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My Lords, I am very pleased to be the Minister responding to this debate and I congratulate the noble Lord, Lord Young of Norwood Green, on initiating it. He is not only well informed on the subject, he has devoted much time over many years to improving opportunities for young people. We are all grateful for his work as an apprenticeship ambassador. I notice that he is not wearing the T-shirt today, but he certainly wears the badge. I should have one on too. At the Communication Workers Union and in this Chamber, he has been tenacious in ensuring that the Government’s commitments on vocational education are not lost in the mail.
I applaud the endurance of the noble Lords, Lord Aberdare and Lord Layard, the noble Baroness, Lady Garden, and my noble friend Lord Norton of Louth, who, perhaps gluttons for punishment, are sitting for a second substantial debate in three days, having spoken on the order on Tuesday. Happily, this debate allows me to address today the issues on apprenticeships raised by them to which I was then unable to respond, although I have a lot of questions to cover. Talking of Augar and relevant to apprenticeships, it is important for the Government to reflect on the lessons of his review of post-18 education and funding. I reassure the noble Lord, Lord McNicol, that they are very much being considered.
Apprenticeships have a long and illustrious history, dating back to the craft guilds of the Middle Ages and underpinning Britain’s status as the powerhouse of the Industrial Revolution. The guilds survive to this day, and their members do great work supporting charities up and down the country. Two apprentice stonemasons are currently working on the restoration of the Elizabeth Tower high above us, and others are no doubt working on our great cathedrals. How good to hear the positive feedback of Georgie Yates from the noble Baroness, Lady Nye. Apprentices are keeping our ancient skills alive with the help of our modernising apprenticeship programme.
For too long, however, young people and those changing careers have not had access to a choice of vocational education options; nor could they always be confident in the quality of training that they received. This Government’s reforms are changing all that, and it is good to have acknowledgement from noble Lords, including the noble Baronesses, Lady Nye and Lady Osamor, that the Government are revitalising apprenticeships to raise productivity, to give employers the skills they need and to create fresh opportunities. We are creating a programme fit for the future, but all transformative change comes with challenges. We know that we need to maintain our focus on bringing new apprenticeship standards on stream, reflecting the needs of employers as the world of work evolves. As the noble Baroness, Lady Osamor, and the noble Lord, Lord McNicol, said, people from underrepresented groups need to be encouraged and supported to start apprenticeships to share in the benefits they offer. I will say more about that later.
As the noble Lord, Lord Layard, and others said, young people need good careers advice from a young age so that they are aware that apprenticeships are a genuine alternative to university. The noble Baronesses, Lady Nye and Lady Osamor, and particularly the noble Lord, Lord Monks, made the point that apprentices should not be treated as second-class citizens. They must be paid properly. I should like to hear from noble Lords of any examples where they are not. In answer to the noble Lord, Lord Monks, on whether we could confirm that there are plans to update the scheme so that it is in line with the real living wage, the current apprentice national minimum wage rate rose by 5.4% in April 2019 and is now at a record high in nominal and real terms. The apprentice national minimum wage is set at a rate that acknowledges the particular costs for employers and benefits for young people involved in the provision of apprenticeships. However, we know that most apprentices receive more than that—it is the legal minimum pay per hour—but no doubt it will be kept under review.
We must continue to spread the message among parents, teachers and employers of young people that our new high-quality apprenticeships can offer life-changing opportunities—a point made by the noble Lord, Lord Aberdare, and my noble friend Lady Pidding. In addressing the challenges, we are learning from the best international systems and listening to feedback from employers large and small.
There are successes. More than 450 apprenticeship standards are now available from levels 2 to 7 and covering occupations in all sectors. The standards approved this month underline that diversity and include broadcast and media systems engineer at level 3, to mention the creative arts, and ecologist at level 7. Apprenticeship starts were up by 10% in the first half of 2018-19 compared to the same period a year before, and high-quality standards now account for almost 60% of those starts. Over the course of next year, we will be giving all employers, not just the larger companies, control over how they pay for their apprenticeship training and assess and recruit their apprentices.
