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Apprenticeships and Skills (Public Procurement Contracts) Bill
(11 years ago)
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Andrew Gwynne (Denton and Reddish) (Lab)
I beg to move, That the Bill be now read a Second time.
Everyone in the House celebrates the value of apprenticeships in providing opportunities and developing skills, and my private Member’s Bill would help to promote more of that. It is vital that we have more quality apprenticeship opportunities, particularly for young people, especially at a time when nearly 1 million of them are still out of work. Surely it is common sense that the Government and public authorities are uniquely placed to use the leverage of the money they already spend on procurement to help promote skills training and provide new apprenticeship opportunities. This should be part of the procurement process, where appropriate. The Bill is a relatively simple idea: every supplier winning public contracts worth more than £1 million may be asked to offer apprenticeship opportunities in those public contracts, if that is what the public body seeks to promote.
First, I should set out the problems in constituencies such as mine and how my Bill could help. Given the stubborn long-term unemployment and youth unemployment in my constituency and many others like it, there is much more that local and national Government could and should do, including through their agencies and other public bodies. In Denton and Reddish, youth unemployment in September was still at 7.6%, compared with 5.9% nationally, in the 18 to 24 age group. Representing a constituency with such levels of long-term unemployment and youth unemployment, I think it is clear that more has to be done to help. The blunt truth is that many of the jobs in my area are low skilled and low wage, so the challenge in areas such as Denton and Reddish must be to upskill the work force, and to raise ambition, opportunities and life chances with it.
Philip Davies (Shipley) (Con)
I congratulate the hon. Gentleman on bringing the Bill to the House. Will he clarify something he said earlier, because I was a bit confused? If I remember rightly, he said that local authorities “may” do this, if they choose to do so, but at the top of the Bill, it says that the Bill is to
“Require certain public procurement contracts let by public authorities to include a commitment…to provide apprenticeships and skills training”.
It says “require”, not “may”.
Andrew Gwynne
And of course it says “certain public procurement contracts”, not all public procurement contracts, and it will be for the public body to determine whether it requires them. If the hon. Gentleman looks at the body of the Bill, he will see that it says “may”. I hope that clarifies his point.
We clearly have much more to do to transform educational opportunities and our culture for the forgotten 50% of young people nationally and the 68% in my area who do not get the chance to go to university. An important way of doing this is to offer quality apprenticeships that give a real and sustained route to a good career and to make the best use of public procurement contracts to help to achieve this.
Jacob Rees-Mogg (North East Somerset) (Con)
I think what the hon. Gentleman is trying to do is thoroughly worthwhile, but I wonder whether it would be allowed under EU contract procurement rules.
Andrew Gwynne
The simple answer is yes, and when we get to that part of my contribution I am sure that the hon. Gentleman will be won over to my argument. Actually, it is already happening in many local and central Government Departments, but there is a lot more we could do, which is why I hope he will support my Bill today.
Apprenticeships provide us with inspirational ways of realising our ambitions and enabling us to break the current cycle. One good example is the 50/50 scheme set up by my own Labour-controlled Tameside council, which awards up to 50 apprenticeship grants of £1,000 to employers who take on a 16, 17 or 18-year-old Tameside resident. Over the past few years Tameside council, working closely with the Connexions service, has gradually reduced the number of young people in my constituency who are not engaged in employment, education or training. Some of those young people want to learn while they are in work, and the initiative is intended to ensure that they have the opportunity to do so. Schemes such as 50/50 recognise the particular problems faced by young people in the current economic climate, and support them. They are training a new generation for economic recovery in places such as Denton and Reddish.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
I am sure that my hon. Friend also welcomes the Liverpool Futures programme, which is run by a partnership of our chamber of commerce, Liverpool city council and the Eldonian Group, and is helping up to 3,500 young people to become apprentices.
Andrew Gwynne
I do indeed. There is much good practice throughout the country that we should be championing. I believe that my Bill will encourage other public bodies to do what my hon. Friend’s council, my council and, probably, the councils of Members in all parts of the House seek to achieve. Notwithstanding all that good work, however, it is a sad state of affairs when fewer than one in 10 employers offer apprenticeships. Far too many young people are being told that they have an apprenticeship after a course lasting 12 weeks or less, and one in five apprentices receive no actual training of any kind. I believe that, between them, Government procurement and my Bill could enable us to change that position.
I am proud of my party’s record in this regard. Under the last Labour Government, the number of apprenticeships more than quadrupled. We launched the official Office of Government Commerce guidance to encourage the growth of apprenticeships, whose principles are also evident in the Bill. I have been informed by both the Public Bill Office and the House of Commons Library that it is still the most relevant guidance for apprentices. The last Labour Government proceeded with major projects such as the kick-start housing scheme and Building Schools for the Future, and their work with the contractors on the Olympic park resulted in the creation of thousands of new apprenticeship opportunities as part of public procurement. That is a legacy of which I think we can be rightly proud.
It was the last Labour Government who ensured that skills and apprenticeships would be an integral part of the Crossrail project that we launched and that, I am pleased to say, the current Government have retained. It was our party that established the Tunnelling and Underground Construction Academy, and constructed the framework for a procurement strategy based on taking apprentices from the local London boroughs. That was crucial to ensuring that young people in some of the most deprived communities in our country have the skills training that will be necessary for the next generation of engineers.
Philip Davies
I am becoming rather puzzled. Having said earlier that the Bill did not require anyone to do anything that they did not want to do, the hon. Gentleman is now producing a catalogue of local authorities and local public procurement bodies that would have done this themselves anyway had they wanted to. If the Bill does not require anyone to do something, and they can already do it if they want to, what on earth is the point of it ?
Andrew Gwynne
That is a fair question. The point of the Bill is that there is still the misconception—as we have heard today—that public bodies cannot do this because of European Union procurement rules. My Bill makes it clear to all that if they want to include apprenticeships in their tendering processes, they can do so. It also aims to drive up standards through the key provision that apprenticeships could be required to be at the higher or advanced level.
Diana Johnson (Kingston upon Hull North) (Lab)
I congratulate my hon. Friend on the Bill. Does it not also signal to employers that they will be expected to provide training for our youngsters? Not only will employers benefit from a skilled work force, but the Bill will benefit the community by creating better jobs, making businesses more competitive, and increasing the number of people who wish to use the services provided by those businesses. It is a win-win situation.
Andrew Gwynne
My hon. Friend is absolutely right. I hope that Members in all parts of the House will support the Bill, because it sends the message that we should be upskilling our work force, that we have confidence in the young people in our country, that we expect their future to be our country’s future, and that we should therefore invest in them through public procurement.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
My hon. Friend is making an excellent speech and a very reasoned case for the Bill, which, it seems to me, will also create a level playing field for businesses. Businesses want legislation such as this because, although there are patches of good practice, if that good practice existed throughout the country, there would be a level playing field not only for the young people who will benefit from the Bill, but for the businesses that invest in them and, at present, must compete with those that do not bother to do so.
Andrew Gwynne
My hon. Friend is right. Over the past few months, when I was drafting the Bill, I spoke to numerous companies, large and small, which were bidding for public procurement contracts. They made precisely the point that my hon. Friend has made. If a public body requires apprenticeships to be part of the tendering process, the standards of the bids will be levelled upwards, so that a company that pursues good practice by providing apprenticeships will no longer be undercut by another that does not invest in skills and training.
Mr David Nuttall (Bury North) (Con)
The hon. Gentleman said a moment ago that the Bill would send a message to public authorities that did not include a requirement for apprenticeships in their procurement processes. If that is all that he aims to do, would it not be simpler to write to the authorities explaining the position and to issue a press release, rather than trying to introduce legislation?
Andrew Gwynne
Were that to succeed, then yes, but the hon. Gentleman knows as well as I do that some Government Departments, public bodies and local authorities would still be saying “We cannot do this.” Introducing legislation giving them the power to ask to be allowed to do it, if it is what they want to do, will make the position clear to all. The Bill is not prescriptive; it does not compel those bodies to act. On the contrary, it empowers them.
Lyn Brown (West Ham) (Lab)
When I read the Bill, I thought to myself “This is a wonderful Bill. It is all motherhood and apple pie. It is fabulous.” Now I am struggling to understand why there is so much Conservative resistance to a Bill that will simply give our young people a decent start in life. What can possibly be wrong with that?
Andrew Gwynne
My hon. Friend has hit the nail on the head. I am confident that by the end of my speech and those of other Labour Members, the sceptics sitting opposite me will be won over to the cause of young people in their constituencies, which is equal to that of young people in Newham, Tameside, Salford, Hull, Newcastle, Liverpool, Birmingham, Scunthorpe and Scotland.
Jacob Rees-Mogg
I am delighted to hear about all this rejoicing in Scotland. As I am being won over by the hon. Gentleman’s impassioned oratory, I wonder whether he ought to take the Bill a step further, in response to my hon. Friend the Member for Bury North (Mr Nuttall), and make it clear that it is above and beyond European law by putting in a “notwithstanding” clause. It would say, “Notwithstanding the European Communities Act 1972”, and that would make things absolutely certain.
Andrew Gwynne
I look forward to the hon. Gentleman supporting my Bill and then moving such an amendment in Committee—I will certainly consider it then, if that is what he is willing to do.
The Labour Government also introduced national apprenticeship week, which aimed to give expanded chances and skills a focus for recognition and celebration, and set up the National Apprenticeship Service to help to drive the project all year round. It was launched as a vehicle to promote the real and valuable opportunities we all believe apprenticeships can offer.
The national apprenticeship week has become a central part of the employment and skills calendar. It is a week in which excellence and aspiration in learning, and acquiring skills and trades in areas as diverse as engineering, construction, the hospitality industry, joinery, accountancy and health and social care, are showcased and celebrated.
We can have our political knockabouts in this place, and I have concerns that this Government have slipped back on some of the progress, particularly for young people, but it would be churlish of me not to recognise that they have largely built on the record of apprenticeships and skills training that they inherited from the previous Labour Government. I hope that they, like me, will recognise that more can still be done. I was overjoyed that the Minister with responsibility for apprenticeships said during last week’s Department for Business, Innovation and Skills questions that apprentices in public procurement do have a role. He said:
“Of course we do use public procurement to increase the number of apprenticeships, not least in Crossrail, which is the largest public procurement and construction project in Europe at the moment. It is true that we had to take action to remove some low-quality provision in the 16 to 19 space when we introduced rules to ensure that every apprenticeship was a job, which it had not previously been…We also have a programme in hand to increase the numbers. Participation in apprenticeships is at the highest level ever, which I would have thought all parties would be able to support.”—[Official Report, 24 October 2013; Vol. 569, c. 421.]
Those were the words of the Minister for Skills and Enterprise. So let us see that clear statement of intent through to its logical end by supporting my Bill, as it is very much in line with that statement; let us use public procurement to drive up the quality of apprenticeship opportunities in this country.
We need an ambitious policy on apprentices—this is our challenge—and my Bill goes a small way to helping to achieve that. The Deputy Speaker will not be surprised to learn that I agree with my Front-Bench team that we need a universal gold standard for apprenticeships. That would mean that there would be the same standards and opportunities for young people who do not go to university as for those who do—we must remember that they account for about 68% of the young people in my constituency.
The policy was announced at this year’s Labour party conference by the shadow Business Secretary, my hon. Friend the Member for Streatham (Mr Umunna), and I am extremely pleased to see him here today supporting the Bill. Although the policy is not part of my Bill, it is surely right that minimum standards are introduced, in stages, leading to a system whereby all apprenticeships would last for a minimum of two years—preferably, three years—would be level 3 qualifications or above and would have a focus on new entrants to the labour market. My right hon. Friend the Leader of the Opposition has also said that if a company wants a major Government contract, it
“must provide apprenticeships for the next generation.”
Indeed, at this year’s Labour party conference the skills taskforce published the first of three final reports, “A revolution in apprenticeships”, which looked specifically at how to increase the quality and quantity of apprenticeships, through new minimum standards and a something-for-something deal with employers. That is because a good apprenticeship can change lives just as much as a degree can.
There are already good examples of apprenticeships in my constituency, and I have mentioned the Tameside 50:50 initiative. Young people in areas such as Tameside are among those with the fewest opportunities to access the jobs market, yet it was Labour-controlled Tameside metropolitan borough council, working with the previous Labour Government, that ensured that contractors for schemes such as Building Schools for the Future took on apprentices as part of the Tameside Works First initiative. I commend to all hon. Members the fantastic new facilities at Denton community college. I should perhaps declare an interest, as my wife is chair of governors of that fantastic new school, which achieved 96% A to C grades at GCSE this year. Those are the best ever results, achieved in superb state-of-the-art facilities. The contractor that built that school, Carillion, took on no fewer than 13 apprentices as part of the construction project, because that was required by Tameside’s council under the Building Schools for the Future initiative. That was good public procurement practice levering in apprenticeships and skills training, and leaving a lasting legacy, not only in employment opportunities for those young apprentices, but in the form of a superb new school driving up education standards in my community for the future.
Tameside council restated its commitment to apprenticeships at the Tameside skills summit on 28 March. It set the challenge to its partners in Tameside to achieve 100% participation by 16 to 24-year-olds in education, training or a job with training by 2020.
Bob Stewart (Beckenham) (Con)
I suppose the hon. Gentleman also accepts that it is sometimes difficult for a small company, consisting of fewer than 10 people, to have a formal apprenticeship scheme. In such cases, we might be talking about giving a job rather than having a formal apprenticeship scheme.
Andrew Gwynne
That is absolutely right. The Bill is not prescriptive and it relates to public procurement contracts in excess of £1 million, so the local public body “may” seek a commitment to skills training or apprenticeships as part of a contract. That can be carried out through a variety of means—
Andrew Gwynne
For a young person. That can be carried out in a variety of ways, one of which the hon. Gentleman outlined. Of course, however, it would be incumbent on that company or group of companies to explain what it is doing as part of the bid process. It would then be down to the public body to determine whether that meets its aims and ambitions for its local economy, but he is right in what he says.
Through the Tameside apprenticeships scheme, the local council has committed to helping small companies such as the ones the hon. Gentleman mentioned to take on apprentices, in response to feedback received about the difficulties they may experience. Those difficulties relate particularly to the construction sector, and some other sectors, where an employer cannot guarantee that contracts will last for the full 12 months or more of the apprenticeship. Tameside apprenticeships, a partnership between Tameside council, Tameside college, New Charter housing trust and the Tameside learning provider network has set a target to achieve 100 additional apprenticeships in the borough in the next 12 months.
If the employer has to withdraw from the agreement, the council has undertaken to pay the apprentices’ wages for a month while a replacement employer is found. As I have already said, the 50:50 scheme set up by Tameside council also provides up to 50 apprenticeship grants of £1,000 each to employers who take on 16, 17 or 18-year-old Tameside residents. It has been a huge success.
Good apprenticeship opportunities are also offered by the local housing association, New Charter housing trust. During apprentice week this year, it showed its continued support for apprentices with a pledge to take on at least 20 people from April, doubling the number of apprentices from the previous year. The trust has apprentices in a range of roles across the company including in administration, domestic gas engineering, painting and decorating and plastering—all good apprenticeships that can offer a ladder to a future career. New Charter has also taken on a role as lead partner in a new housing apprenticeship scheme for Greater Manchester called “Foundations in Housing”, working with other housing associations across the county.
In the Stockport part of my constituency, there is the 100 apprenticeships in 100 days initiative. Stockport council, which, incidentally, is Liberal Democrat controlled—I do not often have good words to say about the Liberal Democrats but today I will break the habit of a lifetime, even though it is noticeable that no Liberal Democrats have turned up to support the Bill—has worked with local employers to get them to take on more apprentices. Within the 100 days, the scheme’s target of 100 apprentices was soon reached and the campaign will now run until mid-November. It has been such a success that it has secured about 152 extra apprentices so far.
I also want to consider some of the good work being done by central Government. We know that since July 2011, the Department of Work and Pensions has been operating its apprenticeships and skills requirement contract schedule, which requires:
“The Contractor shall and shall procure that its Sub-contractors shall take all reasonable steps to ensure that 5% of their employees are on a formal apprenticeship programme.”
