Opposition Day — [16th Allotted Day] – in the House of Commons at 2:32 pm on 4th February 2015.

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Photo of Dawn Primarolo Dawn Primarolo Deputy Speaker (Second Deputy Chairman of Ways and Means) 2:32 pm, 4th February 2015

I advise hon. Members, both Front Benchers and Back Benchers, that there are under two hours for this entire debate. I will do my best to make sure that everybody gets in. Depending on the length of the opening speeches, there will be a time limit, which I will let the House know as soon as I can.

Photo of Chuka Umunna Chuka Umunna Shadow Secretary of State for Business, Innovation and Skills 2:43 pm, 4th February 2015

I beg to move,

That this House
believes that more high-quality apprenticeships are essential to the future prospects of young people and future success of the economy;
notes with concern that the number of 19 to 24-year-olds starting an apprenticeship has fallen by 6,270 in the last year, that 24 per cent of these apprentices are receiving no formal training, and around one in five are not receiving the appropriate minimum wage;
calls on the Government to institute a ten-year national goal to grow the number of apprenticeships for young people and boost the standing and value of technical and vocational education so that the same number of young people that go to university undertake a high-quality apprenticeship;
and further calls on the Government to use the money it already spends on procurement to require suppliers for large Government contracts to offer new apprenticeship opportunities, safeguard apprenticeship quality with new standards so that all apprenticeships are at at least level three and last a minimum of two years, ensure Government plays its part by creating thousands more apprenticeships in the civil service, give city and country regions a role by devolving money for adult skills and give a central role to business through sector bodies to drive up standards and increase apprenticeship places.

I note what you have said about time, Madam Deputy Speaker. I shall try not to drone on for too long.

I want to put this debate in context. It is not simply a debate on apprenticeships. The issue of apprenticeships is central to a wider debate about our economy and whether it is fit for purpose. The changing nature of the world is full of opportunity for Britain. Technology is transforming the way we live. New emerging economies with ballooning middle classes are providing a mass of opportunity for our businesses, but these forces of change are also bringing challenges: how do we deliver the goods for our people when the uncertainty which follows from all this creates insecurity for many?

As I have said before, the answer is to shape these forces of change and do all we can to ensure that everyone can access the opportunities available—in short, to ensure that everyone is connected to the new global economy and has a stake in the future. That requires an economy producing good, decent jobs that are fulfilling, afford a level of dignity, respect and security, and, above all, pay a wage that people can live off. Sadly, that vision is but a dream for too many in Britain today. Under the current Government, average wages have fallen by £1,600 a year on average. They have fallen by more than £3,200 in my constituency. Almost 5 million people are not earning a wage that they can live off. We are seeing rising insecurity, with 1.4 million zero-hour contracts. There are 3.5 million people in work who say they want extra hours.

As a result of all this, our fiscal deficit remains stubbornly high at £91 billion. The Office for Budget Responsibility was clear in its autumn outlook published with the autumn statement that the Government have failed to meet their two fiscal mandates in this Parliament because stagnating wages have led to a fall in national insurance and income tax receipts. However, the living standards crisis that I refer to and the persistence of the deficit are symptoms of a bigger problem: the failure of Government to help raise productivity across our economy.

Sure, Britain leads in aerospace, the automotive industry, business services, chemicals, the creative and digital industries, food, green tech and pharmaceuticals, among other industries. We should celebrate the success in these sectors, but across the economy overall, the gap between UK productivity per hour worked and the rest of the G7 grew to 17% in 2013, the largest difference since 1992. So on average it now takes a British worker until the end of Friday to produce what a German or French worker has finished before they clock off on Thursday.

Photo of Jonathan Djanogly Jonathan Djanogly Conservative, Huntingdon

I am sure the hon. Gentleman will want to remark on the success in my constituency under this Government, with apprenticeships doubling to 1,500 a year. It is not just a matter of problems; it is also a matter of dealing with success. In many parts of the country where there is high growth and unemployment is falling—in Huntingdon it has fallen to 1%— we need better training so that employers can invest in their staff to deal with the lack of skills that exists as our economy improves.

Photo of Chuka Umunna Chuka Umunna Shadow Secretary of State for Business, Innovation and Skills

I agree that quality is important, but apprenticeships in the hon. Gentleman’s constituency have fallen by 11%. Many apprenticeships are not the high-quality apprenticeships that I think he refers to. Many of them are level 2.

There has been much debate in economic circles as to why we have gone backwards on productivity so fast under this Government. People have pointed to the lack of business investment, which is compounded by the problems that businesses have faced in getting access to finance, but skills shortages in our economy are also holding Britain back. Too many young people in particular do not have the skills our businesses require when they leave secondary education, and even among those who do have skills and qualifications, there is a mismatch between their skills and the demand for technician-level competency, particularly for jobs requiring people with science, technology, engineering and maths skills—the STEM skills.

To address this we need a major expansion of high-quality vocational and technical education, in particular apprenticeships for young people, offering more and better work-and-train opportunities in all sectors of the economy, giving them those skills which employers say are lacking.

Photo of Jake Berry Jake Berry Conservative, Rossendale and Darwen

On the number of apprenticeship starts in the hon. Gentleman’s constituency, will he comment on the fact that in 2010, 340 people started apprenticeships and last year 880 people started them. Why does he think the number of apprenticeships has doubled in his constituency?

Photo of Chuka Umunna Chuka Umunna Shadow Secretary of State for Business, Innovation and Skills

I will explain the numbers shortly. The number of young people on apprenticeships in my constituency has fallen by 18%, and in the hon. Gentleman’s constituency the number of apprenticeships overall has fallen by 18%.

Photo of Jonathan Djanogly Jonathan Djanogly Conservative, Huntingdon

On a point of order, Madam Deputy Speaker. The hon. Gentleman said that the number of apprenticeships in my constituency had fallen, but I am looking at the House of Commons published figures—

Photo of Dawn Primarolo Dawn Primarolo Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. Mr Djanogly, you are continuing the debate; that is not a point of order for the Chair. We are pressed for time, and we need to make sure we hear the opening speeches from both sides and have the debate. You have not indicated that you want to speak, whereas others have. We need to get on to the debate, so I call Chuka Umunna.

Photo of Richard Graham Richard Graham Conservative, Gloucester

I seek the hon. Gentleman’s thoughts on three quick points—

Photo of Dawn Primarolo Dawn Primarolo Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. Sit down please, Mr Graham. This is not the opportunity to make three quick points—it is an intervention. [Interruption.] No, I am going to be really strict on this. You wish to speak in this debate as well, and I am doing my best to protect time for Back Benchers. The convention of an intervention is: one point relevant to the point being made. So not three points, but one, thank you.

Photo of Richard Graham Richard Graham Conservative, Gloucester

Thank you, Madam Deputy Speaker. My one point is simply to ask the shadow Business Secretary whether he has considered what the impact of 2 million apprentices is on the wages of the lower earners, and whether it is not natural that a substantial increase in the number of apprenticeships will lead to more people not earning quite as much as they will in the future when they are better trained.

Photo of Chuka Umunna Chuka Umunna Shadow Secretary of State for Business, Innovation and Skills

I thank the hon. Gentleman for his one intervention. I will come on to deal with pay and the 2 million figure he gives, but first I will give way to my hon. Friend.

Photo of Andrew Gwynne Andrew Gwynne Shadow Minister (Health)

May I thank my hon. Friend for the support that he and the Labour Front-Bench team gave to my private Member’s Bill in the previous Session? The Government talked it out, and does he not think that that was a wasted opportunity, because for every £1 million of capital investment in public procurement, we could have secured an additional apprenticeship?

Photo of Chuka Umunna Chuka Umunna Shadow Secretary of State for Business, Innovation and Skills

My hon. Friend is absolutely right about that. I congratulated him at the time on his Bill, and we should continue to remind this House of the efforts that were made then and the wasted opportunity to which he refers. The reason he introduced that Bill was clearly because he read the OECD’s review of vocational education and training, which found that few countries achieve strong engagement in vocational education and training without a strong apprenticeship system. Now, that will not automatically happen on its own. Government must play an active role, not in a top-down, command-control fashion, but by using their convening power in an enterprising, entrepreneurial way, working in partnership with business to address the problem and to increase productivity. Before I explain how we aim to achieve that and consider what the Government have done during this Parliament, when I will touch on that 2 million figure, I want to say something about our record, because I am sure it will be referred to.

I accept that when Labour left office there was an outstanding need to increase the number and improve the quality of apprenticeships in our country, but before Government Members get too excited, I should say that it would be wrong to claim we did not make any progress. In government, we more than quadrupled the number of apprenticeship starts from a woeful 65,000 under the previous Major Government in 1996-1997 to 280,000 starts in our final year in office. Apprenticeships were simply not on the radar when we entered office; they were very much on the radar when we left office. We used the weight of government to begin the culture change we need. So from the 2012 Olympics to Building Schools for the Future projects up and down the country, we linked the creation of apprenticeships to public procurement across a number of Departments. We set up a dedicated National Apprenticeship Service to support and expand apprenticeships. I speak to many young people who tell me that they were signposted to the apprenticeship they are now doing by visiting the service’s website. Of course, it was also Labour in government that established national apprenticeship week in 2008, and the week is now an annual event in the national calendar. I am proud of our record. I am proud that this Labour party rescued apprenticeships from the scrapheap.

