Apprenticeships — Debate

– in the House of Lords at 1:55 pm on 14th October 2010.

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Moved By Baroness Wall of New Barnet

To call attention to the case for maintaining and increasing apprenticeships in both the public and private sectors; and to move for papers.

Photo of Baroness Wall of New Barnet Baroness Wall of New Barnet Labour 2:16 pm, 14th October 2010

My Lords, I am delighted to have the opportunity to open this important debate on apprenticeships. What, at heart, is an apprenticeship for? It is meant to take an individual to an entirely new level of skills and competence through a coherent programme of study and practice. It should provide a company with a skilled employee who has demonstrably developed their abilities. Indeed, businesses such as BAE Systems and Airbus tell me that apprenticeships are critical to meeting their future skill needs. An apprenticeship should give an individual a broad base of useful skills, specific competencies in a technical area and the wider attributes that we call employability. That makes a firm foundation for a career and for progression, if they wish.

I shall focus on the engineering apprenticeship scheme. The scheme is very popular, yet employers still face practical barriers when considering whether to start or increase their participation. Most of these barriers are more commonly cited by small firms, but some are cited by larger companies. What the barriers have in common is that they can in some way be addressed by the Government, funding, employers and sector bodies all working together. I shall address how we can help employers to overcome these current barriers before concluding with some thoughts on the future of apprenticeships. I declare an interest, as I work with Semta, the sector skills council for science, engineering and manufacturing technologies, which is closely involved with the employers in this scheme.

The first barrier is cost. Employers of engineering apprentices will tell you that it costs them a lot to recruit and train their apprentices. An advanced engineering apprenticeship costs the employer a great deal in terms of salary and supervision, even when the actual training costs are covered by public funding. BAE Systems estimates that it costs it £73,000 to train an apprentice on top of government funding. That is a big commitment even for a large organisation, but small firms can find it a particularly difficult barrier to surmount.

The price of an apprenticeship is a reflection of its rigour and content. We can, of course, always look at how to deliver the content at lower cost, using new technology such as e-learning, where appropriate, and maximising economies of scale. Engineering apprentices are paid very well compared to apprentices in other sectors and, indeed, in other countries. That pay reflects their value to the employer and the demands of the framework; it is not and should not be easily changed.

A second barrier for employers is time. The advanced engineering framework usually takes 42 months to complete-a significant time commitment to ask of a company. Some feel that they cannot see that far into the future when planning their training. Semta has done a lot of work on fast-tracking for apprentices, particularly those who are already in the workforce and have achieved a certain level of skill. For adults on an apprenticeship programme, certain elements can be shortened by accrediting prior knowledge. However, all the businesses that I have talked to say that it is imperative that the outcomes are the same, no matter the age of the individual on the programme. Thankfully, we have moved away from the time-served approach to apprenticeship, where people were believed to have completed an apprenticeship simply by working with an expert for a given period of time. Instead, apprentices must now demonstrate their competence against national standards, which has led to a far more rigorous and effective programme.

The third barrier relates to the company's ability to deal with the paperwork and reporting involved. Apprenticeship frameworks that attract public funding must of course be accountable for, and transparent about, that income. It can be confusing for companies to deal with the necessary paperwork, particularly if they have not offered apprenticeships before. The running of an apprenticeship scheme also requires a great deal of management, not just of the paperwork to get the funding but also of the programme itself. Airbus tells me that ensuring that the apprentice is receiving the right training at the right time, achieving all the necessary milestones and taking on the right roles as they become more competent needs someone checking on their progress and addressing any issues.

This is an area where the engineering sector has led the way in its approach. Many years ago, group training associations were set up by groups of small firms getting together to run apprenticeships and other training schemes. The GTA handles the funding contract and manages the schemes itself. It provides member companies with an invaluable service. The local GTA can manage the recruitment of the apprentice, which is vital for small firms seeking a person who is good and a good fit for their business and for the investment that they are making. The GTA can also work with the local college to ensure that all the off-the-job elements of the framework meet the employer's needs and that the apprentice is fulfilling their true potential on the programme.

Another approach has seen large companies helping their supply chain companies by training for stock. Whenever funding has permitted, this has been embraced. This has meant the large firm taking on extra apprentices, who then find places in smaller companies in their supply chains. Large companies welcome this opportunity, as it enables them to boost the skills of their partner companies, while the apprentices have the opportunity to experience the breadth of activity that a large firm undertakes.

A barrier that has certainly impacted on some companies in the past is the quality of applicants that they have received for apprenticeship places. While large companies are usually able to fill their vacancies with excellent people, smaller firms have sometimes struggled to find the right person to become an apprentice. This has been linked to poor careers advice given to young people, who have been led to believe that low academic achievement and poor attitude are no barrier to entering an apprenticeship programme. For engineering this is simply not the case and companies can waste a lot of time removing unsuitable candidates from the recruitment process.

In recent years, thankfully, that barrier has reduced in impact, as more young people seriously consider alternatives to the costs and career progression for full-time academic study post-16 and post-18. Businesses such as BAE Systems have seen many high-quality applicants apply-so much so that the company is now supporting typically 10 per cent of its apprentices on completion to take university degrees.

With cost, time, the need to run the framework to a certain standard and the quality of applicants identified as barriers, is the answer to make apprenticeships shorter and cheaper, to make them less accountable to national standards and to reduce entry requirements? I fear that that seems to be the situation that some are facing at the moment.

Pressure on funding has resulted in Semta facing risks to the content of its framework. It has been told that key elements of the framework-namely, the initial training done by all apprentices through a national vocational qualification called performing engineering operations-cannot now form part of the framework. Removing this essential introduction to safe working in engineering environments and to basic engineering skills would damage the engineering apprenticeship immeasurably. Employers are simply not in a position to fund this element themselves for every apprentice whom they recruit. The argument is that this NVQ, which is taken in addition to the NVQ in the specific engineering discipline of the apprentice, is somehow surplus to requirements. This shows a lack of understanding of the true nature and purpose of apprenticeships, as well as a failure to appreciate how the current structure is designed to be a coherent basis for progression and a sustainable career. It also demonstrates that there are currently pressures on sector skills councils to somehow compromise on the content of their frameworks, which they have developed with employers.

Up to this point, I have highlighted some areas where practical barriers can be reduced without compromising the quality. I will now move on to the philosophical barrier that is at the heart of ensuring that apprenticeships remain the right programmes for individuals and companies. We must not see apprenticeships as a panacea for all skills problems in the workplace. It is important that employers understand what an apprenticeship will deliver for them and that they do not enter into a scheme without knowing the full implications. Advice to employers needs to be clear and needs to explain that, if what they are offering is not an apprenticeship, they should understand that that is not what they are doing and that, rather, they require something else.

Semta works hard to make the engineering apprenticeship framework fit for purpose, but that purpose is not to provide cheap labour for companies or to string together an incoherent set of units and call it an apprenticeship. In some ways, the size and rigour of the engineering apprenticeship could be called a barrier to its expansion, but the quality of the framework is one of its great selling points to both the individual and companies. I accept that to compromise this might bring in some short-term increases in participation, but it would soon result in a lower standard that did not give the business the full range of skills that it requires or give the individual the mobility within the company or outside it. Additionally, it would cheat the future economy of the United Kingdom of a skilled person who could contribute fully.

Apprenticeships have predominantly been used for young people who are usually new entrants to a sector and an occupation. However, it has been found that, when the funding for adult apprenticeships was available, there was a huge appetite among people over 25 and their employers to use the apprenticeship programme to boost the skills of the existing workforce. This is because the framework can be used to raise the skills of those already in the workforce who need to boost their competence and who can benefit from a comprehensive programme of development.

What is an apprenticeship not suitable for? It is not, as I have said, for companies wishing to recruit cheap labour for jobs that do not require a minimum level of skills. It is also not for adults who need only a few elements of the programme to enable them to reskill or upskill. For these people, we must make sure that the qualifications and curriculum framework provide opportunities for funding and accessing bite-sized learning, tailored to the prior knowledge of the individual so that they are not repeating what they already know. This is not an apprenticeship, though; it is still valuable, but it is different.

Maintaining the apprenticeship brand by ensuring the quality is the single most important thing we can do to safeguard the programme for the future. Doing so will ensure that we can get the right people on to an increasing number of these schemes. Only then can we be confident that great apprentices will continue to contribute to the wealth of the country, that companies will have the right people to grow their business in the future and that young people and older people will be able to contribute to the community and to the businesses that they work with. I beg to move.

Photo of Lord Sugar Lord Sugar Labour 2:30 pm, 14th October 2010

My Lords, I thank my noble friend Lady Wall for bringing this debate to the House; it is on a topic in which I have a great interest. At the tail-end of 2008 I was invited by the Government to head an advertising campaign to promote apprenticeships. Before agreeing to do so, I decided to research the message that needed to be projected. I concluded that the campaign needed to be directed at employers as well as prospective apprentices. It was clear to me that there was a lack of understanding as to what was on offer to both the employer and the employee.

In the early part of 2009 the campaign went to air and created a lot of interest. Hits to the apprenticeship website rose from 52,000 to 120,000 per week. There were also 4,000 firm inquires. It is important to note that back in 1997 there were just 60,000 apprenticeships but by May 2009 there were 250,000. Encouragingly, there was a completion rate of 70 per cent. This is an undisputed statistic, and the rise came about under the previous Government. I have heard that the pre-election promise of the current Government-pledging 400,000 apprenticeships over the next two years-has been somewhat watered down. We have to avoid by all means undoing all the hard work of the past. Any proposed government cuts should not be directed at this sector. Indeed, cutting funding for training would repeat the mistakes made during the last recession.

In 2009 I held four seminars on apprenticeships, where I spoke to audiences of employers in London, Birmingham, Leeds and Newcastle. At these meetings the frequent comment from employers was that they would employ more apprentices if the Government gave them some financial incentive. While I could not agree with them at those meetings at the time, I now have to admit that I agree with them. Now, the money provided by the Government to pay for the training of apprentices goes to fund colleges and so-called learning providers. While I believe that these establishments are needed to a certain extent, to cater for such things as day release, I question full-time training courses in manufacturing or any other physical skill trade.

I am confident that what I am about to say will be not be disputed by any of your Lordships. No matter what professions your Lordships embarked on, and what academic qualifications you attained, I am sure you will agree that you gained virtually all your knowledge and experience by working in your chosen occupation. Therein lies the key to where any government funding must go. We must encourage employers to train people. To do that, they have to employ them. In any industry that requires skills, be it manufacturing, building or software development, there is a need to grow your own labour force to make sure that the staff are instilled with your firm's culture and, more to the point, loyalty.

However, I say now what others might be frightened of admitting; while it is important to train staff to grow a future workforce, the reality is that every person you train requires an experienced member of staff to mentor them. From my own companies, experience has shown that to do it properly the mentor has to devote a lot of time to the individual before he or she can be let loose, so to speak. The fact is that while members of staff are mentoring, they cannot do their own jobs fully. Therefore, training the newcomer does not just cost the salary that you are paying, albeit at the minimum wage. More importantly, there is the cost of the loss of the time of experienced staff. So your Lordships might see why employers are saying, "Okay, we will take on and train young people, but we want you-the Government-to pay us or compensate us in some way". In this day and age, when most businesses have to tighten their belts to fight their way out of recession, they can ill afford to have their staff deflected.

Trust me when I say that, from my experience of taking on young people from college or other so-called training facilities, when they enter my company they really know nothing. In my experience they learn while they earn. I conclude that young people will get far more satisfaction and motivation from working in a firm than from sitting in a classroom, theorising. The Government need to think hard about how they can divert money from training facilities to employers. After all, some of these training facilities are not government-owned; they simply send the Government a bill for every apprentice who passes through their hands. There are people in the Government who are clever enough to work out ways either to create tax breaks or to award grants to companies, small and large, instead of what I consider to be blowing the money on these so-called further education facilities.