The noble Lord, Lord Young, asked about training providers. Employers will also have access to a larger pool of training providers to deliver relevant training for them. Crucially, the apprenticeship levy supports businesses large and small to access the training they need. Alongside employers’ levy funds, we will spend over £2.5 billion this year—double what was spent in 2010.
The noble Lord, Lord Layard, asked if the Government will reassess their approach to funding, providing 70% to levels 2 and 3 and 30% to levels 4 and 5, with the level band above that self-funded. Co-investment is a central principle of our apprenticeship performance, and we continue to monitor the impact of our recent changes to funding policy to reduce the burden on smaller employers. We continue to make this co-investment available for apprenticeships at all levels to give employers a choice of apprenticeships to meet their particular skills needs.
The noble Lord, Lord Young, asked whether I will comment on the struggle to meet targets for nursing apprenticeships—an important subject that I know was raised on Tuesday. Nursing apprenticeships offer a high-quality work-based route into the profession, giving more choice for career changes or for those who want to earn while they learn. Importantly, we are working closely with Health Education England to support the NHS to recruit the apprentices it needs to deliver high-quality care.
Almost half of apprenticeship starts were directly supported by levy funds in employers’ apprenticeship service accounts last year. Smaller employers benefit from a generous co-investment from government of 95% of the costs of training. The rollout of the apprenticeship service will give these employers access to new online tools to manage their funds and make informed decisions for the long-term needs of their business.
In response to a question asked by the noble Lord, Lord Young, to support this, we have extended non-levy contracts with providers. This means providing £225 million to support new starts and £395 million to fund existing apprentices at non-levy employers. We have already made additional flexibilities available for levy-paying employers; flexibilities were quite a theme during this debate. This year, we increased the cap on transfers of their funds to other businesses, charities or apprenticeship training agencies to 25% of the value of funds entering their account each year—the noble Lord, Lord Young, mentioned 20%, but it is actually 25%—enabling them to support apprenticeship starts in their supply chain or to meet local skills needs. This is investment on an unprecedented scale, and the levy is central to it. While we recognise that the move towards longer, higher-level apprenticeships presents financial challenges, we are determined to ensure the future sustainability of the programme.
The noble Lords, Lord Young and Lord Pendry, the right reverend Prelate the Bishop of Carlisle and the noble Baronesses, Lady Cohen and Lady Osamor, asked important questions about the need to promote level 2 and 3 apprenticeships, but it is important to remember that apprenticeships are jobs first and foremost. We have empowered employers to choose the apprenticeships that best suit their needs. Starts at levels 2 and 3 still make up the vast majority of the programme—82% of starts in the first half of 2018-19, which is quite interesting—creating the opportunities for progression to higher-level training.
The completion rate was another theme. The noble Lord, Lord Young, and the noble Baroness, Lady Nye, raised the Sutton Trust report showing that 32% of apprenticeships were not completed. It is important to recognise that the move to higher-quality apprenticeship standards is making apprenticeships longer. Current completion data reflects the fact that we are moving rapidly from frameworks to standards. It is a transitional phase, and we expect to see this picture improve as our reforms continue to bed in.
Several noble Lords raised important points about productivity. I turn to the reasons behind our reform programme: why are apprenticeships important and who are they for? This was asked by the noble Lord, Lord Aberdare. The labour market will change beyond recognition in the coming decades, not least with more automation—a point I raised on Tuesday. We need to meet that challenge by delivering high-quality vocational education for today’s and tomorrow’s workforce—and, yes, to satisfy employer demand—but apprenticeships are not only for young people but for people at different stages of their career.
