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My Lords, I too congratulate the noble Lord, Lord Young of Norwood Green, with his notable commitment to apprenticeships, on obtaining this debate and introducing it so comprehensively. It is a timely follow-on from Tuesday’s debate on the Augar review; on both occasions I have had the pleasure of following the noble Lord, Lord Layard.
Thinking about today’s debate, I have been asking myself: what is the apprenticeship levy for, what is it intended to achieve, and for whom? There seemed to be rather a lot of possible answers. It can be a means to promote personal development and social mobility by providing opportunities for individuals, including those from disadvantaged backgrounds, to gain new employment-related skills. That might have been part of the rationale for setting the rather arbitrary target of 3 million apprenticeship starts. However, is it, or should it be, mainly aimed at younger people entering the jobs market for the first time, as the noble Lord, Lord Layard, suggested, or should it be about enabling people of all ages and experience to enhance their skills and move to a new level in their career?
The Government might say that the levy is focused on meeting the skills needs of employers, so they, or the market, should decide what apprenticeships should be available, and how they should be spread between attracting new job market entrants and upskilling existing employees. The Augar report suggests that the levy should help to address national objectives for tackling issues such as productivity and competitiveness, and therefore align with the Government’s industrial strategy. But many employers, including levy-payers in the devolved nations, and others who cannot use their payments to take on apprentices, such as the employers of temporary and contract workers, who are members of the Recruitment & Employment Confederation, may look at the levy just as a sort of hypothecated tax, designed to raise money to help pay for the Government’s skills-related policy initiatives but with no direct benefits for them. The levy does indeed begin to seem like a perfect policy for Boris Johnson, seeking to be all things to all people.
Therefore, my first point—with apologies to noble Lords, including the Minister, who heard me say something similar on Tuesday—is that it is hard to answer questions about how well the levy is working, and how it should be adapted and improved, in the absence of a clear strategic framework setting out what it does and does not seek to achieve, and how its effectiveness should be assessed.
Next, I will outline some issues with how the levy is working, to which I hope the Minister may give some answers, particularly as he has heard many of the same issues raised by many of the speakers in the debate already.
First, there is the question of flexibility, about which so many employers and indeed so many of your Lordships have expressed concern. The uses to which levy funds may be put are tightly defined, as is the amount that can be shared with other businesses in the employer’s supply chain—although the increase from 10% to 25% is welcome. The Augar review suggests that apprenticeships at level 6 and above, including degree apprenticeships, should be available only to apprentices who have not previously undertaken a publicly supported degree. This might help to address concerns that not enough levy funding is going to young people, especially 16 to 19 year-olds. There are suggestions, including from the noble Lord, Lord Fox, that the levy should be redesignated as a skills and training levy, and made eligible to be spent on a wider range of skills development needs, not just apprenticeships. There are also issues about the processes involved in setting up apprenticeships: the lack of transparency in standard-setting; problems with end-point assessments, as the right reverend Prelate mentioned; and the amount of bureaucracy involved, which is off-putting to smaller firms interested in offering apprenticeships.
Other issues relate to funding. Not many levy-paying employers manage to use all their levy funds to provide apprenticeships. However, in trying to do so, they tend to focus on upskilling existing employees, and on higher-level, higher-value apprenticeships. Meanwhile it appears that the funding available for non-levy payers, which comes directly from government funds, supplemented by unspent levy funds, if there are any, shows signs of drying up. How much funding does the Minister anticipate will be available to support apprenticeships offered by non-levy paying employers, and what will happen when that money runs out?
In Tuesday’s debate, I raised the issue of making it easier for SMEs to take on apprentices. Specific mechanisms are needed for this purpose, such as apprenticeship training associations. I also hear that independent training providers, which provide much of the training for SME apprenticeships, are starting to worry about the financial risks involved in that route and are thinking about shifting their focus to larger employers, where their funding is more secure. I hope the Minister will be able to say something today—he ran out of time on Tuesday—about government plans for supporting SME apprenticeships. Perhaps he could tell us how the Government are working with the devolved Administrations and regional bodies to ensure that apprenticeship policies across all four nations are complementary rather than conflicting, and that they all contribute to the skills and workforce resilience needs of the UK as a whole.
Last but not least in my list of issues is the continuing need for awareness raising about apprenticeships, particularly among teachers and parents—a point strongly made in the briefing from the Sutton Trust, along with a recommendation to set up a UCAS-style portal for apprenticeship applications, which I would also support and which the noble Lord, Lord Layard, also spoke about.
I look forward to the Minister’s comments on these issues. I end by mentioning the second part of today’s Motion: the case for the effective delivery of workplace opportunities for young people. The Government’s statutory guidance for schools on careers strategy requires students to have at least seven meaningful employer encounters between years 7 and 13, and at least two workplace experiences by age 18. Students on the new T-level courses, starting next year, will have to spend a minimum of 45 days on an industry placement. This will require substantial commitments of time and resources by employers.
How does the Minister expect this demand to be met? Having had the experience of providing work experience placements in my own small business, and of persuading other employers to do so, I know how challenging this can be for smaller employers, but many will have to be engaged to meet the government’s targets. Is the Minister aware of organisations such as Speakers for Schools, and the similarly named but completely separate Founders4Schools, which are focused on arranging work experience placements at scale?
Founders4Schools runs a program called Workfinder, which has a particularly impressive and ambitious digitally driven approach, especially with fast-growing small businesses. Being digital makes for much better reporting, with greater transparency and accountability. Will the Minister explore how such initiatives can be incorporated into the Government’s plans for ensuring that the large number of workplace opportunities needed are provided and meet high quality standards? As a final thought, he might even consider whether work experience provision might itself be made eligible for levy funding. Many small businesses seem puzzled by why apprenticeships receive funding but work experience and internships do not. I very much look forward to the Minister’s response.