Let us look at what is happening instead. Right now the Government and the taxpayer are playing out something of a charade by providing a place for young people to hide for a while. The Government are giving money to training providers to avoid the embarrassment of having people out on the street. In reality, all they are doing is delaying the inevitable because the end product in many cases is still unemployable and unskilled. The young people will have greater dignity if they are taken into a firm and given a real goal to aim for but do not expect the firms to do it for nothing. While they may get the benefit of a trained employee eventually, anyone who says that an apprenticeship means cheap labour is totally deluded.

I see that I am not out of time, so I will throw in a last curve ball on a completely different subject. One final thing that the Government might do to promote apprenticeships is to ensure, by way of contractual agreement, that firms that are awarded government contracts must employ a proportion of apprentices.

Photo of Baroness Sharp of Guildford Baroness Sharp of Guildford Liberal Democrat 2:38 pm, 14th October 2010

My Lords, I, too, thank the noble Baroness, Lady Wall, for initiating this important debate. I declare an interest as a member of the corporation of Guildford College and as a member of the Skills Commission, an all-party group composed of Members of Parliament and lay members.

As the noble Lord, Lord Sugar, has indicated, many of us learn as much by doing as by listening. Apprenticeships remain probably the most effective way of passing on complex practical skills. In this country we have a long tradition of craft skills. It goes back to the Middle Ages and the concepts of guilds, master craftsmen, journeymen and apprentices. In those days the apprentice was treated very much as the son of the master craftsman. He was mentored, as the noble Lord, Lord Sugar, indicated, and taken within the family of the learning group. Sadly, that tradition was lost in this country during the Industrial Revolution. It was retained in some craft skills. This House is probably a tribute to the craft skills of the mid-Victorian era. In the mass production industries, the sheer brutality of the Industrial Revolution led to the loss of the master-child relationship that one saw in the concept of apprentices. Interestingly, in Germany and many north European countries, which were industrialised later, it was retained. The tradition of training apprentices, as we all know, remained in those countries and is one that we now look to as an example of what we might follow.

Even within mass production, of course, the craft skills-the more skilled members of the industry-were trained through apprenticeships right through to the 1950s and 1960s. Many of our leading industrialists entered industry through this route and moved first into middle management and subsequently into top management through the apprenticeship route. However, this route collapsed with the collapse of manufacturing industry in this country in the 1970s and the 1980s. Its nadir was reached in the 1990s. As the noble Lord, Lord Sugar, mentioned, in 1997, only 60,000 young people entered apprenticeships.

We need to pay tribute to the previous Government for what they did. It began with the report from Sir John Cassels in 1995 and the introduction of the modern apprenticeship, and moved forward very positively under the new Labour Government of 1997. The modern apprenticeship was originally aimed at a level 3 qualification, which is equivalent to A-level, but I rather regret that the concept of the modern apprenticeship was watered down. In 2001 it became a level 2 qualification, equivalent to GCSE, and the level 3 apprenticeship was renamed the advanced apprenticeship. In 2001, approximately 150,000 young people entered apprenticeships. Today, the figure is almost 250,000 young people-an increase of roughly 100,000 over that period-and more are coming through, although the increase is not very large. Interestingly enough, 100,000 young people aged 16 to 18 are now entering apprenticeships-85,000 in the 19-to-24 age group and 56,000 in the 25-plus age group. Over the past few years, since the beginning of the recession in 2007, numbers in that 16-to-18 group have remained very much the same, but we have seen-partly because government money has been available-a very substantial increase in the number of those over 19, and particularly in the over-25s, in the past few years, which I very much welcome. I know that employers are keen to foster this. However, we are, of course, still a long way off the 400,000 target set out in the Leitch report. As I say, in many senses the recession has set back the whole process.

I am pleased that this Government share the previous Government's view of the importance of apprenticeships and, indeed, the importance of their being employer-based. One of the first acts of this Government was to shift £150 million from Train to Gain into adult apprenticeships, which indicates how important they regard the whole area as being. My honourable friend John Hayes, the Minister for Skills, said:

"The most important objective of all is to make Apprenticeships the primary, though I must stress not the only, means for people to gain skills in the workplace ... the Government is committed to increasing the supply of Apprenticeships, and improving the quality of the training offered, to make them better suited to the needs of employers and learners alike".

I wish to raise three issues about the development of apprenticeships. My first issue has been referred to by the noble Baroness, Lady Wall, and the noble Lord, Lord Sugar, and concerns the supply of apprenticeships and the degree to which employers are willing to take on apprentices, particularly those in the 16-to-18 age group. The CBI and the British Chambers of Commerce complain about skills shortages, and indeed about the immigration cap on skilled people, but their own record in training across industry as a whole leaves something to be desired.

There are, of course, outstanding examples of good training provision such as that provided by Rolls-Royce and BAE Systems. It is interesting to note that there are 15,000 applicants for the approximately 80 places on offer at BAE Systems. It is more difficult to get an apprentice place at BAE Systems than it is to get into Oxford or Cambridge. As the noble Lord, Lord Sugar, and the noble Baroness, Lady Wall, mentioned, the bureaucracy puts off a lot of small and medium-sized businesses. The previous Government and this Government are exploring the development of group training associations to help with that problem. I echo the words of the noble Lord, Lord Sugar, when I say that, as well as companies offering apprenticeships, let us also see the growth of apprenticeships in the public sector. This initiative was begun by the previous Government and I hope that this Government will carry it forward.

My second issue concerns careers guidance. As I say, I have been a member of the Skills Commission for some time. A couple of years back, it produced a report on apprenticeships. We were horrified to discover from the Edge survey that a typical teacher had very little concept of what apprenticeships were about. To a great extent, teachers in secondary education go from school into college and back into teaching in schools and have no experience of the outside world. The Apprenticeships, Skills, Children and Learning Act 2009 contains a section that was debated at length in this House and required that all young people should get a broad careers education and that they should be told specifically about apprenticeships. I gather that the directive that would implement this section is being held up. I ask the Minister why this is so and whether it will be implemented. It is extremely important that it is as so many teachers do not understand what apprenticeships are about.

The other important issue I wish to raise is that of progression into higher education. The numbers moving into higher education are pitifully small-something like 2 to 4 per cent of apprentices go into higher education. It is vital that this is seen as an equivalent route. It is a level 3 qualification. It is the same as A-level and it really must be seen as an equivalent route. It is very important that apprenticeships are given equal status. They are an extremely useful way for young people to learn the skills that we need. This Government support them and I am delighted that that is so. I hope that we shall see them moving from strength to strength.

Photo of Lord Bhattacharyya Lord Bhattacharyya Labour 2:47 pm, 14th October 2010

My Lords, I congratulate my noble friend Lady Wall on securing this important debate. It was also a pleasure to hear from my noble friend Lord Sugar. I do not claim to be a celebrity apprentice, but as a former graduate apprentice I am delighted that your Lordships' House is discussing apprenticeships. I have regularly raised this issue in many debates here. I wish that apprenticeships received a tenth of the attention devoted to graduate funding. Tony Blair once said that political interest in vocational education was so low that he could declare war on Iran during a speech on skills and nobody would notice. I am sure that the noble Baroness, Lady Wilcox, will resist the urge to test that theory today.

It is clear that this Government, like the previous one, see the expansion of apprenticeships as central to economic success-the issue is how. The previous Government did some very good things. In the mid-1990s there was not a penny in the budget for apprenticeships, while today there is more than £1 billion a year. Our policies were right and our intentions were honourable. When Ministers raid the Train to Gain budget, they should pause to be thankful that there is now a budget to raid. But we on this side of the House should not pretend that all was well in the handling of skills. It is hard to study the current system without feeling frustration and confusion. The charge made by the Higher Education Minister, Mr Willetts, of bureaucracy in the funding of apprenticeships has some force. There are too many bodies, too many processes, too much complexity and too little employer involvement. Bodies such as the Learning and Skills Council were too bureaucratic.

Despite the efforts of all parties, we still have a huge issue with the skills base in this country. We need to solve this problem. We cannot allow a lack of skills to be a hindrance to growth. The ERA Foundation recently asked leading industrialists how to regenerate British manufacturing. One of the top four issues they identified was the shortage of technicians, ahead of even corporation tax. Our Economic Affairs Committee made a similar point in its 2007 report.

When I was a graduate apprentice, businesses invested in technical colleges, and one of the conditions at that time of becoming a member of my institution, the Institution of Mechanical Engineers, was the completion of a graduate apprenticeship. However, as competition grew, there was less incentive for companies to invest. In response, the Conservative Government in effect nationalised British vocational education by creating the NCVQ. The fundamental shape of the system has not changed much since, although the bureaucracy has been recast repeatedly.

It is well past the time to move beyond shuffling the bureaucratic pack. First, better technical education at the secondary school level is vital to improving our skills base. We must devote more resources to it. The noble Lord, Lord Baker of Dorking, supported by the noble Lord, Lord Adonis, is battling to create a new generation of university technical colleges. We at Warwick have seen his enthusiasm at first hand, and I sincerely hope that there will be funding to make them a reality in my area.

The next challenge is to create more high-quality apprenticeships. This week, I attended the Rolls-Royce annual science awards, where the Skills Minister told me that he was passionate about apprenticeships. I wish him the best of luck with the CSR. Together, we saw the great enthusiasm of young people for building their technical skills. Companies such as Rolls-Royce, Dyson, Jaguar Land Rover and others are exemplars, because science and technical education is essential to their future. These companies act as ambassadors in schools for studying science and for apprenticeships. Unfortunately, too few companies follow their lead. To change this, we must go back to first principles. Why do people wish to enter apprenticeships? For a learner, it is the judgment that serving an apprenticeship will increase their career prospects. This cannot be just ticking a box and getting around unemployment. For an employer, it is an investment in the future of their workforce.

Young people are clear about which apprenticeships are valuable. The Financial Times reported in August that more than 24,000 people had applied for 220 apprenticeships at BT. When apprentices choose to learn at companies such as BT, Rolls-Royce civil aerospace, JCB and Jaguar Land Rover, they understand that future opportunities make it worth sacrificing current income. For employers, an apprenticeship is worth while if the skills that are learnt make the apprentice a more valuable employee. The key to achieving both these objectives is to hand the power of choice to the individual apprentice, so resources flow to the most successful apprenticeships programme. This is the model in Germany. The student chooses the apprenticeship that will provide the best future for them. When they secure their contract, their employer receives a "virtual voucher" that can be spent at whatever technical college the company chooses, while the cost of the apprenticeship itself is the responsibility of the employer. How might we create such a shift in a Britain with limited funding? It is simple; put funding in the hands of the learner and the whole system begins to work in the interest of the apprentice.

A recent monograph by Alison Wolf for the Institute of Economic Affairs makes this point powerfully. As in higher education, we could offer a system of apprenticeship loans to fund technical education, which would be paid back once the worker was earning at a decent level. In this model, each apprentice would make a contribution to their future success. This would create a significant budget, to be spent on high-quality technical education, which real businesses and apprentices value. We would also cut out huge swathes of bureaucracy. An apprenticeship loan would fund the apprentice's technical education, with the state supporting the student's aspirations via subsidised interest and deferred repayment. The company would assume the burden of apprentice wages and firm specific training, as it should. This would allow government to be the guardian of apprentices' right to a quality technical education and not to be the dictator of national skills needs. Employers would have an incentive to design apprenticeships that are attractive to the best future employees, which would drive up standards and numbers. Of course, we also need to fund vocational education directly, but that scarce money is best spent on funding general technical education, not backing specific courses.

Apprenticeships are vital to the success of our economy. I know this from working with the automotive industry, where I have found that growth is hampered by a lack of apprenticeships. We have had 10 years of learning and skills councils and before that the techs. Why are we still bothered about skills? If we back the instincts of apprentices, we will create a stronger technical education for all. That is absolutely essential if we are to rebuild our economy on a sure and stable footing.