The current Government have sought to build on the foundations we put in place. They say that since we left office they have overseen the creation of 2 million new apprenticeship starts, and the hon. Member for Gloucester referred to those. I do not think there is any point boasting about numbers if the apprenticeships are not of sufficient quality. I will come to that in a moment, but first let us look at their claimed numbers. How many of the 2 million apprenticeships are really new apprenticeships and how many have emerged as a result of rebadging—in other words, re-labelling existing work a person is already doing in the workplace as an apprenticeship? A very large proportion of additional apprenticeship places created by this Government have come in the post-25 age brackets. The largest percentage rise in apprenticeships under this Government has actually been among the over-60s, where the increase has been 520%. According to the 2014 apprenticeship pay survey, 93% of adult apprentices already worked for their existing employer before starting their apprenticeship. That would suggest that many existing training schemes, such as those delivered under the old Train to Gain programme, have simply been rebadged and re-labelled as apprenticeships.

That is the situation on apprenticeships for adults. The shortage is perhaps most acute among young people, so what is happening to apprenticeships starts there? The number of 19 to 24-year-olds starting an apprenticeship has fallen by more than 6,000 in the past year. In fact, the number of 19 to 24 apprenticeship starts is currently falling in every single region outside London. Overall, the share of apprentices who are under 25 has fallen from 84% in 2009-10 to 64%, and the share of apprentices who are under 19 has fallen from 43% in the last year of the Labour Government to 28% under this one. So the simple fact is this: for all the boasts, there has been some jiggery-pokery with the numbers. The bottom line is that we need many more apprenticeships and we need to raise employer demand for them. Half our large employers do not offer any apprenticeships at all in Britain today—that is totally unacceptable. As my right hon. Friend Mr Byrne, the shadow skills Minister, has said previously, when it is harder to get an apprenticeship with Jaguar Land Rover than it is to get into an Oxford college, it is pretty obvious that more needs to be done.

The numbers are one thing, but I said that I would say something about quality. In most other northern European countries apprenticeships are level 3 qualifications lasting between two and five years, and they include at least one day a week of off-the-job learning, as well as significant on-the-job training. In England, most of the growth of apprenticeships in recent years has been at a level that would simply not be recognised in those countries. Just 35% of our apprenticeships are at level 3 or above, and just 2% are at level 4. In fact, according to the Department’s own figures, published in its apprenticeship pay survey, one in five apprentices does not even receive any formal training at the moment. The figure increases to almost a quarter of those in the 19 to 24 age bracket, who are not being properly trained. If we truly want to ensure more parity of esteem between the academic and the non-academic—between the way people view university degrees and the way they view these types of vocational and technical qualifications—how can we hope to do that when they are not of sufficiently good quality? We have got to raise standards. Even where apprentices are receiving training, far too many of them are still not receiving the appropriate minimum wage—15% are paid below the appropriate national minimum wage, with the figure rising to 20% for 19 to 20-year-olds.

I will come on to address how we intend to encourage more private sector employers to provide more and better quality apprenticeships appropriate to their needs, but surely government, as one of the biggest employers in the country, should be setting an example, both in recruiting as many apprentices as possible and in providing good-quality apprenticeships. The civil service apprenticeship scheme hired just 200 apprentices in 2014. That is 200 out of more than 400,000 civil servants, which is just not good enough. Never mind the Departments themselves, Government should be doing more in this area. They should use their clout as a procurer of goods and services to get more employers in the private sector to provide apprenticeships.

Our Labour colleagues in local government have already been leading the way in utilising procurement to boost apprenticeship numbers. Newham, Knowsley, Sheffield and Manchester have all developed strategies to use procurement contracts to create apprenticeship opportunities for young people locally. Central Government should do the same, as those opportunities are simply not happening to the degree and on the scale required.

Photo of Bill Esterson Bill Esterson Labour, Sefton Central

My hon. Friend makes the point about the importance of using the procurement system and Government money to drive improvement in apprenticeships. Does he agree that we need do that all the way through the supply chain so that smaller businesses, and not just larger ones, can and do take on apprentices?

Photo of Chuka Umunna Chuka Umunna Shadow Secretary of State for Business, Innovation and Skills

We should do everything that we can to encourage all businesses to take on apprenticeships. We need to be mindful of the fact that sometimes that can be a bit more challenging for smaller businesses, and we should think how we can better support them to take on apprenticeships. It seems to me that, if there were fewer frameworks and more sector-driven apprenticeship frameworks, we could make the system less bureaucratic. But, absolutely, we should do as much as we can to make it easy for businesses to take on apprentices.

Photo of Jake Berry Jake Berry Conservative, Rossendale and Darwen

On a point of interest, I have recruited an apprentice to work for me in my parliamentary office. When the hon. Gentleman says that we should do all that we can to recruit apprentices, I just wondered whether he has done so himself.

Photo of Chuka Umunna Chuka Umunna Shadow Secretary of State for Business, Innovation and Skills

My hon. Friend Steve Rotheram says that he has. I have not been able to because I am right up to my limit on my staff allowance, but I would very much like to. One challenge in representing an inner-London seat is the amount of casework that is involved, but I would love to take on an apprentice if we could all convince the Independent Parliamentary Standards Authority to provide us with more money to do so.

I have talked about what our record was and what this Government are doing, but what do we plan to do in the future? At the Labour party conference in 2014, my right hon. Friend the Leader of the Opposition outlined our ambitious six national goals for Britain in 2025, which included ensuring that as many school leavers go on to apprenticeships as go to university. That will require a dramatic increase in numbers. To achieve that, we will work in partnership with employers to ensure that apprenticeships are appropriate to their needs, which in turn will boost employer demand for them.

We will give employers, through sector and industry bodies, a greater role, ensuring that courses reflect their skills needs and that rigorous standards are set. The aim is for a skills system that is better aligned to the needs of employers and that delivers a pipeline of talented employees. We will also look to boost take-up by employers locally, which is best done by colleagues in local government working with their businesses locally and by those coming together to form combined authorities. We need to see more of such practice. Just look at the incredible progress that has been made by the Labour-run authority in

Leeds under the leadership of Sir Keith Wakefield. The city’s new apprenticeship hub has doubled the number of apprentices in the city, especially among small and medium-sized businesses. Labour colleagues in Plymouth, Bury and Reading are actively engaging with local employers to boost apprenticeship opportunities, too, and we want to see lots more of that.

Alongside such practice, we would use the money that the Government already spend on procurement to require major suppliers on Government contracts to offer new apprenticeships. In that way, we can create thousands of new apprenticeship opportunities. That builds on the successful approach of the previous Labour Government. It is an approach that has been backed by the cross-party Business Innovation and Skills Committee, which has suggested that a minimum of one new apprenticeship place could be created for each £l million spent on public procurement. So a major project such as HS2 could, under Labour’s plans, lead to the creation of as many as 33,000 new apprenticeships.

As I said earlier, quality matters. Under Labour’s plans, all apprenticeships would last a minimum of two years and be level 3 qualifications to safeguard the trusted and historic apprenticeship brand, which has been tarnished in recent years. Those new rigorous standards would ensure that apprenticeships are, once again, a trusted gold standard and address the way that they have been downgraded under this Government.

We were attacked for setting high standards by the Deputy Prime Minister in a frankly embarrassing and cack-handed response by him at Deputy Prime Minister’s Questions last March. He lambasted us for apparently wanting to halve the numbers of apprenticeships by requiring that all apprenticeships be set at level 3 and last for at least two years. The truth is that we want to rename intermediate apprenticeships to protect the “apprenticeship” brand. Apprenticeships that do not currently meet the criteria will continue but under a different name.

The Deputy Prime Minister also got very excited about the use of the word “deadweight” in the independent report into apprenticeships that was produced for us. Chaired by the Institute of Education’s Professor Chris Husbands, the report recommended that we adopt those criteria. What the Deputy Prime Minister failed to notice when he got himself so excited about the use of the word “deadweight” is that the Business Secretary had published a report in 2012 with the title “Assessing the Deadweight Loss Associated with Public Investment in Further Education and Skills.” Clearly, the sooner the Business Secretary successfully carries out his coup of his party, the better.

Photo of Stephen Lloyd Stephen Lloyd Liberal Democrat, Eastbourne

Does the hon. Gentleman agree that a key reason for retaining level 1 as an entry for apprenticeships, is that apprenticeships offer an opportunity for lots of young people who do not have the education or the academic skills? If we do not let them in through a level 1, they will not have the opportunity to go up the apprenticeship ladder. That is a profoundly important point.

Photo of Chuka Umunna Chuka Umunna Shadow Secretary of State for Business, Innovation and Skills

I am talking about not doing away with the qualifications of levels 1 and 2, but calling those levels something different and maintaining the badge of quality for apprenticeships by having them at level 3 and above. That will bring us in line with many other European countries.

Photo of Steve Rotheram Steve Rotheram Labour, Liverpool, Walton

My hon. Friend is absolutely right about protecting the apprenticeship brand. Level 1 is a pre-apprenticeship entry qualification. Levels 2 and 3 are recognised by the industry. A person cannot go on to a building site with a level 1, but they can with levels 2 and 3.

Photo of Chuka Umunna Chuka Umunna Shadow Secretary of State for Business, Innovation and Skills

I agree with my hon. Friend.

