Amendment 34

Skills and Post-16 Education Bill [HL] - Report (1st Day) – in the House of Lords at 8:43 pm on 12 October 2021.

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Lord Storey:

Moved by Lord Storey

34: After Clause 7, insert the following new Clause—“Review of apprenticeship levyThe Secretary of State may request a review of the apprenticeship levy to—(a) ensure eligible costs are sufficient to enable apprenticeship standards to fully meet the demands of their occupation in relation to specific industries in the sector; and(b) provide the opportunity for coordinated pre-apprenticeship training and industry experience to broaden diversity and inclusion.”Member’s explanatory statementThe purpose of this amendment is to create flexibility in the eligible use of employers’ apprenticeship levy funds and to ensure there is wider diversity and inclusion in apprenticeships.

Photo of Lord Storey Lord Storey Liberal Democrat Lords Spokesperson (Education)

My Lords, apprenticeships have been a really important development, particularly for young people. We saw at the beginning of the development of apprenticeships how young people felt that this was an important way to develop their skills and career prospects. For young people, it meant no student debt and more experience—20% on study and the rest on practical training—but in recent years, we have seen a massive decline in apprenticeships for young people, not just because of Covid. Current rates of employer-funded training for 16 and 17 year-olds are at their lowest levels since the 1980s. Just 3% of young people took up an apprenticeship in 2020 and only 2% of those were employer-funded training: it is almost back to the future.

Obviously, the pandemic and staying in education has had an effect, but the IFS concluded that there are fewer policy reforms or initiatives to arrest that decline in work experience among 16 to 17 year-olds. That is the area that we need to talk about, to look at and to be flexible about. Apprenticeship, like other routes of technical education, suffers from entrenched negative perceptions, biases and stereotypes in comparison to an academic route. Apprenticeship providers of high quality that lead to high earnings and better employment outcomes need to be stressed.

The Government have set a target that all public bodies should take on 250 apprenticeships with no age bracket, but the National Audit Office report found that employers were simply using money on existing professional development courses. Will the Government look again at how those targets might be honed more to young people because there is no age limit on them?

Of course, experienced workers should upskill or retrain, but apprenticeships should be prioritised for young people. The Government should look at employers and at receiving funds from the apprenticeship levy, using a substantial part of it on young people who began apprenticeships at levels 2 and 3, before the age of 25. We now need to refocus on the under 25s. We need to be ambitious, particularly with how we use the levy. The LGA—I declare an interest as a vice-president —has asked for more flexibility, for example by allowing a proportion of levy funds to be used to subsidise apprenticeship wages.

As we have discussed before, any of the apprenticeship that is unused of course goes back to the Treasury. The Energy & Utilities Skills Partnership did a survey of its membership and found that 54% of the levy was unspent and going back to the Treasury. What a waste for the education sector and for skills and vocational education. Why are we allowing that to happen? We could unlock that logjam by ensuring that we use that money in more flexible ways—there are plenty of examples.

My amendment highlights the issue of young people from ethnic minority backgrounds, who, quite frankly, have not been taking up apprenticeship opportunities. We need to understand why, and how we can encourage them to do that. By being flexible, we can perhaps make that happen. I hope that Members will support this amendment.

Photo of Lord Aberdare Lord Aberdare Crossbench

My Lords, I have added my name to Amendment 34 of the noble Lord, Lord Storey, because of the key role that apprenticeships have to play in meeting the UK’s skills challenges, as pointed out earlier by my noble friend Lord Bird. However, as it stands, the policy is not working as well as it should or could, as pointed out by the noble Lord, Lord Adonis, and indeed the noble Lord, Lord Storey.

I was about to regale your Lordships with the results of a survey carried out by the energy and utilities sector, but that has already been done on my behalf, so noble Lords will be glad to hear that my speech will be even shorter. However, this illustrates that greater flexibility in the use of levy funds could actually increase the use of apprenticeships to deliver competences needed in that sector, for example through supporting pre-apprentice training initiatives in schools to increase the diversity and inclusiveness of new entrants.

Extra flexibility might allow some of the available levy funds to be used for approved high-quality shorter courses—less than one year long—or for apprenticeship-related costs outside the training itself, which might help in the perennial challenge of encouraging smaller firms to offer apprenticeships. This simple amendment merely gives the Secretary of State the power to request a much-needed review of the apprenticeship levy to ensure that it is working effectively in terms of the level of funding available for different apprenticeship standards and the opportunity to link policy on the levy more closely to other aspects of the overall skills programme. Even if the Government do not accept this amendment, I hope the Minister may say something about how they will respond to the widespread perception that the levy as it stands is not playing as effective a part in addressing the skills challenge as it should.

Photo of Baroness Chisholm of Owlpen Baroness Chisholm of Owlpen Baroness in Waiting (HM Household) (Whip)

My Lords, I am grateful for the opportunity to discuss apprenticeships. We have already heard from several noble Lords today about apprenticeships. They are at the heart of the Government’s skills ambitions—does the noble Lord want to speak?

Photo of Lord Watson of Invergowrie Lord Watson of Invergowrie Shadow Spokesperson (Education)

I thank the noble Baroness. The time rumblings in certain areas are making us act a little less rationally. I will be very brief. I welcome the amendment tabled by the noble Lord, Lord Storey, and I am pleasantly surprised that the Public Bill Office accepted it and regarded it as within the scope of Bill. The levy does not merit a mention in the Bill, despite the Institute for Apprenticeships and Technical Education, which develops and approves the apprenticeships and technical qualifications of employers, being prominent in several clauses. However, here we are.