Photo of Lord Haskel Lord Haskel Deputy Chairman of Committees 2:55 pm, 14th October 2010

My Lords, this is an important debate because apprenticeships touch so many of our current problems, economic and social, including the need to grow the economy, raising our level of technical skills-as my noble friend Lord Bhattacharyya, explained-and the need to provide people to fill the 2 million jobs that the private sector will have to create. Many of those jobs will need to be in manufacturing. It should be remembered that each manufacturing job supports several service jobs, not the other way around.

Immigration happens not because of lax borders, but because we are short of the skills that immigrants bring. One reason why we have so many immigrant workers, particularly from European states, is that those countries have well developed apprenticeship programmes for doing jobs for which in Britain there is no formal training requirement. Many of those jobs are in the construction industry, such as ground work or foundation building. One of our largest areas of unemployment and social deprivation is among young people. Apprenticeships help to get these people to work. My noble friend Lord Sugar and other businessmen have voiced their concerns at the low level of skills and education that prospective employees bring to the workplace. Apprenticeship schemes do something about this.

My noble friend Lady Wall told us that the days of just learning at the bench and serving time are long passed. Yes, apprentices have to learn the technical skills, but they also have to understand them. To get their qualifications, apprentices also have to acquire the modern soft skills of numeracy, literacy, personal communication and presentation. All this has helped to make apprenticeship a much broader, more satisfying, and more worthwhile experience.

Who provides this? As my noble friend Lady Wall explained, large companies do a lot of this work for themselves and their suppliers. Some industries have group training associations and there are some excellent private-sector training contractors. But there is one group of unsung heroes in this modernisation of apprenticeships which is often ignored-the colleges of further education. I live in Richmond and, when preparing for this debate, I visited Richmond upon Thames College, our local college of further education, and spoke to Rob Rudd who, my noble friend Lord Sugar will be pleased to know, mentors some 130 apprentices. They spend up to l6 hours a week at work and the rest at college. The state pays because they are under 18; but over-18 year-olds who have not done well at school, have become disengaged at school, or who are not academic and prefer practical work, or older people who require reskilling, can find their second chance at a place such as Richmond on Thames College.

The college finds local companies with vacancies, in addition to the National Apprenticeship Service. There are no big firms in Richmond, and so the college caters for hundreds of small and medium-sized enterprises in the area. This is especially difficult because many of these small companies are either reluctant to offer apprenticeships or had not really thought about it. The college therefore employs somebody to go around all of these firms to create apprenticeship places-a kind of employment agency.

Furthermore, the college subsidises some of these apprenticeships. With an apprentice of 19 or older, the employer is meant to contribute 50 per cent. Some firms do not pay, either because they cannot afford it or because they are just unwilling to do so. The college carries the extra cost. Private training companies work mainly with the service sector, for which many young people are just not suited. The colleges tend to do the more costly things, like technology, construction, engineering, IT and catering.

Perhaps noble Lords can see why FE colleges are the unsung heroes of apprenticeships. I know that the Minister is aware of their work, and so I hope that she will agree with me. Her honourable friend the Minister of State for Further Education, Mr John Hayes, in his speech of 29 September said,

"We are also taking an overdue look at ... the costs of Apprenticeships".

In the same speech, Mr Hayes also said that the Government have begun to provide an extra 50,000 apprenticeships by redeploying £150 million. Can the Minister say where the extra 50,000 places will be provided and from where the £150 million is being redeployed? How will it affect FE colleges?

One way in which the Government can help these colleges is to take into account prior learning delivered by the college. Many colleges have young apprentice schemes or pre-apprentice schemes which provide a year at college to help apprentices attain the standards they need in maths, English and IT-the soft skills. The proposal is that they will then be tested again when they qualify. It would be sensible to maintain the exemption that already exists. I see from its website that the Minister's department has extended the consultation on this. I hope that the Minister will agree that there is no need to add more regulation to the already rather complex situation.

We all seem to agree that knowledge and skills are the key to future prosperity and a more equal society. The noble Baroness, Lady Sharp, and my noble friend Lord Bhattacharyya spoke about how, when Labour was in power, they persistently pushed up apprentice participation rates. Can the Minister assure us that this Government will continue the good work?

Photo of Lord Aberdare Lord Aberdare Crossbench 3:03 pm, 14th October 2010

My Lords, I am delighted to have the opportunity to speak in this debate, and I declare an interest as a director of two small social enterprises, both of which are engaged in helping unemployed people in London to find and keep employment. Having said that, very few of these jobs have so far taken the form of apprenticeships-certainly fewer than I might originally have anticipated. I also apologise for covering a certain amount of ground where points have already been made very much more elegantly by noble Lords speaking earlier in the debate.

I strongly support the Government's commitment to apprenticeships, which are filling a vital need to provide jobs and training for young people seeking to enter the labour market, and essential skills for the UK economy. I recently attended the launch of the Southwark apprenticeships challenge "100 in 100" campaign, which aims to create 100 apprenticeship opportunities in that borough within 100 days. I was struck by the range of different apprenticeship frameworks now available. There are no less than 190 separate frameworks in 80 different industry sectors. I was struck, too, by the enthusiasm and commitment of those existing apprentices, and their employers, who spoke at the event.

However, it is clear that apprenticeships are currently providing only a small part of the answer to the challenges of youth unemployment. If their impact is to be maintained and increased, their attractiveness to young people-and even more to the employers, without whom there would be no apprenticeship opportunities-needs to be enhanced. There are a number of jobs or sectors which may have good opportunities for young people, but which are not currently well suited to apprenticeships. Apprenticeships work very well for jobs which call for specific skills or qualifications, not just in traditional areas like construction, plumbing and hairdressing, but also in business services such as IT, accounting, design, or marketing and communications. However, they are less appropriate in sectors like hospitality, where the key requirements for staff are sometimes more to do with attitudes and behaviours than specific skills, and where a high degree of flexibility is required in working patterns, which may not fit easily with the need for apprentices to spend one day a week in training. There are several successful apprenticeship schemes for chefs, but fewer for roles such as hotel receptionists, waiters or back-office staff.

Apprenticeships are also scarce in the creative and media sector, where a good many jobs tend to be freelance or self-employed, and may not lend themselves easily to the apprenticeship model. For example, an apprentice has to be employed by someone, which is not always straightforward in a sector where most people are self-employed. Many production companies, magazine publishers and other businesses in the sector are quite small, and SMEs find it harder than larger enterprises to set up apprenticeships: finding out what is involved, identifying suitable frameworks and learning institutions or training partners to deliver them, and accessing available funding. Well targeted information and signposting are needed to make it as easy as possible for different types of employers-small or large, public or private-to implement apprenticeships.

It is therefore important to ensure that apprenticeships-and, indeed, other employment programmes such as the planned new Work Programme-are sufficiently appealing to employers. Many of the employers we have worked with are keen to take on young people and set them on the first step of their careers. At the same time, however, they are all too conscious of the business pressures they currently face which make it hard for them to find or spare resources to train young people, to pay their wages and to provide the support some of them need to stay in, and do well at, their jobs-support such as the mentoring support mentioned by the noble Lord, Lord Sugar.

Again, this is especially true of SMEs. One of the great merits of the previous Government's Future Jobs Fund, regrettably terminated by the coalition, was that it provided a real incentive for employers to offer-indeed, to create-jobs for young people by actually paying their wage costs, at least at minimum wage levels, for the first six months of employment. Apprenticeships do allow employers to pay less than the standard minimum wage, but this may not be entirely a good thing. We have even heard of young people dropping out of apprenticeships for the simple reason that they cannot afford the bus fare to work. It does not help many public sector employers who are bound by collective bargaining agreements to pay higher rates.

Earlier this year, the National Apprenticeship Service offered grants of £2,500 to employers, especially SMEs, to take on 16 and 17 year-old apprentices. This was instrumental in persuading a group of museums to set up a programme for 50 apprentices, which they said they might not have done without the subsidy.

Pump-priming incentives like this may be needed to encourage employers to go the extra mile in creating jobs for young people in these difficult times, and to overcome their initial doubts about the benefits of taking on untrained young people, with all the perceived constraints and paperwork of a government-sponsored scheme.

I have focused on a couple of ways to increase the impact of apprenticeships: extending their scope to cover additional sectors and jobs, and enhancing their attractiveness to employers. There are many others, such as: developing higher-level apprenticeships to provide an access route into higher education; supporting colleges in the provision of pre-apprenticeship training; extending the scheme to cover well regarded training programmes not currently recognised as apprenticeships, such as those run by several guilds or livery companies; or finding ways to enable public sector bodies to take on apprentices at a time when many of them are subject to hiring freezes.

I wondered about the possibility of offering apprenticeships in your Lordships' House, as was done in another place under the aegis of my noble friend Lord Martin of Springburn. I understand that there are programmes for commis chefs and library staff to receive training to gain higher qualifications, although these are not formally classed as apprenticeships. Beyond that, the House, like so many other employers, currently lacks suitable roles or resources for an apprenticeship scheme.

Apprenticeships can play an important part in ensuring that young people have opportunities to work and to acquire skills, even in a period of economic constraint, so that we avoid the catastrophe of a generation of young people missing out on the experience of work when they leave education. I urge the Government to ensure that apprenticeships, along with other youth employment and skills programmes, continue to receive the support, emphasis and resources required to achieve that goal.

Photo of Lord Layard Lord Layard Labour 3:11 pm, 14th October 2010

My Lords, I strongly congratulate my noble friend on initiating this debate. Apprenticeships are vital to the future of the country. As we know, low skill is our problem. It is why we have so many people on low pay, and why we have low productivity and so much youth unemployment. The only way we can eliminate this is through apprenticeships. Learning while working is what young people and employers want. It must be established clearly as the main alternative to A-levels and university for our young people. Youngsters of 13 or 14 must grow up thinking that this is the natural alternative to A-levels or university as a way into a decent job.

That is why, last year, we enacted the historic apprenticeship Act in this House. The main clause gave, in three years' time, an entitlement to an apprenticeship to every young person with the minimum qualifications of five GCSEs at any grade. If that is implemented, it will be one of the most important things done in the last Parliament. However, will it be done? For me, that is the key question of the debate. I very much hope that the Minister will tell us whether the Government will implement the entitlement to an apprenticeship in 2013, which is in the Act. Obviously, it is not easy to do, especially in a recession at a time of financial squeeze. I shall say a bit about what needs to happen for it to be done, and then I shall make a few more points about why it is so crucial that it is done.

There are five key steps. First, as my noble friend Lord Sugar said, we must ensure that the employers are much more central to the process, and that they know that they can have the money. This point was made in the report of the Economic Affairs Committee, chaired by the noble Lord, Lord Wakeham. The answer from the authorities is always that the employers can have the money-but do they know this? I think that most of them have no idea that they could have the money if they wanted to run an apprenticeship scheme. Nobody has gone out and offered them the money up front. How many Ministers have made speeches saying, "Take this money"? Has the National Apprenticeship Service gone round saying, "Take this money"? I do not think so; I have seen no evidence of it; but that is what has got to happen. Of course, employers will not take the money if the system is as bureaucratic as it is at present. Linked to that, there has to be a cut in bureaucracy to make it easier for an employer to run an apprenticeship.

The second issue is the level 2 apprenticeship. Of course we want everybody to get to level 3, but most 16 to 18 year-olds will have to go through level 2 to reach level 3. When the Economic Affairs Committee went to Germany and talked to employers, it was interesting to learn what level of entry qualification they expect for an apprenticeship. They do not expect apprentices to be wonderful. The noble Lord, Lord Sugar, rightly said that they know nothing when they come. They have got to be taken in, in a spirit of good will, by an employer who will make the most of them. That means that employers must be willing to take in young people at 16 and 17 who do not have anything remotely like level 2 already under their belt. This is essential: we will not revitalise the youth labour market in this country, which has closed down over the past 25 years, unless we have employers who accept that their role includes taking in greenhorns.

Thirdly, in the government allocation of funding, the absolute priority must go to 16 to 18 year-olds. The Government love to say how many people over 18 get apprenticeships. It is always a bigger number than the number of those under 18. It should be the other way around, otherwise there is no chance of achieving the entitlement.