I have already talked about compliance with the national minimum wage. To tackle non-compliance and non-payment, Labour would give local authorities new powers to investigate and enforce the minimum wage. Hopefully, that will reduce the 15% of apprentices—[Interruption.] There will be headlines about how I cannot pronounce the word “apprenticeship”. Perhaps I should go back to school myself, but, to be honest, people mess up my name all the time. But, yes, we should be giving local authorities more of a role in identifying companies that are not complying with the requirements under the national minimum wage regulations.

Finally, we will make it very clear that we expect Departments across Government to provide apprenticeship opportunities. If we are elected in 91 days’ time and I am given a job by Prime Minister Miliband, I will be working with colleagues in the Labour Cabinet to ensure that we increase the number of apprenticeship opportunities across Whitehall.

I am mindful of the time, Madam Deputy Speaker, so I will conclude. I do not think that there is a huge difference in views across the House, but it all comes down to competent, determined delivery of policy across Government. We are determined, across all Government Departments, to do all we can to reform and grow our economy. The provision of more and better quality apprenticeship is a key part of that and will help us to ensure that more people can achieve their aspirations and dreams. It is for that reason that I commend this motion to the House. I am clear that there is only one thing to do this May and that is to vote Labour.

Photo of Vincent Cable Vincent Cable The Secretary of State for Business, Innovation and Skills 3:09 pm, 4th February 2015

I am delighted that the Opposition have chosen apprenticeships as the topic for this debate. The motion’s opening line is an admirable statement of what we are trying to do:

“That this House believes that more high-quality apprenticeships are essential to the future prospects of young people and future success of the economy”.

“Hear, hear” to that. It offers a good definition of what the Government have been doing: the number of apprenticeships has doubled from just over 1 million to 2 million over this Parliament, and as Mr Umunna has emphasised quality, I should say that the proportion of advanced and higher apprenticeships and longer apprenticeships has risen systematically as a result of our reforms.

We are therefore very comfortable debating apprenticeships. Indeed, the only subject that we would be more comfortable debating is job creation, which I think the Opposition have chosen for next week—the hon. Member for Streatham is very brave. I was trying to understand their thought processes in approaching the question. I suspect that they said to themselves, “Well, the Government actually have a pretty good record on all this stuff, so let’s try to find a negative number to debate. It doesn’t matter what it is, so long as it’s negative.” They did find a negative number. In 2013-14, for one year, and for one age group, there was a slight reduction—4%—in the number of apprenticeship starts. That fact is quite correct, but the argument built around it is utterly specious.

Let us look at that age group—19 to 24-year-olds—because it tells a good story about what has actually happened. I do not want to dismiss older apprenticeships, as the hon. Gentleman did, because many of them are extremely valuable in raising the productivity of the labour force. The time series gives us a good analysis of what has happened during our time in office. In the year before we came into government there were 114,000 apprenticeship starts for that age group, and in the last year for which we have records, 2013-14, the figure was 159,000, which means there was a 40% increase in the age group he defines as the most important. As has already been pointed out to him, there has been a 60% increase in Streatham, and a 75% increase in Hodge Hill.

The number of starts is one way of measuring apprenticeships, but in some ways participation is a better measure, because it captures the benefits of longer apprenticeships and fewer drop-outs. The situation with participation is even stronger. It suggests that over that period the numbers grew from 210,000 to 309,000, which is a 46% increase. Overall, participation in apprenticeships grew by 73%, and for advanced apprenticeships—level 3 and above—participation has grown by 90% under this Government.

Photo of Liam Byrne Liam Byrne Shadow Minister (Business, Innovation and Skills)

I thank the Secretary of State for giving way; he is being characteristically generous. I am glad that he has focused on the fall in the number of apprentices under the age of 25. Does he think that that trend can be reversed with the budget that the Chancellor has set out for his Department, as implied by the fiscal path for the years ahead? He knows as well as I do that if the science budget is protected, that implies a 44% cut for the Department. Does he think that it will be possible to reverse the fall in the number of apprentices with that kind of settlement?

Photo of Vincent Cable Vincent Cable The Secretary of State for Business, Innovation and Skills

It is certainly possible, as I think we shall see when we get the 2014-15 figures. I agree with the right hon. Gentleman that we should be investing more in apprenticeships, not less. That is certainly my clear objective. He might not have noticed, but the autumn statement included a commitment to £40 million extra for higher and advanced apprenticeships over the next two financial years, so we have every reason to be optimistic about achieving continued growth.

The figures I have cited, which I do not think are disputed, actually understate the improvement achieved, and for precisely the reason that the shadow Secretary of State emphasised: the necessary shift to longer apprenticeships and higher level apprenticeships. When we came into government, the share of level 1 was above 40% for that age group, and it is now only 10%.

We decided in 2012 not to include level 1 within the definition of an apprenticeship. As Steve Rotheram pointed out, that was entry level. We now call those traineeships, so there is progression. It is valuable to have level 1, but we no longer describe it as an apprenticeship. If we take out the very short courses, in particular, which tended to dominate in the earlier period, we see that the number of people in the 19-to-24 age group has actually doubled, because of the preponderance of very short courses in the apprenticeship programmes we inherited.

Let us look at the higher level apprenticeships. For level 3 the number of starts has doubled. For higher—level 4, foundation degree and above—we have seen a tenfold increase since we came into government, from 1,700, which was negligible, to 18,000. There is an important point to make about levels. I think that the hon. Member for Streatham dismissed too easily the value of level 2 apprenticeships.

Photo of Vincent Cable Vincent Cable The Secretary of State for Business, Innovation and Skills

Well, he seemed to imply that they were not quite apprenticeships. Actually, there is a lot of statistical evidence that people who do a level 2 apprenticeship and no more have significantly higher earnings than those who do not—about 11% or 12% over a three to five-year period. There are many important trades, such as bricklaying, in which a level 2 qualification offers valuable progression into a badly needed occupation. The hon. Gentleman is right that we should be moving up the level chain, which we are doing, but I do not want him or anybody else to devalue level 2 qualifications or to seek to eliminate them.

Photo of Chuka Umunna Chuka Umunna Shadow Secretary of State for Business, Innovation and Skills

I agree with what the Secretary of State is saying. I am seeking not to devalue level 2 qualifications but to bring us up to—[Interruption.] Well, Mr Graham says that we want—[Interruption.]

Photo of Dawn Primarolo Dawn Primarolo Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. Mr Graham is not taking part in this exchange. Just make your intervention, Mr Umunna.

Photo of Chuka Umunna Chuka Umunna Shadow Secretary of State for Business, Innovation and Skills

What we are proposing is to bring us up to the same benchmarks as our competitors, who are more productive than we are.

Photo of Vincent Cable Vincent Cable The Secretary of State for Business, Innovation and Skills

I hope that is a clarification that level 2 will not be removed from the hon. Gentleman’s definition of an apprenticeship, should he find himself in government. I hope that the Deputy Prime Minister is not right that this is some kind of ploy to reduce the numbers and save money.

Photo of Richard Graham Richard Graham Conservative, Gloucester

My right hon. Friend makes an extremely valid point. It is quite extraordinary that the shadow Secretary of State has not read his own motion, which states very clearly

“so that all apprenticeships are at least level three”.

What is the role for level 2? My right hon. Friend is right to question that.

Photo of Caroline Spelman Caroline Spelman Conservative, Meriden

Does my right hon. Friend share my concern about the message that Mr Umunna is sending to young people in my constituency who are studying hard right now for level 2 qualifications, and about the message he is sending to the colleges and staff who are working hard to ensure that they have the sorts of relationships with employers that can make that happen? Should he not think more carefully about what he says?

Photo of Vincent Cable Vincent Cable The Secretary of State for Business, Innovation and Skills

The right hon. Lady is absolutely right. Level 2 qualifications are valuable in themselves, as she rightly emphasises, but they are also part of a progression route. Many people who do a level 2 qualification take a break before going back and doing a level 3. I hope that we have now clarified that level 2 is a part of apprenticeships.

Photo of Steve Rotheram Steve Rotheram Labour, Liverpool, Walton

With regard to proper apprenticeships, it depends on what a person’s qualification is on entry. With a lower qualification threshold, they would do a national vocational qualification level 2, on the way to doing an NVQ level 3. It is not either/or; it is part of an apprenticeship.

Photo of Vincent Cable Vincent Cable The Secretary of State for Business, Innovation and Skills

That is very helpful. The hon. Gentleman clearly speaks from experience and knowledge, and we respect that.

The figures are very clear: we have seen a big increase in volume and a big increase in quality. That did not happen by accident. It is important to talk through the constraints on the public finances that I inherited, and on which the hon. Member for Streatham elaborated with regard to the problems that will face the next Government. When I came into office, I was told that the previous Government had planned to cut the Department’s budget by 25% had they returned to office. That was clear and explicit. Indeed, we have had to confront that in office. Let us be clear that it would have been no different had he been doing my job.

The Department’s budget is dominated by two items: higher education, including teaching and student support, and adult skills. There are other, smaller items such as industrial support and science. We were therefore faced, in office, with some very painful and difficult decisions. The advice I got from the Opposition, in a particularly shrill and angry way, was that we must give priority to university undergraduates—future graduates. We did the calculations and found that had we followed the advice from the Opposition, and had we introduced the policy that I think—it is not totally clear—they are now considering introducing on tuition fees, we would have had to cut the adult skills budget by about 40%. Within that, we would have had to cut apprenticeships by even more, because, being of higher quality, they are more expensive than other forms of training. Apprenticeships, which the hon. Gentleman described as growing steadily throughout the time of the Labour Government, as they did, would have been emasculated as a result of the public spending cuts that I think his party would have made had it been in government, and that I was being advised to make.

