Baroness Barran:

Moved by Baroness Barran

483A: Leave out “3” and insert “7”Member’s explanatory statementThis Amendment seeks to broaden the discussion to include higher levels of apprenticeship.

My Lords, I formally move the Amendment in the name of my noble friend Lord Lucas and I will speak to it in my closing remarks.

I think we have yet to have a full discussion on Amendment 483, as well as Amendment 483A, so perhaps we could proceed to that discussion.

My Lords, I will speak briefly in support of Amendment 483, which I have put my name to. The noble Lord, Lord Layard, has set out the arguments very eloquently. I would merely like to add the perspective of a former Treasury official.

Economic growth, or the lack of it, lies at the heart of the country’s problems. Without it, we simply will not be able to afford the costs of an ageing population. The Government will be forced to raise taxes even more than they already have and public services will deteriorate further, alienating an already alienated electorate. There is little the Government can do to promote growth in the short term. As an open economy, Britain is likely to grow only as fast as global demand permits, and we all know the effect of increased protectionism, but the Government can do something about the medium and long term.

We all know what drives growth: good infrastructure, competition, innovation, and a sensible tax system—but, above all, skills. Successive Governments have done a good job on education. Attainment in schools has improved and there has been a dramatic expansion in university education over the last 50 years, which, for the most part, has been reflected in the living standards of graduates. However, that still leaves 50% of school leavers who do not go to university who are poorly served by a vocational educational system that compares badly with our competitors’.

Technical and further education has never been prioritised sufficiently, and I can understand why. The media, the Government and the Civil Service are all dominated by graduates. Technical education is not sexy. The lags in the impact of any reform are long and variable. The plain fact is that there are not many votes in it, but sometimes Governments can do the right thing for future generations. I welcome recent announcements by the Government of a youth guarantee and the extra support for skills in the spending review, but they need to go further. An apprenticeship guarantee provides a golden opportunity to make a step change in provision and long-term economic performance.

I recognise that money is hard to come by, but the Treasury is an economics ministry as well as a finance ministry, and it needs some positive announcements to offset the inevitable gloom in the forthcoming Budget. I encourage the Minister and her department to engage actively with the Treasury. It should be possible to, for example, tweak the apprenticeship levy to give it a greater youth focus. If the money cannot be found now, the Government should at least set out a timetable, and if they cannot set out a timetable, they can at least sign up to the objective.

As the noble Lord, Lord Layard, said, a previous Government passed the Apprenticeships, Skills, Children and Learning Act 2009. It can be done, and I call on the Minister to act.

My Lords, this is a rather crucial Amendment. The reason is that we are a nation that is inclined to talk about education as if it is always academic education. If I have criticisms of previous Governments—and I have of those from both sides—they are that we have emphasised education as if it is the only way, rather than part of a grouping of educational opportunities.

We are also rather inclined to not support technical education, and the comparison with our competitors is notable and historically of very long standing. I recently read a report about such education by a committee of the House that remarked that Prussia was much better at it than we were. The Committee will immediately see how long ago that report was produced. Curiously, we have always found this a difficulty in the way that we think about things and in many of the changes that we have made, such as the insistence that polytechnics should become universities, as if that somehow improved the circumstances and that there was something less good about having something that was aimed specifically at talking about the issues that we are discussing. We have to change the atmosphere.

I much approved of the comments just made by the noble Lord, Lord Macpherson, about what the Government could do if they did not have the money. However, there is quite a lot of money in that fund, which seems to have gone back to the Treasury rather than being used in quite the way one would have hoped. However, if they do not have the money, it is very important to make the statement that this is important, and that it is part of the way in which we help those who need it but who, once having had it, will be making a real contribution.

This is why I come back to the point made by the noble Lord, Lord Layard, that the Treasury will get the money back. There is a real truth in this. We need it; we have not had it. I am not blaming any particular Government for this, because, after all, this was a pretty late decision of that Labour Government, even though it was changed afterwards by the coalition Government for reasons that I cannot now remember. However, it is important that we recognise that this is an essential part of a modern educational system. We have not got it, we ought to get it, and the Government need to come to terms with a change in the way we think.