Fourthly, as the noble Baroness, Lady Sharp, said, schools must be required to inform their youngsters about apprenticeships. I simply do not understand what has happened about that clause in the Act and why it is not being implemented. Perhaps we will be told.

Fifthly, somebody must co-ordinate this. Who is responsible for making the entitlement happen? It can only be one body: the National Apprenticeship Service. Has it been told that it must make this happen? Has it been asked to produce an action plan for making it happen? Again, perhaps we will be told.

We are talking about a really important social and economic change, and perhaps I may end with a few interesting facts to show why it is so important. First, apprenticeship is a first-class investment. I should like to quote some estimates of the social rate of return-that is, the rate of return to the whole of society-from apprenticeship based on some excellent work by a former colleague of mine, Steven McIntosh, who is now at the University of Sheffield. He shows-it is a robust estimate, much tested-that the rate of return from apprenticeship has been over 35 per cent per annum. That is incredibly high. Comparable estimates which many of us have done for rates of return from A-level and university are in the ballpark of 10 per cent and are probably even less for full-time vocational education.

Unfortunately, until recently the Government and people of all parties have tended to think that the solution to our problems is more full-time vocational education. It is not; it is apprenticeship, yet at the moment full-time education is treated more generously than apprenticeship. Full-time education for 16 to 18 year-olds receives £4,000 a year, compared with £3,300 for apprenticeship, although, as I said, the latter yields a rate of return of one-third. Of course, the reason is that full-time vocational education-this applies equally to the diploma and the NVQ-does not provide a ticket for the trade.

A misconceived thrust was given but fortunately we are now getting back on track with apprenticeship as a centrepiece. However, it is easy to see what will happen in the recession. Young people will stay on in full-time education for lack of anything else to do and we will pay out the £4,000 for them because there are no places for apprenticeships, which they would much rather have. We have to make sure that that does not happen, because either they will not stay in full-time education and become unemployed or they will go into a less useful form of education. Unemployment would be a social tragedy and more full-time education could well be a waste of money compared with apprenticeship.

Equally, I point out-this has already been mentioned-that apprenticeship is the secret of success in many of our competitor nations. My colleague Hilary Steedman showed that to be the case recently in a wonderful report on apprenticeship in different countries.

We are discussing something which is not peripheral but central to the future of our country in both the short and long run. In the short run, we face a real national danger of mass youth unemployment, losing a whole generation. Many of these youngsters will reject full-time education and, if we cannot secure them an apprenticeship, we will have a real problem on our hands. In the long term, we will never get a more productive or more equal society without a proper, flourishing system of apprenticeship, which has to start as soon as a young person has nothing better to do. Therefore, it is a dreadful error to build up apprenticeships for those over the age of 18 and not to give priority to 16 to 18 year-olds. Our young people have to see, when they are 13 or 14, that apprenticeship is as available to them as full-time education. I hope that the Minister can assure us that that is what the Government intend to do by implementing entitlement at the due date.

Photo of Lord Taylor of Warwick Lord Taylor of Warwick Non-affiliated 3:22 pm, 14th October 2010

My Lords, I also thank the noble Baroness, Lady Wall, for securing this debate. It is both important and timely.

It was an American commentator who said, "Cheer Up. The worst is yet to come!". We know that the economy has very difficult challenges ahead but fundamental to economic recovery will be the issue of skills and training. In my view, apprenticeships are the ideal vehicles for correcting our skills deficit.

I see apprenticeship training as leading from the top-it is mentoring-so that others can achieve their potential. Some years ago when I worked for a company, a common phrase was applied if things went wrong. It was, "Assistant heads must roll!". That ethos is not the way to encourage and nurture talent.

A man who ran a small business once said, "When I started my business, I had nothing. Fifteen years later, I still have some of it left". With increased bureaucracy and red tape over the past few years, it has been very difficult for small businessmen to afford to take on trainee apprentices, yet small business is the cornerstone of our economy, and high-quality training opportunities such as apprenticeships are vital to supporting its growth and success.

I congratulate the noble Lord, Lord Sugar, on raising the profile of the apprentice through his BBC television series. I watched the programme last night and noted that he said he did not want "steady Eddies" or "cautious Carols". I understand by that that he is looking for young people with initiative who are prepared to take risks and to listen and learn while they earn. I congratulate him on raising the profile.

However, there are other ways of building that profile. I feel that there is a perception problem when it comes to apprentices. Over the past few years, there has perhaps been a perception that an academic degree from a university is somehow superior to practical vocational skills. That is not the case and we have to address that perception problem. Just about every noble Lord who has spoken so far has come up with very practical ideas about what we should do to improve the apprenticeships environment.

I want to tackle the problem of perception. In my submission the Government should consider a national, annual apprenticeship day in every local authority to celebrate-I emphasise that word-what apprenticeships have achieved and what they contribute to this country. What about issuing a special stamp which could celebrate some of the world's most famous apprentices, such as Isambard Kingdom Brunel, Henry Ford, Vincent van Gogh, Sir Alex Ferguson, the manager of Manchester United, and the late designer Alexander McQueen? That would certainly increase the profile of apprentices and give them a sense of pride in their achievements.

Edge, the apprenticeship organisation, says that two-thirds of teachers regard their knowledge of apprenticeships as poor and that only one in four teachers recommends apprenticeships in preference to higher education. I believe that the Department of Education should encourage all secondary schools to provide their students with presentations from training providers, employers and apprentices themselves.

It is important to make the point that only two per cent of apprenticeships go to girls. We need to encourage more girls to look at engineering, science, technology and mathematics. Perhaps Karren Brady, a colleague of the noble Lord, Lord Sugar, could help to promote the message that more girls should look at becoming apprentices.

The ceremony associated with obtaining a degree should be expanded to apprenticeships. It could be localised and made appropriate to different parts of the country. That would give apprentices a sense of civic pride in their area, and school pupils would see that and aspire to join their ranks. I would go even further. I would like to see a royal society of apprenticeships, rather like the Law Society or the British Medical Association, with a social and professional network similar to that provided by universities.

Apprenticeships also need to become part of the growth industries such as IT, the green economy and high-tech engineering. The sports and recreation industries are large wealth creators for this country, so they should be part of the expansion of apprenticeships. My father was a professional cricketer and semi-professional footballer. He played cricket for Warwickshire. His apprenticeship involved little more than helping to lay out the kit and polish the boots of the first team squad which he eventually got selected for. Nowadays many professional sports, especially soccer, encourage some training in business and other skills, but it is still patchy and needs improving. There are still too many who fail to make the grade as professional sportsmen and have no other skill training to fall back on, so please do not neglect the sports and recreation industry.

I do not see higher education and further education as competitors. The university sector can play an important role in assisting the elevation of the image of practical learning. For some years I had the privilege of being chancellor of Bournemouth University, which places a high emphasis on education and meeting the practical needs of employers. We used to say that you will not be able to study the history of punk rock at Bournemouth University.

We need to develop different levels of training, and that should start with the re-engagement of those outside the workforce and might involve bite-size, modular chunks of learning. Of course that could lead to a more focused level 2, full apprenticeships at level 3 and advanced apprenticeships at levels 4 and 5. Quality control could be monitored through a simpler form of Ofsted-like report. The point was made earlier by other noble Lords that if we ignore the unemployed and do not give them a chance, we shall be creating a bigger problem for the future.

I fully agree with the noble Baroness, Lady Wall, that apprenticeships should not be seen as cheap labour. There is ample research to show that apprenticeships bring value to employers as well as providing expertise to the apprentices. They are not a problem; they are part of the solution to growing the economy again. The future has arrived. We must recognise it and embrace this opportunity.

Photo of Baroness Drake Baroness Drake Labour 3:30 pm, 14th October 2010

My Lords, the case for increasing apprenticeships is compelling. The seminal report by the noble Lord, Lord Leitch, in 2006 confirmed that the UK's skill base remained weak by international standards, holding back growth, productivity and social justice. It stated clearly that, if the UK was not to slip down the league table and if businesses were to compete globally, a radical step change was necessary. It stated that skills were no longer a driver of success but the key driver of success. The noble Lord's report set a series of tough ambitions for 2012, including half a million apprenticeships. The 2010 Ambition 2020 report by the Commission for Employment and Skills measures progress against those ambitions. It confirms that, without collaborative intervention by the Government, the UK labour market will face a shortfall of more than 3 million skilled people by 2020 and that, although the UK remains a significant economic force internationally, our productivity rate is outside the upper quartile of OECD countries and needs to increase by 13 per cent-that is some way when one reflects that a 1 per cent increase in productivity generates about £11 billion in additional GDP.

Recent OECD figures show that, in terms of skills, the UK is improving absolutely but not relatively. At the higher skills level, we hold our position, but in basic and intermediate skills, although we have clearly improved in absolute terms, our ranking has fallen slightly from 21st to 23rd. Yes, significant progress has been made, but other countries have made progress, too-some at a higher rate. We have to push ahead-no pause, no hesitation. Public spending decisions need to recognise that.

Apprenticeships are one of the skills success stories of the past decade. By 1997, apprenticeship starts had collapsed to 76,000. Compare that to the recent figures emerging of the strong growth in 2009-10, with about 280,000 starts and with successful completion rates at an all-time high of more than 72 per cent. However, it is not sufficient to arrest the decline; the UK must jump on the trajectory to world class. In an environment of public sector reductions, the Government are looking to the private sector to deliver employment growth, but that is unlikely to happen without a sustained commitment to delivering skills transformation.

About 80 per cent of employers offering apprenticeships report that they provided higher productivity, that they made them more competitive and that investment is normally recouped within two to three years. The CES estimates that, for the economy, apprenticeships return on average between £16 and £17 for every £1 of state investment and a 90 per cent employment rate.

I want to highlight three concerns. First, it is important to get the correct mix of apprenticeships as well as the correct volume. It would be wrong to maintain the latter at the expense of the former. Expenditure decisions should recognise the real need for higher-level apprenticeships. To do otherwise would provide a poorer match to industry needs and fail to recognise the impact of technology, automation and the knowledge economy. However, sectors have varying needs and the Government must secure an increase in higher-level apprenticeships while maintaining sufficient volumes of foundation apprenticeships, particularly in the service sectors. Inefficient trade-offs for political purposes between apprenticeship volumes and mix would ensure the delivery of suboptimal outcomes for productivity and competitiveness and should be resisted.

Secondly, decisions must be well informed and targeted by both company size and sector. We are all well aware of the skills challenges in science, technology, engineering and maths. Small and medium-sized enterprises do a lot of apprenticeship training. It is a myth that they do little. They account for the majority of places: 80 per cent of apprenticeships are provided by companies with fewer than 100 employees, with the majority in firms with fewer than 25 employees. The early data emerging on places in 2009-10 suggest that an additional 30,000 employers provided 40,000 extra places last year, with the vast majority being SMEs. There are still many more small companies to target.

Companies with more than 500 employees offer 5 per cent of apprenticeship places overall, so larger companies need to be encouraged to increase places, even to overtrain, and feed their supply chain. A major challenge to growth in apprenticeships will be the availability of employer places in key sectors. As so many other noble Lords have said, to drive up business demand apprenticeship frameworks must reflect up-to-date skill needs. Funding methodologies, delivery rules and audit regimes should balance guaranteeing quality and value for the public purse with the need for simplicity, which is often so important to so many employers.

Thirdly, it is essential to anticipate how the major skills challenges will evolve over the next five years. For example, there are cliff edges in those industries where the workforce is ageing and where apprenticeship starts are insufficient. As other noble Lords have said, engineering technicians and construction trades are just two. As has also been said, it is important to tackle this from both the demand and supply sides, to utilise labour market intelligence to inform young people where future skills demands are likely to be and to target firms where future skills challenges will be.