We can see from that initiative how the same formula could be applied directly elsewhere and in other Government Departments beside the DWP. Many more apprenticeship places could be created if the Government really wanted to expand apprenticeships in the public sector and through public procurement. I believe that my Bill can help the Government to facilitate that.
What better spur to action can there be for the two thirds of businesses that still do not offer apprenticeships than the knowledge that they are crucial to the Government and to working with the Government? Government, whether local or national, realises that it must be the responsibility of public procurement to do all it can to give young people a chance to get experience as an apprentice. Having an hands-off approach is simply not good enough and I commend the Government for recognising that in at least one of their Departments.
As I said in my opening remarks, all Members of this House celebrate the value of apprenticeships in providing opportunities and developing the skills of our work force and our future work force. We need to have more quality apprenticeship opportunities, however, particularly for young people at a time when nearly 1 million young people are out of work. I believe that my Bill would be useful and helpful to the Government in promoting that. It is common sense that the Government and public authorities are uniquely placed to use the leverage of the money that they already spend on procurement of public services to promote skills training and to provide new apprenticeship opportunities. That should be part of the procurement process.
The Bill is a relatively simple idea. Every supplier winning public contracts worth more than £1 million may be required to offer apprenticeship opportunities if that is the desire of the relevant public body. The Bill is not prescriptive and it does not compel, but it does empower. It would mean that companies applying for certain public procurement projects could be asked to include and offer quality apprenticeships as part of their bid if the public body wants that. My Bill would ensure that all apprenticeships offered as part of a public procurement contract would have to be advertised to all local workers, ensuring that those looking for a job would have a chance to apply and to be successful.
My Bill focuses on advanced and higher level apprenticeships, at levels 3 and 4, to ensure that we have apprenticeships that can rival university degrees. We should consider that point, given that in my constituency 68% of young people—and no doubt a similar proportion in the constituencies of other right hon. and hon. Members—or 50% of young people across the country do not have the opportunity to obtain a higher education qualification.
Lyn Brown
My hon. Friend is most generous in giving way. In my constituency, a firm called Kesslers has an amazing apprenticeship programme. It takes young people from the local area and trains them up to a high level. Its biggest problem is that it cannot get the higher education sector to hear its needs so that it can take its apprenticeships even further up the educational tree. Does my hon. Friend agree that higher education has a part to play in apprenticeships and we must encourage the providers to supply the courses that are needed to allow our young people to go as far as they possibly can?
Andrew Gwynne
My hon. Friend is absolutely right. One of the consequences of the provisions in my Bill will be a snowball effect. If public bodies, in particular, demand higher and advanced level qualifications as part of the apprenticeship deal more often, the greater the likelihood that higher education institutions will offer the qualifications that are relevant to the industries concerned. I think that from small things big things will grow. I am encouraged that my hon. Friend is in the Chamber today, because she speaks passionately about the job and work opportunities for her constituents. Like me, she represents a deprived community where educational opportunities are often the best route out of poverty. We know that in our communities public procurement is often the big spender. Using that money more wisely to help lift the job opportunities, skills and ambitions of young people in Newham and in Denton and Reddish is the best way of giving them opportunities for the future and of boosting the local economy.
As I said, many local authorities are already leading the way in their use of procurement to boost apprenticeship numbers. Not only my council, Tameside, but Knowsley, Sheffield, Leeds, Manchester, Liverpool and many others are developing strategies to use procurement contracts to create local apprenticeship opportunities for young people. Other authorities such as Plymouth, Bury—the authority of the hon. Member for Bury North (Mr Nuttall) —Reading and Stockport are engaging actively with local employers to boost apprenticeship opportunities more generally.
Richard Burden (Birmingham, Northfield) (Lab)
My hon. Friend is making a very powerful case. Would he also pay tribute to the work that Birmingham city council is doing with its 1,000 apprenticeships in 100 days initiative, which has had a major impact? But it is really important that all these initiatives reach those areas where the young people, who are often excluded, do not know these opportunities are available and target those areas as well as areas where racking up economic activity is already going on.
Andrew Gwynne
My hon. Friend is absolutely right and I commend the superb initiative in Birmingham. He is absolutely right that we must ensure that those who are the hardest to reach and who most need such opportunities have access to them. My Bill requires that those opportunities be advertised in the local jobcentre, because that is the only way to ensure that those hard-to-reach groups have the opportunities to access their way out of poverty, and to develop the skills and education that so far, sadly, they have missed. I am extremely pleased that my hon. Friend is here today to support these measures, because they will have a big impact, in cities like Birmingham, in driving up the ambitions and the skills of young people.
The hon. Member for Shipley (Philip Davies) asked why, if this work is already taking place, there is any need for the Bill. In my discussions with a variety of public bodies, local councils, companies large and small, and training organisations, they have said that for all the good practice that exists, far too many public bodies still do not regard public procurement as a way to drive up skills. Perhaps that is because they do not have the ambition to do that, or because they have unfounded fears that some bogeyman in Brussels will say that it is not permissible. If the hon. Members for Bury North and for Shipley are fearful that my Bill might fall foul of Brussels, I invite them to join us in the Aye Lobby later, because I know that they both love nothing more than a scrap with those bogeymen in the Berlaymont.
I do not believe that Brussels is a problem, but others are looking to Government to provide them with the certainty that they need, so that local authorities, public bodies and Government Departments may require certain public procurement contracts to include a commitment to skills training.
Diana Johnson
I wonder whether my hon. Friend, with his vast experience and knowledge of the national health service, feels that the NHS and the new structures that have been created by the coalition are playing their part in providing apprenticeships and training for our young people.
Andrew Gwynne
My hon. Friend makes a good point, because while there was some good practice in the national health service, this is one area where we have witnessed in recent months the rolling back of skills training. I do not know whether that is because the new NHS bodies have been so fixated on reorganisation that they rather neglected skills training, or whether it is purely because some of the new bodies do not realise that they have the power when commissioning services—as clinical commissioning groups have, as providers of public services—to ask some of the people bidding for those contracts to provide apprenticeships. My Bill would make it quite clear that public bodies—my definition would encompass clinical commissioning groups—would be able, as part of their contracting process, to ask companies that bid for those contracts to provide adequate skills training.
Luciana Berger
I congratulate my hon. Friend on introducing today’s private Member’s Bill. It is absolutely fantastic and I am delighted to be supporting it today. Does my hon. Friend accept that in some large infrastructure projects in some areas, there can often be some local ill feeling that a lot of the people coming to work on the projects come from far away? I think of a project locally, on Merseyside, not naming any names, where there is a lot of ill feeling that people are travelling long distances—from as far away as Bristol—to work on it. Does he agree that a scheme such as he is proposing today, to encourage local apprenticeships, would really help to develop local skills, so that for future projects, it will not be necessary to ship people in from far and beyond?
Andrew Gwynne
My hon. Friend is absolutely right. That is one reason why my Bill makes it clear that those opportunities for apprenticeships and training should be advertised locally, so that local young people in constituencies such as Liverpool, Wavertree will have access to those skills training positions that are being made available in the city of Liverpool. At any one time, umpteen posts will be being made available in Liverpool, but if we do not tell young people in Liverpool—as in my constituency, there is structural, long-term unemployment and long-term youth unemployment there—we shall never break that cycle. This very simple measure will therefore make a big difference in a city such as Liverpool, along with the other areas of the country that we have already mentioned.
It is worth placing on the record that the cross-party Business, Innovation and Skills Committee report on apprenticeships recommended a similar approach in respect of public procurement. The House of Commons Committee argued that the Government should aim for the benchmark used by many leading businesses in the construction sector, including Kier, Willmott Dixon and Laing, whereby for every £1 million spent by Government Departments and their agencies on public procurement, at least one new apprenticeship place should be created. Some estimates suggest that that could create tens of thousands of apprenticeships, although my Bill is much less ambitious and makes no commitment on the numbers of apprenticeships within public procurement projects.
I am very pleased that my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) is not only here today to support my Bill but is one of its sponsors. I pay tribute to the ten-minute rule Bill that she introduced a few years ago, which has led to important Front-Bench policy developments in the Labour party and, I believe, helped to build the head of steam for our campaign today. I pay tribute to my hon. Friend.
My private Member’s Bill has attracted supporters, including the Union of Construction, Allied Trades and Technicians, the Association of Colleges, the National Union of Students and—although I do not want to put off the hon. Members for Bury North and for Shipley—Unite and the GMB. However, we still do not know whether today those on the Government Front Bench will back this very sensible and very modest measure to help boost apprenticeships.
Almost 1 million young people are unemployed and we must act now to prevent another lost generation. A public procurement policy as outlined in my private Member’s Bill could create even more and better apprenticeships, and we would start to transform the numbers and the life chances of countless young people. So my plea to all today is to support this simple measure. It makes economic sense and it is common sense, but it is also the right thing to do and, in these financially constrained times it would be cost-neutral to the public purse. Therefore I urge all Members and the Government to support my Bill in the vote today.
Philip Davies (Shipley) (Con)
I congratulate the hon. Member for Denton and Reddish (Andrew Gwynne) on securing the slot at the top of today’s proceedings for his private Member’s Bill. It is common in these times to congratulate somebody on that, but I want to go a step further and congratulate the hon. Gentleman on the passion that he showed in his support for apprenticeships. Nobody who heard him today could doubt how much this subject means to him, or his desire to help as many young people as possible achieve their goals in life and fulfil their potential, which is what apprenticeships are all about. I commend him for the speech he made because that passion and that desire to help those people in his constituency and across the country shone through for everybody to hear. It was an excellent speech.
However, I admit that I am slightly confused by some parts of the hon. Gentleman’s speech, as I alluded to earlier. In some respects the Bill is a typical Friday Bill, in the sense that we are, in effect, being invited to support something that expresses a nice sentiment. I am not aware of anybody in the House who is opposed to apprenticeships or who does not want to see people achieve their potential, reach their goals in life and have the right path tailored for them. That is common ground across politics. I question why anybody involved in politics would want to stand in the way of any of that.
On a Friday we are invited to support not just a sentiment, but a particular piece of legislation. This is one of the occasions where it seems that if we support apprenticeships and the Bill has “apprenticeships” in the title, we must support it, because if we do not, we must be against apprenticeships. I do not like that approach to passing legislation, where we are invited to vote on a sentiment rather than on a Bill.
The hon. Gentleman’s thesis, if I understood it correctly—I am sure he will correct me if I am wrong—was that there is a lot of confusion out there. The Bill is typical in that we are invited to support a sentiment, but it is untypical in the sense that the hon. Gentleman rather characteristically honestly seemed to suggest that it was not actually necessary—there was no need for a law. Although a law would help in achieving his goals, it was not strictly necessary.
Andrew Gwynne
It would be false to suggest that the Bill is not necessary, because if there is confusion, it is necessary to clear up that confusion beyond any doubt, and the best way to do that is to put the clarification into legislation and on the statute book.
Philip Davies
I appreciate that point of view, which certainly has merit. My concern is that rather than clearing up confusion, as the hon. Gentleman seeks to do, passing the Bill would create even more confusion. The reason I say that with some certainty is that having read the Bill myself, obviously, before today’s proceedings, I am more confused than ever about what its impact would be. It has not cleared up any confusion; it has made me even more confused than I was before.
At the very start of the Bill—I shall read out the words because it is in some respects the most crucial part—it states that this is a Bill to
“Require certain public procurement contracts let by public authorities to include a commitment by the contractor to provide apprenticeships and skills training; and for connected purposes.”
Clearly, the Bill requires certain public procurement contracts to include a commitment to provide apprenticeships. It is not an invitation or a suggestion that certain contracts may be able to do that; it is a requirement that certain contracts must do that.
The hon. Gentleman’s speech seemed to fly in the face of what is written at the head of the Bill. I do not doubt his desire that the Bill should allow local authorities and other public bodies to do that if they so wish. He made it abundantly clear that that was the intention behind his Bill, and I have no reason to doubt that that is the intention, but any public body looking at the legislation that he is seeking to pass in order to clarify the situation could only read the heading of the Bill—the most fundamental part, setting out what the Bill is all about—and believe from reading it that it must do as stated, and that it is not voluntary, but something that it is required to do.
Andrew Gwynne
My Bill is only short so I am sure the hon. Gentleman has had time to read it all. The opening words require
“certain public procurement contracts”.
Were I the borough solicitor for my local authority, I would then look at clause 1(2), which states:
“An authority issuing a contract under subsection (1)(a) may require that a minimum proportion of the apprentices employed by the contractor are higher or advanced apprentices.”
It is pretty clear.
Philip Davies
I hope to have the opportunity to come on to some of the detail in the Bill. Suffice to say at this point that I am not sure that the bit that the hon. Gentleman read out is particularly relevant to the bit that I read out. The bit that I read out is a requirement to provide apprenticeships and skills training generally, whereas the bit that he read out is about a higher level of apprenticeships, so we are talking rather at cross-purposes. I am not entirely sure that his point addresses my point or that my point addresses his. That is why I think we may be left with further confusion.
Mr Nuttall
Perhaps I can assist. I wonder whether the real problem is in clause 1(1)(a), which states that
“the authority must”—
it does not say “may”; it says “must”—
“give due consideration to the relevant guidelines issued by the Office of Government Commerce (OGC) or by the Cabinet Office”.
Does my hon. Friend share my concern that those guidelines could easily be amended to make it a mandatory requirement?
Philip Davies
My hon. Friend makes a very good point. We heard what I thought was an excellent speech from the hon. Member for Denton and Reddish and it was difficult to disagree with much of what he said. We may have a slight disagreement about the respective merits of each party’s approach and what they did while in government, but it would be churlish to argue the toss on that. I am willing to look above the party political and look at the issue as a whole, and I agreed with virtually everything that the hon. Gentleman said. My concern—I am grateful to my hon. Friend the Member for Bury North (Mr Nuttall) for jumping in at this stage—is that the hon. Gentleman’s view that the Bill was all about people’s choices seemed to fly in the face of the language in the Bill, such as the words “require” and “must”.
Andrew Gwynne
Surely the hon. Gentleman would concede that after “must” the clause continues
“give due consideration to the relevant guidelines issued by the Office of Government Commerce (OGC) or by the Cabinet Office or any related body”.
Surely he is not seeking to allow apprenticeships that fall outside the Government’s own guidance for apprenticeships.
Philip Davies
Again, there is an awful lot on which we agree. It might help if I started with those parts of the Bill and the hon. Gentleman’s speech with which I agree the most, and they relate to his desire, which I share passionately, that apprenticeships must be of a certain quality, which has not always been the case. That is not a party-political point because it has probably been the case under successive Governments. Everyone knows the value that people place upon apprenticeships, and political parties of all persuasions have realised that the public have a great deal of faith in what might be called old-fashioned apprenticeships and have jumped on the apprenticeship bandwagon and tried to suggest that they are bringing them back. What the public have thought of as apprenticeships has not necessarily matched what they delivered. Some apprenticeships became nothing more than the sort of on-the-job training that would take place when someone was recruited to a new job, to which people attached the name “apprenticeship” to make them look good, make them sound good, and make the Government look good with the numbers, when really it was no such thing. What I most welcome in what the hon. Gentleman has said today is his desire to ensure that the quality of apprenticeships remains high.
Andrew Gwynne
I am pleased to hear what the hon. Gentleman has just said, in the light of which I appeal to him to support the Bill today so that we can have clause-by-clause debates in Committee, which is the appropriate place for them. Given what he has said, I take it that he supports clause 1(1), which sets out exactly the argument for having assurances that in public procurement contracts any apprenticeships must meet the Government’s guidance.
Philip Davies
The hon. Gentleman seeks to take me down a route on which I am not entirely sure that I am anxious to follow him, which is that if there is one clause, paragraph or line in a Bill with which one agrees, one must support the entire Bill even if one disagrees with the rest of it.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
Given that the Bill has only four clauses, will the hon. Gentleman explain which clause he disagrees with?
Philip Davies
As ever, I want to make some progress, and it could be argued that I am being thwarted in so doing. I do not want to be distracted today. I want to get on with it, as I always do, and I hope that I will satisfy the hon. Gentleman. But to return to the thrust of the argument that because I agree with virtually all the speech of the hon. Member for Denton and Reddish and some parts of the Bill, I must therefore support every Bill that has some parts with which I agree, that is not a view that I share. I agree with some parts of most Bills. An MEP once said to me that it is like having a cup of tea with some poison in it. Most of the tea might be fine, but no one would want to drink it. It is the little bit of poison that one must look for in legislation, not the general thrust.