I then made a decision, which I think was one of my better ones, to listen to the advice, to reject it, and to do the exact opposite. We took a serious political hit on higher education, but we did the right thing in ensuring that universities were properly funded and that we got a fair repayment system. We also made the decision to invest more, not less, in apprenticeships. That is how we have got to where we are, with not only the volume but the quality. That is because we followed up getting the volume by taking short apprenticeships of below one year out of the system; by significantly supporting advanced and higher level apprenticeships; and, perhaps most importantly—the hon. Gentleman did not mention this at all—by introducing employer ownership through giving business a greater say in how these funds are allocated. In all those ways, we have improved quality.

Let me deal with some of the other critical comments in the hon. Gentleman’s speech and motion. First, he quoted the figure, as he did when he was on television with me the other day, regarding what he calls the lack of formal training—[Interruption.] Indeed, there was a survey that suggested that some apprentices—

Photo of Vincent Cable Vincent Cable The Secretary of State for Business, Innovation and Skills

There were a substantial number of surveys; I am quoting the one that the hon. Gentleman has highlighted.

Photo of Vincent Cable Vincent Cable The Secretary of State for Business, Innovation and Skills

We have published a survey in which 24% of apprentices said that they had not received formal training. The hon. Gentleman has built his criticism around that.

Photo of Vincent Cable Vincent Cable The Secretary of State for Business, Innovation and Skills

I am not disowning the report; it clearly exists. [Interruption.] Perhaps the Opposition could be a little less silly and just try to follow the argument. The key is in the word “formal”. Many people do good apprenticeships in business that involve informal work in the workplace, and many people define good training in that way. The survey that we conducted, which the hon. Gentleman is having a little giggle about, tells us very clearly that 90% of those trainees are satisfied with their apprenticeships, while 72% are very satisfied. Ninety-seven per cent. said that they had been trained—sometimes informally, sometimes formally—and 90% got a job. Perhaps most crucially, there is a very high earnings premium. I have quoted the figure for level 2, and for level 3 it is significantly higher—about 16% three to five years after graduation. The proof of the pudding in is in the eating: these apprenticeships do provide satisfaction, jobs and higher salaries for the people who do them.

Let me address the minimum wage. The survey shows that 15% of people are not being paid the minimum wage. That figure is clearly too high, and unacceptable. The motion says that it is “one in five”. I am not sure who did the maths on this, but one in five is not 15%. Perhaps we need compulsory maths for Opposition Front Benchers as well as apprentices. The key point is that 15% is way down on the 30% figure that we inherited. As the hon. Gentleman knows, because he has been part of these debates during the past year, we have significantly improved enforcement measures. We have increased penalties from £5,000 per firm to £20,000 per person, we have introduced naming and shaming, and we have increased the enforcement budget by 30%.

We do take the minimum wage seriously. We believe that it must be enforced and that it should apply to apprentices as it should to anyone else.

The hon. Gentleman is right that procurement is a lever for the public sector to employ. We already have many examples of good practice in public sector procurement. Crossrail is a company that has really committed itself to high levels of apprenticeships. There are a couple of practical problems, as I hope he recognises; I think he hinted at one of them. First, for small and medium-sized enterprises and social enterprises, where we are trying to increase the share of public procurement, there is a conflict of objectives. Do we regard getting SMEs into procurement as more important than increasing their number of apprenticeships? There is no clear answer to that. Secondly, companies that are required to introduce apprenticeships would simply add that to the cost and it would be passed on to the public sector, so instead of a direct subsidy through our 50:50 payment system we would be providing indirect subsidies. These are not crippling objections. We need to reflect on how we can better use public procurement, but crude legislation and compulsion is probably not the best way. I accept that public procurement is a good vehicle, and we have to work on this.

Photo of Bill Esterson Bill Esterson Labour, Sefton Central

I agree that it is a real challenge, given the current situation, to enable more SMEs, particularly the smallest businesses, to take on apprentices. Does the Secretary of State agree that countries such as Germany have cracked this problem over many years, and that there are things we can apply from Germany and elsewhere to achieve the goal of getting more small businesses to take on apprentices?

Photo of Vincent Cable Vincent Cable The Secretary of State for Business, Innovation and Skills

The hon. Gentleman is right. There is a German model that seems to work for that country, and Austria is another example. Their approach is different from ours, but it has given them consistently high levels of skills in manufacturing industries, in particular. We should learn from that. There is an element of compulsion and levying that we have moved away from in the UK. However, I am certainly happy to learn from Germany on this and other things.

Photo of Andrew Gwynne Andrew Gwynne Shadow Minister (Health)

There are also some very good examples here in England. May I commend to the Secretary of State the work of Labour-controlled Tameside council, which covers part of my constituency, and which has established a local apprenticeship company from which SMEs can draw down apprentices, even though the local authority is running the company?

Photo of Vincent Cable Vincent Cable The Secretary of State for Business, Innovation and Skills

Yes, I believe there are lot of good models of that kind, and I commend the one that the hon. Gentleman mentions.

That leads on to another issue that the shadow Business Secretary raised—devolution and how we capture decision making to a local level. He is right that we should have as much devolution as possible. That is what we are trying to do through the city deals and the local deals. There are many good models. Leeds is one, and Manchester is also getting off the ground. Sheffield is pioneering a lot of the local-level commissioning of apprenticeships that is particularly good for getting through to SMEs.

Devolution is not simply about local government or LEPs. One thing we had to do when I came into office was strip away some of the bureaucracy governing further education colleges as leading providers. We had to greatly simplify a very bureaucratic top-down system. Devolution is also about devolving to companies, and one of our major initiatives—employer ownership schemes and the trailblazers, which set industry-level standards—has reduced bureaucracy for small companies and helped them at industry level to formulate standards that they can use. Devolution is not just about local government.

Photo of Robin Walker Robin Walker Conservative, Worcester

Does the Secretary of State agree that LEPs can be great champions of apprenticeships when they have been given the power to do so? Today, the Worcestershire LEP announced that the ambitious target it set itself of having 10,000 people participating in apprenticeships in the county by 2015 has already been achieved. Is that not an example of how by using the existing structures in our existing counties, rather than creating artificial regions, we can drive forward apprenticeships and skills?

Photo of Vincent Cable Vincent Cable The Secretary of State for Business, Innovation and Skills

That is one of the examples. The LEPs have demonstrated the success of devolution and there are many other models. I know that my hon. Friend Stephen Lloyd has done brilliant work locally by simply working with local colleges and local authorities. There are many local examples and that is what we should be trying to achieve.

I know that you want to bring more people into the debate, Madam Deputy Speaker, so let me make two points in conclusion.

Photo of Liam Byrne Liam Byrne Shadow Minister (Business, Innovation and Skills)

Before the Secretary of State concludes, will he update the House on the potentially quite sweeping changes to how we fund apprenticeships in this country? The Minister for Skills and Equalities’ predecessor launched a wide-ranging consultation on direct payment through the PAYE system, but on 13 January the Minister of State, Department for Education, Mr Gibb, told the House that the process was in a state of suspended animation and that no further reform would be made. Will the Secretary of State tell the House this afternoon what on earth is going on?

Photo of Vincent Cable Vincent Cable The Secretary of State for Business, Innovation and Skills

Our objective is to try to make the system of employer ownership much more extensive. We have had great success with our pilots and are anxious to extend the system. Different models have been canvassed and there has been a ministerial statement describing very clearly where we are. We are keen to do this in a way that creates incentives rather than disincentives for small businesses. The right hon. Gentleman is quite right that we are not rushing into a scheme prematurely, but are consulting. That is exactly what Governments do, and when the Government are returned, if I am still in this post, I am sure that we will see a lot of action in that area.

Let me make my two concluding points. First, the shadow Business Secretary mentioned the importance of the status of apprenticeships. That is absolutely right. For far too long we have had a two-tier system under which supposedly clever people went to university and those who failed went on to vocational courses. We need to break that down. It is being broken down and there is a change in perception. A recent survey suggested that 57% of parents are willing to recommend an apprenticeship course to their children. Many of them can see the economic advantages of such a course and the status is changing.

The big issue is the one the shadow Business Secretary started with. I agree that for the sake of the economy we need significantly increased investment in people and skills. The figure we have in the Department is that every £1 million invested in apprenticeships yields an £18 million return to the economy. It is essential that we extend rather than contract the number of apprenticeships. We have a proud record of doing that and I want to see it continue.

Several hon. Members:


Photo of Eleanor Laing Eleanor Laing Deputy Speaker (First Deputy Chairman of Ways and Means), First Deputy Chairman of Ways and Means

Order. It will be obvious to Members that there is little time left in the debate and that many people wish to speak. We will therefore have a five-minute time limit on Back-Bench speeches.

Photo of Adrian Bailey Adrian Bailey Chair, Business, Innovation and Skills Committee 3:32 pm, 4th February 2015

Although I am speaking in part about an inquiry by the Select Committee on Business, Innovation and Skills that took nine months and made many recommendations, I shall try to keep my comments within the time limit.