As many noble Lords have said, skills are a key driver of fairness. Lack of skills contributes to inequality, but acquisition of skills acts as a solution. Qualifications are correlated with stronger employment and higher wages. Young people have experienced the largest percentage increase in unemployment rates, which is why it is so important to see a clear expenditure commitment from the Government on increasing apprenticeships. The necessary drive to increase the number of young people entering university should not lead to the relative neglect of vocational education. Both the academic and the vocational are essential. The advantages of different learning programmes should be made clear to young people. An apprenticeship at level 2 provides a wage premium of 20 per cent for males and 4 per cent for females compared with lower-level qualifications. At level 3, the premium is 22 per cent for males and 14 per cent for females relative to level 2 qualifications. Employment rates for apprentices on completion are around 90 per cent, which is significantly higher even than degrees.

Finally, I shall refer to a point raised by the noble Lord, Lord Taylor. There is also a need to address continuing occupational segregation-the concentration of men in certain occupations and women in others. WhenI was an EOC commissioner, I chaired an investigation into occupational segregation, which showed that the greatest skill shortages were correlated with male concentrations. Such segregation was found to pervade the apprenticeship system. Unless the causes, such as cultural pressures, stereotyping and inadequate careers guidance, continue to be addressed, labour market inefficiencies will remain and young people will be denied access to opportunities.

I thank my noble friend Lady Wall for securing this debate, which is critical to the interests of the UK, employers and young people. The case for increasing apprenticeships is compelling. To hesitate will be to fail to grasp the prize of taking the UK up the rankings and making us world class in skills.

Photo of Lord Wakeham Lord Wakeham Conservative 3:39 pm, 14th October 2010

My Lords, I congratulate the noble Baroness on introducing this important debate. I confess that my main purpose in taking part was to listen to what I thought would be some useful and interesting contributions and, in particular, to hear how my noble friend the Minister and the Government intend to deal with some of these issues. Do not let us kid ourselves: this is a very old problem. I once said in this House that it is a problem going back more than 100 years. I remember that Lord Dearing, whom we miss dearly, immediately corrected me, saying, "No, it's at least 130 years". Then, in evidence to a Select Committee, he referred to 150 years.

In this country, we have a very reasonable standard of higher education. I declare an interest as chancellor of Brunel University. As far as I am concerned, I gave honorary degrees to the two noble Lords in this Chamber who have made the best speeches. I can also see others to whom I have given honorary degrees over my time as chancellor. However, I had great pleasure in giving the noble Lords, Lord Sugar and Lord Layard, honorary degrees. There may be one or two noble Lords to whom I have not yet given such degrees, so if they can give me their names I will see what I can do.

For the rest of our population, we have a history of low productivity and low wages, at much detriment to our economy, and needless disaffection among the young, as the noble Lord, Lord Layard, said. In many European countries, as we saw when we were doing our Select Committee inquiry, apprenticeship is an important way of dealing with a number of these problems. As has been said, I chaired the Economic Affairs Select Committee some years ago. The noble Lord, Lord Layard, was a driving force and was very helpful in educating us in a number of areas where we needed education. My impression was that there is a mighty challenge. I am most interested in hearing how the Government are setting about tackling it.

I read, as I know a number of other noble Lords have read, with interest the speech made by my noble friend's colleague, John Hayes, on 29 September. It was a good speech and a lot of work went into it. It is clear that the Government are taking this seriously and making a number of initiatives. My worry is that they make too many initiatives. There have been enormous numbers of initiatives, but not enough follow-ups. It is partly the fault of Governments, in the sense that, in my experience, they have been for ever changing the structures of government. They put in a bright, young Minister in order to develop the policy on skills. The result of coming up with some sensible ideas is that he gets promoted to another job. The next Minister comes in and says, "Well, the way to get on in this world is to come up with another initiative". Instead of following up on the good initiative, he produces another initiative. Our report did not put it quite as bluntly as that, but that situation occurs with government. As a result, we have a much too bureaucratic system. While I accept that there are good employers at all levels, small and large, I know that a lot of small employers feel that the whole thing is too bureaucratic for them to get involved, so they do not.

In essence, the problem is, first, that many young people leave school today without the basic functional literacy and numeracy required even to begin on apprenticeships. We saw that in the evidence that we took as we went around the country. There were kids wanting to do a good job-for example, work in a nursing home. Unfortunately, they could not do sufficient mathematics, so they were not even capable of dispensing medicine to patients. That is crazy. Secondly, many schools fail to inform their students about apprenticeship opportunities. I have a feeling that too many of our schools look on apprenticeships as a failure. They want to keep these kids on to become failures at A-level instead of saying to them, at the age of 16, "You have a real chance of a worthwhile career if you go into something else".

The problems surround the apprenticeship programmes themselves. In my view, the Government have allowed individual employers too little involvement in how they are run, causing many employers to feel that they are just passive partners. This has been put more eloquently than I will say it, but employers need to be at the centre of apprenticeship provision. Apprenticeship schemes have suffered from too much emphasis on quantity rather than on quality. Completion rates for advanced apprenticeships are still too low, while progression through the different levels on to higher education also needs to be improved. Successive Governments have seen these problems, but they have not done enough about them, so we have a problem that is bad for the economy of the nation and bad for millions of young people who are missing out on a chance to improve their skills and earning capacity. That is a loss to the country.

I will be most interested to hear what my noble friend has to say. We have had this problem since long before she came into the Government and long before the last Government took office; it has been there for a very long time. I hope that we will not have to deal with too many new initiatives, because we have had enough of those. I hope that she will show us the way to give a lead that helps the many employers who will not play their part at the moment because they feel that the schemes are too bureaucratic.

Photo of Baroness Jones of Whitchurch Baroness Jones of Whitchurch Opposition Whip (Lords), Shadow Spokesperson (Culture, Media and Sport) 3:45 pm, 14th October 2010

My Lords, I add my thanks to the noble Baroness, Lady Wall, for initiating this debate. She has an admirable reputation for taking forward the work of the skills sector and has already made a significant contribution to this debate. As my noble friend Lord Sugar and others have identified, the previous Government had a great deal of which to be proud in terms of their experience in the apprenticeship world. They rescued the concept of apprenticeships and made them a realistic alternative training route for hundreds of thousands of young people with, as we have heard, more than a quarter of a million apprenticeship starts estimated to take place in 2010. In addition, their enlightened move to make all young people stay in education or vocational training until the age of 18, combined with the funds to make it happen, transformed young people's prospects and recognised for the first time in many years that alternatives to academic study were more attractive to many young people and could equally lead to successful careers.

But this strategy was very much a work in progress. Although we were moving in the right direction, it requires continued commitment and investment to embed modern apprenticeships as a genuine alternative training choice for all young people, and it also requires a much greater buy-in from UK employers. A recent report from the London School of Economics, which may be the one to which my noble friend Lord Layard referred, identified that competitor countries still have much higher levels of apprenticeships. For example, England has only 11 apprenticeships per 1,000 employers compared with Germany, which has 40 per 1,000. Only 8 per cent of employers in England offered apprenticeships in 2009, whereas the much higher rates in Germany very well illustrate that apprenticeship is embedded in their culture and linked to a commitment to lifelong vocational upskilling. So the UK is missing out on a vital resource that would help in the industrial and technological race of the future.

At the same time, City & Guilds surveyed employers in 26 countries and found that most believed that hiring students with vocational qualifications in the business sector was better than taking on university graduates, but they also admitted that only a small proportion of their apprentices subsequently went on to be promoted to senior management roles, thereby highlighting the problem that they are still undervalued by many in the business community.

The baton has now been handed over to the coalition Government and it will be interesting to see how they intend to take the challenge forward. So far, I have to say that the omens are not encouraging. The first decision of the coalition was to water down the Conservative manifesto commitment to create 400,000 extra apprenticeships and college places in the next two years. Now there are no longer targets, only warm words and aspirations. As to the report of the Select Committee on Economic Affairs-I bow to the interpretation of its findings of the noble Lord, Lord Wakeham-I took away from it that the key to a successful apprenticeship policy is effectively to measure demand; how many employers would be prepared to create places and how many young people have been turned down on application. This would give the Government a clear steer and precise projections with which we could all judge whether they were being successful. Figures and targets matter.

With this in mind, like others, I read with interest the speech by the Minister of State for Further Education at the Institute of Directors a couple of weeks ago. I was looking for evidence of the investment in training and apprenticeships which might be coming down the line. I was disappointed. The only figure mentioned was the reallocation of the £150 million train-to-gain budget which has successfully allowed 1.5 million workers the chance to experience workplace training, many for the first time. It seems that spending on these second chance learners, many of whom have had a poor initial education, is no longer a priority. Can the Minister clarify whether this is the case?

In his speech, the Minister acknowledged the role that skills can play in stimulating growth. That is good; we can all agree with that. However, it is not clear how the Government are planning to invest in the extra training and apprenticeship places now to ensure that UK workers are skilled up and ready to take on the challenges of the new competitive world when growth kicks in. It is fairly obvious that training takes time-often years-so where is the funding and investment strategy from government to drive up our skills base and prepare us now for the new global business opportunities?

Without drive and impetus the skills training agenda will go into decline. The latest unemployment figures mark a worrying trend-jobseekers up and vacancies falling; more and more young people joining the ranks of the unemployed. The fear of the recession is already skewing opportunities for vocational training. We now see unemployed graduates applying for vocational training opportunities which they would previously have regarded as being beneath them, while other young people who might previously have gone to university are applying for apprenticeships as a guaranteed job in a difficult economic climate, thereby squeezing out those for whom the posts were originally intended. So just at the time when we were beginning to establish modern apprenticeships as a respectable alternative career choice, demand is vastly outstripping supply, with the traditional target recruits facing rejection and disillusionment.

Where are the new apprenticeships going to come from? Seemingly, not from the public sector. The anticipated level of cuts promoted by the Government across public services has created, effectively, a recruitment freeze. No new jobs are being created, not least in training posts. What is more, in the recent report of the Learning and Skills Council into barriers to creating new public sector apprenticeships, lack of funding was highlighted as a major issue, and this is clearly going to get worse. When cuts of this magnitude are contemplated, it is a sad fact that training budgets are the first to be hit. So, unless the Government are going to intervene and ring fence funding for public sector apprenticeships-which so far they have shown no intention of doing-we will lose a generation of newly-skilled young people ready to take forward the public services of the future.

Already opportunities in the construction sector have been hit hard. The previous Government had ambitious plans to use the power of public procurement to drive up skills and apprenticeships in the construction sector which, in the recession, was increasingly relying on the public sector for business. However, the Government's deeply unpopular decision to cancel the Building Schools for the Future programme and to decimate the housebuilding grant to the Homes and Communities Agency has made a mockery of that strategy. It is clear that without active government intervention, the overall number of public sector apprenticeships will fall.

So we come back to the central question: where will the new apprenticeships come from? I may be a cynic, but when the Minister of State talks about a new partnership between government, employers and the individual, I interpret it to mean that government will pay less and employers and individuals will pay more. I hope that the Minister will be able to disabuse me of this conclusion, not least because I do not think that such a strategy will work.

I believe that, first, because, when the economic climate is tough, neither employers nor individuals will have the additional spare capacity to invest in skills training, particularly when the future is so uncertain. Secondly, is it not in all our interests, rather than those of just individual employers, that we have competitive, well qualified public and private sectors to compete on the world stage? I will be interested to hear what the Minister has to say on this. Most importantly, I hope that the Minister will be able to give us some real facts on how much the Government intend to invest in apprenticeships and skills training in the coming years and what their target recruitment levels for apprenticeships are. Only then will we be able to monitor whether this strategy is working and how successful it will be. I look forward to hearing her response.

Photo of Baroness Turner of Camden Baroness Turner of Camden Labour 3:56 pm, 14th October 2010

My Lords, I thank my noble friend for introducing this debate and for the manner in which she did so. It is important that young people realise that apprenticeships provide access to skilled, respected and well paid jobs. Not everyone can go to university-many may not wish to do so-yet improving the skills base is important in securing our economic success. The previous Government understood this, hence their 2009 White Paper, Skills for Growth. Labour's £l.2 billion apprenticeships budget was a result of this.

