in London is not just about moving people from worklessness into work. All the evidence shows that it can be just as difficult to move up the job ladder from a low-skilled, poorly paid job into a better-paid and more highly-skilled job. Getting from a job with few prospects to a good job is just as tough as getting off benefits and into work.

People who want to get on need support - improving their skills, but also sorting out childcare, tax credits, housing and other issues.

That's why we want to develop a universal adult advancement and careers service that addresses the need for properly integrated employment and skills support. That's something the London Board has also advocated.

We want to make sure that this new joined-up approach provides advice and support to cover all the issues facing people who want to get on at work. We want all people in work to raise their skills, enabling them to build successful careers in a constantly changing global economy.

The new adult advancement and careers service will provide the support that Londoners need to share in the prosperity of this dynamic city.

Two of the pilots that we're going to develop over this year will be based in London. I can announce today that the first will cover Southwark, Lambeth and Wandsworth, where we will work closely with Jobcentre Plus and its partners.

I also want to establish a second London pilot focusing specifically on the challenges facing people who already have a job but who want to get on - to develop further skills, take more responsibility and earn higher wages.

I intend to work with the Mayor on how we develop that second pilot, but also on how we ensure that the whole of London can ultimately benefit from this provision.

ESOL

There are around 600,000 people of working age in London for whom poor English language skills are a major obstacle to employability - and are equally critical to people's sense of belonging in Britain and the ease with which they can feel part of community life.

We must prioritise investment in English language teaching so that it benefits the most vulnerable and disadvantaged groups. London already accounts for over half of our national spend on English for speakers of other languages.

While we concentrate our resources on community cohesion and integration, providers in London are already testing different ways of teaching that are more focused on employability and bring in greater investment from employers.

Hackney Community College, for example, has a programme for people seeking classroom assistant jobs in schools. Barnet College's new language for work programmes - available in both the daytime and evening - prepare students for particular jobs and sectors.

Apprenticeships

We need to deal with other issues in the skills system.

Apprenticeships are rightly valued across our country as a system of work-based learning. In future, we want to see apprenticeships become a mainstream option for young people, with perhaps a fifth of young people having the opportunity to go into a proper work-based apprenticeship.

Last month, we set out how a new National Apprenticeship Service will deliver an expanded apprenticeship programme and will provide a single point of contact for employers who want to offer apprenticeships.

That work is going to be particularly important in London. There are fewer opportunities per head for London's young people to do an apprenticeship than in almost any other part of England. There are particular problems of under-representation among black and ethnic minority young people and among disabled young people.

We're not seeing enough apprenticeships offered by public sector employers in London. And there's the challenge of supporting SMEs, which comprise 86 per cent of all businesses in London - the highest proportion of any part of the country.

Building on our national reforms of apprenticeships that we announced last month, we want to pay particular attention to apprenticeships in London - and my colleague David Lammy, the Skills Minister and Tottenham MP, is going to head up a special taskforce to support their growth.

Train to Gain

I just spoke about making the skills system more responsive to employers. Our major mechanism for doing that is through Train to Gain.

Train to Gain is a system that offers free skills advice and brokerage facilities through the LSC - matching companies with further education and training providers who can deliver flexible training according to the working patterns of each business, drawing on public finance and support.

Since Train to Gain rolled out nationally in August 2006, more than 10,000 London employers in the capital have received support. But we want to go much further.

Last November, we announced that the budget for Train to Gain will rise to over £1 billion a year by 2010/11. That's more than three times the current level of spending and about one third of the entire adult training budget directly shaped by employers.

Under the expanded and less bureaucratic Train to Gain, there will be more money available for companies of all sizes, more intensive support through brokers for bigger companies, and dedicated funding for training volunteers, the self-employed and priority unemployed groups.

It is essential that not only bigger organisations take advantage of Train to Gain. We need to ensure that SMEs get proper access to this substantial amount of public money. That means being prepared to invest in leadership and management in SMEs.

The small programme of £4 million per year that we currently have for investing in leadership at SMEs, so that people can understand the skills needs of their business, will rise to £30 million next year. The programme is open to businesses employing between 10 and 250 people, and we expect nationally to support around 60,000 people - managers and leaders - from about 42,000 companies over the next three years.

