Amendment 39

Part of Skills and Post-16 Education Bill [HL] - Committee (2nd Day) – in the House of Lords at 5:00 pm on 15th July 2021.

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Photo of Baroness Penn Baroness Penn Baroness in Waiting (HM Household) (Whip) 5:00 pm, 15th July 2021

My Lords, now that I have de-masked myself, I will first make two remarks to the noble Lord, Lord Watson. In my enthusiasm to start my speaking role on this Bill, I did not thank him for his kind words in welcoming me to the Dispatch Box. I also acknowledge completely his point about the timing of various announcements and the need to ensure that noble Lords have as much information as possible to help them to scrutinise proposals for this Bill. We will endeavour to do our best in that regard.

I am grateful, too, to the noble Lord, Lord Addington, for giving us, on behalf of his noble friend, the opportunity to discuss apprenticeships, which are at the heart of the Government’s skills ambitions. As we recover from the impact of Covid-19, apprenticeships are more important than ever in helping businesses to recruit the right people and to develop the skills that they need.

I hope that noble Lords will allow me a little time to outline a few principles of the apprenticeship levy and its funding, as that will respond to some of the points made in this debate. The funds available to levy-paying employers through their apprenticeship service accounts can be used for apprenticeship training or assessment in their own businesses, or transferred to other employers. They are not the same, however, as the Department for Education’s annual apprenticeships budget.

While those unspent funds, therefore, expire from the employer’s accounts after two years, the broader funding contributes to the budget set by the Department for Education, according to its rules, and funds other costs associated with apprenticeships. This includes training and assessment for apprenticeships for employers that do and do not pay the levy, the cost of English and maths tuition and additional payments to support young apprenticeships—as I heard from noble Lords, those are a priority—and those with additional learning support needs.

On Amendment 39, I reassure noble Lords that we keep apprenticeship funding policy under review. I say to the noble Lords, Lord Addington and Lord Aberdare, among others, that a key principle of the apprenticeship levy is that we should only pay for apprenticeship training and assessment costs from the apprenticeship budget, as apprenticeships deliver a significant return on investment from the public purse, rather than using the levy to fund wider skills training needs.

We have an ambitious agenda for apprenticeships and we have made huge strides forward with the apprenticeship reforms, but we cannot and will not stop here. We want to grow the programme, drive up quality and improve apprenticeships, to the benefit of all employers and ultimately the economy, through increased skills and jobs. While widening the scope of the apprenticeships budget to pay for other costs or skills training, even for a time-limited period, would not be in line with the Government’s aims for the programme, I hope that noble Lords who have raised questions about how it currently operates will be reassured by some of the improvements that we are making to make it easier for employers to use and to encourage take-up by potential apprentices.

We continue to listen to employers and to adapt apprenticeships to better meet their needs. Work is under way on a package of improvements that respond directly to employer feedback, so that employers can make better use of their apprenticeship funds.

First, we are introducing a new service that will make it easier for employers that pay the apprenticeship levy to transfer funds in their accounts to other employers, including smaller employers. Large employers will be able to pledge funds for transfer and other employers will be able to receive these funds, so that both will benefit from those transfers. In response to a question from, I think, my noble friend Lady Neville-Rolfe, the lead employer that is transferring those funds will not retain any responsibility for the provision of training after the transfer. It is not an additional burden on them.

Secondly, we are helping employers to choose more innovative training models, such as front-loaded training and accelerated apprenticeships, which will help apprentices with relevant skills and experience to complete their training more quickly. Finally, we are supporting sectors of the economy that have more flexible working patterns, such as the creative industries. We will shortly launch a £7 million fund to help organisations in England to set up and expand new flexi-job apprenticeship schemes.

The noble Lord, Lord Aberdare, asked about the funding available for apprenticeships. In 2021-22, the funding available for investment in apprenticeships in England is almost £2.5 billion. That is double what was spent in 2010-11. We have increased the investment available for apprenticeships.

My noble friend Lady Neville-Rolfe and the noble Lord, Lord Addington, asked about the aims of the apprenticeships programme and its direction of travel. Our reforms to the programme have all been focused on making them longer and better, with more off-the-job training and proper assessment at the end. Many pre-reform apprenticeships were of low quality and involved little or no training. That is what we have aimed to change.

We know, however, that there is more work to be done and, in addition to the reforms that I have mentioned that will make it easier for employers to take up their levy funds, we have introduced new incentives for those employers, particularly during the pandemic, to take on new apprentices. Until the end of March those incentive payments were £1,500 for those aged 25 and over and £2,000 for those under 25—71,140 incentive payments were paid up to that date. We have increased the incentive to £3,000 and that remains in place until 30 September.

I hope that noble Lords take some reassurance from what I have outlined that we remain committed to the apprenticeship programme. While we do not agree with diverting apprenticeship funding to other forms of skills training, we acknowledge the need to continue to review and adapt the apprenticeship programme so that there is better take-up and it works better for employers and those who will potentially benefit from it. I therefore hope that the noble Lord, Lord Addington, feels able to withdraw his amendment.