My Lords, I would like to add one very specific but pertinent comment to the debate at this point. Obviously, we are not going redesign the whole of apprenticeships here on the Floor of the House, but I strongly support the emphasis that the noble Lord, Lord Layard, has placed on 16 to 18 year-olds, and bring to your Lordships’ attention a very strange anomaly in the way we approach this.

When a young person fails to get an apprenticeship and remains in full-time education of some sort, this is paid for automatically as part of the open-ended commitment to pay for classroom-based education, even if it is also vocational or technical education, until somebody is 18 or 19. But apprenticeships for 16 to 18 year-olds have to come out of the levy—of which there is going to be very little money left next year, by the way, but that is a whole other discussion.

At the very least, in the short term, the Government could commit to moving the funding for apprenticeships for 16 to 18 year-olds into a different budget, into the perfectly correct national commitment to fund young people’s education and training until the age of 18.

Briefly, I want to reinforce what has been said. What is unspent of the apprenticeship levy gets returned to the Treasury, not to be spent on education or apprenticeships, which is bizarre. It is a double whammy, because businesses, seeing that their money has not been spent and is likely to go back to the Treasury, suddenly start putting staff on high-level courses, equivalent—

This is risky, because I am doing this from memory. I appreciate that in earlier years, significant amounts of money were returned to the Treasury, but in the last year we were in government, it was £11 million—so basically absolutely everything was spent. I say that in relation to my noble friend Lord Deben’s remarks, and I hope the noble Lord, Lord Storey, will put that in context.

The noble Baroness is right—the amount that was not spent or did not go to the Treasury was coming down.

No. To be clear, of the many millions of pounds that were raised through the apprenticeship levy, the amount that was not spent on apprenticeships and was returned to the Treasury was £11 million in the last year that we were in government, as I remember it.

The point I was also going to make was that companies and businesses that had not spent the levy and did not want to see it returned to the Treasury were using it not for level 3 apprenticeships but for high-level master’s-type apprenticeships. That surely cannot be the right thing to do; it is not in the spirit of apprenticeships.

I was quite shocked that, in my city of Liverpool, Liverpool City Council, which had an apprenticeship scheme over a two-year period, returned £1 million of money to the Treasury. That money could easily have been spent on level 3 apprenticeships. The noble Lord, Lord Layard, gave us all the statistics at the beginning. We need to ensure that there is money for level 3 apprenticeships, because the original hope of apprenticeships was that they would go to the young people who desperately needed to have this opportunity.

My Lords, the issue of apprenticeships is really relevant to improving the life opportunities of young people. I respect what the noble Lord, Lord Layard, has done in tabling this Amendment, which is supported by many distinguished people. Noble Lords should recognise that the introduction of T-levels was intended to provide education in a more controlled atmosphere, as opposed to young people —children—going out to work, legally of course.

T-levels—which, by the way, required a ministerial direction issued by my Right Honourable Friend Damian Hinds because they were against the advice of civil servants—are a good way of trying to make sure that young people get that opportunity without necessarily having to be forced into the world of work. I may be overinterpreting the noble Lord’s amendment.

The other issue employers face is the balance between how you treat children in your workforce and how you treat adults. In my experience at the Department for Work and Pensions, that was a key difficulty in considering how to encourage young people into work. I note that the amendment is very specific, referring to the ages of between 16 and 18.

On my noble friend Lord Lucas’s amendment, which would promote provision of places up to level 7, thought is being given to how young people can then qualify as solicitors and the like by embarking on this path. However, I somewhat agree with the noble Lord, Lord Storey: schemes were developed that effectively skewed away from the entry roles that we still need young people to get into. Regrettably, due to the Employment Rights Bill, we are seeing fewer and fewer such opportunities for young people. It is a real worry that, despite the Government’s best intentions, we will see NEETs going up rather than down.

I support the sentiment of the amendment from the noble Lord, Lord Layard. I fear it will be difficult fully to put into practice exactly what he wants, but I encourage the Government to continue to do whatever they can to make it as straightforward as possible for young people to get apprenticeships and, more importantly, for employers to take young people on as apprentices.

My Lords, I rise to speak as a design technology teacher, a veteran of the IfATE Act, an officer of the APPG on apprenticeships and a member of the House of Lords Social Mobility Policy Committee.