I welcome the debate and the cross-party agreement on the importance of apprenticeships and the skills agenda. I find the concentration on figures and party-political point scoring, shall we say, about the number of apprenticeships supremely unhelpful in determining our skills needs and how we will meet them. The Government, to their credit, have been prepared to invest £1.6 billion in apprenticeships in the past financial year, but we have seen a fall in the number of starters. Notwithstanding the substantial increase in the number of apprenticeships overall, we know that the increase has been much lower in construction and engineering apprenticeships, which are incredibly important in the development of our economy.

If we take the education system as a whole and add in the money we put into the apprenticeships programme, we see that we are investing a huge amount of money but are not addressing the skills imbalance in the economy. I will single out two crucial areas in which we need to improve our performance if we are to address the problem. The first area is the education system, particularly the careers service in schools. Much has been said about parity of esteem, and I welcome the concentration by my hon. Friend Mr Umunna on reinforcing the status of apprenticeships, which is absolutely vital if we are ever to change the mindset in schools. If I have time, the second area on which I will comment is engagement with small businesses, but I will first talk about schools and the culture in the education system.

When the Committee visited Sheffield, it came across a very bright apprentice who had been offered a university place at school, but was virtually ostracised when he told the school that he would take an apprenticeship; he was not even invited to the school’s end-of-term event. That experience is reflected more widely. The

Edge Foundation has said that 26% of those surveyed had been actively discouraged from becoming apprentices. I do not blame schools or teachers, because they are delivering on an agenda set by the Government. If the Government want to change the situation, they must set the agenda on Ofsted and monitoring to ensure that vocational training receives the same support and promotion in the education system as universities and A-levels.

Photo of Robin Walker Robin Walker Conservative, Worcester

I agree completely with the Chair of the Select Committee. I recently held an event in my constituency for apprentices to talk to school careers advisers. One thing that came across very strongly was that apprentices and their employers told careers advisers that people expected to increase their earnings in the long run by going for an apprenticeship. Careers advisers seem to start from a natural assumption that apprentices are paid less. Does the hon. Gentleman agree that that is one of the myths we need to take on? The long-term earning potential of apprentices is often much higher.

Photo of Adrian Bailey Adrian Bailey Chair, Business, Innovation and Skills Committee

I entirely agree. For too long the careers service has been seen as a bolt-on to the educational process, as reflected in criticisms by the Education Committee and Ofsted. I am not satisfied that the guidance issued to schools in April fully addresses that issue. The ability to understand a student’s potential and to place them in the most appropriate skills setting is absolutely essential both to the individual involved and to the economy as a whole. That area of education is grossly neglected.

I want to move on briefly to small businesses. In my experience, blue-chip companies understand apprenticeships, deliver on them and play a vital role. However, our economy is dominated by small businesses—more than 90% of businesses are small ones—and it is generally recognised that that sector has the potential to increase employment. It is essential to get more small businesses to take on apprentices, but all too often they do not have the capacity, time or finances to train them in skills.

I accept that the Government have recognised the need for more employer involvement, but the latest statement on 13 January fell short of what small businesses need both in relation to the funding regime and the guidelines necessary for them to have the confidence to take on apprentices. There is a lack of clarity and too much bureaucracy, and the Government need to take a consistent approach to small businesses if we are to overcome the problem.

Photo of Maria Miller Maria Miller Conservative, Basingstoke 3:39 pm, 4th February 2015

In my constituency of Basingstoke, the number of apprenticeships this year is double the number in 2009 under the last Government. Over the past four years, there have been more than 6,000 apprenticeships—1,600 in the last year alone.

I thank all the businesses who take on apprentices and the colleges that work so hard to make apprenticeships such a success. I am sure that the Opposition spokesman, Mr Umunna, did not want to suggest that those businesses were simply rebadging existing training programmes, because that would belittle the incredible work that the many hundreds of businesses in my constituency that take part in the schemes put into making them a success.

I welcome the announcement by my right hon. Friend the Prime Minister that a future Conservative Government will make a £1 billion commitment to delivering 3 million more apprenticeships by 2020. That is the sort of commitment that businesses in my constituency want to see.

Why do I think that apprenticeships are so successful in my part of Hampshire? It is for three reasons. First, apprenticeships are part of the culture. We have one of the longest-running apprenticeship schemes in Basingstoke at the Atomic Weapons Establishment. Employers believe in apprenticeships because they have seen how they work, whether it is Fujitsu or MiniTec. Whether they are large or small, businesses have seen how apprenticeships deliver quality staff.

Secondly, businesses in Basingstoke believe in apprenticeships because we have one of the top-performing colleges in Basingstoke college of technology, which delivers hundreds of apprenticeship schemes every year in subjects as diverse as IT, web design and child care. Such organisations are leading the way, and we should be celebrating them today.

The third element, which was picked up on by my hon. Friend Mr Walker in his intervention, is the role of local enterprise partnerships. My local LEP, Enterprise M3, put apprenticeships at the heart of its skills and employability strategy that was published two years ago. It is that leadership and commitment, which has come right from the top, that has helped us to secure so much support, particularly through growth deal funding, which has supported the establishment of key skills centres right across the LEP. That is just the sort of support that we need for this programme.

I want to make three further points in the time that is available to me. First, the hon. Member for Streatham made it clear in his opening statement for the Opposition that the motion focuses on young people, and rightly so. However, he seemed very dismissive of the role of apprenticeships for older people who have been established in the work force for a number of years. He needs to consider that position more carefully. My local college delivers three quarters of its apprenticeships to people who are over the age of 18.

Photo of Chuka Umunna Chuka Umunna Shadow Secretary of State for Business, Innovation and Skills

It is entirely wrong of the right hon. Lady to describe me as dismissing apprenticeships for older people. My point is that we need to increase the numbers dramatically, particularly in respect of young people. It is totally wrong of her to misconstrue my comments in that way.

Photo of Maria Miller Maria Miller Conservative, Basingstoke

I am grateful to the hon. Gentleman for making his position clear. It was a little less clear in his speech. The teaching staff at my local college will want to hear what he has just said, because it is important that we have a lifetime approach to training for people in our work force. Training does not stop when we leave college, school or university; it goes on through our lives. Apprenticeships offer an incredibly strong way for people to increase their skills and ensure that they have a high level of employability, particularly in areas such as mine, where we estimate that 50% of the job opportunities will require a higher education qualification in the future.

Secondly, I want to focus on the quality of apprenticeships. I commend the Government for driving up the standards of apprenticeships in recent years. However, I do not think that we should devalue the importance of level 2 apprenticeships. They are an immensely valuable way of making up for lost time at school or college for youngsters—or, indeed, older people—who do not have basic qualifications. I hope that the Opposition would want to rephrase the motion, because it tends to suggest that they are devaluing level 2 apprenticeships or writing them off altogether. I would not endorse that at all.

Finally, I know that the Minister is looking at funding routes that enable employers to get involved in apprenticeships, and I would like to talk to him about the process used by the Skills Funding Agency to allocate growth funding—perhaps he will meet me separately to discuss that. Currently, the SFA requires providers to recruit additional apprenticeships and then bid for funding. Opportunities to bid for funding are every three months, but the agency does not guarantee that extra funding will be allocated in that process. Colleges and employers should work together to maximise the opportunities for apprenticeships, and we must ensure that we do not lose opportunities simply because of the slowness of the process.

Several hon. Members:


Photo of Eleanor Laing Eleanor Laing Deputy Speaker (First Deputy Chairman of Ways and Means), First Deputy Chairman of Ways and Means

Order. I am afraid I was rather optimistic with the five-minute time limit, because five minutes plus interventions becomes seven minutes. I must now reduce the time limit to three minutes, although I will be kind to Steve Rotheram as he had no warning about that.

Photo of Steve Rotheram Steve Rotheram Labour, Liverpool, Walton 3:45 pm, 4th February 2015

Like many hon. Members, in just 92 days I will have reached the end of my first term as an MP. In my mind, it is still inconceivable that I have made it from being an apprentice on a massive building site to being, well, an apprentice on a massive building site, and although my political apprenticeship is about to be completed, the Palace of Westminster is not a bad site to work on. When I walked through the gothic archway that leads to the Chamber for the first time, flanked on either side by the familiar green Benches that I had only ever seen on the telly, I thought that I would be the only brickie in Parliament. But no—not only is my hon. Friend Chris Williamson a former bricklayer, but no less than the Deputy Speaker himself is a time-served, trowel-carrying member of the building fraternity.

The Prime Minister was challenged by young people on the programme “Stand Up Be Counted”, and he said that although the apprenticeship wage is not that high, the training and experience that someone gets should lead to a good job. However, he did not say what he is doing to address the problem of wage rates. My party is right to advocate equality between an apprenticeship and an undergraduate degree, but there must be greater focus on training people for specific sectors where there is real employment growth.

The Construction Industry Training Board construction skills forecast predicts that the construction industry will need more than 200,000 entrants over the life of this Parliament. That is in part to cope with political priorities such as house building and road improvements, but also to deal with an ageing population in the work force, with many workers reaching retirement age. That means that an average of 40,000 construction workers will need to be trained each and every year. To put that in context, in the last financial year just over 1,000 apprentices completed construction apprenticeships.

Construction was hit hard by the global financial crisis and the Government’s austerity measures, and thousands of workers lost their jobs or were replaced by cheaper migrant workers. We have seen the continued casualisation of the industry, and the latest practice of umbrella companies top-slicing workers’ wages. That is why I am proud of the campaign led by my union—the Union of Construction, Allied Trades and Technicians—to stop quick-buck merchants and unscrupulous employers from damaging the reputation of the whole industry in a way that puts off many young people from considering construction apprenticeships as an attractive employment option.