One of the problems in recent years has been the decline of manufacturing industry in many areas. It is now generally accepted that our economy has become unbalanced, with too much reliance on financial services. Many of us said this at the time-the trade unions said so-but no one was listening then. The image of trade unions, for which the media are largely responsible, is almost entirely negative. That is unfair. Unions have always played a substantial role in the training and further education of their members. I was for many years a union official. My union had always supported education and training for members. We supported Ruskin College in Oxford. I benefited from courses at Ruskin, to which I had been sent by my union, and many years later I became a governor there. Like many unions, we ran our own training college. Much of the collective bargaining in which I was involved was concerned with the training and re-training of employees, a large part of it relating to the introduction of new technology. Our aim was to keep people in employment-no redundancies-through training and re-skilling. That was the policy that we followed. The TUC has a learning and skills organisation, supported by all its affiliates. It is called unionlearn and has worked with public and private employers. It believes that a good skills base is good for the economy, vital to the recovery and in the best interests of both business and employees.

It is true that there are considerable challenges. The UK Commission for Employment and Skills concluded that we need significant improvements if the UK is to be world class in productivity, employment or skills. Unionlearn believes that these improvements can be achieved. A union learning fund has been established to set up a network of learning representatives to raise awareness of training, to help build active learning partnerships between unions and employers, and to work on learning and skills.

Of course, young people must be encouraged through the various routes available-many of them have been referred to in some of the very interesting contributions to this debate. However, I would be interested to know what the Government have in mind. It is widely acknowledged that many young men in particular face bleak prospects because of the high level of youth unemployment. Much more should be done to ensure that on-work training is available. The knowledge and experience of unions can be of great assistance in that regard.

I have mentioned young men. However, when I was a member of the Equal Opportunities Commission, one of our campaigns that had some limited success was the WISE campaign-Women into Science, Engineering and Construction. It was led by our then chair, the noble Baroness, Lady Platt, who is herself an engineer. She spent a lot of time persuading schools and parents that this was a suitable career choice for their daughters. Apprenticeship schemes in manufacturing industry should also be available to women; they are no doubt a result of our equality legislation, but encouragement is often required.

The debate about university funding and the Browne report should not sideline the pressure for access to apprenticeships and on-work training. Nor should there be attempts to cut expenditure in that area. We are talking about investment in our future-in all our futures. I await with interest the Government's response.

Photo of Lord Cotter Lord Cotter Liberal Democrat 4:00 pm, 14th October 2010

My Lords, it is good to speak on apprenticeships today, thanks to the noble Baroness, Lady Wall. The last Government initiated some good progress in the field, and it is welcome that the coalition is putting a big emphasis on apprenticeships as a vocational route for education. That is more vital than ever when there are considerable concerns about people having jobs, but also when the clear view of all is that we need to be a skilled nation.

University education is important, but so is the acquisition of specific vocational skills. A recent report from the Apprenticeship Ambassadors Network said that apprenticeships in this country were among the world's best, which is welcome. However, the same report drew attention to the fact that, in England, only 8 per cent of big businesses offered apprenticeships in 2009, the lowest proportion out of eight countries studied. Those countries were selected as being similar to this country, seven being in Europe, and all with similar backgrounds to ours. It was stark to learn that, in the other countries, the percentage of big firms offering apprenticeships ranged between 25 and 30 per cent. Clearly, action is needed to get our big companies to step up to the plate, and to help them to do so.

Still looking at the business perspective, it is clear that there is a great need for small businesses to be engaged; I am glad to hear that the percentage is quite high, but there is a great need to increase it, as for big business, because the small business sector is the backbone of the country. It has also often been said, but I say it again, that bureaucracy needs to be kept to the minimum to assist that process.

Concerns have been expressed for some time about the low level of apprenticeships in the public sector, which must also be addressed. However, since much emphasis has been placed on the need for the private sector to provide jobs and stimulate the economy during these difficult times, the Government clearly need to encourage both sectors to engage.

The issue of schools' career advice was raised by my noble friend Lady Sharp and others, but I add my voice to it. Careers advice must be of a high standard. It has been said that in England, as in France, schools are often hostile to work-based learning and provide little or no assistance. More than one report has indicated that careers advice is often not good enough at school level, when young people need to look to their prospects. I recollect hearing that apprenticeships have frequently not been referred to at all as an option; that must change.

Apprenticeships are offered nowadays in many sectors, which is welcome, but we must not exclude traditional trades in which people use their hands. I came across an example recently where a young person wanted to find an apprenticeship for carpentry but could not find such an opening. I also remember hearing that quite a lot of skills that are important and which we had in the past have been lost. When I was on the Audit Committee, we were very concerned about the difficulty of finding skilled people to help with the maintenance and improvement of the parliamentary buildings. We should not lose sight of traditional crafts and of many others.

I raise one point for the Minister to support. We need to communicate with employers about apprenticeships. I understand that this process was blocked by the Government's freeze on marketing and communication, which, for example, halted such communication by the National Apprenticeship Service. Fortunately, a partial exemption from this directive has been allowed for apprenticeships, but it is important that communication is increased. I hope that the Minister will consider what I feel is an important point.

We are discussing today the need for an expansion of vocational education. In that connection, it is welcome that the coalition Government are promising an increase in apprenticeship places.

On training, as the Leitch report said, we in this country have a serious problem with management and leadership. It is widely recognised that often the quality of managers is poor; only 20 per cent of our managers have a management qualification. We can spend much time on training and apprenticeships, but all this can come to nothing when, as sometimes or often happens, poor management skills lead to a waste of such talents.

Clearly, the debate is welcome and a lot has come out of it. I am sure that we are all learning, as I have done, from many factors mentioned in it, and I hope that the Government, in their endeavours to increase apprenticeships, will listen. Clearly there is great support for apprenticeships, which is why this debate has been so important. I hope that the Government will address the many good points that have been made by many speakers.

Photo of Baroness Donaghy Baroness Donaghy Labour 4:07 pm, 14th October 2010

My Lords, when I put my name down to speak in this debate, I had a conversation with my brother, who lives in Australia, and who worked for many years in the industrial maintenance of heating systems. He occasionally supervised apprentices. I asked him about his most vivid experience of working with an apprentice, and he replied that he once needed to climb a ladder to switch off a valve near the roof of a factory and asked his apprentice to "foot" the ladder. This was in the days before using a cherry-picker was considered a safe alternative for this sort of job. For those who are not sure, footing the ladder meant that the apprentice had to stay by the ladder and place his foot on the bottom rung to prevent it slipping. My brother emphasised the importance of not moving away from the ladder; he said, "If World War III breaks out, it is all right to shoot back but you do not take your foot off the ladder". This is beginning to sound like a Gerard Hoffnung record. When my brother had climbed to the top of the ladder to turn off the valve, he looked down before beginning his descent and discovered to his horror that the apprentice had moved away from the ladder and was talking to his mates about the night before. When he came safely down the ladder-and I shall interpret this for the House of Lords-he had to admonish the apprentice for disobeying his instruction.

That anecdote taught me four things. First, I shall not be asking my brother for anecdotes ever again. Secondly, clarity of instruction, including warnings of the outbreak of World War III, does not always get through. Thirdly, there are boring aspects to all jobs, but they can prevent serious accidents, some of them fatal. Finally, inspiring and motivating is an important part of any trainer's armoury.

My interest in apprenticeships stems from my time on the Low Pay Commission and from the inquiry that I conducted last year for the previous Government on fatal accidents in the construction industry. I was party to the original Low Pay Commission recommendations on apprentice pay rates despite their unpopularity even with my own union at the time. I am particularly pleased that the commission is having another look at this issue while maintaining the first principles of supporting a competitive economy, with the rates being set at a prudent level, being simple and straightforward and, finally, making a difference. I am sure that the Government will take its eventual recommendations seriously.

The last Low Pay Commission report shows the distribution of apprenticeships as follows: 49 per cent in hairdressing, early years, health and social care, business administration and customer service, retail and hospitality; 26 per cent in that ubiquitous category "other"; and 25 per cent in construction, engineering, electro-technical and motor industries, quite a small proportion of which is in construction. While not trying to play down the importance of that 49 per cent, I cannot help thinking that these, on the whole, low-paying occupations find mutual benefit in employing apprentices on an even lower rate for eight months to two years. It is a very different situation in construction.

I am a supporter of the construction industry, which consists of entrepreneurial, can-do people. It is vital to the UK economy and provides significant numbers of people with employment, but its record on apprentices is not good. As I wrote in my report last year, "All the major reports", written about construction,

"refer to the industry's poor image and reluctance of parents to encourage entry into the industry as one of the major draw-backs ... As the majority of the workforce (approx 55%) have skills below NVQ level 2 or equivalent and approx 11% hold 'low or no qualifications' ... it is clear ... there is ... a long way to go".

The structure of the construction industry-some would say its absence of structure-means that it is easier to poach from other companies than to train. That problem is not exclusive to the construction industry.

During the inquiry we did a considerable amount of work through case studies. What emerged is that almost equal numbers of qualified but inexperienced workers and experienced but unqualified workers were involved in fatal accidents, so both elements are equally important. A well trained apprentice in construction is less likely to be a danger to themselves and, just as importantly, to others. This industry still experiences between 50 and 75 fatal accidents every year, and the under-recording of accidents leading to injury is a national scandal. Two of the cases that I came across involved young men who had received little or no training, who were not supervised and, in one case, who was given an instruction that was wholly inappropriate for his level of experience. I spent an evening with one of the families. What happened to their son-he fell off the roof of a factory and died-amounts to a life sentence for his whole family.

More quality apprenticeships in construction will improve the industry, may save lives and may give more opportunity to those young people who 40 years ago would have followed their fathers into the coal, steel or car manufacturing industries, and who are so alienated in today's society. There are around six applicants for each vacant place in construction apprenticeships. There is no lack of interest, but the majority of construction companies fail to train apprentices. With some, that is because of genuine financial uncertainty. Where they do take on apprentices, however, the dropout rate is high. I was given many reasons for this: young people received a poor deal and were taught inappropriate courses; they were not really committed; or they received only 15 hours' training a week instead of 33 hours, which applied years ago. The picture is slightly better in Scotland, with eight apprentices for every 100 workers compared with 0.9 for every 100 workers in London, and the extent of self-employment must also have a major impact on training.

The point was made by some organisations whose representatives I met that the narrowness of training sometimes adds to the risk on site, where a multidisciplinary approach is often expected. This led to workers performing tasks with which they were not familiar, another major cause of fatal accidents in construction. Examples were given of builders who installed solar panels but who were not skilled roofers and often put themselves at risk. Another point was made that the 16 to 19 age range for apprenticeships was not always appropriate for certain trades-for instance, sheeting and cladding, where a more mature approach was required.

I called for a more flexible approach to apprentice training grants and a more targeted approach to certain specialisms. This would improve retention and qualification rates. In their response, the previous Government indicated rightly that this piece of work would be the responsibility of the main board of CITB-ConstructionSkills to address in the first instance. They indicate that:

"ConstructionSkills may wish to explore the possibility of carrying out work to identify the underlying reasons for the non-completion of apprenticeships. This may also cover students in full-time college courses which some learners may believe are a form of apprenticeship. The research could also touch upon which specialist trades are most appropriate for 19+ year old apprentices".

In making these comments about the shortcomings of construction apprenticeships, I wish to pay tribute to ConstructionSkills and the CSCS board for the work that they do. The construction trade unions also have an important part to play in their dedication to skills training.

I urge the Government to pick up the baton on these recommendations, which the previous Government accepted in full. I also pay tribute to the work done by the business department in ConstructionSkills to co-ordinate efforts to rescue those apprentices where a job was no longer guaranteed after training. I hope that in any future discussion about the structure and financing of ConstructionSkills, the Government will bear in mind all the work that has already been done by Sir Michael Latham and Sir John Egan as well as the important initiatives taken by my noble friend Lord Prescott in this area. I thank my noble friend Lady Wall for instigating this debate.