I think we all agree that apprenticeships are vital to this country. It is rather sad that this subject seems to have led to a general exit from the Chamber, but I think that is more because it is lunchtime. I welcome the defence industrial strategy and its new apprenticeship and graduate clearing system, which I know BAE Systems was heavily behind. We have seen Skills England start, and we hope upon hope that it is the answer. This is an incredibly important and nuanced subject, and I am afraid I do not think these amendments are the answer.

My Lords, I shall try to make a few remarks in summing up. Apprenticeships really feel like they should be an answer but are proving to be extremely difficult to get into operation. Employers, especially SMEs, find it difficult to give the work, but they are where you would expect to find most of those apprenticeships, especially at the introductory level. Most people have said, “Yes, it’s a problem”. T-levels have been brought in but, if I remember correctly, you have to work with an employer while doing them, and that has proved difficult in the past.

The reason why they are proving so difficult is that it is a bit of a mess. We have boards and so on for careers guidance, and things locally and nationally. We clearly need more emphasis on making sure that people know where these opportunities are, how they will be supported and how they will get through. There is a general duty proposed in the Bill, but something inside me says that, as written, it is an invitation to Henry VIII powers—possibly Henry IX and X as well. The fact remains that we have not got this right. There have been some valiant efforts, but we have not managed to bring the people who want and would benefit from an apprenticeship to those who will give one to them. That is the problem.

I hope that, when the Minister responds, we will get a better idea of how this will work. The levy has, shall we say, had its problems—that would be a generous way of putting it. The Minister has an opportunity to tell us how the Government are going to develop this. It should be remembered that many of the people in the client base have not been that successful academically —I think just about everybody would agree with the comments of the noble Lord, Lord Deben—and the fact is that schools are judged by GCSEs and A-levels. That is the path forward and everything else is a secondary option. That seems to be the culture; Governments have tried to change it, but I do not think they have succeeded. What are the Government going to do to get these more practical-based operations in?

It would be remiss of me if I did not say that we need to look at the English and maths qualifications. I refer to this again as somebody with dyscalculia and 14 fails in functional skills in an apprenticeship. We did some work on this. It is a pity that the noble Lord, Lord Nash, is not here because we managed to get some consideration on English when the original Bill was brought forward; both he and I bear the scars of that process. I thank him for taking on his own Civil Service and Government to get it. Any Minister who is prepared to show that degree of courage will always get my support.

I hope we can get an idea of how we are going to address the problems, which have certainly been accepted, associated with getting people into apprenticeships. On the question of the things that should be attractive to those who have not been great successes in conventional education, or according to normal cultural expectations, what are we going to do? We need to act, not only for the nation’s general economy, but for the people who are the clients.

My Lords, I welcome this debate on the value of high-quality apprenticeships at all levels, with a focus on levels 2 and 3, and Amendment 483 in the name of the noble Lord, Lord Layard, and Amendment 483A, which I have moved on behalf of my noble friend Lord Lucas.

The noble Lord, Lord Layard, predictably, gave a very insightful and expert analysis of the issues, particularly for young people who are not going to university, and painted, sadly, an accurate but rather bleak picture. I would agree with him rather than the noble Lord, Lord Macpherson, but I think there would be votes in it. The noble Lord said that it would be very popular across the country to take action on this. Anyway, that is not perhaps for this Committee to worry so much about.

I feel that, as I make my remarks, I have former colleagues sitting on each shoulder: Gillian Keegan, the first member of the Cabinet who had previously been an apprentice; and Rob Halfon who saw apprenticeships as a key part of what he described as the “ladder of opportunity”. That is exactly the kind of image and vision that the noble Lord, Lord Layard, set out.

The previous Government did a huge amount of work to raise the quality of apprenticeships and to expand them from some of the more traditional areas into financial services and others to better mirror our very heavily service-based economy and, crucially, to support important areas of the public sector where we have significant workforce shortages. That is in part where level 7 apprenticeships came in. I know that one point that my noble friend Lord Lucas would have made, had he been here, was that level 7 apprenticeships also contributed to that parity of esteem and the sense that apprenticeships could have the same prestige as a degree qualification.

I absolutely recognise the urgency to address the high level of youth unemployment, particularly after recent figures that show how much it has risen in the past year, and to give all young people a sense of real opportunity, which an apprenticeship can bring. We have been concerned at some of the changes that the Government have introduced so far, shortening the length of apprenticeships and removing the funding for apprenticeships at level 7.