The Government agree with Sir Philip Augar’s finding that apprenticeships have a vital contribution to make to delivering our industrial strategy priorities helping young people to develop the skills that they need for progression to the high-skilled jobs of the future. We know from other leading apprenticeship systems worldwide that high-quality training drives productivity and increases earnings. We know that a young person completing a level 3 apprenticeship in England can expect a 16% earnings boost, and a joint AAT and CEBR study found that an apprenticeship at level 5 or above can be worth an additional £150,000 over a working life. So clearly it boosts the economy and the well-being of the individual as well.
While we are focused on driving forward our reforms and increasing starts to bring about these benefits, we will not sacrifice quality for quantity—a point made strongly by the noble Lord, Lord Young of Norwood Green. Apprenticeship standards are at the centre of our drive for high-quality training. Another theme raised in this debate was the question of quality versus quantity. The noble Lord, Lord Fox, asked if we agreed that we should scrap the 3 million start target and focus on quality. We are focusing on quality. The right reverend Prelate the Bishop of Carlisle focused on the importance of quality. We remain committed to reaching 3 million apprenticeship starts, but are not worried that it may take some time to get there. What is more important is that we maintain our focus on quality to ensure that we meet the skills needs of employers and create the opportunities for young people to progress in their careers.
Before we began our apprenticeship reforms, employers told us that the quality of training was often inconsistent. We listened to their concerns and acted by putting the independent Institute for Apprenticeships and Technical Education at the service of employers to help them develop the standards they need and to act as a guarantor for the quality of training. We recognise that there have been some teething problems. Such problems were raised by the noble Lord, Lord Young, and the right reverend Prelate the Bishop of Carlisle, but I hope that I can reassure the House because we have overseen a significant acceleration in the process for the approval of standards, particularly using our so-called Faster and Better programme. As I have already mentioned, more than 450 standards are now available for employers to choose from, with more in the pipeline; they cover traditional skills, the professions and emerging industries.
We are proud of what these changes have achieved—two-thirds of apprentices were receiving good or outstanding training provision in 2017-18—but we know there is more to do. The noble Lords, Lord Aberdare and Lord Pendry, asked about Ofsted, saying that it is perhaps not best placed to regulate apprenticeships. We take Ofsted’s judgments on the quality of the training and teaching offered by apprenticeship providers seriously and we have raised the bar for entry to the register of apprenticeship training providers. We now require all providers, new and existing, to demonstrate that they have a satisfactory inspection record. We are acting in cases where training providers fall below the high standards that employers expect, and recently announced a new framework to monitor the quality of provision at higher levels, to be led by the Office for Students.
The right reverend Prelate the Bishop of Carlisle said he had heard that some standards still did not have an endpoint assessment in place, which was another theme. ESFA recently confirmed that we will require an endpoint assessment organisation to be in place for all standards. That will give employers and apprentices the confidence that endpoint assessments are ready when they need them and of the quality that is required.
Off-the-job training is also vital for apprentices to develop the knowledge, skills and behaviours they need to succeed at work, which was a point raised by my noble friend Lord Norton and the noble Lord, Lord Young. We understand that some employers find meeting the 20% minimum off-the-job training requirement challenging. We have listened to their concerns. But as a perspective, the requirement in the UK has a smaller impact on employers compared with other OECD countries; for example, in Germany around a third of an apprentice’s time is spent in off-the-job training. We recently launched new guidance to make these flexibilities clear and transparent for employers, and many are already using block release, successfully balancing their apprentices’ training with business needs.
The noble Lords, Lord Aberdare and Lord McNicol, asked whether we would introduce further flexibilities to meet employer needs. I reassure the House that we continue to keep all aspects of apprenticeship funding policy under review to make sure that we continue to deliver high-quality apprenticeship starts. Spending on apprenticeships is demand-led. We do not anticipate that all levy payers will use all the funds in their accounts. Income from the levy is also used to fund apprenticeship training in non levy-paying employers.
