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Apprenticeship Levy — [Caroline Nokes in the Chair]

Part of the debate – in Westminster Hall at 2:58 pm on 11th February 2020.

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Photo of Robert Halfon Robert Halfon Chair, Education Committee, Chair, Education Committee 2:58 pm, 11th February 2020

It is an honour to serve under you, Ms Nokes, and to be sat next to my hon. Friend Richard Graham, who has done so much to support apprentices. Like me, he understands the importance of promoting the prestige of apprentices, which is why he employs one. My own apprentice, Dan Swords, is present in the Public Gallery. That prestige is incredibly important.

I will make a general point before talking about the levy specifically. The solutions proposed by my hon. Friend are very important, but a number of other things need to be considered. We can tune the apprenticeship levy as much as we want, but we have to address prestige and careers as well; otherwise the levy, however good or bad, will not succeed in the way we would like. Prestige is important. The fact that Mr Speaker is going to employ an apprentice in his office sends an important signal to millions of people across the country about how prestigious apprenticeships are. More parliamentarians should employ apprentices.

One of our biggest problems in terms of the prestige of apprenticeships and the number of people who want to do them comes from the fact that apprenticeship careers are so poor. One of the last things I did as Skills Minister in 2017 was to introduce the Baker clause, which compels schools to invite apprentices, apprenticeship organisations and further education colleges into schools, but that is not happening as it should be. I strongly welcome the letter that Lord Agnew is sending to schools, but a letter is not enough. The Ofsted guidelines must be much tougher and look at the outcomes. How many children in those schools are going on to apprenticeships, further education qualifications, or technical education as that comes through the system? We will not change the attitudes of parents and families unless we transform careers.

There is an incredible duplication of careers organisations from the Departments for Education and for Work and Pensions. I would like there to be one organisation—a national skills network—and a UCAS-type system for further education, skills and apprenticeships, which would also include universities. Rather than having separate education systems, there should be a one-stop shop for students or apprentices to get advice on the best FE college or kind of apprenticeship. That is the way to promote parity of esteem, not by having separate systems. We have talked for a long time about a UCAS-type system for FE, skills and apprenticeships, but it has still not happened.

Unfortunately, there has been gaming of the levy system. The Times Educational Supplement has published a report today saying that more than £100 million of apprenticeship levy funds have been spent on masters degrees for managers. New polling by YouGov for the Centre for Social Justice shows that in the last 12 months almost one in five businesses has used the levy to accredit skills that their workers already have. We need to reform the apprenticeship levy so that funds are used more productively. The Government could do that by restricting funds for employees who are already qualified to degree level, or by allowing employers more generous terms when they create apprenticeships for low-skilled workers. In other words, if employers used their levy for gaming the system, they would use a tiny part of it, but if they used it to get more young people, more 16-year-olds, doing apprenticeships that meet our skills needs, they would use much more of it. We need to look at the levy in that way.

We also need to do more to ensure that the disadvantaged have access to degree apprenticeships, which are my two favourite words in the English language, as those who know me know. I am not talking about the gaming of the system for masters degrees, but degree apprenticeships in law and engineering. Last week, during National Apprenticeship Week, I went to the TUI holiday store in my constituency of Harlow and met a degree apprentice who is doing law for TUI. She is an outstanding individual who wanted to earn while she learned, so she has no debt at all. She is virtually guaranteed to get a job with TUI at the end, so her career is made.

We should be doing more. We should have an ambition that at least 50% of our students do degree apprenticeships. We need to increase and ring-fence funds from the apprenticeship levy. We could do that by broadening its remit so that employers with a salary roll of £2 million qualify.

We have to be more imaginative in removing the bureaucracy, as my hon. Friend the Member for Gloucester has said. He touched on nursing degree apprenticeships, on which the Education Committee did an inquiry. There could be many more if the bureaucracy, the rules and regulations, and the apprenticeship levy were more flexible in all sorts of ways. We are missing an opportunity. We had an argument about the bursary—I am glad it has come back in one form or another—but it would be better if the vast majority were doing nursing degree apprenticeships, and if the Institute for Apprenticeships and Technical Education and the Department had the vision and provided strategic guidance and a more flexible levy and rules. There has to be flexibility.

Better-off families are two and a half times more likely than their disadvantaged peers to know about degree apprenticeships, and that is linked to careers advice. The Government should hardwire apprenticeships into all careers advice and we should enforce the Baker clause more stringently. In my previous job as a Minister, and in my current job as Chair of the Select Committee, I have gone around the country visiting incredible providers—private providers and FE providers—but in 2018-19 only 56% of providers inspected were rated good or outstanding. The Government should strengthen Ofsted’s capacity to carry out monitoring visits much earlier for new market entrants and across a large part of the market.

Let us think imaginatively. We have a research and development tax credit. Why on earth do we not have a skills credit to help companies that are doing the right thing, such as smaller companies employing apprentices? We need to look at wider issues, such as whether we should extend the levy across the board, as proposed by the Association of Employment and Learning Providers, whose representatives are also in the Gallery, and get rid of the training costs for employers.