Philip Davies
I am still reeling from the hon. Lady’s opening remark. That is how rumours start in this place. It would probably be more damaging to her reputation than to mine if that rumour were to spread. I will try to come to the meat of the Bill and put to the back of my mind the temptation that she put in my mind about what happens on a Friday morning. For the record, it is the first I have known about it.
The reason I agree so much with what the hon. Gentleman said is that we need to go back to the purpose of apprenticeships. It is a shame that my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) is no longer in his place because if I am wrong about this, he would have put me right. Apprenticeships date back to the reign of Elizabeth I.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
I am really looking forward to the history lesson on apprenticeships that we are about to receive. However, I want to press the hon. Gentleman for a third time on the fundamental question from the Opposition Benches. If he does not wish to respond to us, perhaps he would like to respond to his constituents, who I am sure are listening very closely to his comments in this debate. Will he please confirm to the House exactly which clause he takes issue with? It is only a four-clause Bill, and he will have the opportunity in Committee, should he support it, as he clearly does to some extent, to pick apart any particular clause. I think that the whole House would be keen to know at this juncture what issue he takes with the Bill.
Philip Davies
I am grateful for the hon. Lady’s confidence that my constituents listen carefully to the speeches that I make in Parliament. That has been a revelation this morning. To be perfectly honest, I was not aware that anyone listened to my speeches in Parliament, but if my constituents are listening, it is a great boost for me to know that they are hanging on to every word. It is certainly news to me. They are very good at hiding the fact that they are hanging on to my every word.
My fundamental problem with the Bill—which I reiterate in response to the various interventions, and then I hope that I will be able to make some progress, which I am sure we all want—is that it will create more confusion about whether these are requirements or just something that can be done. If this were required of people in the public sector, I would appreciate the sentiment, but it would be misguided and would lead to some unintended consequences. If it is not compulsory, it is completely unnecessary, because any public body can do these things anyway. The hon. Gentleman made an interesting point about EU procurement and the role that that plays in this, but I will come on to that later because I want to show why the Bill might be counter-productive and have some unfortunate unintended consequences.
The reason why the hon. Gentleman is right about the quality of apprenticeships is that that is how they started in the reign of Elizabeth I. They were very limited and they lasted between seven and 14 years, which was far in excess of the time needed to obtain skills in a particular sector, but it showed that the person who had passed their apprenticeship was an expert in their field. That is what I would like us to return to; not necessarily that they would take up to 14 years to complete, but that a completed apprenticeship would allow someone to be perceived as an expert in their field. The hon. Gentleman was right to say that that is what we want to achieve.
I do not want to go into the detail of apprenticeships in the time of Elizabeth I, but I can do so if anyone is interested.
Philip Davies
I am grateful to my hon. Friend for showing such interest. Perhaps what happened in Elizabethan times should be the blueprint for more apprenticeships today. It is always wise to look through history. Many jobs had a formal apprenticeship in those days. There is an interesting blog on life in the Elizabethan period which refers to the statute of artificers, which gives details about how apprentices used to be handled and, whether true or a little fabricated, it gives some idea of what apprenticeships were like at the time. The statute governed all trades and crafts and states:
“Employment is to be for no less than a year at a time in any of the sciences, crafts, mysteries or arts of clothiers, woollen cloth weavers, tuckers, fullers, cloth workers, sheermen, dyers, hosiers, tailors”
and the rest of people in such trades. There were also fines. If someone was retained for a year, they could not be let go at the end of that term without notice of a quarter of a year. People could be given a 40 shilling fine if they failed to keep to that.
The hon. Member for Denton and Reddish might want to consider a system of carrots and sticks to ensure that employers and employees get the most out of apprenticeships, because they are a massive investment for both and it is essential that both keep their side of the bargain. A system of carrots and sticks would take us back to where apprenticeships first started and probably help the apprentices.
I support what the Government are doing to improve the quality of apprenticeships, because it seems to me—the Minister will correct me if I am wrong, although I hope that I am not—that they are trying to make them much more employer-led. That bottom-up approach means that employers are provided with the skills they need and can train people to do things that are of value in the workplace, rather than something that is academic and does not achieve anything practical.
The Government have also been trying to make apprenticeships more robust and to ensure that they mean something, and that is exactly the way to go. They must not just be a name tacked on to the back of any kind of training. Given the success of the Government’s apprenticeship scheme—I have heard many figures for the number of apprentices, but it seems to be around a few hundred thousand—it seems to me that we should be encouraging the Government to pursue their current strategy, rather than reinventing the wheel, because it seems to be working well. We have heard examples of people turning down opportunities to do degrees in order to do apprenticeships because they see them as a better route to success. I think that is to be commended. The Government are doing such a good job, so it seems bizarre to consider interfering with something that is working particularly well.
I am pleased that apprenticeships, as a result of the Government’s desire to make them more rigorous and credible, are finally getting the status they deserve. I have long believed that far too many people go to university. The education system had become a kind of conveyor belt that people could not get off until they finished university, and not going to university was frowned on. That was greatly damaging, because too many people were leaving university but could not get graduate jobs, and now they will have lots of debt, which I regret. I never agreed with tuition fees, either their introduction by the Labour party or their increase by this Government, all of which I opposed. Those people became disillusioned. I think that it has helped foster an attitude of wanting to start at the top, because the concept of starting at the bottom and working their way up has become alien to too many people. I think that the status apprenticeships now have, with people learning something worthwhile on the job and seeing a path to a future career, is something we should all celebrate.
It has been a big week for apprenticeships. The Prime Minister, perhaps in anticipation of this Bill, was at the BMW Mini car plant in Oxford on Monday, where he confirmed the Government’s unequivocal support for apprenticeships and promised to deliver the best apprenticeships in the world, which I am sure was music to the ears of the hon. Member for Denton and Reddish, who made that such a part of his speech. Then the Minister for Skills and Enterprise issued a written statement on the future of apprenticeships in England, which the Minister here today might mention in greater detail when he sets out the Government’s view. The statement read:
“Apprenticeships are at the heart of the Government’s drive to give people of all ages the skills employers need to grow and compete. They already deliver strong returns for the economy, for employers and for apprentices. A record 1.5 million Apprenticeships have been started since 2010.”
That seems a very good record.
I do not know whether this is relevant to the Bill, because it appears not to focus on these industries, but the Government seem to be saying that the focus should be on the really highly skilled industries, including aerospace, digital, energy and utilities, electro, technical, financial services, food and drink manufacturing, life sciences and industrial sciences. They are the future of the British economy. We have to target those high-tech, highly skilled industries if we are to compete in the global economy. We should be encouraging the Government to support those firms.
I come across high-tech manufacturing businesses in my constituency that are really struggling to find employees with the relevant skills for their industries, which is very sad. If we want to make apprenticeships work better, we should focus on ensuring that we have the right apprenticeships in those areas. I am not entirely convinced that the biggest area we should be concentrating on at the moment is public procurement. I do not doubt that it is worth while, but I am not sure that it will take us to the stage we need to get to.
Luciana Berger
Is not the point that we need more apprenticeships in all areas? There are many schemes, including on Merseyside, focused on those highly skilled areas, such as ICT, engineering and aerospace, and indeed we have Daresbury on Merseyside, but we also have a local scheme in Liverpool that creates apprenticeships in our landscaping services. There are lots of different sectors where young people can play a vital role, develop skills and have employment right through their lives. I was confused by the hon. Gentleman’s interventions earlier. If we are spending public money on building and creating things, why should we not at the same time encourage local authorities to spend that money on skilling and improving our young people?
Philip Davies
I intend to come to that point later, but the point I will make briefly in response to the hon. Lady now is that we are all in favour of apprenticeships, as I have made clear, but hopefully we are not all equally in favour of apprenticeships at any price or at any standard. It is no good just saying that we want more apprenticeships; we want more proper apprenticeships that lead to proper jobs and train people in a proper skill so that they can become an expert. One of my concerns about the Bill is that some local authorities might go through the motion and go back to where we were before, with apprenticeships that are not of the level we would all like to see just in order to tick some boxes. I know that that is not the intention behind the Bill, but sometimes I worry that that will be the unintended consequence.
Andrew Gwynne
The hon. Gentleman is making a perfect case for supporting my Bill, because clause 1(2) states:
“An authority issuing a contract under subsection (1)(a) may require that a minimum proportion of the apprentices employed by the contractor are higher or advanced apprentices.”
The Bill would offer the opportunity for the upskilling that the hon. Gentleman wants.
Philip Davies
I totally agree with the sentiment behind what the hon. Gentleman is saying, but in many respects he has “may” and “must” the wrong way around. If the Bill stated that local authorities “may” do this if they want to—rather than that they “must” and that it is a requirement—but if they do the apprenticeships “must” be of a very high standard, I would have a lot more sympathy with it. It seems to me that he is saying that public bodies must—I know that he disagrees, but this is how I read the Bill—do this, but that the quality is an option rather than a requirement. I therefore think that the bits that public bodies could choose to do are the wrong way around, and there is no guarantee that the apprenticeships would be of a high quality. He might like to encourage them to be of a high quality, but his Bill does not require that.
Andrew Gwynne
I am genuinely pleased that the hon. Gentleman wants there to be upskilling and wants the requirement to be strengthened. May I urge him to support the Bill and, in Committee, table an amendment to clause 1(2)? In that way, he could replace “may” with “must”.
Philip Davies
If I hear the hon. Gentleman correctly, and I may not have done, this sounds like a red letter day for me. It appears that he has agreed to change the wording of his Bill to suit my views. This is the first time an amendment of mine has been agreed in advance; they are not usually agreed even when tabled at the appropriate time. If I am right, it has been a successful day at the office for me and my time has not been wasted.
I say to the hon. Gentleman that the Government are already doing a good job in introducing greater rigour into the apprenticeship scheme. I would not want to do anything that inadvertently led to that being weakened, so I am not convinced that the Bill is the way to go. I shall come to what local authorities and public bodies should focus on when deciding on procurement, which does not always go well.
Trying to have a top-down approach, which is what the Bill encourages, is not necessarily the way forward. A bottom-up approach is far better. It is better to leave businesses to ensure that apprenticeships are tailored to their needs. The problem with the Bill’s approach is that we will end up losing the idea that apprenticeships should be set by businesses to suit their approach; the issue will become a tick-box exercise for companies to achieve a contract.
Companies will not necessarily introduce an apprenticeship because there is a job at the end of it and they really need the skill; the danger is that the whole thing will become a form-filling exercise: “Oh, if it will help us get a contract, let’s just say that we’ll take on an apprentice. There won’t be a job for them at the end, but the costs of putting the person through an apprenticeship is x and we’ll get a contract worth y. We have done the calculations, and it’s worth our while taking on an apprentice—five, if we have to.” That company would know full well that at the end of the period there would not be a full-time job for the apprentice, who would have spent time on a false prospectus, hoping that something would happen.
Barbara Keeley (Worsley and Eccles South) (Lab)
We are talking about local areas, and I will talk about the situation in Salford if you call me to speak, Mr Deputy Speaker. I have had cases of the revolving-door apprenticeships that the hon. Gentleman mentions. A council or other public body would quickly know that a particular contractor was doing that, and they would not fall for it twice. There is a protection in that if the public body had a bad experience once, it would know not to have it again.
Philip Davies
I understand the point, but local authorities would have to undergo an awfully long learning process. If somebody takes on an apprenticeship lasting a year, two years or three years, as the hon. Member for Denton and Reddish envisages, only to find out that a job was never going to be available at the end, it will take at least three years for the lesson to be learned. There is no telling how many contracts could have been awarded in that time. The situation would just roll forward.
Andrew Gwynne
The hon. Gentleman is partly right. Having an apprenticeship that leads to a job is superb and should be the ambition. Surely, however, we should also support apprenticeships that lead to a degree-level qualification. Although they might not lead to a job with the particular company, they would widen the opportunities for future employment by giving the apprentices work experience, skills training and a decent high-level qualification for the future.
Philip Davies
That may be true. My problem with the sentiment behind the Bill—this has been a problem in the past—is that apprenticeships have been seen to be an end in themselves: what is seen to be important is the fact of an apprenticeship. With the best will in the world, it is not the apprenticeship that is the end in itself, but what it does for a person’s career prospects. My concern is that we focus too much on the word “apprentice”, without focusing on what it will deliver for the long-term career aspirations of the people concerned.
Andrew Gwynne
The only end I want to see is an end to youth unemployment, an end to long-term unemployment and an end to the low-skill, low-wage economy.
Philip Davies
We all want those things; I am not aware of anybody who has come into politics to extend youth unemployment, stop people from fulfilling their potential, deny people opportunities or prevent the best people from getting jobs through their own effort and characteristics. We all want that—it is a statement of the obvious. We all want the same outcome.
What goes to the heart of much of this debate is not the ends we want to achieve—no doubt we all want the same ones—but how we best achieve those ends. I am not convinced that the hon. Gentleman’s approach, no matter how good the sentiment behind it, will deliver what he and I wish to see. It may take people off the unemployment list for a short period, but I am not interested in that. I want them to be off that list for ever and to go down a path that will mean that they are never unemployed again. I am not entirely sure that, with the best will in the world, the Bill will deliver that.
Andrew Gwynne
Surely the hon. Gentleman agrees that one of the best ways to get people off the unemployment register for ever is to ensure that they are highly skilled and relevant to the needs of a modern work force and a dynamic economy. Backing the Bill is one way of helping to achieve that.
Philip Davies
Of course we agree on that, but I am not convinced that the Bill delivers that; if I were, I would agree with it. It could deliver false expectations and enable companies bidding for a contract to go through the motions of offering something that will not do the apprentice any good and benefit only those companies.
I am sure that the hon. Gentleman does not want a false prospectus to be put before young people to help a big company win a lucrative contract. A lot depends on how the initiatives are described. He describes them as he does, but if I describe them as I do, people might come to a different conclusion about whether we should support them.
Mr Deputy Speaker (Mr Lindsay Hoyle)
I am sure that the hon. Gentleman will be speaking only in English today.
Philip Davies
That is a relief to me, Mr Deputy Speaker. Perhaps my Yorkshire accent is causing the confusion; I am not entirely sure. I have tried to set out why I am not convinced that the Bill will achieve what people want. I made it abundantly clear that I agreed with virtually everything that the hon. Member for Denton and Reddish said in his opening speech, but I am not sure that the Bill matches the speech.
Andrew Gwynne
I am trying to tease the hon. Gentleman into supporting the Bill. Perhaps, again, he could do that by supporting it on Second Reading and tabling an amendment in Committee for a sunset clause. If, after a period, it turns out that he is right and I am wrong, and the Bill has not succeeded, the Act of Parliament would cease to exist.
Philip Davies
The hon. Gentleman has inadvertently, I think, hit on a touchy subject. He is probably not aware that I proposed a sunset clause for a previous private Member’s Bill—an expiry date, in fact—to which the promoter and the Government agreed, but the Government reneged on their promise when it went to the other place. He will therefore forgive me if I am rather nervous about agreeing to sunset clauses, which sometimes are not delivered.
Andrew Gwynne
I shudder to think that the Government might renege on a promise. May I give the hon. Gentleman an example? My previous private Member’s Bill in the 2009-10 Session—the Debt Relief (Developing Countries) Bill, which became the Debt Relief (Developing Countries) Act 2010—had a 12-month sunset clause inserted in Committee. In fact, it was his Government who, after 12 months of enactment of that very laudable Act, decided that it had indeed worked in the way I always believed it would, and made that Act of Parliament permanent.
Philip Davies
The hon. Gentleman has clearly had more success with my Government than I have, and I commend him for that, although, on reflection, that probably would not be too difficult. Once scarred, one becomes very shy of agreeing to sunset clauses. His offer was no doubt generous, and I will bear it in mind, but I am sure he will forgive me if I remain rather cynical about agreeing to something that might not be delivered.