As the noble Lord, Lord Aberdare, said, apprenticeships are key to ensuring that Britain is equipped with a well-skilled workforce in the years ahead. It is a bit of a disappointment to some of us—certainly to me—that the scheme, which is a good idea, and the levy, which is an important way of ensuring that employers contribute to the costs of training, have yet to produce anything like the effects hoped for and, indeed, required. The number of young people taking apprenticeships is now down to something like 60,000—I am not quite sure. It has declined dramatically, and that is to be regretted.

When we debated this in Committee, I said to the noble Lord, Lord Storey, that I was happy to support the amendment but remained a bit unsure about using levy funds for any purpose other than apprenticeships. In his opening remarks, he said that it could perhaps be used to pay apprenticeship wages, and I am not sure whether that is different. I want to avoid a situation where the money goes back to the Treasury and disappears. As long as the unspent part of the levy was kept within apprenticeships, as it were, we would not be unhappy if it involved some support for wages. On that basis, I am happy to support the amendment. I hope that when we talk about apprenticeships again we will see an upturn in their fortunes. They have a very important contribution to make to the development of skills going ahead.

Photo of Baroness Chisholm of Owlpen Baroness Chisholm of Owlpen Baroness in Waiting (HM Household) (Whip)

I offer many apologies to the noble Lord, Lord Watson. It was so rude of me. I am afraid my tummy overtook my brain, not for the first time.

Apprenticeships are at the heart of the Government’s skills ambition. Given Covid-19’s impact on our economy, apprenticeships are as important as ever in helping businesses to recruit the right people and develop the skills they need.

I want to take a few minutes to outline the principles of the apprenticeship levy and funding as I think that will help to respond to some of the points made. The apprenticeship levy has put apprenticeship funding on a sustainable footing and means that this year £2.5 billion is available to support apprenticeships. The levy has been set at a level to fund apprenticeship training and assessment in all employers—both those who pay the levy and those who do not.

As my noble friend Lady Penn explained in Committee, the funds available to levy- paying employers through their apprenticeship service accounts

“are not the same … as the Department for Education’s … apprenticeships budget.”—[Official Report, 15/7/21; col. 2025.]

This budget also funds additional payments made to employers and providers with apprentices aged 16 to 18. It funds the £3,000 incentive that can be claimed by employers hiring new apprentices. I should like to highlight to noble Lords that these incentives were recently extended by the Chancellor of the Exchequer until the end of January 2022, helping more employers to invest in apprenticeships as we recover from the pandemic.

This is one example showing that the apprenticeships programme is dynamic and responsive to both employers and the wider economic context. In addition, we are delivering a set of improvements and flexibilities that will make apprenticeships work better for employers in all sectors and give employers greater opportunities to make full use of their levy funds. Importantly, we also continue to listen to employers and adapt apprenticeships to better meet their needs. Work is under way to deliver a package of improvements which responds directly to employer feedback so that they can make greater use of the apprenticeship funds.

I think the noble Lord, Lord Storey, will be pleased to hear that, first, we are introducing a new service to make it easier for employers who pay the apprenticeship levy to transfer funds in their accounts to other employers. Large employers are able to pledge funds for transfers and other employers will be able to apply to receive these funds, helping both to benefit from transfers. Secondly, we are helping employers 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 which have more flexible working patterns, such as the creative industries. We will shortly launch a £7 million fund to help organisations in England set up and expand new flexi-job apprenticeship schemes.

I should also like to say a little about how we are supporting individuals into apprenticeships. We have introduced accelerated apprenticeships, which will reduce the duration of an apprenticeship for individuals coming from certain T-levels, skills boot camps and occupational traineeships where they have acquired substantial prior learning. This will join up skills opportunities and make them more appealing to both employers and individuals. We are undertaking the largest ever expansion of the traineeship programme for 16 to 24 year-olds, supporting more young people to move into apprenticeships and work. As over 30% of all traineeship starts are by learners from black, Asian and minority ethnic backgrounds, and over 20% of traineeship starts are from learners with learning difficulties or disabilities, our investment will also help to broaden diversity and inclusion. I hope the noble Lord will agree that there are some positive steps we are taking.

The noble Lord, Lord Storey, asked if the programme has shifted from older people. More than half—53%—of all apprenticeship starts continue to be by young people under the age of 25. This compares to 56% in 2015-16, prior to our reforms. As well as supporting young people into employment, it is important to recognise the role apprenticeships play in upskilling and reskilling people throughout their lifetimes. I hope I have made the noble Lord, Lord Storey, happy with what I have said and that he will therefore feel comfortable withdrawing his amendment.

Photo of Lord Storey Lord Storey Liberal Democrat Lords Spokesperson (Education)

I think you have made Lord Storey very happy. I felt at one stage like I was in a sort of parallel universe when I was speaking—with people walking past, it was very strange. I reassure the noble Lord, Lord Watson, that I was not proposing that levy funds be used for wages. I was saying that we should be innovative in how we use the levy and that might mean increasing the amount of money we give to apprenticeships.

I was pleased to hear from the Minister about the package of improvements and new models of working. Flexibility is really important. We are all committed to the notion of apprenticeships, but we have to make the wider community and society realise how valuable they are. Maybe we could start in Parliament itself. I wonder how many apprenticeships for 16 to 24 year-olds there are in the House of Lords. Are there any? Perhaps not. Let us say straightaway that we will introduce some apprenticeships in our House. That would be a real start. I beg to withdraw this amendment.

Amendment 34 withdrawn.

Consideration on Report adjourned.