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Apprenticeships and Skills Policy — [Sir David Amess in the Chair]

Part of the debate – in Westminster Hall at 2:30 pm on 8th January 2019.

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Photo of Judith Cummins Judith Cummins Shadow Minister (International Trade) 2:30 pm, 8th January 2019

I thank my hon. Friend for making that point, which is definitely one for the Minister to address.

As I was saying, in July 2018 there was a total of 25,200 apprenticeship starts nationally, which represents a 43% drop from July 2016. Starts in Bradford South have fallen from 1,370 in 2015-16 to just 680 in 2017-18 —very nearly a 50% drop. Several Bradford firms have told me that the complexity of the system is a major barrier to entry, and that seems to be a particular problem for small and medium-sized businesses. That was clearly set out to me when I had the privilege of attending the apprenticeship awards evening at Bradford College late last year. While we were discussing the fantastic successes of apprenticeships at the college, it raised a number of difficulties facing both the college and the many SMEs it works with. Many of the latter find the administrative demands of the new apprenticeship system extremely difficult to manage, and the college itself is experiencing cash-flow difficulties, caused by changes to the apprenticeship contract and the digital payment process, with payment times having increased to an average of 14 weeks from an average of seven before the reforms. The college has had to create four new posts to help it to navigate the changes and support its employers.

In his recent Budget, the Chancellor acknowledged some of the shortcomings identified in the current apprenticeship policy. For example, he announced his intention to reduce the requirement to contribute to the costs of off-the-job training from 10% to 5% for non-levy employers, which should help a little. In Bradford South, I have levy employers asking if the same 5% reduction in fees will apply to them once they have exhausted their levy funds. They currently deliver the extra apprenticeships under Solenis, which also requires a 10% core contribution from employers.

I recognise that a new system takes time to bed in, but the Government’s approach needs more than just a little fine tuning. We need a more radical overhaul of our skills policy to help places such as Bradford get the growth and prosperity we deserve. We have a situation where public policy, whether intentionally or unintentionally, has turbo-charged the London economy to the detriment of other towns and cities outside the capital. The Government need to address the failure over decades to tackle persistent regional skills imbalances. We need a mechanism to support industries and individuals in areas that face economic decline and need help to adapt to the demands of the global economy.

The jobs of the future will require people to work more closely with advanced technologies. Workers will need support to adapt and retrain, to secure decent and sustainable work; otherwise, in many places in the UK we will face a lasting legacy of low qualifications, low productivity and low pay. Yet the Government have no convincing strategic framework for identifying sectors and areas in which large numbers of jobs are at risk from technological and economic change. In fact, the apprenticeship levy contributes to further regional imbalances, as more funding is raised per head in London and the south-east than in the rest of the country. London has the lowest skills need in the country, yet the levy will raise more funds there, as the capital has both a greater proportion of workers employed by large employers and far higher pay. The Social Mobility Commission’s “State of the Nation 2017: Social Mobility in Great Britain” report identifies that as an emerging risk, and the commission urges the Government to develop education and skills policies to better support disadvantaged young people in areas such as Bradford South, stating that that could be done

“by targeting any used apprenticeship levy funds at regions with fewer high-level apprenticeships”.

According to the commission, apprenticeships are a more common path into employment for young people in many youth coldspot areas, where there are higher barriers to social mobility than in hotspots, but those apprenticeships are often of lower quality than in the hotspots. If we are to rebalance our economy, we urgently need reforms to the apprenticeship levy to ensure that it meets the needs of the most disadvantaged areas and those with a legacy of underinvestment, such as my constituency of Bradford South.

A debate about skills policy must not be just about how to support young people to enter the workplace; it also must consider those who are already working. To achieve a sustainable supply of skills with the flexibility to meet the ever-evolving needs of business, industry and the public sector, the UK must maximise the potential of its existing workforce. That is why the 45% reduction in spending on adult education since 2010 is so short-sighted and damaging to our economy. If Government want business and individuals to see training as an investment and not as a cost, they must lead by example. To meet the wider training need of the economy, we need more focus on how the apprenticeship levy can be used to tackle the overall skills shortage.