I am big supporter of small businesses, not just in my constituency but across the country. They generate much of the wealth in this country and will generate much of the future growth in the UK economy. One of my concerns regarding small businesses is that there is already an awful lot of red tape and rules surrounding public procurement contracts. I genuinely worry that the Bill would not help small businesses to get some of these public procurement contracts but might in fact hinder their chances of doing so. Let me give the House a flavour of this. In preparation for the debate, I had a look at the procurement rules and standard conditions of contracts and supply of services of my local authority, which is Bradford council—unfortunately, but there it is. The first thing I came across was a 30-page document about how somebody goes about applying for a contract at Bradford council and what is expected of them. It is a combination of the blindingly obvious and other things I cannot really see the point of, but it is all set out in great detail for everybody to go through exactly what they have to do.
Once businesses have navigated their way through the 30-page document and got their lawyers and solicitors to pore over exactly what some of the conditions mean, they then have to go through the obligatory equality and diversity document, which runs to another 13 pages, whereby they have to set out all sorts of information about any complaints they have had, any findings against them in the past three years, and whether they have been the subject of formal investigation by the Equality and Human Rights Commission. That seems a bizarre requirement, because it does not ask whether it has been found in breach of anything by the Equality and Human Rights Commission but whether it has been investigated by it. If it has been investigated and found to have a clean bill of health, it seems a bit rough that it still has to declare something that may rule it out of getting a contract. There are also forms to fill in and nine parts of a thing that people have to answer.
The hon. Gentleman probably thinks that that is great and we should be encouraging local authorities to go through it all. In fact, he clearly thinks it is so great that he wants to add further things to the public procurement rules and regulations. No doubt when all these businesses are bidding for their contracts they will have to say how many apprentices they are going to take on and what the standard is going to be. All this is just to bid for a contract; there is no guarantee that they are going to get it. Any small business would have to take on the costs of going through all this preparation. The more we pile on to these contracts in the application process, the more we ensure that no small business will ever get any of them.
I am sure that that would be an unintended consequence, because I do not think that the hon. Gentleman would want to do anything to disadvantage small businesses in bidding for public procurement contracts. I know him—I have followed his career closely—and I have never heard him say anything to suggest that he would want to do that. As far as I recall, he has been a champion of small businesses, including those in his constituency. However, I worry that this would be an additional burden.
Andrew Gwynne
Clause 4, on interpretation, makes it clear that
“‘relevant contract’ means a contract which…exceeds a total value of £1 million”.
That has to be read alongside clause 1(2), which says:
“An authority issuing a contract…may require…a minimum proportion of apprentices”.
It is up to the discretion of the public body whether it wants that requirement for a particular contract. I hope that the hon. Gentleman’s local authority in Bradford would not want to create a set-up that precluded local businesses from winning these contracts. However, I certainly want to see a commitment to skills and training as part of bigger contracts such as the Denton community college project that I mentioned in my opening speech.
Philip Davies
The hon. Gentleman has only confirmed what I already knew about what he thinks this Bill will achieve, but I am not convinced that it would. I think it would be an extra layer of bureaucracy for people who are bidding for these contracts. Perhaps, as I am on a roll, he might think about increasing the size of contract to which the Bill would apply. Many small businesses would very much like to get their hands on £1 million contracts from public bodies. If he has big contracts in mind, perhaps the £1 million figure should be considerably higher.
Andrew Gwynne
I am happy to have this debate in Committee. If the hon. Gentleman believes that all the red tape that he has listed appertaining to his local authority is the problem, then perhaps he could do more to convince his Front Benchers that if they accept my Bill, then under their one in, one out rule they could look at other measures that he has cited as being a problem in his local authority. I have to say that these issues are not a problem in my two local authorities, one of which is Labour-controlled and one of which is Liberal Democrat-controlled.
Philip Davies
The hon. Gentleman is very lucky, then, but his Bill applies not only to his local authorities but to all of them, including mine, which is also run by the Labour party. I cannot say that I necessarily have the same faith in my local authority as he does in his.
The problem is that all the existing requirements are not only leading to lots of burdens for small businesses in getting their hands on some of these lucrative contracts but causing lots of confusion for the local authorities themselves. Adding further requirements on to local authorities regarding public procurement would cause even more confusion. I am concerned about this because of what happened in Bradford council. A report was produced that showed a major lack of skills and expertise among council staff in Bradford tasked with getting the best deals for its suppliers. Bradford council spends about £350 million a year with outside suppliers and holds more than 1,500 contracts. The council’s corporate overview and scrutiny committee revealed a major skills shortage not among the people who were doing the contracts but among the staff who buy the goods and services and commission the works from the suppliers. It seems to me that, occasionally, the staff, who are already trying to juggle all these documents in order to get the best deal, are just not up to the job. I do not see how asking them to consider something else as part of the public procurement process would help them in their efforts to get the best deal for the council taxpayer.
Barbara Keeley
I think that we are all, like the hon. Gentleman, supporters of small businesses, but they could really benefit if larger companies provided more training, particularly higher level apprenticeships. Small businesses would then benefit from taking on an employee who had done an apprenticeship with a larger company. Does the hon. Gentleman not see the general benefit, particularly to small businesses, of more training and the completion of more apprenticeships?
Philip Davies
I take the hon. Lady’s point and I will come on later to the view of the Federation of Small Businesses on the Bill and whether it thinks it would be to its advantage. For the moment, I want to stick to the point about the capability of the people in public bodies who are giving out contracts.
The report on the contract procurement process at Bradford council found that, of 170 council employees doing procurement work, none—not one—was actually trained in it, and that staff lacked a
“widespread understanding of both UK law and European directives related to procurement and commissioning”.
The report brings into doubt the argument advanced by the hon. Member for Denton and Reddish that passing an extra Act would clear up any confusion, because Bradford council staff did not have any understanding of UK and European law anyway. Adding another law would not help; it would probably make them even less likely to understand the law.
The report goes on to say that, among a 20-strong dedicated procurement team, there was a
“shortage of procurement skills and expertise”,
that the team was
“often asked to conduct tenders at short notice and are unable to maximise value improvement”,
and that officers were
“often restrained and inflexible in their approach to procurement and were becoming very compliant and rules orientated”.
That goes to the heart of one of the dangers of this Bill. Procurement should be a relatively straightforward process. It is about trying to get the best possible service or product at the best possible price, thereby generating the best value for money for the purchaser—in this case, the taxpayer. That is what people should focus on when doing procurement.
The problem is that there are so many rules, regulations, documents and policies that the basics of what procurement should be about are getting lost in myriad other factors. The Bill does not help address that problem, which has left Bradford council taxpayers out of pocket because they are paying more than they should for contracts. As the report states, officers were
“inflexible in their approach to procurement and were becoming very compliant and rules orientated”.
I fear that the Bill would make what has already been identified as a problem in local authorities such as Bradford—I do not have a great deal of faith in Bradford council, but I am sure it is not alone in this—even worse. People would focus on the wrong things—nice-to-have things—and forget about the big picture and what they were supposed to be doing.
Andrew Gwynne
I am grateful to the hon. Gentleman for giving way; he is being generous with interventions. Surely one of the important things for Bradford is to get Bradford people back to work, highly skilled and highly qualified. That is a core function, I think, of Bradford council in its procurement policy.
Philip Davies
A good starting point for its procurement policy would be to get more qualification among the people doing the procurement in the first place. It should also get the best deal for the taxpayer. That is what the focus of any procurement should be: getting the best deal for the taxpayer. The problem is that more things are being added on as a result of thinking, “Wouldn’t it be nice to have this and that? Let’s make this and that a requirement of a contract and encourage them to go down that route.” All that does is divert the attention of people involved in public sector procurement from what their main focus should be, which is to get the best value for money and the best price for the taxpayer.
Andrew Gwynne
Is having young people not in education, employment or training of best value to the taxpayers of Bradford?
Philip Davies
The hon. Gentleman seems to be arguing that procurement policy will solve every ill in the country. I do not see that. He will be telling me next that public procurement contracts could eliminate illegal immigration. It just does not work like that. Let us focus on how we can make effective progress on individual areas.
As I have said, I think that the Government are doing a very good job at increasing the number of apprenticeships and at making sure that they are proper apprenticeships and that they lead to worthwhile jobs. The Government are already making good progress. We should encourage, celebrate and enhance that work.
The problem with procurement is that public bodies often do not get the best value for money for the taxpayer, so that is what we should focus on. Once we have done that and local authorities and public bodies have iron discipline in getting the best deal for the taxpayer, perhaps then we could look at how they could use procurement to advance some of the public policy areas mentioned by the hon. Gentleman. My point is that we—particularly Bradford council—are a long way from that. Let us get back to basics to start with and start negotiating some good deals for the taxpayer.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I am a little bit worried about Bradford council. I know, as you have pointed out, that you are not too keen on it, but I think we ought to move beyond Bradford council. Let us keep to the point of procurement generally and apprenticeships and skills.
Philip Davies
Of course, Mr Deputy Speaker. My lack of enthusiasm for Bradford council was clearly getting the better of me.
Philip Davies
In many cases, public bodies are already co-operating with businesses, and further intervention could have a negative effect. The Minister for cities, the Minister of State, Cabinet Office, my right hon. Friend the Member for Tunbridge Wells (Greg Clark), has confirmed a second wave of city deals, and that strategy goes a long way towards achieving what the hon. Member for Denton and Reddish wants. I am, therefore, not entirely sure that the Bill is needed in that respect.
My right hon. Friend has issued a written statement about the Greater Ipswich city deal, which is about addressing youth unemployment, increasing the skills level of the local work force and making sure that local businesses, local authorities, colleges and the Government co-operate in order to provide opportunities, ensure that
“dedicated support is available to match young people with jobs through a youth jobs centre…Expand the number of jobs and apprenticeships in local businesses”,
and increase
“local investment in skills training”.—[Official Report, 30 October 2013; Vol. 569, c. 49WS.]
It is not that anyone disagrees with the agenda of the hon. Member for Denton and Reddish, but the Government, through their city deals, are already doing an awful lot to address it. They should be allowed to flourish and continue their work, and I hope they will be successful. The Bill will not necessarily help; it may get in the way of, or even repeat, that work.
I think we would all agree that the Federation of Small Businesses is a leading business organisation of small businesses and the self-employed. It was formed in 1974 and has about 200,000 members, so we should listen to what it has to say. The Federation of Small Businesses is very supportive of apprenticeships:
“We believe apprenticeships can transform a young person’s life and give them access to bespoke training and often a highly skilled job as a result. Apprenticeships should be recognised as vital introductions to careers that can take individuals all the way to the top in the business. We need to see reforms continue to strengthen and protect the image of apprenticeships which, over the years, has been damaged by constant change.”
The Federation of Small Businesses shares the opinion with me and the hon. Member for Denton and Reddish that apprenticeships are valuable, but that they must be high quality. I agree with the FSB that that has not always been the case., but it also welcomes the Government’s “commitment to quality apprenticeships”.
The FSB supports the
“intention behind the Bill, which is to drive up apprenticeship numbers.”
As I have said, it would be difficult to oppose the sentiment behind the Bill. However, it also says that it is concerned that the Bill
“might hamper the progress being made and unintentionally harm the image of apprenticeships by reinforcing the perception that apprenticeships are a government driven work scheme of limited value. It is for this reason that we oppose the use of procurement to boost apprenticeship numbers.”
Andrew Gwynne
I have seen the letter from the Federation of Small Businesses. I take issue with its view because although we are using the power of public procurement to increase the number and improve the quality of apprenticeships, it is the private sector—whether that is being done by big or small businesses—that will be delivering the apprenticeships. It is therefore not seen as a Government initiative because the requirement is on the private sector to deliver them.
Philip Davies
That is where the hon. Gentleman and I part company. If a public body insists that a certain number of apprenticeships must be provided for a business to win a contract, that is not apprenticeships being delivered through the private sector, because it is being insisted upon by the Government. I am with the Federation of Small Businesses in thinking that an unintended consequence of that is that apprenticeships would go back to being a Government-driven scheme.
Andrew Gwynne
Is the hon. Gentleman seriously saying that a local authority such as Tameside, which has problems such as youth unemployment, long-term unemployment, low skills and low wages, cannot be ambitious and say to the private sector organisations that want to win contracts in the area that they must play their part in boosting the local economy?
Philip Davies
Of course the local authority can say that. I take it from what the hon. Gentleman said earlier that it is saying that. The Bill has not been enacted, but there seems to have been no impediment that has stopped his local authority from doing that. It can do what he wants already. It does not need this piece of legislation.
Andrew Gwynne
To take the argument further, the hon. Gentleman will recognise that that is not being done in many parts of the country because local authorities misunderstand the rules, and that many Government Departments are not doing it. I have used the Department for Work and Pensions as an example. Surely it would be a good thing to make it clear in statute that this is an option for local authorities.
Philip Davies
Perhaps this is another difference between our philosophies. The hon. Gentleman seems to think that if we pass a piece of legislation, everybody will do what he wants them to do. I do not see it like that, particularly if there is no requirement to do anything. I do not agree that passing the Bill would lead to the step change that he wants. I fear that the Bill would not remove confusion, but that it would create confusion over whether local authorities have to do what it says and over how much importance they should put on it. It would lead to the unintended consequences that the Federation of Small Businesses has identified.
The federation went on to say:
“We need to ensure that apprenticeships become a quality ‘product’ for all sectors and sizes of business. They need to be highly skilled training programmes which many employers want to use as a way of growing their business.”
The key is that employers must use apprenticeships because they want to and because it is right for their business and for the people concerned, not because they have been told to do so as part of a public procurement exercise.
The federation added:
“By concentrating on quality in the long-term we believe numbers will follow.”
I agree with that. If we want to ensure that as many people as possible take up apprenticeships, we must focus on making them of a high quality so that people can see that they mean something, that they deliver something worth while and that people who have done them go on to fulfil their potential. If that is delivered, the numbers will follow, because businesses and young people will see the benefit. We do not need to force apprenticeships on them or provide harsh encouragement, or however the hon. Member for Denton and Reddish wants to describe it. In the long run, I am not sure that that is the way to get many more successful, genuine apprenticeships. I agree with the concerns expressed by the Federation of Small Businesses.
I wonder how the apprenticeship requirements would be enforced by local authorities. If a local authority requires a business to take on a certain number of apprentices, that could lead to unintended consequences. The contractor might be unable to fulfil the commitment because of unforeseen circumstances. The local area might not have the calibre of people they are looking for or there might not be enough people who want to go down the right avenue. Somebody might start an apprenticeship and then drop out. Where would we go from there? Would the contract be scrapped mid-flow because the person was no longer taking the apprenticeship? Would other companies sue the council because they lost the contract not on the basis of cost, but on the basis of apprenticeships and the apprentices have dropped out midway through the contract? There could be all sorts of legal ramifications if local authorities make this something that companies must consider.
Mr Nuttall
My hon. Friend is being generous with his time this morning. Does he share my concern that if a given number of apprentices were required under a public procurement contract, particularly at a local level, it could result in an increase in the tender prices? Despite what was said earlier, there would therefore be a cost to the public purse.
Philip Davies
I very much agree with my hon. Friend. Another danger is that if apprenticeships become an important focus for a public body in its procurement, it will become the focus of the bids. A company will increase the price that it is charging in order to take on x number of apprentices and will get the contract on that basis. The price that is charged to the taxpayer will therefore be higher than it otherwise would have been. The problem of overpaying for contracts in the public sector that has been identified would be made worse by this proposal.
Andrew Gwynne
Doe the hon. Gentleman have any evidence to suggest that that is happening now?
Philip Davies
I cannot give him evidence of what would happen under a Bill that has not come into effect. He does not know what effect the Bill would have and neither do I. I am merely expressing some concerns about the effect that it might have.
Andrew Gwynne
I will try to help the hon. Gentleman. When Tameside procured new schools under Building Schools for the Future, it ensured that there was a commitment to take on local apprentices. Was the contract price inflated as a result? Does he have any evidence to suggest that? Is not the reality that all it meant was that the contractors provided adequate skills training as part of the bid?
Philip Davies
You chastised me earlier, Mr Deputy Speaker, for concentrating too much on Bradford. The hon. Gentleman might have his blinkers on, and he may not have seen beyond the world of Tameside, great place though it is. I used to work at Asda’s Stockport store, and I am sure he used to travel through his constituency regularly to go there. I am sure many of his constituents have shopped there, too. However, we cannot really make a decision on national legislation based on the impact that he thinks it will have on Tameside or how successful the measures have been there. Perhaps he might want to introduce a private Bill that applies only to his local authority, but unfortunately the Bill before us today would not apply only to Tameside.