The situation is stark and a number of factors require addressing immediately. Careers advice is patchy at best, and we must get away from the perception that construction is just for low achievers. The gender imbalance is still acute. Out of the 13,500 apprenticeship starts last year, only 250 were female, and for the best part of a decade construction has not been an industry that guarantees secure employment.

Liverpool city council has a great apprenticeship model, should others be looking to replicate its success. However, unless the Government are serious about filling the considerable skills shortages that exist in the construction sector, it will be extremely difficult to deliver those infrastructure priorities and we will need to import increasing numbers of skilled workers from abroad.

I firmly believe that the Government can change the circumstances of ordinary people for the better, and if I am re-elected in a few months’ time and come back here, the Labour Government that we will form will give hope to a new generation that is looking for high-quality skills, training and employment in our costed apprenticeship programme. I hope I am returned to see it.

Photo of Jake Berry Jake Berry Conservative, Rossendale and Darwen 3:49 pm, 4th February 2015

I am sorry we have only a short time to discuss apprenticeships, which have changed my constituency massively over the last five years of this Government. In 2010, 630 under-24s were claiming jobseeker’s allowance, and in the year before the election, there were 600 apprenticeship starts. During that time of high youth unemployment in my constituency, we saw something really bizarre: both the vacancy rate and, in certain sectors, the number of unemployed people rose. It was completely counterintuitive. The reason was that young people were leaving school without the menu of skills that our local high-tech, high-quality engineering and manufacturing businesses wanted.

We have heard about the importance of encouraging smaller businesses to take on apprenticeships. I took it upon myself to visit all the small businesses in my constituency and say, “Why are you not embedding apprenticeships in your business?” In 2010-11, I found that lots of those businesses, for myriad reasons, had simply given up on apprenticeships. I visited a weaving mill in Darwen and said to the owner, “It’s fantastic to see all your looms still going”—people think we have lost our textile industry in Lancashire, but it is still going strong—“but every single person working them has white hair.” I do not mean to criticise anyone with white hair, but in 10 years, if he has not got apprentices back into his business, his highly skilled British manufacturing business will shut.

The mill owner, along with other great employers in my constituency, such as JJO plc and WEC Engineering, came together to launch apprenticeships campaigns with the simple aim of recruiting 100 apprentices in 100 days. We have now had three of these campaigns. In the first one, we recruited 160 apprentices in 100 days; in the second, we recruited more than 200; and in last year’s, we recruited more than 300. In fact, the tie I am wearing for this debate was woven by a young apprentice who benefited from one of those campaigns. It is three campaigns old and is beginning to look its age—and it gives evidence of the number of lunches I have worn it for as well.

Because businesses in my area embraced apprenticeships, we have cut by half—to just 320—the number of unemployed young people and doubled the number of apprenticeships to more than 1,100. I am grateful for the support of businesses in my area in doing this.

Photo of Gordon Marsden Gordon Marsden Shadow Minister (Transport) 3:53 pm, 4th February 2015

I congratulate my Front-Bench colleagues on tabling the motion and focusing on 19 to 24-year-olds. When I had the honour to serve on the Front Bench, one of the things I took to it from my experience in Blackpool was that 19 to 24-year-olds were a key group that must not be left out of the process. Many in that age group have missed out on chances, perhaps because of disability, caring responsibilities, lifestyle or family disruption, but theirs is a key group for progression. There is certainly good practice in respect of that age range. I think of the “build up” programme in Blackpool college, which brings many apprentices into construction; the Lancashire apprenticeships scheme; and the skills and jobs fair I held last year involving 300 young people and 40 to 50 business participants.

As we have seen today, however, the Government were slow to match their rhetoric on 19 to 24-year-olds with the statistics. Why are they failing? In part, they are failing because they made such a disastrous mistake on traineeships. Traineeships were first mooted in 2012 by the Deputy Prime Minister. The idea was dawdled over for 18 months, and then became part of a long wrangle between the Department for Work and Pensions and the Department for Business, Innovation and Skills over the definition of benefits. It had no marketing budget and no proper sell to colleges, and there was a continued failure to consult employers, as we see even today in comments in

FE Week

. The 19 to 24 age group needs to be encouraged.

This is a Government who, while lauding apprenticeships in the round, have hindered the potential to access them in detail. This perspective has constantly been undermined, as we have heard, by the lack of co-operation from the Department for Education, not least in relation to the shambles of careers advice. This Government have commissioned good reports from business people such as Doug Richard and Jason Holt, but then failed to act quickly or effectively on them. They have not listened to what businesses and business organisations have said—and none more so than on the policies of procurement, which we introduced in government with some wonderful examples such as Crossrail.

We have commissioned a trio of reports on FE, skills and apprenticeships, and we have recognised the need for mechanisms to secure a critical step change in the take-up of apprenticeships by small and medium-sized enterprises. As I pointed out when I spoke at Training 2000 at Bolton in 2012, greater connections with the supply chain about training and other things are all key mechanisms to getting things across to benefit 19 to 24-year-olds.

That is why in our devolution proposals we talk specifically about skills and apprenticeships. They offer a key role not just for local councils, but for unions and union learning fund people. In that process there must be a key role for apprenticeships in the service and creative sectors, as well as in logistics and transport. We are going to have infrastructure projects that will produce £50 billion of spend over the next few years. We need to make sure that significant numbers of apprenticeships come from that, rather than having the record of hype and disconnect between BIS and DFE, which has too often blotted out this Government’s copybook on skills, training and apprenticeships. We need a strategy of progression, which the Opposition Front-Bench team are taking forward.

Photo of Stephen Lloyd Stephen Lloyd Liberal Democrat, Eastbourne 3:56 pm, 4th February 2015

It is a pleasure to speak in the debate. The limited time available means that I shall have to circumscribe what I was going to say. First of all, I appreciate that this is an Opposition day debate, so I appreciate that the Opposition will find things that they think we have done badly, and vice-versa. However, I want to rise above that, because the most positive aspect for me is that both sides recognise that apprenticeships have gone through—possibly started by the Opposition—a transformational process. I believe that the coalition has broadly carried that on successfully, so I am hopeful that whoever are in government after the general election will keep their feet flattened down on this whole apprenticeship agenda. It has been absolutely transformational for many hundreds of thousands of people across the nation.

I was the first MP after the general election to launch 100:100. It is not just that I was optimistic about defeating my coalition colleagues in Eastbourne, but that with a business background I had a clear understanding and appreciation that when good apprenticeships are put in place, they are both tremendously successful in securing employment for those who have been apprentices and beneficial to the companies involved. We achieved 181 rather than 100; since then, more than 3,500 apprenticeships have started in Eastbourne. It has helped to lift the confidence and mood of the constituency considerably. I am sure that it is also likely to be one reason why we have come through the recession so successfully.

I pay particular tribute to Sussex Downs college, whose apprenticeship unit has been outstanding. I have worked closely with the college right from the very beginning, and continue to do so. It is running at a conversion rate, for a number of different apprenticeship sectors, of 92%. I want that in Hansard, so I refer again to a 92% conversation rate of apprenticeships into jobs. Colleagues will know that very few Government employment schemes ever run at that rate of conversation. I congratulate Sussex Downs on its apprenticeship scheme.

Finally, on the status issue, I have been working closely with a number of different groups to try to set up something called “the Royal Association of Apprenticeships”. Depending on what happens after the general election, I hope to continue to make progress on that project. I am keen to work with leading Opposition figures as well, because the status aspect of apprenticeships is crucial, and if we could put together something like a royal association and make it work, it would enhance the status and gravitas of the whole concept of apprenticeships. I think this is necessary and will provide an important part of the jigsaw to improve apprenticeships generally for long into the future.

It has been a privilege to speak. Apprenticeships have been a game changer, and I look forward to that continuing for the next 20 years.

Photo of Bill Esterson Bill Esterson Labour, Sefton Central 3:59 pm, 4th February 2015

I am glad that Stephen Lloyd mentioned the important role played by training providers in supplying the off-the-job learning that is such a crucial factor in apprenticeships. Hugh Baird college in Sefton does a fantastic job in partnership with the employers who look after the apprentices, across a range of sectors.

When I visited Michelin Tyre in Stoke a couple of years ago, I met engineers who were in their late 40s or early 50s. They were the youngest engineers in the company until a year or two ago, when the company suddenly realised that it had no way of replacing its engineers. We heard the same story from Jake Berry. Michelin now employs a number of young, high-quality apprentices, who are doing fantastic work and developing the skills that the company needs. As we have heard, that is a familiar story.

The construction industry in the north-west needs 1,500 new bricklayers and 1,500 new roofers each year. Where are those skilled jobs to come from unless we get the apprenticeship agenda right? I hear from schools in my constituency that fewer pupils are studying vocational subjects such as design and technology. Of course we need to encourage young people to go to university, but all too often we value academic learning and qualifications at the expense of vocational learning and qualifications. The culture needs to change, but I fear that we are far from reaching that point. Whether deliberately or not, we differentiate between the two, and that absolutely has to change. As I said in an intervention, it is simply not an issue in Germany, where the vocational and academic paths run alongside each other. As is implied in the motion, the technical baccalaureate is important in enhancing the status of technical education and qualifications, as well as addressing the shortage of skills in the STEM subjects.