The enormous potential of apprenticeships to address this country’s productivity challenge cannot be realised if young people are not aware of all the options available to them. Our careers provision recognises that parity of esteem between academic and vocational routes also means giving those considering their options the best advice we can. We are working with schools and FE colleges through our apprenticeships support and knowledge programme, giving teachers the training to allow them to promote apprenticeships to their students.
My noble friends Lady Pidding and Lord Norton asked about numbers in terms of promoting apprenticeships. During National Apprenticeship Week in March there were more than 1,200 visits and events, including more than 300 events taking place to promote apprenticeships in schools. National Apprenticeship Week generated more than 25,000 visits, so it was an important push. That is an important point to make.
Our apprenticeships support and knowledge programme also provides access to a network of inspiring young apprenticeship ambassadors and apprenticeship live broadcasts to let young people speak directly to employers about the latest vacancies. The programme has reached more than three-quarters of a million young people since its launch in 2016. In addition, we have expanded the role of the Careers & Enterprise Company to give all young people access to inspiring encounters with the world of work.
I noted the comments made by the noble Lords, Lord Aberdare and Lord Monks, and my noble friend Lady Pidding. It is very important that the evidence for getting into schools has to be there. It is clear that sustained and varied contacts with mentors, coaches, employer networks, FE colleges and training providers can motivate pupils to consider a broader and more ambitious range of future education and career options.
The noble Lord, Lord Aberdare, asked what we are planning to do to meet the demand resulting from the careers strategy and the planned introduction of T-levels. A key element of T-levels is a high-quality, structured industry placement of 45 days. There is an extensive programme of support in place for their delivery, including a capacity and delivery fund for providers and the investment of £5 million in the National Apprenticeship Service.
The noble Lord, Lord Aberdare, also asked whether the Government should make funding available for work placements as they do for apprenticeships. Under the Government’s careers strategy we have targeted a £2.5 million investment fund to support employer encounters. This is in addition to the £5 million investment already mentioned.
Last year, we acted to introduce a legal requirement for schools and colleges to allow technical education and apprenticeship providers into their schools to talk to pupils about their offer, commonly known as the Baker clause. I notice that my noble friend is no longer in his place. This important matter was raised by the noble Lords, Lord Young and Lord Aberdare, the noble Baroness, Lady Nye, and my noble friends Lord Norton and Lady Pidding. This is important because we expect all schools to comply with its requirements and are intervening directly to enforce this where necessary. I have here a letter that I have written to reassure my noble friend Lord Baker that the department is doing a great deal to increase the level of compliance among schools with their duty under the Baker clause. Certain direct intervention measures have been taken; for example, Minister Milton wrote to the five largest multi-academy trusts which were found not to be complying with the duty. Local authorities, regional schools commissioners and MPs have also been written to, to remind them of the important role that they play in encouraging schools to comply with the Baker clause. The department has also delivered key messages on the aims of the Baker clause and its enforcement over the past year, including delivering a webinar for 500 schools during National Careers Week. I assure noble Lords that we will remain on the case.
As the noble Lord, Lord Monks, said, changing the perceptions of parents and employers is just as important if we are to embed a culture of apprenticeships in this country. We are taking on the outdated perception that university is the only desirable option for ambitious, motivated young people. This message is at the centre of our new marketing campaign, Fire It Up, demonstrating that apprenticeships are an aspirational choice for anyone with passion and energy. We have also launched Opportunities Through Apprenticeships, a pilot project working with four local authorities to raise the value of apprenticeships in the most disadvantaged areas.
We are committed to ensuring that no young person’s background stands in the way of starting an apprenticeship. To reassure the noble Baroness, Lady Osamor, in the first half of 2018-19, 11.1% of starts—that is, 23,700—were by people of black, Asian or minority-ethnic backgrounds. In the first half of 2018-19, 11.9% of starts were by those with a learning difficulty or disability. She raised an important point.
Various questions have arisen but I am running slightly out of time. If I am allowed, I shall spend—