Andrew Gwynne
I do not wish to draw your anger, Mr Deputy Speaker, but I would point out that I want the best practice of Tameside and Stockport to be spread out across the whole country, which is the purpose of the Bill. Let us make it happen in Bradford, too.
Philip Davies
I am touched by the hon. Gentleman’s desire to help Bradford. The local authority probably needs some assistance, and I am sure it will be ringing him up as we speak to learn about best practice. Perhaps we ought to say that Chorley is a great place, too, so that you do not feel left out of this local authority love-in, Mr Deputy Speaker.
I have a helpful suggestion for the hon. Gentleman, to ensure that the FSB’s concerns are addressed and that it is not inadvertently excluded from the process. If he wants to pursue his agenda, although I do not necessarily believe it is the right way to go, he should make it clear that small businesses would be excluded from the Bill’s requirements and that they would apply only to businesses with a certain turnover. That might overcome the FSB’s problems with the Bill.
Andrew Gwynne
The hon. Gentleman is genuinely coming up with some pertinent ideas. Again, I urge him to support the Bill and table amendments in Committee so that we can have a thorough discussion about the merits of the case that he is making on behalf of the FSB.
Philip Davies
I am not entirely sure that a further discussion is what I am asking for. We are having a good discussion today, and we can have a further discussion in the Tea Room if the hon. Gentleman wants one. I am looking for solutions to the problems that I have mentioned.
I promised that I would mention EU procurement law, as my hon. Friend the Member for North East Somerset did. I am not a great fan of the EU, it has to be said. In fact, the sooner we are out of the wretched organisation the better, but unfortunately, while we are in it we are governed by it. The hon. Member for Denton and Reddish said he was adamant that the Bill would not fall foul of EU procurement law. I might have missed this, but I am not entirely sure of the basis on which he has decided that. Has he taken legal advice, or is he just working on the basis that as his local authority is already doing this and has not been pulled up by the EU, it must be fine?
Andrew Gwynne
I would helpfully point out that the Government, in the form of the Department for Work and Pensions, are doing it as well. Let us take a stand on this.
Philip Davies
That is helpful. I thought the hon. Gentleman said earlier that the DWP was poor at it, but obviously I misunderstood him and it is doing well. However, public procurement has to comply with a number of EU directives and regulations. According to EU legislation, all tenders from the public sector that are valued above a certain financial threshold must be published in the Official Journal of the European Union, which is published every day in 22 languages.
There have been cases in the European Court about public procurement, particularly one in Italy in which there was a requirement to procure at least 30% of supplies from undertakings established in southern Italy. That was taken to court because it was seen as discriminating against suppliers in other parts of the EU. The conclusion of the case was that nothing can be introduced in a public procurement contract that may discriminate against a potential supplier in other parts of the EU. If the hon. Gentleman is saying that a public body granting a contract should ensure that there are a certain number of apprentices, I am not entirely sure of the basis on which he can be confident that that does not fall foul of those EU procurement rules.
Andrew Gwynne
I know that the hon. Gentleman seeks a European bogeyman behind every piece of legislation, but may I commend a bit of reading to him? That is the European Commission’s guidance note “Buying Social—A Guide to Taking Account of Social Considerations in Public Procurement”. It suggests that promoting employment, decent work and access to training can be taken into account in public procurement contracts.
Philip Davies
I am grateful to the hon. Gentleman, but unfortunately it is not for him, or even necessarily for the European Commission, to decide on EU law. It is for the European Court to decide whether something falls foul of that law. I do not doubt the intentions behind what some people would like to happen, but I am not sure that he can be totally confident on that point.
The hon. Gentleman made it clear earlier that some public bodies are already getting on with it and doing what he wants them to, and that nobody is kicking up a big fuss about it. As he has told us on many occasions, it is working well for his local authority. One unintended consequence of passing the Bill could be to encourage somebody to take a complaint to the European Court, which would force it to make a judgment, and it might rule that the idea is illegal. At the moment, it is just happening, everybody is quite happy about it and nobody is kicking up a fuss. I am sure he agrees that that unintended consequence would be a tragedy.
I will not go into any more detail about numbers of apprentices, because I do not think that would be necessary or particularly relevant. However, I wish to mention some statistics on the national apprenticeships website, because I believe that the Bill might damage some of the great figures that it gives. One is that 96% of employers who take on an apprentice report benefits to their business, which is absolutely fantastic. One reason why that figure is so high is that employers take on apprentices for all the right reasons. They get the right person and can see what the benefit to their business will be. My fear is that if the Bill were passed, they would take on apprentices for the wrong reason—simply to win a contract rather than to bring genuine benefit to their business.
Another statistic on the website is that 72% of businesses report improved productivity as a result of employing an apprentice. Again, that is absolutely fantastic. I hope that, if nothing else, this debate will stimulate people to think about taking on an apprentice and seeing the benefits that will flow to their organisation. However, there has to be a bottom-up approach, and the top-down approach encouraged by the Bill would not help those fantastic statistics. It is surely better that employers take on an apprentice because they want one rather than take one on grudgingly because they feel they have to.
You will be pleased to know, Mr Deputy Speaker, that I am drawing my remarks to a close—I am trying to race through them as fast as I can. However, I have a few points to raise that the hon. Gentleman may want to reflect on. How does he intend to ensure that the quality of apprenticeships being offered is maintained? Who in a public body that was giving a contract would be responsible for ensuring that the company concerned had taken apprentices on, that they were doing something worth while and that the apprentices had not dropped out halfway through? It cannot be down to the national apprenticeship scheme alone. Presumably, the public body that is giving the contract must monitor what is happening. Who will do that and how much will it cost?
Does the hon. Gentleman envisage a situation in which the number of apprenticeships that need to be taken on is pro rata to the size of the contract? For example, if there is a £1 million contract, the expectation might be that the contractor takes on at least one apprentice; if there is a £2 million contract, the expectation is of two apprenticeships; and if it is £5 million, there will be five apprentices; and so on. Perhaps the contract will be worth £10 billion—it could be the contract for high-speed rail. Is he saying that it is fine if that contractor takes on only one apprentice because it ticks the box, or does he believe that the value of the contract should be reflected in the number of apprentices taken on? I would be interested to know his views on that.
How big a factor should apprentices be when deciding whether to give somebody a contract? How much should other value to the taxpayer, such as the price, be taken into account? Somebody might bid £1 million for a contract and offer to take on three apprentices, but somebody else who offers no apprentices bids £500,000 for the contract. What weight is given to the apprentices in that situation? Who does the public body give the contract to in that situation? How important is taking on the apprenticeships the hon. Gentleman wants to deliver in the overall contract? I would rather the public body gave the contract to the £500,000 bidder, because that gives the best value to the taxpayer, but he might have a different solution. I wonder where his Bill fits in.
The hon. Gentleman has a definition of public authority in the Bill, but I am not entirely sure how far that goes. For example, is the BBC covered by his Bill? If it is, how does he envisage the scheme working? If it is not covered, why not? Why is the Bill not part of the BBC’s deal given that it is a publicly owned, public service broadcaster?
What protection does the hon. Gentleman envisage in contracts for existing staff? What if somebody bids for a contract and offers to take on so many apprentices, and pays for it by getting rid of existing staff? Surely we do not want a situation in which somebody gets rid of existing staff to ensure that they hit the target. I am sure that that would not go down well with the trade unions, which he mentioned. What protection does he envisage for existing staff to ensure that they are not elbowed out of the way to provide an apprentice?
How would the hon. Gentleman know that an apprentice had been taken on a result of a contract? Suppose a massive company bids for a contract that is only a small bit of its pie—it might take on 100 apprentices in the course of its business, irrespective of the contract. When it bids for the contract, it might say, “We’ll bid £1 million for the contract and, by the way, take on 100 apprentices.” Who is to say whether the taking on of those apprentices is linked to the contract? How would the hon. Gentleman ensure that the apprentice who is taken on is linked to the contract? I do not see how that is possible. That is another way in which the measure discriminates against smaller businesses, which cannot cross-subsidise apprentices from other parts of their business in that way. I am not entirely sure how that will work or who will monitor it, or how much such monitoring will cost.
What will the hon. Gentleman do to improve the skills of the people who are procuring? As I have said, that is one of the problems. How will any subcontracting be monitored?
Mr Nuttall
My hon. Friend has hit on a crucial point. As he knows, contracts, especially in the construction sector, often revolve around many subcontracts. Is it clear to him—it is not clear to me—whether apprenticeships created by a subcontractor count towards the main contract?
Philip Davies
My hon. Friend is right. It is not clear whether or not apprentices in subcontracts count. Is there a requirement on a subcontractor bidding for a proportion of a contract? If the subcontract is for more than £1 million—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. The hon. Gentleman has mentioned that he is coming to the end of his speech. Other hon. Members want to speak and I am worried about getting them in. It might be helpful to him if I say that, if you bid for one contract, the subcontract is within the main contract, so it does not apply.
Philip Davies
I am grateful to you, Mr Deputy Speaker. I am not entirely sure what part of the Bill states that, but you are far more wise in these matters than I am, and I happily accept your judgment. However, when the hon. Gentleman sums up the debate, he might wish to address those points, so hon. Members can be clear on what we are voting on.
To go back to my initial point, I agree with what the hon. Gentleman wants to achieve. I admire his passion for improving the lot of young people, developing their skills and fulfilling their potential. My fear is that the Bill will not clear up the confusion he has identified, but add to the confusion of local authorities and public bodies. In addition, it could damage small businesses that want to bid for contracts and devalue current apprenticeships. I am sure that he wants none of those things, but that is my concern with the Bill. Until he can answer those questions and deal with those concerns, I am not sure that I can support his Bill, even though I absolutely agree with his thoughts on apprenticeships and what he would like to achieve.
Barbara Keeley (Worsley and Eccles South) (Lab)
I am pleased to have the opportunity to speak in support of the Bill, which has been introduced by my hon. Friend the Member for Denton and Reddish (Andrew Gwynne). I congratulate him on the Bill and on the excellent way in which he opened the debate. We can lose our way in such debates when there are such long contributions from Government Members, but we will remember this debate for how he opened it.
I want to say to my hon. Friend and those who are interested in supporting the Bill that apprenticeships are important for my constituents, who appreciate how much difference a completed apprenticeship can make to their employment chances. We need a strong skills infrastructure and a high proportion of our young people participating in higher education, or gaining an advanced apprenticeship or equivalent technician-level qualification. That is one point of agreement among hon. Members this morning—we all support the more advanced apprenticeships that can take people to a higher level of training.
I have looked at the benefits to those who take on apprenticeships. The Richard review of apprenticeships found that apprenticeships deliver substantial wage and employment benefits over the learner’s lifetime. It found that, in fact, an advanced apprenticeship delivers wage returns of 22% and employment returns of 14%. The person who achieves an apprenticeship can therefore earn 22% more than similar individuals who have not completed one. In addition, completed apprenticeships continue to deliver those strong earnings and employment returns for seven years post-completion. On the point from the hon. Member for Shipley (Philip Davies), completing an apprenticeship straightaway delivers higher wages to that person and carries on delivering for seven years.
Andrew Gwynne
I am pleased that my hon. Friend is going to support my Bill today. Is not the point about lifting those opportunities and raising the salary levels of her constituents of real importance, because in her area, like mine, low skills and wages are endemic? This is about tackling those two great social problems in places such as Salford and Denton and Reddish.
Barbara Keeley
It very much is, and I really do agree with my hon. Friend.
I agreed with the point my hon. Friend made earlier about long-term unemployment, particularly youth unemployment, being high in Salford and my constituency, as it is in his. In my constituency—only a part of Salford—we have almost 3,000 jobseekers, of whom 900 are unemployed young people and 390 are over-25s who have been unemployed for two years or more. In fact, the number of people who have been unemployed for two years or more has risen this summer by 34%. I hear from young people, week in, week out—as I am sure do other hon. Members—about how over one or two years of unemployment they can start to lose hope. I get some really desperate appeals for help and support from them.
The previous Labour Government’s offer was that by 2015 there would be an apprenticeship for every 16 or 17-year-old who wanted one and was suitably qualified. We should keep that in our minds, because obviously, with the economic difficulties in recent years, we do not want 16 and 17-year-olds who are not in education, employment or training to lose hope, and I think they could do so. Worryingly, the number of apprenticeship starts for under-19s has fallen by 20,000 from 132,000, in 2010-11, to 112,000 last year. That is a dismal record. Youth unemployment remains stubbornly high, yet the number of apprenticeship starts for that age group have fallen. That is pathetic.
Government Members, in particular, have spoken about the difficulties of small employers taking on apprentices. You might be aware, Mr Deputy Speaker, that I took on an apprentice in my constituency some years ago. She was a 17-year-old who had started her business administration apprenticeship in a bakery, but was interested in working in an MP’s office. She was an excellent staff member and completed her apprenticeship, becoming one of the highest-achieving apprentices the college had ever worked with. In her early 20s, she is now a county councillor serving part of your constituency, Mr Deputy Speaker. We can, therefore, support apprenticeships. It is an interesting development that not only did she train in business administration, but she has gone into local government and I am sure is doing an excellent job.
Diana Johnson
I am listening carefully to my hon. Friend. I, too, took on an apprentice in my office—a young person who had been made redundant part way through his apprenticeship—and he was such an excellent employee that I kept him on and found him a job. MPs showing how apprentices can bring added value to even a small office is a good example of the value of apprenticeships.
Barbara Keeley
Indeed, it is. I should say—I am sure it was the same for my hon. Friend—that that excellent experience was partly due to the training supervised by my office manager, to whom I give credit. As employers, we have to remember that we can play our part. Like all employers, we must offer training. What is more, having a 17-year-old working with us really revitalised my office. I was invited to a 21st birthday party—the first I have been to in a long time!
Apprenticeships.org is the website of the National Apprenticeships Service. In May, we were worried that only 37 apprenticeships in Salford were available on the website, and now there are still only 44, so the situation is not improving. There are other websites, but that is the national one. Salford city council is doing an excellent job providing support for apprentices and apprenticeships through Salford Futures, an employment initiative that has been running since April 2012. It, like the earlier example from Tameside, provides support to unemployed Salford residents through the provision of work experience placements and pre-employment training and support. It also encourages local employers to create and develop employment opportunities through the provision of grants, funding and wider business support. I have managed to link up employers who contacted me with that business support, and I know it is excellent.
Salford Futures is being delivered with the support of the Greater Manchester combined authority, not just individual authorities. The hon. Member for Shipley talked about his local authority perhaps not excelling in procurement, but local authorities can work together on this, and that might be a solution for any authority that feels it does not have the skills to do it. It is supported by the Greater Manchester combined authority and co-funded through the Greater Manchester commitment to youth employment scheme. There are some excellent partnerships in areas such as Greater Manchester, which are committed to ensuring that we tackle the scourge of youth unemployment. The package of support for employers includes
“Access to a 13-week wage subsidy, paid at national minimum wage, for any employer that recruits an eligible Salford resident into an apprenticeship or job with accredited training for a minimum period of six months…Brokerage and dedicated recruitment support…Information and advice on accessing additional funding opportunities, including the National Apprenticeship Service’s…initiative…Wider business support from Salford City Council's business team”.
I commend the business team. I put an employer who was interested in taking on apprentices in touch with them, and I know that they gave that employer a great deal of support.
The Bill would ensure that suppliers who won major public contracts began to offer apprenticeship opportunities if those contracts were at a certain level. We have just had a lot of to-ing and fro-ing about the circumstances, but the Bill actually follows on from “Apprenticeships”, the fifth report from the Business, Innovation and Skills Committee. Having looked into it, the Committee recommended that approach, and suggested that at least one new apprenticeship could be provided for every £1 million of procurement spending.
I have described what Salford city council has been doing, but there is also good news from Salix Homes. Our housing associations are really showing the way ahead. Salix Homes was recently named by Salford council as the chosen landlord to take ownership of the 8,500 council homes in Salford in a proposed stock transfer, although that is, of course, open to consultation. It has worked to secure a commitment from its contractors—or subcontractors—to recruit two apprentices for every £1 million invested in homes and communities throughout Salford. That amounts to more apprenticeships than the number recommended by the Select Committee, and it shows what can be done. Salix Homes has promised that if the stock transfer goes ahead, it will invest a further £700 million over the next 30 years, which it says
“could generate more than 1,000 new apprenticeships for…young people.”