Concern was expressed to the Education Committee about the damage caused by the reduction in the number of professional careers advisers, and the removal of work experience as an option for many young people. Businesses have told me in my constituency, as well as in evidence given to our Committee, about the difficulties that that causes in preventing young people from being exposed to the fantastic opportunity that is presented by apprenticeships.

We must increase the number of apprentices. We need to make it far easier for businesses to take them on. We also need to make apprenticeships far more attractive to young people, and to ensure that vocational qualifications and learning in this country are regarded as being of the highest standard and value. That is why the motion is so important. I hope that it is passed, so that both our young people and the country as a whole can benefit.

Photo of Neil Carmichael Neil Carmichael Conservative, Stroud 4:02 pm, 4th February 2015

I will set my remarks in the context of the successful Government industrial strategy, because it has driven the need for 83,000 additional engineers every year. I think it important to concentrate on our apprenticeship programme, which must start to fill that huge gap. The need is obvious. For example, £100 million has been invested in Airbus, in my constituency and elsewhere, to push forward the frontiers of technology, and firms in my constituency such as Renishaw, ABB, Delphi and Lister Shearing all want more engineers, because their order books are full and their export opportunities significant.

I want to make three points. First, we must ensure that the relationship between business and education improves by making it possible for business to tell education what it needs, and for education to appreciate the sheer numbers that are required in certain areas. That, of course, must include a focus on STEM subjects. Secondly, I think that further education colleges are the unsung heroes of this story. It might be worth while for us to start thinking about a kind of Russell group to include the very best FE colleges, so that they can lift themselves up, celebrate their success, and become the key deliverers of some of the apprenticeships to which I have referred.

Thirdly, we need to talk about apprenticeships in much more glowing terms than we often do, and one way to do that is to have a proper award. It is not enough just to give apprentices something from the business. There should be an award that says, “Wherever you are and whoever you are, you’ve done it and you should be proud. Here’s a certificate to salute that fact.”

Those three ideas are designed to improve what we understand an apprentice to be and to show why we value them so much. In my constituency, I try to do all these things in different ways. I established a festival of manufacturing and engineering, which is geared to ensuring that schools and business have an ongoing relationship. I salute the successful apprentices and firms who drive up standards and ensure that our real and growing economy is equipped with the skills to deliver the output and productivity we need. They are being created by various measures and by the long-term economic plan.

Photo of Richard Graham Richard Graham Conservative, Gloucester 4:06 pm, 4th February 2015

It falls on me to be tail-end Charlie in this debate on which so much consensus could and should have been reached, as Mr Bailey pointed out. We all, across the House, share enthusiasm for apprenticeships: their improvement, their widening and their breadth. Unfortunately, today that opportunity was lost in what was, frankly, a disgraceful speech by the shadow Business Secretary. His dire, tribal attempt to rubbish this Government’s—and, above all, the country’s —remarkable achievements in growing apprenticeships and shrinking youth unemployment led to a string of inaccurate and, frankly, almost offensive claims. Let me try to deal, very briefly, with some of them.

The shadow Business Secretary said that the numbers of young apprenticeships were down. The Secretary of State pointed out that they are slightly down for 19 to 24-year-olds in 2013-14. In Gloucester, however, they are still more than 80% higher than the comparable figure when the previous Government were in power, and were more than double that figure in 2012-13. Overall, apprenticeships for 19 to 24-year-olds in Gloucester are at 1,730 in the past three years, compared with 740 in the last three years of the Labour Government. The figures, however one tries to twist them, are remarkable.

The shadow Business Secretary said that many of the apprenticeships were not worth the paper they are written on. How insulting to the 5,000 new apprentices in Gloucester. He said, and it is in the motion, that level 2 apprenticeships are not worth anything at all. Let me tell the House that that is completely wrong. The evidence shows that many apprentices do a level 2 apprenticeship—for example, in business administration—for a year and then go on to do a level 3 apprenticeship in the second year. I know this to be true as the second MP to hire his own apprentice. The shadow Secretary of State admitted that he himself does not have an apprentice and I do not believe that any others on the Opposition Front Bench do. I am happy to take an intervention. [Interruption.] The shadow Minister, Mr Byrne is saying that he does have one, which is encouraging, but it is disappointing that the shadow Business Secretary does not and does not have that first-hand experience.

Photo of Jake Berry Jake Berry Conservative, Rossendale and Darwen

Very briefly, because I know we are pushed for time. On the point of MPs having apprentices—

Photo of Eleanor Laing Eleanor Laing Deputy Speaker (First Deputy Chairman of Ways and Means), First Deputy Chairman of Ways and Means

Order. The hon. Gentleman has already made many interventions. I am sorry, but we are at the end of this debate.

Photo of Richard Graham Richard Graham Conservative, Gloucester

I think my hon. Friend was going to make the point that it is important that we lead by example and employ our own apprentices wherever possible.

The shadow Business Secretary went on to talk, with an element of derision, about the number of apprentices over 60 who have started since this Government came into power. I hope that my older constituents, Age UK and others will have noted that point carefully. In fact, he offended almost everybody I can imagine, including all the businesses, training colleges, councils and the NHS in Gloucester that have taken on apprenticeships in the past five years and have done so much to give the opportunities to young people that all of us across this House surely agree is incredibly important. In a sense, his final words rather summed up his speech. He finished by saying that he will be voting Labour. Well, I am delighted for the Leader of the Opposition that he has the vote of his shadow Business Secretary, but if that is the summary of his party’s strategy, it is pretty disappointing. We heard nothing about the opportunities to widen apprenticeships into more sectors, including nursing; the opportunities from the pilot scheme the Government have run to let employers take control of their training funds; and the ways in which the guilds can offer apprenticeships. There were many things that could and should have been covered today, and it is a great disappointment that they were not. I will certainly not be voting for this motion, but I do agree wholeheartedly with all the Members of this House who support apprenticeships and want to see more of them.

Photo of Liam Byrne Liam Byrne Shadow Minister (Business, Innovation and Skills) 4:10 pm, 4th February 2015

I am not sure which debate Richard Graham was in, but he certainly constructed a few windmills of his own to tilt at. No doubt, that will be of interest to his local press in what I know will be a tight contest.

This in general has been a very good debate. It has been especially heartening to see interest across the House in driving behind a shared ambition to boost the number of apprenticeships, to close the skills shortages gaps that bedevil so much of our economy and to close the looming large productivity gap that my hon. Friend Mr Umunna alluded to in his opening remarks. The fact that there is now a 20% productivity gap between this country and the rest of the G7 is shocking, and it is going to make it very difficult for us as a country to earn our way out of the cost of living crisis into which this coalition Government have landed us.

It is simply impossible for us to raise wages in the way we want to unless we raise productivity rates and that, in turn, is going to require us to raise the level of skills in this country. As my hon. Friend said, we are very proud of our record in government in rescuing the apprenticeship programme from the Conservative Administration back in 1997. I think the grand total then was 65,000 apprentices, and we are very proud that we were able to raise that number to nearly 300,000 by the time we left office. We achieved that through some concerted policy measures, not least the creation of a National Apprenticeship Service, which was extremely successful in its short life. I am glad the current Government kept it on, although I am afraid it is now a somewhat eviscerated version of its former self.

We were the first Government to introduce a national apprenticeship week back in 2008, but crucially we learned the hard way—and it is a shame these lessons were not taken up in the way they could have been—that public procurement could be used to drive up apprenticeship numbers, and I was very pleased to see on Monday deep below Tottenham Court road the extraordinary work that Terry Morgan and the Crossrail team are undertaking there. That public procurement project has now driven about 440 new apprenticeship numbers into the system. That is a very good example of public procurement being used to increase the number of apprenticeship opportunities for our young people.

A number of hon. Members have noted with appreciation that there is a degree of consensus in this debate, and the Government did do some things that sought to build on the firm foundations left by the last Labour Government. The skills strategy published in 2010 committed to improving apprenticeship standards, and the higher apprenticeship fund was a welcome innovation, as was the money for higher apprenticeship numbers that the Secretary of State referred to in response to an intervention from me.

The question, however, is whether the scale of this Government’s ambition is anywhere near the level that is needed to get this country out of the hole into which they have put us. It has been argued this afternoon that there are four or five important areas where the Government’s apprenticeship reforms have fallen short. First, there is the question of whether there is enough training in the apprenticeships that are available today. The Secretary of State did an heroic job of defending the data his Department published, but the truth is that nearly a quarter of the 19 to 24-year-old age group do not receive any formal training, which means an apprentice in England gets under seven hours of training a week. We do not think that is good enough, and neither do the Secretary of State’s own advisers. In fact, the Doug Richard review set the target at 20% for off-the-job training each week so, on the Secretary of State’s own data and by his own measures, his Department is failing to deliver the right level of training for apprentices. That obviously has a knock-on consequence for pay. I am glad the Secretary of State acknowledged that 15% of apprentices not receiving the minimum wage was a scandal and was not good enough and more action needed to be taken to end that abuse. If young people know that an apprenticeship is something that is not properly paid and where the Government are content to look the other way when they are abused by employers, it is going to be harder, not easier, to draw young people into apprenticeships. The level of ambition in driving out low pay from apprenticeships is not good enough, and I am afraid we did not hear enough on that front from the Secretary of State this afternoon. I hope the Minister will correct that deficit when he winds up.