Photo of Lord Liddle Lord Liddle Opposition Whip (Lords) 4:18 pm, 14th October 2010

My Lords, I, too, thank my noble friend Lady Wall for initiating this important debate. We have had a lot of interesting and impressive speeches, not least from my noble friend Lord Layard, who has contributed more to public policy in this field than possibly any other single individual, but also from a bevy of noble Baronesses on my side of the House who have spoken from their experience as trade unionists and have given a valuable illustration of the practical benefits that this trade union experience brings to this House.

My own interest in this topic is that I was an adviser to the Secretary of State for Business in the final 20 months or so of the Labour Government and did a lot of work in this field at that time. I came to the view that, while the Labour Government had done so much, there was still an awful lot more to do. This became more critical after the 2008 crisis when it was clear that we needed to rebalance the British economy and move to real engineering from financial engineering. We will not do that unless we do something about our apprentice and technician training in this country.

There is also a social issue. We need to find a way of providing decent jobs for people in this country who do not go to university. What we see is a terrible hollowing out of our labour market. There was a disappearance of what I call decent working-class jobs in the previous generation. In the knowledge and service economy we get a polarisation, with earnings racing ahead at the top and, at the bottom, many people in work but poor at the same time. The jobs in the middle that provided decent opportunities have disappeared. The only way we can rebuild that is through much more focus on apprentice and technician training. It is a mammoth economic and social challenge. The noble Lord, Lord Wakeham, was absolutely right: it has been a challenge for Britain for more than a century but it is even more urgent now.

The fact that it is urgent is accompanied by a great fear that in the coming public spending cuts the resources for investment in this key challenge for Britain simply will not be available. I add a few reflections of my own on how the Government might try to avoid such a situation. First, it is essential that if the apprentice guarantee is to be effective, we have to get the schools much more involved in a vocational curriculum from a fairly early age. People talk about a vocational curriculum but it is a little more expensive to provide than so-called academic learning. As the per capita payments to schools are squeezed, which I fear they will be, there is a danger that the money for the expansion of vocational education will also be squeezed. I have a suggestion and I would like to hear what the Minister thinks about it. A pupil premium for children from disadvantaged backgrounds has been talked about. It is a good idea but let us have a premium for schools that not only take in a disproportionate number of children from disadvantaged backgrounds, but deliver good vocational outcomes. We need to give priority to that in our school system.

Secondly, we have to use the money that is available for training as effectively as possible. The Labour Government concentrated a lot of money on basic skills and level 2 qualifications. There is a very strong social case for that. However, we ought, in a period when we have to be rigorous about our priorities, to focus on apprenticeships and workplace training. We have to provide better support than we so far have for advanced apprenticeships, as well as level 2 apprenticeships. When I was in the department, the idea of public support for advanced apprenticeships always caused much difficulty with the Treasury, which had a doctrine of market failure. Its view was that market failure applied at the bottom of the labour market but if apprentices were needed higher up the scale, surely employers would spend the money to provide the apprentices themselves. I do not think that has worked in practice for a long time. We must do something about it.

We have to focus the available money on building partnerships with groups of employers to provide apprenticeships. The noble Baroness, Lady Drake, used the wonderful phrase "collaborative intervention". We must encourage more collaborative intervention by government to get employers to act. I agree with the noble Lord, Lord Sugar, that public procurement is a possible lever here. I also agree that we should be looking at so-called licences to operate as another vehicle-basically saying that you cannot do a job unless you have a proper qualification. When there is great pressure on public finances, the case for statutory intervention in this area, particularly on a sectoral basis, becomes a lot stronger in order to get employers to work together. We-certainly noble Lords on these Benches-will have to look at that again.

Thirdly, we need to develop ladders of opportunity between basic apprenticeships, advanced apprenticeships, technician classes and between level 3, level 4 and degrees. I know that there are many problems attached to the Browne review but I was thrilled by its recommendation that the discrimination against part-time students that exists in the present system should be ended. That was a very positive feature of the Browne review. I rather agree with my noble friend Lord Bhattacharyya that we could make progress by enabling people to get loans for apprenticeships as well as for degrees. The fact that these loans are not available for apprenticeships in the way that they are for undergraduates is disgraceful discrimination against the working class.

We also need expansion on the part of universities that concentrate on teaching-the post-92 universities. I am a director of one in Cumbria. They must focus much more on developing bridges between apprenticeships, technician classes and degrees. Those institutions will need a lot of help to make that adjustment. I should like to feel that the Government are aware of that need and will act on it. We should put apprenticeships at the centre of our economic and social policies. We need stronger partnerships with employers; to put funds and choices in the hands of students; to have real workplace experience in apprenticeships; and to develop pathways to advanced and higher levels of excellence. Only if we do these things will we have some hope of achieving the resurgence of private sector dynamism and jobs growth on which the coalition Government's future certainly depends.

Photo of Lord Young of Norwood Green Lord Young of Norwood Green Shadow Spokesperson (Business, Innovation and Skills) 4:28 pm, 14th October 2010

My Lords, I, too, thank my noble friend Lady Wall for giving us this opportunity to have such an excellent debate and I congratulate all those who have taken part in it. However, I shall not describe noble Baronesses in quite the same way as did my noble friend Lord Liddle, in case they indict me for political incorrectness.

The noble Lord, Lord Wakeham, talked about bright young Ministers. I am not sure whether I was a bright Minister but I certainly fulfilled the criterion of being a "Young" Minister. I had the pleasure of dealing with skills and apprenticeships. I say that because, as a former apprentice, I have had a lifelong involvement with this matter. The noble Lord talked about there being too many new initiatives. However, some of those new initiatives were needed. The previous Government created a National Apprenticeship Service, for which I do not apologise as I consider that it was needed. We came up with the idea of an online vacancy matching service with regard to apprenticeships. Fortunately-fingers crossed-that computer service is still working and has not crashed. The noble Lord commented on the lack of employer involvement. I take issue with that view, as we have sector skills councils, which very much involve employers in the creation of apprenticeship frameworks and the development of apprenticeships. He talked about literacy and numeracy. As my noble friend Lord Liddle said, we invested a huge amount in, and achieved, improvements in literacy and numeracy.

I could not help noticing that the current Secretary of State, Vince Cable, recently said that he was surprised that there were only 250,000 apprenticeships. I thought that it was lucky that he did not inherit his department in 1997. He would have been appalled, even flabbergasted, as then there were only 65,000 apprenticeships, with a completion rate of 25 per cent. I am puzzled by his surprise, but there are a number of things about the Secretary of State's recent statements that have surprised not just me but a number of others.

In the previous Government, we tried to adopt a strategic approach. I only wish that my noble friend Lord Leitch was here for me to congratulate him on his report, which mapped out our problems in skills and what we needed to achieve. That is what we based a lot of our policies on. As a number of noble Lords have said, we introduced the Apprenticeships, Skills, Children and Learning Act, which did a number of important things. It legislated to give all suitably qualified young people the right to an apprenticeship by 2013, created the National Apprenticeship Service, created a statutory framework for apprenticeships and ensured that all young people at school receive adequate information, advice and guidance about apprenticeships. That, as the noble Baroness, Lady Sharp, reminded us, has not yet been achieved in all schools; my experience from visiting schools is that the situation is gradually improving, but it is not good enough. We should also remind ourselves that we gave 22 million workers the right to ask for time to train. Unfortunately, only a third of employers provide training; two-thirds of employers have not yet seen the light or they indulge in poaching. In terms of legislation, my noble friend Lady Jones referred to our raising of the participation age. That was another fundamental improvement for young people, who were told that up to the age of 18 they ought to be in either education or training.

I put in a Written Question, which was answered by the noble Lord, Lord Shutt, asking how the Government were going to achieve their stated aim of an additional 50,000 apprentices. We all welcome the aim and Ministers have said that they will fund it by transferring money from the Train to Gain budget. That will have an implication in itself. However, putting that to one side, I asked what measures were to be put in place to achieve those additional 50,000 apprentices. As we know, it is one thing to say that you are going to achieve apprenticeships but it is another to realise that target. I was directed by the noble Lord towards the Government's Strategy for Sustainable Growth, but all it says, apart from a few warm words, is:

"The Apprenticeship programme, newly refocused to prioritise progression to Level 3 and higher will help deliver the technician level skills that a dynamic economy needs. This year we will ... provide incentives to encourage provision and take-up of training in priority areas including a growth and innovation fund".

The House needs to be assured on the detail of that because, unless you have a clear strategy to achieve those 50,000 places, the statement of that aim will, unfortunately, be just warm words.

Another Minister of State, John Hayes, has been referred to a number of times. I cannot help feeling that he, too, is on a voyage of discovery, because he says:

"I know that the work of GTAs (group training associations) has not been sufficiently recognised in recent years by the Government and its agencies. I know, too, that this neglect cannot be allowed to continue".

I could not help bridling at that. We spent a lot of time and effort recognising the work of group training associations and, indeed, putting in additional money to encourage more of them to be created. Why did we do that? It is because GTAs are a means of ensuring that small and medium enterprises can gather together and cut the administration costs of employing apprentices. I suggest that the Minister of State does a little more homework before he makes that kind of comment.

There have been many good speeches in this debate, but I hope that noble Lords and Baronesses will forgive me if I do not refer to all of them; after all, that is the Minister's job when replying. However, I will pick out one or two points. There have been a lot of references to both the cost and value of apprenticeships. I am making a plea for us to get the balance right. Of course there is a cost in employing an apprentice. However, we too often neglect the fact that apprentices also have real value. Not only do they foot the ladder, but they bring a lot of invigorating new ideas to companies. It is a two-way street. You need good-quality mentors, but the people who deal with young apprentices say that they are themselves enthused by their contribution. Apprentices want to get involved in real work as soon as possible.

I pay tribute to my noble friend Lord Sugar for his contribution to that apprenticeship campaign. A lot of people expressed cynicism, saying: "What is the point of employing somebody like Lord Sugar for this? What does he know?". Well, as he reminded us, he proved his worth in the increased interest that we got from employers. I would not say that I agreed with every aspect of his assessment of the value of FE and other forms of training. We were reminded by my noble friend Lord Haskel of the vital contribution of FE colleges.

I remind noble Lords who spoke about public procurement that that was also something that we did. We insisted that public procurement contracts must in future define how many apprentices there will be and what training will take place. There is sometimes a little collective amnesia in this area.

The noble Baroness, Lady Sharp, reminded us about the collapse of manufacturing. It was not only the collapse of manufacturing that caused the decline of apprenticeships; that was also an unintended consequence of privatisation. The number of apprenticeships held in nationalised companies dropped alarmingly.

My noble friend Lord Bhattacharyya made an interesting contribution. His point about loans for apprenticeships as well as universities was so good that I wish that I had thought of it myself; I can pay no higher compliment than that. Indeed, I was getting around to that idea, but he was ahead of the game.

We should remind ourselves that the previous Labour Government guaranteed all 16 and 17 year-olds the right to an apprenticeship or school, college or training place by the end of September of each academic year. As I said, we wanted every young person to be in education, training or an apprenticeship until the age of 18. We had an education maintenance allowance for over 500,000 young people. We backed employment for young people with an investment of £1.2 billion in the Future Jobs Fund, which has unfortunately been scrapped.

I do not have time to go into all the details of some of the other things that we did, but there has been a lot of talk about advanced apprenticeships. That was part of the previous Government's strategy, with three key parts. We talked about expanding the number of apprenticeships on offer by 35,000 to create a new class of skilled technicians. We intended to introduce skills accounts for each individual to invest in their education. There would also have been a radical simplification of the skills system.

I liked the idea of the noble Lord, Lord Taylor, about celebrating apprenticeships. He will be pleased to know that a number of enlightened employers have graduation days for their apprentices. British Telecom is one. It is a really good idea: we should celebrate finishing apprenticeships. It is just as much of an achievement as when an undergraduate graduates.