Andrew Gwynne
I am grateful to my hon. Friend for highlighting more of the best public procurement practice that already exists. Salix Homes has set itself a very ambitious target. Have any small businesses in my hon. Friend’s constituency expressed the fear that that may prevent them from being included in the subcontracts?
Barbara Keeley
No. I understand that Salix Homes and the sub-contractors want to work in a way that helps both local young people and those who train them.
Salix Homes wants to employ highly trained people if it becomes the owner of those thousands of homes, and I commend it for that commitment. It would not, however, become the landlord in my part of Salford, where another organisation, City West Housing Trust, committed itself to creating 40 apprenticeships, which it managed to do in 2012. Perhaps we can now generate a race between the two housing associations: the target set by Salix Homes might provide the spur for City West Housing Trust.
Andrew Gwynne
My Bill requires apprenticeships that are being generated in places such as Salford to be advertised in local jobcentres to give young people an opportunity to gain access to training and skills. Does my hon. Friend agree that that is an important provision?
Barbara Keeley
Indeed, and I shall say more about it in a moment.
As my hon. Friend said, it makes a great deal of sense for the Government and public authorities to use the leverage of the money that they already spend on public procurement—this is not additional funding—to promote skills training and provide new apprenticeship opportunities. We need those in Salford. According to the latest monthly figures, we have a core of 3,000 unemployed people, including nearly 1,000 young people, and that preys on my mind.
I hope that my hon. Friend is heartened by the example that I gave from Salford, but it is clear that many more apprenticeships could be created if the Government backed his Bill. Recently, we have had contracts let by public authorities without any local advertising of job vacancies or any commitment to provide apprenticeships and skills training, and that is a real missed opportunity. My hon. Friend talked about the new schools completed through Building Schools for the Future, but I had contractors complaining to me as our new schools were being built that they did not feel it offered them opportunities locally. We have had new buildings at Salford Royal hospital, and the BBC and ITV have moved to Salford Quays. The BBC has done quite an amount, as a publicly funded body—it is not a public authority and so the Bill would not strictly apply to it—to take on more apprentices. The BBC has said that, being the name it is, people apply from all over the country, whereas I know that what it wants to do, now that it is based at Salford Quays, is try to take on local young people. Having the vacancies advertised in the local jobcentres would help with that. So a number of opportunities have been happening in Salford, but we still have fewer than 50 apprenticeship vacancies advertised on the national apprenticeships website. I should say that four of those are with the BBC in Salford, whereas 20 are with the BBC in London, so we are still not forging ahead as much as we should.
I go back to the fact that we have 3,000 jobseekers in my constituency, with 900 young people unemployed and 390 over-25s who have been unemployed for two years or more. I think about that group of unemployed young people. I want them to have the opportunities of an apprenticeship and the benefits that can bring: higher wages straight away; higher wages over the period of seven years; and more chances of employment. We need the extra apprenticeships that could come through the measures in the Bill and I very much commend it to the Minister and to all hon. Members here today.
Mr David Nuttall (Bury North) (Con)
It is a great pleasure, as always, to follow the hon. Member for Worsley and Eccles South (Barbara Keeley), who made a considered and thoughtful contribution, much of which we could all agree with. As has been said, we are all agreed that apprenticeships are generally a very good thing and that a lot of good work is being done on them. If this debate has done nothing else, I hope it has been able to highlight some of the excellent practices going on around the country. I apologise for the fact that I have to leave at about 2.15 pm, Madam Deputy Speaker. I am not sure when the debate will finish. It may have wrapped up by then, but if it has not I apologise to the Bill’s promoter and to the Front Benchers, if I miss their speeches.
The hon. Member for Denton and Reddish (Andrew Gwynne), my near neighbour in Greater Manchester, made an interesting opening speech. When there are no explanatory notes to a Bill, as is the case with this one—I certainly was not given any by the Vote Office—I always rely on the opening speech to clarify some of the issues. It probably says more about me than it does about the hon. Gentleman, but I was a little more concerned and mystified by some of the Bill’s provisions after I had heard his speech, and the explanations he gave in response to some of the interventions, than when I read it in my office over the past couple of days.
The hon. Gentleman has a touching, perhaps naive belief in the Government’s ability to create jobs and to do so through direction and the inclusion of certain provisions in contract clauses. He mentioned the 50:50 scheme, and I understand, if I heard correctly, that that scheme was run by his local authority, which paid £1,000 for each apprentice. I am not sure whether the number of apprenticeships was limited or unlimited, but of course there is already a Government scheme, the apprenticeship grant for employers—AGE—scheme. I am sure he will be familiar with the scheme, which provides £1,500 to small businesses.
The AGE scheme, which applies specifically to young people aged 16 to 24, was announced in November 2011 and launched in February 2012, and was designed to encourage more small businesses to take on apprentices and to encourage young apprentices to raise their skill levels. It pays £1,500 to every small business that takes on a young apprentice if the firm has never hired an apprentice before and if it has 1,000 or fewer employees when it takes the apprentice on. It is very much geared towards small and medium-sized enterprises, and the employer cannot claim more than 10 grants. Perhaps the hon. Gentleman’s local authority got the idea of giving a cash sweetener to local employers from that scheme.
One point has emerged which goes to the heart of the Bill: is it mandatory, compulsory or merely permissive? That question is at the core of my concerns. We have heard a lot from the hon. Gentleman about his belief that the Bill is purely permissive but, frankly, that is not the purpose of legislation. Local authorities and public bodies already have the freedom to do what the Bill proposes. Indeed, we have heard many examples already of good practice. Where appropriate, public bodies have encouraged—I would not want it to go any further than that—contractors to take on apprentices.
The only possible rationale for having the Bill at all is if someone has the view that there are not enough apprenticeships and that not enough are of a high enough quality. Clause 1(2) is about a possibility—I will not put it any more firmly than that, as that is what the hon. Gentleman has said himself. It says that an authority “may”—note, “may”—
“require that a minimum proportion of the apprentices employed by the contractor are higher or advanced apprentices.”
That is about raising the general skill level of apprentices.
Andrew Gwynne
Does the hon. Gentleman not think that if a local authority—for argument’s sake, let us say Bury metropolitan borough council—is procuring services and wants to ensure that the apprenticeships linked to the contract are of a higher or advanced level, it should be able to specify that in the contract?
Mr Nuttall
I am grateful for that intervention because it allows me to make an important point. If the Bill were to say the opposite and prevented any procurement contract from including a provision requiring a contractor to take on higher level or advanced apprentices, or any apprentices at all, I would certainly be very much against it. But of course that is not the Bill before us, and local authorities already have the power to include such a provision, as the hon. Gentleman said.
Andrew Gwynne
But does the hon. Gentleman not want to put it in statute, so that it is beyond all reasonable doubt that public bodies can specify that a proportion of apprenticeships tied into a contract should be of a higher and advanced level?
Mr Nuttall
I am not aware that there is any doubt at all. The phrase “beyond all reasonable doubt” is commonly used to describe the burden of proof in a criminal case, where the prosecution must prove their case beyond all reasonable doubt. As has been made clear, there may be some instances where local authorities, for whatever reason, are not doing what some other local authorities are doing, but by the hon. Gentleman’s own admission, the Bill will not change that.
Andrew Gwynne
Actually, the Bill will change that because it will make it clear to those local authorities that are not doing this that they are legally able to do it. The hon. Gentleman says that there is no doubt at present, but if so he cannot have been listening to his hon. Friend the Member for Shipley (Philip Davies), who seemed to spread a lot of doubt about whether local authorities were able to do just the kind of things that we are talking about.
Mr Nuttall
The hon. Gentleman refers to my hon. Friend’s speech. This debate is not about whether I agree with my hon. Friend; it is about the terms of the Bill. The arguments that my hon. Friend made may or may not be the same as the arguments that I will advance—and quite frankly, I do not think it matters whether they agree or not.
Philip Davies
Does my hon. Friend agree that the nub of the situation is that either this will require local authorities to do something that they do not want to do, in which case it will be undesirable, or it will allow them to do something that they can already do, in which case the Bill is unnecessary?
Mr Nuttall
I entirely agree. I think that intervention goes to the nux of the Bill—[Hon. Members: “Nux?”]—the crux of the Bill. Did I say nux? That is a new word. It is the difference between the nub and the crux. It goes to the core of the Bill—I will change track.
Andrew Gwynne
Of course the Bill is empowering in its ability to allow local authorities to require a proportion of apprenticeships to be of a higher or advanced level. The only compulsion that I can see is that a relevant contract must require the contractor to advertise the vacancies in their local jobcentre. Surely the hon. Gentleman is not arguing that that is a bad thing.
Mr Nuttall
I do not want to jump ahead too far in my speech, or I shall run the risk of repeating myself later. The hon. Gentleman is right about the provision in clause 2:
“A relevant contract must require the contractor to—
(a) advertise all vacancies”.
I have my concerns about that, which I will come to. Before that, let me deal with the question whether the Bill is mandatory or permissive, which is where I started this preliminary remark.
Although I am constantly told that the Bill is permissive in so far as clause 1 is concerned, I have concerns, as I mentioned briefly in an intervention, that if the guidelines were altered, one interpretation of clause 1(1)(b) would mean that a tenderer—somebody applying for a contract—could be required to do as the clause states. It would be mandatory in those circumstances because the clause says:
“must . . .
(b) ensure that the provisions in the guidelines issued by the OGC . . . are reflected in that contract”.
If that provision were used, it would become mandatory. I say that by way of preliminary comment.
Two or three speakers have mentioned the number of higher level apprenticeships, level 4. The statistics that I have, which I think are the most recent ones, show that the number of level 4 apprenticeships increased from 3,700 in 2011-12 to 9,000 in 2012-13. Although these are still small numbers, they are the very highest level apprenticeships, which are a fairly new creation, so by definition the numbers will be small because it takes a while for people to follow through the lower levels and to be able to move on to the higher level. That step change in those numbers from 3,700 to 9,000 shows the general direction of travel.
I start by congratulating the hon. Member for Denton and Reddish on his success in coming so high up in the ballot for private Members’ Bills that he secured pole position on one of the coveted first seven Fridays, which means that he could be certain of having his Bill debated. It deals, as I said, with a worthy cause and at first sight it seems very attractive, but that is all that can be said for it. It is superficially attractive, but I fear that it will not achieve what he wishes to achieve. I share with him the desire that there should be more higher quality apprenticeships, but as I will go on to say, all the evidence, and there is plenty of it, shows that the route that the Government have taken over the past three years has increased the number of apprentices.
The Bill goes to the heart of the debate about the extent to which the Government—any Government—should micro-manage individual businesses and their relationship with Government.
Mr Umunna
The hon. Gentleman can carry on giving his speech for as long he is obviously going to, but is it not the case that he can address many of the issues he raises in Committee? As is habitually the case on Fridays, when he often appears in the House, is this not an ideological attempt to stand in the way of a very good piece of legislation which will complement what the Government are doing to boost apprenticeships in his community, for which some of his local councillors, such as James Frith, have been arguing for some time? That is what this is about.
Mr Nuttall
As we have heard this morning, the fact that someone opposes a Bill does not mean that they oppose a particular cause, whether that be, as in this case, apprenticeships, or anything else. I want to put on the record that I know all about apprenticeships and working and learning at the same time.
Mr Nuttall
I am pointing out some of the flaws in the Bill, which is what I was elected to do. If the Bill is such a good idea, why in 2009, when the OGC produced the original “Promoting skills through public procurement”, did not the Labour Government enact the Bill to go with it? There is a good question.
Philip Davies
Does my hon. Friend question the arrogance of people who think that they should be able to introduce a Bill and have it nodded through Parliament without any scrutiny whatever? Is that not the type of activity that does disservice to the House?
Madam Deputy Speaker (Dawn Primarolo)
Order. This morning’s debate is not on the process of private Members’ Bills or its merits. There has been an exchange but I am sure that the hon. Member for Bury North (Mr Nuttall) now wishes to come back to his specific points on the Bill. That would help all of us.
Mr Nuttall
I was being dragged off there by the shadow Minister, but I will come back to the specific points that I wanted to make on the Bill.
The Bill is not new. In many respects, it mirrors the Apprenticeships and Skills (Public Procurement Contracts) Bill that was introduced in the first Session of this Parliament on 14 September 2010 by the hon. Member for Newcastle upon Tyne North (Catherine McKinnell). It is interesting that when that was introduced by way of a ten-minute rule Bill, the hon. Lady prayed in aid the Federation of Small Businesses, which my hon. Friend made clear now has serious concerns about this Bill. It is concerned that the Bill may harm the progress that has been made during the last three years. My hon. Friend made a good point.
I am sure that it was only the large number of hon. Members who wanted to support the hon. Lady’s Bill that stopped the hon. Member for Denton and Reddish being one of its supporters in 2010. But I am grateful to the hon. Gentleman for introducing his Bill because it gives me and my hon. Friend an opportunity to make clear what has been, by any measure, one of the great success stories of the present Government.
The coalition programme for government said:
“We will seek ways to support the creation of apprenticeships, internships, work pairings, and college and workplace training places as part of our wider programme to get Britain working”.
It is worth noting at the outset what is meant by an apprenticeship. Basically, it is a paid job that incorporates both on-the-job and off-the-job training. When someone has completed an apprenticeship, they will have a nationally recognised qualification.
In response to the shadow Minister, I said that I had personal experience of this, and I do. Using the definition of an apprentice as someone who learns and earns at the same time, that is precisely what I did for 10 years after I left school. Rather than going to university, I joined a local firm of solicitors as a trainee legal executive, for which I was paid a wage. As my hon. Friend the Member for Shipley (Philip Davies) said, in the past being an apprentice often meant starting at the bottom, which is exactly what I did. I was one level up from the office junior, as I used to say at the time.
I then went out on day release to study in the afternoons and evenings for examinations under the auspices of the Institute of Legal Executives. As part and parcel of its training requirements, a person could not become a fellow until they had been employed for eight years, to ensure that they had a thorough and grounded knowledge of the processes. It was a nationally recognised qualification. I used it, along with the degree I studied for at the same time through correspondence from London university, to go on and work for two more years as an articled clerk, which is really just a different term for an apprentice solicitor, before qualifying as a solicitor.
The shadow Minister, having launched his personal attack on me and used a clever way to name my opponent at the next general election, has now left his place on the Front Bench, but I think it is fair to say that I have personal experience of working, learning and earning at the same time.
Public procurement contracts should be awarded on the basis of value for money. Even without the Bill, projects already promote apprenticeships. Crossrail will deliver over 400 new apprenticeships through its supply chain over the lifetime of the contract. All main works contractors will create one new apprenticeship, or the equivalent training opportunities, per £3 million of spend. Crossrail is working in partnership with the National Apprenticeship Service to support contractors in delivering the apprenticeship programme.
The National Apprenticeship Service was established in April 2009, under the previous Government. It has overall responsibility for apprenticeships in England. It promotes apprenticeships to employers and those seeking to take up an apprenticeship by providing support throughout the recruitment and training process. It maintains a national online apprenticeship vacancy system that allows employers to post vacancies and aspiring apprentices to search and apply for them. It is interesting that a requirement to post an apprenticeship through NAS is not included in clause 2.
Apprenticeships have changed considerably in recent decades. There are now over 200 different types of apprenticeship available across a variety of sectors, including: agriculture, horticulture and animal care; arts, media and publishing; business administration and law; construction, planning and the built environment; education and training; engineering and manufacturing technologies; health, public services and care; information and community technology; leisure, travel and tourism; and retail and commercial enterprise. Virtually no aspect of Government procurement does not fall within one of those sectors.
Each apprenticeship is made up of three elements: first, the national vocational qualification, which examines work-based skills; secondly, a technical certificate, which examines theoretical knowledge; and, thirdly, key skills, which examine transferable skills—for example, numeracy and literacy.