It is pretty clear to us that apprenticeships are currently too short. Approximately a third of English apprenticeships last under 18 months—a shortcoming compared not simply with international standards but with other parts of the United Kingdom. In Northern Ireland only 12% of apprenticeships are that short, and only 17% are in Scotland. So the Government have much further to go in increasing the length of apprenticeships just to match other parts of the United Kingdom.

The measures undertaken to increase the number of higher apprenticeships are welcome, but the truth is that only 2% of apprentices go on to degree-level skills.

There is no vocational, professional and technical path to a degree-level skill worth its name in this country, and we are absolutely determined to change that.

A number of Members rightly pointed out that underlying many of these shortcomings are problems in not just the apprenticeship system but the education system. The fact that we do not require everyone in our country to do English and maths up to the age of 18, as we recommend, is a problem. The fact that there is no gold-standard technical baccalaureate at the age of 18 is a problem. The fact that this Government have undertaken the wholesale destruction of our careers service is a problem, and the Chair of the Business, Innovation and Skills Committee, my hon. Friend Mr Bailey, and my hon. Friend Bill Esterson, were absolutely right to point the finger at that problem, which we will be determined to fix.

Our young people face the challenge of a world in which one in six of their peers is still out of work. If they want to go to university, they will graduate with a bill of £44,000—a debt that, on average, they will not pay off until they are in their 50s. Not enough apprenticeships are available to them because the numbers are going down, and nor are there a meaningful number of opportunities to take them on to degree-level skills. The fact that only 2% of apprentices go on to acquire degree-level skills is a major problem that employers, particularly in engineering and science, argue is holding our country back. Many companies are not re-shoring jobs because of the skills shortage. Mike Wright, chief executive of Jaguar Land Rover, said in an independent review commissioned by my right hon. Friend the shadow Chancellor that we are graduating only approximately half the number of engineers we need to make good the skills gap. That means that we have to transform the number of technicians coming on line each year through the apprenticeship system. Right now, the Government simply do not have plans in place to fix that balance.

The Secretary of State was sanguine about the fiscal outlook for his Department, but the truth is that if the Chancellor gets his way and the science budget is protected, the BIS budget will be cut by some 44%. The Secretary of State knows as well as I do that that is not deliverable—certainly, his civil servants do; it is not a fiscal settlement that will allow him to build the bigger, better apprenticeship system that we need.

A different level of ambition is needed. We should set a goal of sending over the next 10 years as many young people into a high-quality apprenticeship as head on to university. That is the level of ambition we need in this country, and if we are to deliver on it, we need to get several things right. First, we need to ensure that our apprentices can compete with the best in the world, which is why level 3 is the right level of ambition. Level 2 is an important step on the road to that qualification, but if we want to compete with the best in the world and close the productivity gap, we need to set our standards high, not low. We therefore need radically to expand the number of higher-level apprenticeships. That is why the Leader of the Opposition has said clearly that our priority in expanding the university system is to create thousands of new technical degrees that would allow apprentices to go on and study up to degree-level skills. Those are the kind of skills that our science-based businesses are asking for.

We need to accompany these changes with radical measures to devolve spending to city regions, which will often know their local labour market best, but above all we must harness public procurement on a completely different scale compared with the ambitions set out by this Government. That point was wisely made by the Chair of the Select Committee. I am glad that there is a shared ambition across the House on the aspiration but there needs to be a practical policy in place to deliver that aspiration, and Labour Members are determined to practise what we preach.

Photo of Nicholas Boles Nicholas Boles The Minister for Universities and Science, Minister of State (Department for Business, Innovation and Skills) (Jointly with the Department for Education) 4:20 pm, 4th February 2015

It came as a bit of a surprise to learn that the Opposition were proposing a debate on apprenticeships, because as we have heard during this excellent debate, the Government can point to a remarkable record of success in their apprenticeship programme. We heard from my hon. Friend Richard Graham that the number of apprenticeships in his constituency was 80% higher in the past year than in the last year of the previous Government, and my hon. Friend Jake Berry told the House that, through his efforts to create jobs fairs and no fewer than three apprenticeship fairs, unemployment in his constituency was now 50% lower than it was when he was elected to Parliament. We heard from my right hon. Friend Maria Miller that her local college, Basingstoke college, was keen to invest more money every year to create more apprenticeships, and I will of course be delighted to meet her and the college principal to discuss ways in which the college can bid more effectively for money in-year when it can identify ways to grow its programme.

I was particularly pleased to hear from Steve Rotheram, who brought to the debate the enormous advantage of having completed an apprenticeship himself. I have no idea why he chose to give up that honourable trade for the one that he is now pursuing, but I am nevertheless full of admiration for him. He made an important contribution —compared with the woolly and glib thinking of those on his Front Bench—in pointing out the crucial importance of level 2 apprenticeships, particularly in construction. It would simply be wrong to tell the young men and women who are doing a level 2 apprenticeship in bricklaying that it was no longer going to be called an apprenticeship, even though they were employed, working hard, going to college and training, and even though they were securing valuable qualifications, of which many more are needed.

We also heard from my hon. Friend Neil Carmichael, who made the particularly important point that there was a key link between apprenticeships and the industrial strategies that the Secretary of State for Business, Innovation and Skills has brought in. He also said that we needed to work with local economic partnerships to create apprenticeships that support the local growing sectors in his constituency and elsewhere. I am sorry that I have not yet been invited to his festival of manufacturing and engineering, but I look forward to receiving an invitation to the next one when he is re-elected in May.

We have heard from my right hon. and hon. Friends about the good record of this Government. We have our record to be proud of, but Conservative Members also have a clear plan for the future. Unlike the Opposition’s proposals in the motion, our plan is fully costed and fully resourced.

Photo of Nicholas Boles Nicholas Boles The Minister for Universities and Science, Minister of State (Department for Business, Innovation and Skills) (Jointly with the Department for Education)

We will continue to improve the quality of apprenticeships through our Trailblazers programme by getting groups of employers to develop apprenticeship standards that deliver the skills that they need. We will also offer young people a clear choice: to earn or learn—to get a job or to go to university—or to combine earning and learning through an apprenticeship. It does young people no favours to let them start their lives in subsidised inactivity, neither earning nor learning, so we will restrict the benefits that young people receive and use the money saved from that and from the proceeds of a reduction in the benefits cap from £26,000 to £23,000 to fund 3 million high-quality apprenticeships between 2015 and 2020.

By contrast, what we have heard from the Opposition has been hopelessly vague. After the comprehensive demolition of the shadow Secretary of State’s policy on tuition fees by university vice-chancellors, he has clearly decided to try his luck with apprenticeships, but yet again we see that the right hon. Gentleman is better with atmospherics than with policy detail.

Photo of Eleanor Laing Eleanor Laing Deputy Speaker (First Deputy Chairman of Ways and Means), First Deputy Chairman of Ways and Means

Order. The Minister is not giving way, and neither did Mr Byrne when he was at the Dispatch Box. I must point out that the Front-Bench speakers in this debate have spoken for well over an hour, which is why Back Benchers have had very little time to speak. The right hon. Gentleman has had his chance. I call the Minister.

Photo of Nicholas Boles Nicholas Boles The Minister for Universities and Science, Minister of State (Department for Business, Innovation and Skills) (Jointly with the Department for Education)

Thank you, Madam Deputy Speaker. The Opposition motion refers to an aspiration that there should be as many people starting apprenticeships as there are going to university. Treasury officials—not Ministers—have costed this policy and advised that it would cost £710 million in 2015-16. But when challenged about how they would pay for this, what tax they would put up, what other spending programme they would cut, answer came there none.

The Opposition motion also promotes the fantastically deluded idea that all apprenticeships should be level 3 and should last a minimum of two years. Treasury officials—again, not Ministers—costed this policy too. They advise that it would cost £680 million in 2015-16. Can the shadow Front-Bench team explain how they would pay for that, who would pay more tax, whose services would be cut? Of course not.

It is especially disappointing to see this policy soufflé survive the exacting inquiries of the Opposition’s very own Masterchef, the shadow Minister. He has a razor-sharp mind and a real zeal for reform, but I am afraid it is clear that he has been relegated to the sidelines, allowed out only on high days and holidays and, as we have just heard, forced to read from the Leader of the Opposition’s lazily profligate script. The flimsiness of the Labour party’s proposals for apprenticeships might be harmless enough in the early years of opposition. That, of course, is where the shadow Secretary of State has learned his trade. But in government, it would create chaos.

Employers, training providers and young people are making big decisions when they decide to invest in creating apprenticeships and in creating the training programmes to support apprenticeships and, as young people, deciding to commit to an apprenticeship. They need certainty and clarity if they are to have the confidence to make a long-term commitment to apprenticeships. They need a competent Government with a clear plan and a clear understanding of how much their plan will cost and how they will pay for it.

If there is a Conservative Government after 7 May, we will invest in apprenticeships, which will be jobs and will last more than 12 months. Every apprentice will have an employer. There will be 3 million of them between 2015 and 2020 and we will pay for them by reducing other areas of Government spending so that, as we have in this Parliament, we can increase our investment in the apprenticeships programme. I urge Members to support those parties that really understand how to grow apprenticeships, and to oppose the motion.

Question put.

The House divided:

Ayes 218, Noes 294.

Division number 148 Opposition Day — [16th Allotted Day] — Apprenticeships

Aye: 218 MPs

No: 294 MPs

Ayes: A-Z by last name


Nos: A-Z by last name


Question accordingly negatived.