I have been told to wind up. In conclusion, I say this to the Minister. In a debate yesterday, she talked about getting the CSR out of the way. I do not think that we will get it out of the way: it will have long-term repercussions. I hope that the PricewaterhouseCoopers forecast yesterday about the loss of jobs in both the public and private sectors is wrong, because we do not think that unemployment is a price worth paying. I hope that the Minister can demonstrate how, as we go through this very difficult period, the Government will nourish and sustain apprenticeships.

I will end on this note. We have often been accused by the Government of not fixing the roof when the sun was shining. We fixed the roofs of colleges when the sun was shining and when it was not. In 1997, the National Audit Office spoke of a crumbling infrastructure. I hope that this Government will improve on that record.

Photo of Baroness Wilcox Baroness Wilcox The Parliamentary Under-Secretary of State for Business, Innovation and Skills 4:41 pm, 14th October 2010

My Lords, it is wonderful to hear the former Minister speaking with so much enthusiasm that it is difficult to get him to sit down. I know that he enjoyed his job very much and I hope that he will be heartened by at least some of my words. I am grateful to the noble Baroness, Lady Wall, for bringing to the attention of the House such an important issue-one on which she is obviously well versed. Her knowledge of engineering apprenticeships was an education for me. With consultations shortly to close on the new government strategy for skills, and with the return to the airwaves of the much loved programme of the noble Lord, Lord Sugar, this has been a timely debate. Therefore I thank the noble Baroness, Lady Wall, and all noble Lords who have spoken. I am much encouraged and informed by what has been said. I was particularly moved when the noble Baroness, Lady Donaghy, talked about the construction industry. Her words will stay with me when I go back to my ministry and I welcome her to the House. I will try to address many of the points that have been raised. If I miss any of them because my time runs out, I will of course reply to noble Lords by letter.

Apprenticeships are at once the most ancient and modern form of vocational training. As has been said, in this country their formal existence dates from the Middle Ages, but in places such as China they have been around for a thousand years. Confucius explained why apprenticeships work by saying: "I hear and I forget, I see and I remember, I do and I understand". The noble Lords, Lord Young and Lord Bhattacharyya, had experience of apprenticeships of very different kinds. Apprenticeships have touched for the better the lives of many noble Lords who have spoken today. They touched my own, because my father started his life's journey as an indentured apprentice to a master craftsman, to whom he referred with affection and respect throughout the whole of his subsequent career. I am sure that the noble Lord, Lord Sugar, would approve of this. The noble Baroness, Lady Sharp, also recalled this relationship at its best.

Today, thousands of young people are benefiting from the excellent start to working life that an apprenticeship can offer-but they are open not only to the young. Noble Lords may have seen recent reports in the media about current apprentices in their 60s and 70s. There is hope for all of us if we get thrown out of here. One of the many virtues of your Lordships' House is its sense of fair play. It is in that spirit that I am bound to acknowledge that there is agreement on all sides of the House that apprenticeship training must be central to any Government's approach to skills. I go further and acknowledge that one of the undoubted achievements of the previous Administration was to bring about a significant expansion of the number of apprentices in training. My noble friend Lord Wakeham can be assured that we aim to build on those initiatives, and although I may not be a bright young thing whom the Government are likely to move on ever so fast, I hope that I will stay in this ministry long enough to make sure that everything stays in place for a while.

I am convinced that, even in these straitened times, the task now must be not only to continue to increase the number and range of apprenticeships on offer but also to improve their quality. If we manage to do that, the historic promise that apprenticeships hold-of providing the right skills and knowledge to get on in life-will be delivered not just to some but to all apprentices. Happily, my conviction is shared across the coalition Government. In spite of the strain on the public purse, we all recognise the central place that apprenticeships must occupy in any successful work-based training system.

I was rather disappointed that the noble Baroness, Lady Jones, was not able to recognise the clear commitment that this Government have made to apprenticeships. I hope she will see that I do a bit better as time goes on. I also hope that the whole House will have welcomed the commitment made in the coalition's programme for government to,

"seek ways to support the creation of apprenticeships, internships, work pairings, and college and workplace training places as part of our wider programme to get Britain working".

In the light of the Audit Commission's critical report on the Train to Gain programme, we redeployed £150 million of funding from Train to Gain to create up to 50,000 new apprenticeship places, which have been referred to today, in the current year. This is the way to deliver high-quality skills which are genuinely employer-led. In answer to a point raised by the noble Lord, Lord Haskel, the Skills Funding Agency and National Apprenticeship Service have been working alongside the further education and skills sectors to make those apprenticeship places available where there is local demand. They have reassured my colleague in the other place, John Hayes, that this process is going well and that we are on track to deliver our commitment.

Among many examples of steps that the Government are taking to increase the supply of apprenticeships in areas that most need them, I shall choose just one. I know that the noble Baroness, Lady Wall, has a special interest in the Government's skills agenda. She may therefore have noticed that my colleague, the Minister with responsibility for higher education and science, announced that the Birmingham Chamber of Commerce and Birmingham Metropolitan College are creating 3,000 new apprenticeship places which are to focus on areas such as green technologies, business skills and high-tech engineering. I hope the noble Baroness will agree that this is exactly the sort of local partnership that we want to see more of.

As the noble Lord, Lord Bhattacharyya, rightly said, in all our plans the apprentice can play a vital role in shaping the design and delivery of apprenticeships. I reassure the noble Lord that we see all apprentices as our most important asset in demonstrating the business benefits of the programme to employers.

As for the future, my colleague in the other place, the Minister for Further Education, Skills and Lifelong Learning, John Hayes, has already publicly made clear our priorities on a number of occasions.

Above all-here I am responding to the noble Baroness, Lady Sharp, and the noble Lords, Lord Layard and Lord Cotter-the Government want apprenticeships to become the gold standard for workplace training. They must become, even more than they already are, a form of training which employers are proud to offer because of the business benefits that apprentices bring, and to which prospective apprentices aspire just as much as people aspire to a university degree. As my colleague in another place, the Secretary of State for Business, Innovation and Skills, pointed out in his Statement on higher education funding back in July, there should not be a rigid dividing line between higher and further education. Why not take an apprenticeship rather than a traditional degree course?

The noble Baroness, Lady Sharp, raised the important issue of careers advice in schools. Schools already have a clear obligation to ensure that pupils receive information about apprenticeships. The Education and Skills Act 2008 requires schools, in discharging their statutory duty, to provide careers education, as well as impartial information and up-to-date materials that present a full range of 16 to 18 education or training options. I reassure the noble Baroness that the commencement of Section 250 of the Apprenticeships, Skills, Children and Learning Act 2009 has been delayed pending the completion of that review. I should make it clear that that applies equally to the public and private sectors. Public sector employers have shown increasing commitment to apprenticeships and that should continue both for new staff, where those opportunities are available, and for existing staff. In government, it is important to practice what we preach and I am pleased to be able to tell your Lordships that there is an exemption to the current Civil Service recruitment freeze which allows departments to continue to recruit apprentices. I expect them to continue to offer apprentice places to existing staff also.

The question of the noble Lord, Lord Sugar, on promoting apprenticeships through government procurement is a very important point. The Government, and the public sector more widely, wield significant influence through the contracts which they negotiate and, like the noble Lord, this Government are interested in looking at what more can be done to use that influence to encourage employers with public sector contracts to consider the skills needs of their workforce.

To encourage more people in the public and private sectors to take up apprenticeships, the Minister for higher education and science announced only last week that people completing their apprenticeships in certain sectors will be given the title of technician. The National Apprenticeship Service will be working with the Technician Council and with the apprentices, providers and employers whom this announcement affects so that apprentices can soon proudly sport that badge of honour. I am drawn to the idea outlined by my noble friend Lord Taylor of a national apprenticeship day, commemoration stamps or anything else which will raise the expectation, the enthusiasm and the status of apprentices. Here I may be talking with prejudice, as I was brought up by my father who believed that universities were for people who thought and technical colleges were for people who did. I went to a technical college, so maybe I am prejudiced.

I fully realise that our ambitions for apprenticeships require urgent action in four main areas. First, there is a continuing need to expand the number of apprenticeship places on offer, as the noble Lord, Lord Liddle, said. That is especially true of level 3 and above, where demand from employers for skills is growing and where the lifetime earnings premium of the apprenticeship is comparable with a degree.

Secondly, as the noble Lord, Lord Aberdare, rightly said, we must create a much clearer ladder of progression within the apprenticeship programme. To that end, my department has already written to all sector skills councils asking them to develop level 4 and 5 apprenticeships' frameworks to match those which already exist in sectors such as engineering. We recognise that there is much more to do on that front.

Thirdly, I say to the noble Lord, Lord Aberdare, and to my noble friend Lord Wakeham that we must make it easier for employers to offer apprenticeships by improving the information available to them and cutting unnecessary red tape. That is particularly true for small and medium-sized businesses which, as the noble Baroness, Lady Drake, emphasised, form the bedrock of the apprenticeship schemes in this country.

Our final, and probably most difficult task, must be to reach a consensus on the right funding model for apprenticeships in our current circumstances and to establish a fair division of costs between the Government, employers and learners.

An advanced economy needs people with advanced skills in order to grow and we need to use all our talents. Here I pick up the point made by my noble friend Lord Taylor. He pointed to the gender imbalance. I can reassure him that nearly 50 per cent of apprentices are women. However, he is right to note that that is not the case in all sectors. We have a huge task to break down entrenched gender stereotypes. We published a draft skills strategy in June and have been consulting with employers, learners and skills sectors over the summer. We will publish a full skills strategy to accompany my department's growth strategy after the spending review, which will set out in more detail how we intend to support our learning, skills and priorities.

I hope that this will reassure the noble Baroness, Lady Wall, that the coalition Government are committed to driving up the skill levels of the workforce. Apprenticeships already make a tremendous contribution to society, but this Government intend to go further: they intend to ensure that they are improved and expanded so that more individuals and businesses can benefit from the opportunities that they offer. I end with the words of that great exponent of crafts and apprenticeships, John Ruskin:

"The highest reward for man's toil is not what he gets for it, but what he becomes by it".

Again, I thank the noble Baroness, Lady Wall, for bringing this debate to your Lordships' House.

Photo of Baroness Wall of New Barnet Baroness Wall of New Barnet Labour 4:55 pm, 14th October 2010

I thank all noble Lords who have taken part in the debate this afternoon. I anticipated that it would be very interesting, but even I have been surprised by the things that I have learnt. I thank the Minister for her suggestion that she has learnt something today. I always take the view that if you participate in something but do not learn something, what was it all about? That applies to me and, I hope, to her, today.

I do not intend to go through all of the various points that have been raised. To some degree, I share the views of my noble friends Lord Sugar and Lord Haskel about FE colleges. Some FE colleges are great; some are less than great. I know from my experience that there is a lot to do to build some of them up to be the very best. We owe that to the young people who are going through their apprenticeship off-the-job training with them.

My noble friend Lord Sugar mentioned the importance of mentors. I ask the noble Lord, Lord Wakeham, whether he could recommend a mentor to me, because I am really disappointed that he did not suggest that he would give me an honorary degree. Obviously, I need to do better, and I can do better only if I am mentored.

Photo of Lord Wakeham Lord Wakeham Conservative

I thought that I said that if anybody wanted to make an application, I would do the best that I could.

Photo of Baroness Wall of New Barnet Baroness Wall of New Barnet Labour

I am verbally making the application, and I will make sure that I follow it up in writing.

Again, I thank everybody who has spoken; it has been a tremendous debate, with lots of good suggestions. To refer to a comment by my noble friend Lord Young in response to the suggestion of the apprentices' day, he was being a bit humble, because he has supported me on a request on several occasions to come to a number of businesses to present awards to apprentices. The celebrations that happened on those occasions have been marked by big and small companies. I thank my noble friend, but I also thank the noble Lord for recognising, as the Minister described, that that is not only acknowledging what people have done but encouraging others in giving apprenticeships the value that they need. I beg leave to withdraw the Motion.

Motion withdrawn.