Apprenticeships can be studied at different qualification levels, starting with basic, intermediate level 2 apprenticeships, equivalent to A*-to-C GCSEs. Above those are advanced level 3 apprenticeships, equivalent to A-levels. Finally, there are higher level 4 apprenticeships, equivalent to a Business and Technology Educational Council professional diploma or a higher national certificate.
The rationale behind the Bill is well intentioned—to encourage more companies to provide apprenticeships. However, I am not convinced that the way to do that is by passing such legislation as this. The way to create a more skilled, better qualified work force is to have a growing economy in which companies can compete in the global marketplace. When they want a larger work force, they can train people using the apprenticeship route, working with the Government to set nationally recognised standards and with a training provider to which they can send their employees for off-the-job training. The companies themselves train them on the job and give them work.
The latest figures show that there has already been a significant increase in the numbers—
Madam Deputy Speaker (Dawn Primarolo)
Order. I have been closely following what the hon. Gentleman has been saying. He has made his preliminary remarks and discussed extensively apprenticeships and the different definitions. Now I would like him to relate his comments to the Bill; he has been speaking for 32 minutes. This is not a general discussion about apprenticeships.
Mr Nuttall
Madam Deputy Speaker, I will. The rationale behind the Bill is that there are not enough apprenticeships; that can be the only reason for the Bill. However, official data show that last year more than 500,000 apprenticeships were created, which demonstrates one of my arguments for opposing the Bill.
Madam Deputy Speaker
Order. The hon. Gentleman has just put very succinctly his point about the Bill. I am asking him to make sure that all his comments refer to the Bill with the same clarity, rather than referring to every industry that might offer apprenticeships.
Mr Nuttall
Thank you, Madam Deputy Speaker. I will try to be as succinct as I can about the points I want to make about each of the clauses.
Clause 1 deals with apprenticeship requirements. It is the key clause because it states that when a public authority, defined as
“any body or person discharging functions of a public nature, including local authorities”,
prepares to issue a relevant contract—that is, one exceeding a total of £1 million—it must
“give due consideration to the relevant guidelines”.
We have not heard much about those relevant guidelines, but they were published by the Office of Government Commerce in 2009 in a document called “Promoting skills through public procurement”. It is a long document, but I want to refer to one particular sentence. The document goes through the process that a public body has to follow in granting a tender. It says of the stage at which the contract is granted:
“It is at this stage that public authorities should”—
I am afraid that the document is not written correctly because there is a word missing; I think it should say “should meet”—
“Regulation 39 of the Public Contracts Regulations 2006”,
which states
“that contracting authorities ‘may stipulate conditions relating to the performance of a public contract, provided that those conditions are compatible with Community law and are indicated in the contract notice and the contract documents or the contract documents’.”
Clearly, the 2006 regulations contained in the guidelines mentioned in clause 1 already give local authorities the power that the Bill seeks to give them in order to do all the things the hon. Gentleman would like them to do.
The second part of clause 1 would require that an authority “may specify” that
“a minimum proportion of the apprentices employed by the contractor are higher or advanced”
apprenticeship level. Because of the use of the word “may”, that could equally mean “may not specify”. The provision is therefore completely superfluous, irrelevant and unnecessary.
“Apprentice” is defined in clause 4 as having
“the meaning given in section 32 of the Apprenticeships, Skills, Children and Learning Act 2009”.
I thought that I would have a look at that to see what the definition is. It gives a definition not of “apprentice” but of “apprenticeship agreement”, which is not what one would expect from reading clause 4. If the Bill receives a Second Reading, that should be looked at, because clearly some clarification is needed regarding the definition of “apprentice”.
Clause 2 deals with the advertising of work force vacancies. In an intervention, the hon. Member for Denton and Reddish said, “You must be in favour of that”, but it is not as straightforward as that. In some cases, these contracts cover the whole country. Does he intend that, if the contractor needs to take on half a dozen extra workers as a result of getting the contract, they should advertise every single one of those vacancies across the whole country? That is what the clause would mean if taken literally, and of course one has to take it literally, so, if it is a national contract, that is what the contractor would have to do. As the hon. Gentleman himself admitted, this is the one clause that is mandatory, because it
“must require the contractor to…advertise all vacancies”
in local jobcentres.
Another aspect is that many local newspapers rely on job adverts to survive in this day and age. I wonder what they would think of this provision if they suddenly lost their local job adverts as a result. The first thing that many people do when they are looking for a job is to turn to the local paper.
Barbara Keeley
What does the hon. Gentleman have to say about the situation with our local paper, which is not delivered to all parts of Salford? A lot of postcode areas do not get a paper and if the jobs were not advertised at the jobcentre, the people who live in those areas, most of which are deprived, would not see them.
Mr Nuttall
I think the hon. Lady is referring to a free paper, but what I had in mind was a paid-for paper. Either way, any jobseeker who is anywhere near half-interested in finding a job will not find it beyond their wit to get hold of a paper.
Mr David Hamilton (Midlothian) (Lab)
On the question of a paid-for paper, my area has a population of 80,000, but the local paper’s circulation is only 7,000. The jobcentre is the only place that most people can get it.
Mr Nuttall
The point remains the same: a jobseeker would look in the paper whether it is delivered to their home or whether they read it at a friend’s house, a jobcentre or a library. The point is that they would still look in a local paper.
Philip Davies
Is not the issue more complicated than that? Many people who may be interested in pursuing an apprenticeship might not go to the jobcentre to look for an advert. Someone who is doing their A-levels and considering the next stage of their education—they might be thinking about going to university to do a degree—might never go to the jobcentre, but if they saw a particular opportunity advertised, they might think, “That might be better for me than going to university.” Is it not the case that advertising at just the jobcentre would be of no use to many people?
Mr Nuttall
My hon. Friend makes a good point. The clause is restrictive. It suggests that all an employer would have to do is put an advert in just the jobcentre and they would then think that they had discharged their duty. They would not necessarily feel that they should advertise any wider than that, because that is all the clause requires them to do.
Andrew Gwynne
Surely the hon. Gentleman is not arguing against the logic he voiced earlier when he said that he supported small businesses? He seems to be saying that they should be compelled to advertise apprenticeship positions in the local papers, which would involve many requisite costs.
Mr Nuttall
I am not suggesting any compulsion. It is the hon. Gentleman’s Bill that suggests that small businesses must advertise.
Mr Nuttall
I am not suggesting that small businesses should be forced to advertise in a local paper. I am suggesting that, given that the Bill requires them to advertise in a jobcentre, they might then not advertise in a local paper.
Philip Davies
Is this not the difference between our attitude and that of Opposition Members? Their nanny state approach is to say that employers cannot be trusted to advertise in a way that will help them find the right person for the job. Surely we can trust employers to advertise in a way that helps them find the right person for their business. We do not need the nanny state approach of the Labour party.
Mr Nuttall
Any employer seeking to take on new apprentices or, indeed, new employees will want to cast their net as widely as possible. When I was an employer, we routinely advertised in the paper and at the jobcentre, because we wanted as many people as possible to see the advertisement, which is what any form of advertising seeks to achieve. This is not the worst clause I have ever seen, but I do not think there is any need for it, because any employer looking for new staff would automatically seek to cast their net widely.
Clause 3 states:
“Skills training provided by the contractor must form part of a nationally accredited scheme.”
Anybody who knows anything about the current form of apprenticeships will be aware that they result, by definition, in a nationally recognised qualification, whether it is at level 2, level 3 or level 4. I am therefore not sure what is added by clause 3.
The Government have done a lot to develop apprenticeships since taking office. They asked Doug Richard, an England-based Californian entrepreneur, to look in great depth at how the apprenticeship system was working. Hon. Members may remember that he came to prominence as a dragon in the first two series of the BBC’s “Dragons’ Den” programme. In 2008, he founded the School for Startups, which is an enterprise that teaches entrepreneurship in partnership with UK universities, the Royal Institution and the British Library.
The Richard review, which was produced in November 2012, is a substantial piece of work. Doug Richard spent months speaking to apprentices, employers and Government organisations. He highlights the problems that have developed in the apprenticeship system. The Government carried out a substantial consultation process for several months over the summer, which involved seven workshops covering assessment, qualifications and—
Madam Deputy Speaker (Dawn Primarolo)
Order. I am afraid, Mr Nuttall, that you are again drifting beyond the purpose of the Bill. Let me be clear that your remarks have to relate to the Bill and its four clauses, which you have already debated rather extensively. We do not need a review of the Richard review. I want you to relate your comments to the Bill and its clauses. I hope that I have made myself clear this time, because I think that I might have failed last time.
Mr Nuttall
The reason the Richard review is enormously relevant is that in such a huge piece of work, nowhere did Doug Richard come up with the solution that is contained in the Bill. He spoke to hundreds of employers and Government organisations—I will not go through them all—but he did not come up with the solution in the Bill, and neither did any of people who responded to the Government’s consultation exercise over the summer. I hope that we hear more from the Minister about that, because he will have all the facts and figures at his fingertips. The Government’s work on the matter is therefore relevant.
As my hon. Friend the Member for Shipley briefly mentioned, this week the Prime Minister himself announced the new trailblazer programme during his visit to the Mini plant in Oxford. That programme will move apprenticeships on to a new level and deal with the problem that the hon. Member for Denton and Reddish says he is concerned about, which is the quality of apprenticeships. The Government’s approach is to have employers, rather than the Government themselves, lead the development of apprenticeships, and that is what the trailblazer system will ensure. As the Prime Minister said:
“If you want an apprenticeship, we’re going to make sure you do the best apprenticeship in the world.”
That sums up the trailblazer approach.
Philip Davies
Does my hon. Friend agree that, whereas we all want to strive for what the Prime Minister set out, the Bill would be in danger of bringing apprenticeships back to being tokenistic? They would exist only to fulfil a contract requirement, not to help the wider apprenticeships agenda.
Mr Nuttall
That is the fear about making requirements mandatory, or even creating an impression that would make them quasi-mandatory, which could happen if we passed the Bill.
It has been suggested that the Bill’s definition of “relevant contract” as those being of more than £1 million means that it will not affect small and medium-sized enterprises. Actually, a £1 million contract may cover a period of not a month or six months but three or five years. A micro-company, which is defined as one with fewer than 10 employees, could easily bid for such a contract, so it is simply not the case that the £1 million threshold means that the Bill will cover only the largest companies.
We want to encourage more small and medium-sized companies to apply for contracts, and the Government’s website is an excellent resource. If there is one thing that we can get out of this morning’s debate, it is to encourage small and medium-sized enterprises that are thinking about bidding for Government work to look at that website, which is really user-friendly. A few days ago, the Government finished consulting on how to make it even more user-friendly, and I hope we will hear about that from the Minister. The website is excellent, and users can filter contracts by type and financial value. As a matter of interest, because of the £1 million threshold specified in the Bill, I typed in “construction” and filtered the results to contracts of more than £1 million, and 304 contracts were listed.
I am not sure what the point of clause 2 is. It looks unnecessary to me.
On clause 5, I am not sure why a 12-month delay before the Bill comes into force is specified. The hon. Member for Denton and Reddish did not say why, if it is so important, it should not come into force straight away. Perhaps he will explain in his closing remarks why he has not provided for it to come into force in the usual way, perhaps one month after Royal Assent.
I accept that there is a plethora of statistics on the number of apprenticeships but, by any measure, the Government have an excellent story to tell on the number that have been created in the past three years. The Bill will not do anything to increase the number of apprenticeships. On the other hand, it might create a tick-box atmosphere and culture among those who are interested in, or who apply for, Government contracts. For all those reasons, I oppose the Bill.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
I am delighted to take part in proceedings on this important Bill, which I support. I reiterate my congratulations to my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) on introducing this excellent Bill, which I believe is crucial.
I am disappointed by what the hon. Member for Bury North (Mr Nuttall) said over the course of 55 minutes. I cannot understand how he believes his constituents are best served by him speaking for just under an hour in Parliament in London on a Friday against a Bill that would help them, particularly the young people, into employment. I cannot wait to go and campaign for the Labour candidate in Bury North, who I know will stand up for young people who are desperate to get into employment. In the north-west of England, where we have seen an increase in unemployment, it is incumbent on all hon. Members to do everything we can, going down every single avenue, to promote employment and skills.
Andrew Gwynne
I will join my hon. Friend on the streets of Bury North to campaign for the Labour candidate. Does she agree that the people of Bury North will find it very hard to understand why the hon. Member for Bury North (Mr Nuttall) does not want job opportunities to be promoted in the local jobcentre in his constituency?
Luciana Berger
I listened closely to the remarks of the hon. Member for Bury North. I know how many of my constituents rely on the jobcentre for finding out about opportunities. They might not be able to afford to pay for our local paper. We do not have a free sheet—our previous free sheet is now inserted in the paid-for paper. For those reasons, the hon. Gentleman’s objection is incomprehensible.
Andrew Gwynne
Did not our hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) make the pertinent point that, in many of our constituencies, the free papers are no longer delivered to many of the communities to which we want to reach out with those adverts?
Luciana Berger
I thank my hon. Friend for making that point. We need to do everything we can to promote and let people know about opportunities. Our local newspapers are under a lot of pressure, including the Liverpool Echo. We used to have the Merseymart free sheet, but it is no longer available. It used to be delivered, but now it is not. People have to buy the Liverpool Echo to get the Merseymart free sheet, which is inserted in it. For all those reasons, it is important that we increasingly look to our jobcentres. The Government are asking people to use the internet more, and the jobcentre website, on which people can access opportunities virtually, is an important resource.
Philip Davies
Will the hon. Lady explain the difference between desirable and compulsory? There is a clear difference. It might be desirable if we eat salad every day, but I am sure she would not want to make it compulsory. It might be desirable for people to put adverts in the jobcentre, but that does not mean it should be compulsory. Does she not trust businesses in her constituency to know where to advertise jobs to get the best people for them? Does she not trust businesses in her constituency?
Luciana Berger
I listened carefully to the hon. Gentleman, but we are conflating various points. Businesses are free to advertise their jobs wherever they wish, but the jobcentre is a crucial resource. Jobcentre Plus requires jobseekers to apply for a number of jobs within a time period. For many people, that is the first resource they use. It is a free resource for business, and I am surprised that the hon. Member for Bury North does not want his businesses to advertise on it.
The Bill seeks to
“Require certain public procurement contracts let by public authorities to include a commitment by the contractor to provide apprenticeships and skills training; and for connected purposes.”
I support the Bill because I have met many people with experience of tendering for public procurement contracts, during which process they must specify and comply with many things. Different local authorities and public bodies, such as the NHS or education authorities, use different frameworks, but they are all very comprehensive, and because tendering companies must comply with and cover so many different things, if the contracts say nothing about apprenticeships, they often do not get included.
The Bill would not mandate apprenticeships, but would be an important tool with which to ensure an increased focus on this area. We need to do everything we can to help people into employment, particularly young people. If people do not get into employment when they leave school, college or university, it becomes increasingly difficult for them to do so over the rest of their working lives. I have met many companies that are concerned about this, but which do not understand the rules—we have discussed Europe already. The Bill would make it a lot clearer and much easier for businesses and public authorities to focus on apprenticeships.
Andrew Gwynne
My hon. Friend has hit the nail on the head. Above all, the Bill would give clarity to those contractors about what public bodies can and cannot ask of them.
Luciana Berger
I thank my hon. Friend for making that helpful clarification at a time when others have sought to confuse that point.
I do not want to take up too much of the House’s time, but I wish to support what Liverpool city council has done on apprenticeships. It has made every effort to work with partners to create apprenticeships in our city. I repeat that unemployment is rising in the north- west. Under enormous pressure from the massive cuts imposed by central Government, the Labour council in Liverpool is trying to be positive and forward-looking and to create employment opportunities. It has created 926 apprenticeships—no mean feat—by working with its service partners, including Glendale, a ground maintenance company, and BT, with which it has provided ICT apprenticeship opportunities.
The council has created hundreds of apprenticeships through the council’s investment plan for schools. The Government’s decision to scrap the Building Schools for the Future programme had a massive impact in Liverpool, where 26 schools were in the pipeline for refurbishment or rebuild. It was an absolute disgrace that the scheme was scrapped, but the council has done everything it can to go ahead with as many schools as it can afford. Knowing that investment in those schools and education buildings is vital, we have put in place our own investment plan for schools, in spite of the Government, not with their help, and now the construction firms building 12 new schools in Liverpool have committed to creating apprenticeship positions as part of their contracts. The council has done that of its own accord.