I would argue—maybe it is easier from this side of the Dispatch Box—that this should be an area of “both and”. Level 2 and level 3 apprenticeships clearly fulfil a different role in the economy from those at levels 4, 5, 6 and 7, but they are no less important. One is not more important than the other. When we were in office, we were particularly concerned about levels 4 and 5. I will be interested to hear the Minister’s reply to the noble Lord’s amendments. I hope that she can reassure the House that the Government are committed to continuing with the employer-created standards rather than the frameworks that the previous Government introduced and that further moves will be made to secure the engagement of small and medium-sized enterprises in the use of apprenticeships.

The noble Baroness, Lady Wolf, who is no longer in her place, made an important point about how to fund an expanded apprenticeship offer at levels 2 and 3. I also very much recognise the comments made by my noble friend Lady Coffey in relation to T-levels. My reflection on that is that these changes take a great deal of time to embed. I do not think that in visiting schools I have met someone who has not been thrilled to be doing a T-level. I visited many schools where children wanted good, high-quality technical and vocational options and were not even aware that T-levels exist. At the very least, the Government will need to do these things in parallel. I hope very much that we will hear a positive response from the Minister.

My Lords, I start by noting that, although there are a smaller number of noble Lords in the Chamber, the quality of the contributions has nevertheless been truly significant. I thank my noble friend Lord Layard for bringing this to the Chamber and for continuing to share his enormous expertise and passion in this area, ably supported by the noble Lord, Lord Macpherson. I emphasise that this Government absolutely understand the importance of apprenticeships and the scandal of reduced opportunities for young people and are fully engaged in discussions on how to address this and move forward.

The important issue to note is that we see working in this area as one of the key levers in breaking down the barriers to opportunity. As the noble Lord, Lord Deben, so ably expressed, the lack of opportunity for so many young people is absolutely shocking. His comments on the emphasis on academic qualifications were very well made. It is an issue about how success is measured and we all need to reflect carefully on that as we move forward.

I have a personal story to tell. As a local ward member in Leeds, a grandparent came to my surgery, very concerned about his grandson, and said that there did not seem to be the opportunities and that he was not getting the help he needed. I started trying to talk to him about the apprenticeship route and he said, “Oh no, I don’t want my grandson to go down the dirty rag route that I went down”. There is an issue about stigma and promotion, making sure that everybody gets adequate information to promote apprenticeships: the young people themselves, obviously, but also parents and carers, and teachers—do we know how much they are engaged in this area? It is absolutely critical. I stress that this is about rebalancing apprenticeships back towards young people who have the most to gain from them. But we have to be honest that the rate of starts has fallen dramatically over the last decade. We cannot get away from that; we cannot dress it up. The performance just has not been good enough. I go back to the time of the introduction of growth deals. The other point I emphasise is that, where relationships are built locally, bringing together employers with education providers and young people themselves, that is where you start to see success and things really starting to move forward.

I was interested in the discussion about the Treasury. The decisions being made by this Government are not on a cost-saving basis, as I think has been highlighted, but of course the Treasury has a significant role to play in encouraging growth, recognising the impact on the coffers within the Treasury of being successful in that area. Of course, the new foundation apprenticeships are critical in moving this forward, including across the whole reach of construction, digital engineering and manufacturing. There is nothing more powerful than meeting the MD of a company who started off in that company as an apprentice and who can give that first-hand, lived experience of how the opportunities just went up off the scale and how grateful they are for the opportunity to engage in that space.

That is why, to support businesses to make the most of these new apprenticeships, the Government will provide £2,000 to employers for every foundation apprentice they take on and retain in the industry. We are also offering a range of additional financial support, including £1,000 payments to employers where they hire apprentices under the age of 19. Specifically to pick up on the comments of the noble Baroness, Lady Wolf, the Government pay full training costs for young apprentices aged 16 to 21 and certain eligible apprentices aged 22 to 24.

To pick up on the discussion about repayment of the budgets—the noble Baroness, Lady Barran, intervened on this very point—over the past two financial years the English apprenticeships budget has been almost fully spent, so that is something to bear in mind.