I do acknowledge that the Train to Gain system had a slower start in London than in other parts of the country. There were initial problems with the ability of colleges and training providers to accommodate employer demand. However, Train to Gain is now gaining pace in London.

Between August and December last year, more than 14,000 people started a programme of learning. We've made it a priority for the LSC in London to ensure that the new measures in Train to Gain are implemented effectively and drive up performance.

The focus of Train to Gain at the moment is on skills up to Level 3. But it is essential that we make sure that training providers at all levels understand and cater to the specific needs of particular sectors.

One of the major strategic challenges for my department is to build on the existing relationships between business and higher education to ensure that both get the most out of the partnerships that we can create.

Here in London, LondonHigher, which represents the capital's university cluster, is currently working with the LSC and the London Board to look at the ways in which the demand for higher level skills can be better met by the university sector.

Procurement

A lot of what I've talked about so far has been investment directly into skills. But there are other opportunities to expand skills in London.

Major investment is underway to improve London's infrastructure. Billions in public money will be spent on Crossrail, on the Olympics and the development of the Thames Gateway. Thousands of jobs will be created as a result - each one a chance - but at the moment, just a chance - for Londoners to get ahead.

Last month, the Prime Minister said we would use these infrastructure projects to expand apprenticeship places. For it is absolutely right that the legacy of our investment goes beyond more houses and better public transport. It must strengthen London's skills base and boost job prospects for London's residents in a lasting way.

I believe that companies who benefit form this level of public investment should commit to an investment of their own: to improving the skills and abilities of their employees.

According to the Olympic Delivery Authority, contractors will employ an estimated nine to ten thousand people in 2009/10. 10,000 jobs will be created in the Olympic Park, another 10,000 at the Stratford City and Athletics Village development.

There will be particular demand for specialist construction, customer service and audio-visual skills.

We're committed to helping businesses who have won these contracts through Train to Gain. There are dedicated centres producing workers with the right skills - like the new Plant Training Site at the Olympic Park, which will help meet the needs of construction companies.

But I want to do more. There is other good practice out there, much of it emanating from City Hall. There's the Mayor's Responsible Procurement Policy. The important precedent of the East London Line extension, which is creating job and training opportunities in the local area. And elsewhere, there's the ongoing development of Heathrow, where an on-site programme has trained more than 1,000 construction staff working on the new Terminal Five.

I want to build on all this good practice. Which is why we will now explore the whole issue of procurement. To ensure that companies receiving significant Government-funded contracts are also supported to offer apprenticeships and other training opportunities.

Within my own department, we have a £2 billion budget over the next three years to fund major capital works, improving facilities in further education colleges up and down the country.

We want to ensure that contractors for that work address the skills needs of their employees and take advantage of the generous support packages now in place.

Conclusion

In conclusion, I am confident that the right steps are being taken to secure a positive future for London, economically and socially: by meeting the skills needs of business and by helping individuals progress from school to university, from welfare to work, from low-paid jobs to rewarding careers.

Looking ahead, we are putting every effort into developing the skills base of this city and this country. Let's take each opportunity as it comes.

153 London employers have currently signed the skills pledge - a commitment to developing the skills of all their staff to Level 2 or beyond. It's a good start, but it is way below the number of companies that we could have in London making that commitment.

Next Monday is the start of apprentices week, which marks the beginning of the expansion of apprenticeship opportunities. Companies will be coming forward across the country to announce the commitments they are making to increase the apprenticeship numbers, and I hope we can begin to see that happen in London too.

Next month, my department will publish our Science and Innovation Strategy, setting out in more detail how we want to put skills, research and the other elements together to foster the conditions for innovative businesses, helping to create optimal conditions in places like London to maintain their competitive edge.

And in 2011, a year before the Olympics, London will host the WorldSkills competition - where the best and the most able of the world's young people will come together to compete over a whole range of skills.

This year we came back from Japan with one gold medal. Working with you and the people of London, we want to create a winning team that demonstrates the best of what our young people can produce, as we pave the way towards the Olympics in 2012.

Thank you for listening this morning. I think there's a huge challenge out there. I have no doubts about how much remains to be done. But I hope we are putting in place an approach to skills that responds to your needs as employers, and that together we can deliver the skills and other opportunities that Londoners need.