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My Lords, I too thank the noble Lord, Lord Young, for introducing this debate and all those who have sent us informative and helpful briefings. There are too many to acknowledge but all have been read. The noble Lord is, of course, a real-life apprentice—as is the noble Lord, Lord Pendry—and is an enthusiastic supporter of apprenticeships. I go to any number of apprentice events and he is always there; I suspect he goes to others where I am not. I share his enthusiasm and can only wish that schools had more incentive to encourage their students into apprenticeships instead of their remorseless academic imperatives of GCSE, A-level and university. I agree with the noble Baroness, Lady Pidding: what are the Government doing to give schools reasons to promote apprenticeships and work-based skills and, indeed, the information and guidance about them which most teachers will not have? I share the concerns of the noble Baroness, Lady Cohen, about the Higher Education Bill and the Technical and Further Education Bill. I was leading for the Lib Dems on both and there was a notable disparity of interest in them. I also share the concerns of the noble Lord, Lord Monks, about the graveyard of previous initiatives; we know that so well.
One of the features of winding up in a debate such as this is that all the brilliant things that I was going to say have been said far more brilliantly by other speakers. I shall try not to repeat, but to add my weight to some of the issues which other noble Lords have raised. The levy has not met with undiluted enthusiasm. We hear that it is too complex, too restrictive and, as the noble Lord, Lord Norton, said, “not fit for purpose”. The Recruitment & Employment Confederation tells us that its members pay over £110 million into the apprenticeship levy every year but, because of the restrictive funding rules, it is a struggle to use this funding to train workers on flexible and temporary contracts. It estimates that, two years on, over £104 million is left unspent. As both the noble Lord, Lord Pendry, and the noble Baroness, Lady Prashar, set out, the vast majority of temporary and contract workers are automatically cut off from training opportunities through the apprenticeship levy. They cannot access training opportunities, while recruitment agencies are unable to use their funds beyond supporting the recruitment industry. Yet these people could benefit most from training opportunities. Why is the levy not designed to encourage agency workers to progress?
As the noble Lord, Lord Aberdare, and other noble Lords have said, there are strong calls for the remit to extend to other skills and training, rather than just apprenticeships. What is the Government’s thinking on this? If workplace opportunities are to be increased for young people, there needs to be much more flexibility regarding the support available. As the right reverend Prelate set out, with reference to the previous debate on mental health, we need to encourage disadvantaged young people. I support the noble Baroness, Lady Prashar, in her remarks on social mobility and the noble Baroness, Lady Nye, on support for women and drawing attention to gender disparities. The noble Baroness, Lady Osamor, reminded the House of the right range of apprenticeships and spoke of the BAME disparities.
We are getting mixed messages. On the one hand, the levy fees are apparently underspent. In 2017-18, levy-paying employers accessed only 9% of the available funds, which expire after 24 months. These funds should surely be available for other forms of training and skills development. On the other hand, I was told that a senior Minister recently declared that the apprenticeship money would run out in a few months. Concerns were expressed by the National Audit Office and others earlier in the year that the levy would not be able to meet employer demand and the pot is now indeed running dry. What is the position on this? Is it partly because the higher level 6 and 7 apprenticeships are costlier than levels 2 and 3, which were the original focus of the scheme?
In the Middle Ages, apprentices were young people who spent five to seven years learning their trade or craft. They then became journeymen and in due course, hopefully, masters of their trade or craft. This was, of course, before technicians were invented, although I have to say that some of the crafts were extremely technical. One of the great strengths of this was that they had a job to go to. These days we seem to have abandoned the idea of youthful learning and use the term “apprenticeship” to apply to much more advanced studies. I share the concern of the noble Lord, Lord Layard, about the number of 18 year-old NEETs, and that of the noble Lord, Lord Young, about the drop between starts and completions. Apprentices of yore got qualifications as they studied. Now, there is not necessarily a mandatory qualification for an apprenticeship standard. We are told that an employer can use one voluntarily, including degrees, which may bear little relevance to apprenticeships.
“In apprenticeship standards, the apprenticeship itself serves as the qualification that accredits occupational competence, as measured by a robust, independent end-point-assessment”.
However, there will still be a need for formative assessment, measuring and reviewing progress towards achieving competence. One of the simplest ways of doing this is through qualifications, which have the great benefit of giving people a sense of achievement and the incentive to carry on. Endpoint assessment is not suitable for all skill areas. Continuous assessment, validated through a qualification, is often a much better way of measuring. What is the Government’s thinking on endpoint assessment? Is it still the preferred choice, despite evidence to the contrary in a number of occupations?
I support what my noble friend Lord Fox said about the creative industries. These are a real jewel in the crown of British industry, but they are unable to use a large part of the £75 million they contribute in the levy each year, in part because the 12-month employment does not fit the project and freelance work that is more common for them. Why cannot apprentices build credits towards their apprenticeship, as the OU allows for its degrees? Would that be worth exploring? Will the Minister also take account of the pilot project my noble friend mentioned in the creative industries?
The levy seems to have encouraged employers to brand adults embarking on MBAs and similar programmes as apprentices. Surely, that was never the intention. Others have referred to the fictional figure of 3 million apprentices, which we now know was based on back-of-a-fag-packet calculations. This focus on a meaningless number led to the chasing of quantity over quality and has not been helpful to the Government’s avowed aim of having only high-quality programmes admitted as apprenticeships.
Earlier this week we debated the Augar review, with its many recommendations for further education and work-based achievement—the Minister has been working overtime recently. We warmly welcome this focus on an essential part of education, which has, as we have heard all around the Chamber today, been neglected and undervalued for far too long. The apprenticeship levy may have been a neat idea, but it does not seem to be encouraging large employers to support small ones in recruiting apprentices. We hope that the review will lead to a drive to simplify, mindful that the country really does need young people to acquire the employment skills that will be ever more necessary for the economy if we do end up leaving the EU. Apprenticeships are not just good for the economy; they are good for individuals and the community too. We owe it to our future workforce to ensure that there are opportunities for rewarding, satisfying work.
To address funding constraints there is a recommendation for a standalone non-levy apprenticeship budget of a minimum of £1 billion, to ensure that the 98% of employers not paying the apprenticeship levy have access to high-quality apprenticeships to help them drive their productivity. People need to be given the tools and skills to help them build their career. Despite significant levels of investment, our skills system has failed to have a decisive impact on the varying socioeconomic challenges and opportunities in local areas, or to make a major impact on outcomes. Part of the problem has been the churn in Skills Ministers, of whom we have had far too many over the years. Each time, they come in with a new brilliant idea which they never have time to implement, so the ideas go into the graveyard referred to by the noble Lord, Lord Monks.
Currently, national policy does not allow levy contributions to be fully pooled locally. Funds unspent within 24 months must be returned to the Treasury, rather than being retained locally, and this hampers efforts to have a more joined-up and strategic approach to apprenticeship spending in local communities. The apprenticeship programme should be an exciting way to support people, young and old, into productive, skilled employment. I hope that the levy and the different programmes will be reviewed to ensure that this aim is delivered, to the benefit of all.