This Amendment seeks to ensure that every eligible young person aged 16 to 18 in England should have the opportunity to have an apprenticeship. I emphasise that, while I think that is a great aspiration, we have to remember that apprenticeships are jobs first and foremost. Therefore, it is absolutely fundamental and critical that we fully engage with employers to make sure that we gain their confidence and that they can decide when they can offer apprenticeships to meet the skills needs of their operations, and that the apprenticeships created are sustainable. Of course, it goes without saying that Ministers are always happy to engage with my noble friend on these matters as we move forward.

On Amendment 483A, spoken to by the noble Baroness, Lady Barran, on behalf of the noble Lord, Lord Lucas, we recognise the importance of level 7 apprenticeships and the impact that this may have for older learners and professions—I think he was specifically interested in architecture. I have personal experience, as we got to a point where every legal business in Leeds was offering apprenticeships. It was remarkable talking to businesses about their experience of apprentices going in from school and how far advanced they were in comparison, I have to say, with the graduates going in later. I think we have some real opportunities to talk about how we need to celebrate this and, as I said before, try to undermine the perception of the second-class status of apprenticeships. That is absolutely fundamental. We have the evidence we need to get across.

In response to this amendment, I have to say that the Government believe it is absolutely vital that we prioritise public funding towards those at the start of their working lives and at lower apprenticeship levels, rather than those already in work with higher levels of prior learning or qualifications. That is why, from January, young people under 22 will be the priority for level 7 apprenticeships, and we will no longer be funding those older learners.

We encourage employers to recognise their success, and many of them already contribute to that. This builds on the enormous breadth of work done by Skills England and the evidence it has brought forward through its analysis of official apprenticeship statistics and engagement. We understand that some level 7 apprenticeships are popular and well used by employers, and therefore we are encouraging employers to invest in upskilling their staff over 22 to level 7 when it delivers a benefit to the business and the individuals involved.

I hope I have managed to convey our absolute conviction that apprenticeships are a vital part of our journey to creating more opportunities for young people. There is an enormous amount of work to do in this space and I am very pleased that the Government are putting steps in place to achieve the right outcomes. For these reasons, I kindly ask the noble Lords not to press their amendments.

My Lords, I am most grateful to everyone who spoke in this excellent debate. The noble Lord, Lord Macpherson, got us off to a good start on the economics, which is, of course, a central part of this—but economics can appear to look just at the whole economy rather than at the fates of individuals. Ultimately, of course, the economy is about the fates of individuals and especially the fates of these young people who are headed for lives of such poverty and also, in many cases, inactivity, at a cost then to the rest of us.

I am very grateful for what I think was the main theme, which came out of almost all the contributions—from the noble Lords, Lord Deben, Lord Storey, Lord Hampton and Lord Addington, and the noble Baronesses, Lady Barran, Lady Wolf and Lady Coffey. It is that we have taken our eye off the needs of these young people at the lower levels of skill. How do we get people to levels 2 and 3 as the top priority for the use of the levy money? What has been happening, as we know, is that the levy money has been increasingly diverted, I would say, to supporting older people—often existing employees—and to higher levels of qualification. That would be all right if it were not being diverted from the needs of young people, whom employers have increasingly been turning their backs on. That is what we have to reverse, and it requires a major policy decision by the Government and the setting up of a major administrative structure to reverse this whole trend. I think it is encouraging that the survey by the CIPD showed that employers are up for this if some leadership and support is given to make it come about.

We are worried that the levy is being diverted. We should revert to the principle that its main purpose is to get people up to levels 2 and 3—when it comes to levels 4 and above, there are many other potential sources of funding. There is obviously the student loan. It is not so obvious that essentially the taxpayer, through the levy, is funding higher-level education for people taking levels 4 and 5 or degree apprenticeships at level 6, when most of those studying at levels 4 to 6 are on student loans or alternative sources of funding. Obviously, if the employer wants to get a bright young person quickly, they can contribute to the cost. We must re-establish the idea that the central—the first—overriding claim on the levy is young people doing levels up to level 3.

I am very grateful to the Minister for what she said and for the sincerity of her concern about all this. We would very much like to meet and see how this can be carried forward and, in the light of that, for the moment I would like to withdraw the Amendment.

I thank the noble Lord, but we are debating Amendment 483A, so I need to ask the noble Baroness, Lady Barran, to withdraw that first.

I beg leave to withdraw the Amendment.

Amendment 483A (to Amendment 483) withdrawn.

Amendment 483 withdrawn.

Amendment 484 not moved.