Philip Davies
The hon. Lady says that Liverpool council has done that already. As far as we are aware, it has not been breaking the law, so it seems that she is arguing against herself; she is saying that the Bill is not necessary, because local authorities can do it anyway.
Luciana Berger
If the hon. Gentleman had listened to the earlier contributions from Opposition Members, he would have heard that we were sharing best practice. Many bodies, whether local authorities or other public bodies—education trusts and the NHS spring to mind—are not aware of the opportunities and do not have that focus or direction, and therefore they do not do it. That has an impact on companies and organisations, including those in the voluntary sector, which do not include the requirement in their proposals, and everyone loses out as a result. As I have said, I have given examples of good practice, but they are not sufficient on their own. We need even more apprenticeships. It is not enough merely to celebrate what Liverpool city council has done; we need to see it being done across the board.
Andrew Gwynne
Is that not why it is so important to make it absolutely clear in statute that public bodies may require extra higher and advanced-level apprentices as part of a contract?
Luciana Berger
I entirely agree with my hon. Friend, who has made his point very eloquently.
Philip Davies
Is the hon. Lady really saying that in order to encourage people to do something that is already legal and desirable, we need to pass an Act of Parliament? That is like saying “Statins are good for you, but some people have not realised that, so let us pass an Act of Parliament in order to tell people that statins are good for you.” Does the hon. Lady not understand the absurdity of her position?
Luciana Berger
I have listened carefully to what the hon. Gentleman has said, but, as many Labour Members have pointed out, the point is that not everyone is doing something that is particularly important for our nation at this juncture. I cannot stress that enough. It breaks my heart every time I meet an unemployed young person—indeed, anyone who is unemployed—or a person who needs to re-skill because opportunities no longer exist in the area where that person used to work. We need to do everything we can, proactively, to ensure that examples of good practice such as Liverpool city council— and I celebrate everything that that council is doing—are not just one-offs, but can be seen across the board. That is not happening now, and that is why we need the Bill.
I mentioned Liverpool’s investment plan for schools. It has also launched a pre-apprenticeship programme, because it acknowledges that it is hard for a young person who is not in employment, education or training even to get on to the first rung of the ladder. In partnership with City of Liverpool college, it is offering a 24-week programme to 16 and 17-year-olds who wish to gain valuable skills and enhance their employability so that they can join the full apprenticeship programme. Another programme in Liverpool is intended to help young people to develop the skills that will enable them to secure apprenticeships in music engineering. That is a fantastic scheme. We also have an “apprenticeship hub bus”, which will provide a one-stop-shop of advice and live apprenticeship job vacancies for those who are leaving education.
All that work has resulted in a reduction in the number of NEETs from 1,803 to 1,308. However, there are still 1,308 16 to 19-year-olds in Liverpool who are not in education, employment or training. We need to do all we can to remedy that, which is why I support the Bill.
I have an apprentice in my constituency office. His name is James Crombleholme, and he joined me just over a year ago. He is beginning the second year of a business administration apprenticeship, again through a programme involving Liverpool city council. If I could employ more apprentices, I would gladly do so, but ours is a small organisation, and we are doing our very best. James is gaining vital skills in the office, and is a valuable member of our team. He is a delight to have around, and he exemplifies the need for as many apprenticeships as possible. Many small organisations such as MPs’ offices should employ apprentices, and they need to be informed of that opportunity.
If public money is being spent, we should do everything to ensure that it is spent in the best possible way. That means investing in our young people and in the future of the country, particularly at a time when 2.5 million people are unemployed. That is far too many, and far too many young people are unemployed as well. The Bill’s specific focus on apprenticeships is very important, and I hope that it will be given a Second Reading.
Lyn Brown (West Ham) (Lab)
First, I congratulate my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) on introducing such a Bill. I have never been so lucky as to be successful in the ballot, but perhaps if I am here for another year or so I might finally get the success that has eluded me.
My hon. Friend has also been lucky in the Minister who is on the Front Bench today—the Minister of State, Cabinet Office, the hon. Member for Ruislip, Northwood and Pinner (Mr Hurd)—as he is a decent and good man. He and I sat here for many Friday mornings putting the Sustainable Communities Bill through the House. I hesitate to suggest, because I realise that I might be damning his career badly by this, that he truly does understand this kind of soft regeneration issue. If one took the Sustainable Communities Bill down to its last detail, one could have argued that it was not necessary because we could have done all the things in it without having to pass legislation. However, it was an empowering Bill and it meant a lot to the third sector. So my argument is that not only is this Bill a good one in its own right, but it follows the trajectory taken by the Minister in his own private Member’s Bill that was passed under the previous Government. I therefore have a lot of faith that his response will be hopeful and positive, and will allow this Bill to progress to the next stages, to allow my hon. Friend the Member for Shipley (Philip Davies)—I hope I may call him that—to table his amendments. I know that my hon. Friend the Member for Denton and Reddish would welcome him on the Committee.
I wish to draw on the experience of the London Legacy Development Corporation, which is undertaking excellent work in my constituency and neighbouring constituencies to transform the legacy of the Olympic games into an enduring benefit for local people. I hope that that legacy will endure for generations to come. Since October 2012, the LLDC has been delivering a large programme of construction works at the Queen Elizabeth Olympic park to clear the games-time overlay, including temporary venues, walkways and roads. It is connecting the park with the new roads, cycle paths and pedestrian paths that criss-cross over the site, connecting it to the surrounding area. It is also completing permanent venues, bridges and parklands for their legacy use.
The scheme is a £229 million transformation programme and it has presented the LLDC with its first opportunity to deliver against its strategic aim of being a catalyst for regeneration and convergence in east London and its public commitment in terms of the employment and skills benefit during post-games construction.
Andrew Gwynne
My hon. Friend is making a compelling case about how public procurement can lever in those skills and training opportunities for young people in quite a deprived part of the country, but is it not the case that too few public bodies in her constituency in east London are making use of those opportunities? Would my Bill not help to lever in those extra training opportunities as an enabling power for those public bodies?
Lyn Brown
My hon. Friend is absolutely right. The reason I so want to talk about the LLDC is that it has an innovative way of delivery, which might help him in his arguments with our friend on the Government Benches about the issue of small companies not being able to deliver on this scale. We are talking about a new vehicle to achieve my hon. Friend’s aims.
May I say to my hon. Friend that I think he has missed an opportunity, but I am hoping he will correct that as we go on this afternoon, which is to draw attention to the wonderful Minister and encourage him, through our warm words and congratulations, and the heartfelt faith that we have in his abilities, to support the Bill today?
Andrew Gwynne
I do not wish to pile even more praise on the Minister, but I have every confidence that he shares our ambition to raise the skills and job opportunities of people in places such as Newham and Denton and Reddish and I am confident that when he comes to the Dispatch Box he will have lots of nice things to say about the Bill. We are not too far apart and what differences we have can be ironed out in Committee.
Lyn Brown
Indeed they can, and the Minister knows just how exciting such a Committee can be, having been through that process himself.
The LLDC’s focus has been on the creation of job and apprenticeship opportunities in legacy for local people, especially for young people and underrepresented groups who face significant barriers to entering or returning to the labour market. The principal vehicle for delivering those benefits has been embedding them as a requirement in procurement.
Through its social and economic policy, the legacy corporation has developed an approach that uses its procurement processes to assess a bidder’s track records and proposals for securing local social and economic benefits. I remind hon. Members that the LLDC is not some socialist organisation capturing the regeneration opportunities in east London. It is, in fact, a vehicle of the Mayor of London, who would not wish, I think, to be called “one of these outrageous socialist types”. He might possibly rail against such an accusation. It is his programme that has determined that the LLDC will use its procurement in this way.
One of the arguments made by the hon. Member for Shipley, who, sadly, is no longer in his place—I know that he has not left the Chamber because I am speaking—was that it would take too long to go through an assessment process for each of the preferred contractors to prefer the contractors who delivered on the apprenticeships. The gentleman who runs London obviously disagrees, because his processes are clearly about assessing a bidder’s track record and proposals for securing economic benefits and determining a contract based on those assessments. He also wishes to embed those commitments contractually and works in partnership with the contractors, operators, tenants and development partners to deliver them.
Andrew Gwynne
I do not wish to take the name of the hon. Member for Shipley (Philip Davies) in vain as he is not in his place—although he has left his presence in the Chamber in the shape of a lone copy of the Daily Mail. So let me ask my hon. Friend: is she aware whether the Mayor of London has had any problems with the European Commission as regards public procurement?
Lyn Brown
I am not. I would assume that we would have heard if there had been any particular difficulties with said establishment and the procurement processes for London.
As the Bill is not, as my hon. Friend said, about forcing people to do things, the important point is that the Mayor and his offices are working with contractors to develop and deliver his aims. It is not about forcing, but about enabling and empowering.
The Mayor also wants to focus on early intervention with contractors, so that they understand their requirements and co-ordinate delivery. That makes perfect sense to me.
Andrew Gwynne
Is it not a good thing that my Bill would give the Mayor of London the ability to say to those contractors, “As Mayor of London, I expect a certain proportion of the apprenticeships that you are providing to be of a higher or an advanced level”?
Lyn Brown
It is indeed, but the dialogue with the contractors is clearly what is essential in this process, and my hon. Friend’s Bill provides the Mayor of London and others with a vehicle to say to them, “See? It is here in black and white. It is law. I am entitled to do this. This is something I am enabled to do by Parliament, but I would like to work with you as a contractor, to get the best from you and from the programme.”
The Mayor also delivers and develops interventions with the borough partners, so all the London boroughs are enabled to be in partnership with the programme. He works with Jobcentre Plus—let us face it, that can only be a good thing—and he works with the Greater London authority to embed best practice and partnership working to support contractors in fulfilling their obligations. How can that be a bad thing? The Bill provides the Mayor of London and his organisations with the opportunity to show contractors that they are not acting illegally by undertaking this process.
Andrew Gwynne
Does my hon. Friend think it is a good or a bad thing that her constituents in West Ham will have access to job adverts in their local jobcentre, rather than having to guess where such opportunities are advertised?
Lyn Brown
I absolutely do think it is important that we are working with jobcentres. In Newham we have an excellent programme called Workplace, in which local employers work with the local council and Jobcentre Plus to advertise local positions locally before they are advertised regionally or nationally. That can only be a good thing in an area with the deprivation indices that we have. It is one way of embedding into the area an economic and social legacy for the people that I represent.
The other good thing about what the LLDC is doing is that it adds value and avoids duplication with the existing employment and skills provision of the London boroughs. We are not talking about something that becomes unwieldy, or that is not welcomed by the other host boroughs. When we are recreating infrastructure and targeting delivery according to the needs of the park, we ensure that it is done in the most cost-effective way.
The LLDC is tailoring its approach to the specific needs of the contracts in the programme. We are not asking employers to take on apprenticeships and to have apprenticeships that are not consistent with what they are contracted to undertake. That is another good thing. The Bill would not require the LLDC to change its modus operandi at all; it gives a platform on which the LLDC can base its apprenticeship programme. Obviously, it promotes best practice in recruitment and promotes the London living wage or the construction working board agreements—whichever is higher. I am sure that every Member in the Chamber would applaud that.
There is a strong client commitment to delivering jobs and apprenticeships, which means ensuring that these elements are sufficiently weighted in the pre-qualification questionnaire and invitation-to-tender evaluations. The Bill sends an important message to bidders about the importance of this agenda to the LLDC. The need for apprenticeships is there. It is in the pre-qualification questionnaire. If you want to—I am sorry, Madam Deputy Speaker; I know that you will not want to qualify as a contractor at the LLDC, although you could should you wish to, of course.
Any company that wishes to qualify to take a contract with the LLDC has to submit a completed questionnaire. One of the questions in it is, “Are you prepared to offer apprenticeships?” If the company is not prepared to do so, it might get a bit cross. It might think to itself, “Why should I have to?” The Bill will point to the fact that the LLDC is entitled to place that requirement in its pre-tender questionnaire.
The LLDC makes sure that contractors are aware of everything in its procurement pipeline, and uses the principle of relevancy to identify appropriate evaluation questions and weighting. Externally, the LLDC ensures that bidders are clear about the regeneration aims and objectives of the LLDC—convergence and so on. I know that we all understand what that means.
Crucially, the LLDC provides contractors with enough information to know what kind of commitment they are making. It specifies the commitment that companies will have to make in order to get the contract. It is clear that companies will be monitored, evaluated and held to account for what they deliver or fail to deliver. The Bill will make sure that those companies understand that the LLDC is not asking anything of them that it is not entitled to do.
The LLDC asks bidders to set targets for apprenticeships for under-represented groups such as black and minority ethnic communities, disabled people, previously unemployed people, people who have been unemployed for a very long time, and women. I hope you do not mind, Madam Deputy Speaker, if I digress for a moment and say that one of the things that I liked about the apprenticeship programme for the building of the Olympic sites was how it encouraged women into construction industries.
One of the things I learned from sitting in a digger truck and trying to excavate the earth at the Olympic park was that employers liked women using their equipment, because we are gentler on it and the equipment lasts longer if women are employed to use it. I know this from my own experience of driving a car and using the clutch, but my husband disagrees somewhat.
Barbara Keeley
Earlier I mentioned City West in Salford, which takes on apprentices. Those apprentices usually appear at city festivals, where I saw the best example I have ever seen of somebody plastering. That left me, and probably left that woman too, with the view that plastering is not something I will ever be good at. She persuaded me to try it. She was an excellent woman plastering apprentice, but this MP is not going that way.
Diana Johnson
I went to the Hull training awards last Friday in my constituency. The overall winner, the apprentice of the year, was a woman engineer, which I was delighted to see because we are missing out on a huge pool of talent among young women, who do not think engineering is for them. They make some of the very best engineers in this country.
Lyn Brown
Indeed they do.
The LLDC also seeks a firm commitment to this approach in the procurement by its contractors, so not only is the LLDC looking at its own people, but at the secondary chain. The expectation of apprenticeships goes further than just the one tier. We know that a big contract is let to a contractor, who lets to subcontractors. The LLDC has ensured that procurement for apprenticeships goes further down the line than the initial contract. In future, should anybody ever query its right to do so, the LLDC will be able to point to the Bill introduced by my hon. Friend the Member for Denton and Reddish to show that it is quite entitled to ask for that commitment.
The LLDC will also evaluate its contractors on the proposals for working with boroughs to make sure that they are getting the most from those apprenticeships. I, like most hon. Members present, have an active third sector in the provision of training opportunities for young people. Community Links in my constituency is continually involved in finding young people who have become particularly disaffected at school or thereafter, helping to put them back on track. It will be able to refer to the LLDC a young person whom they think is right for an apprenticeship. That kind of partnership has real ramifications for our communities. If we ramp them up properly and use procurement in this way, and if we demonstrate by law that we, the LLDC and public bodies are entitled to use procurement in this very socially acceptable and socially manipulative way, we can see—
Andrew Gwynne
My hon. Friend is making a superb contribution today. I commend to her the work of Stockport Engineering Training Association Ltd in my constituency, a training company that has been established by industries in the north-west, mainly engineering, railway and nuclear industries, to provide training and apprenticeship opportunities for young people. It is concerned that the number of schemes coming through its centre has fallen in recent years. Should we not address that through public procurement?
Lyn Brown
I agree with my hon. Friend. Giving local authorities and procurement authorities the confidence that they can use procurement in this way to create apprenticeships and use it for the benefit and betterment of our communities can only be a good thing. I am sure that the Minister will not close his ears to our entreaties to allow the Bill to continue into Committee.
Surely it is in everybody’s interests that contractors deliver jobs and apprenticeships and make the commitment to them, as the LLDC has, as a key partner in east London, bringing significant locally based employment and skills infrastructure to support recruitment needs. It encourages an open and regular conversation with contractors and their supply chains, beginning immediately upon the contract being signed. As we know, it begins before that, because that is what good relationships are about, but, make no mistake, when the contract is signed, it is expected that the companies will deliver and honour the commitments that they have made to the apprenticeships in those local areas.
We need to ensure that the changing trends in the construction industry, such as the higher levels of subcontracting and shorter construction programmes, have made it difficult for some firms to offer traditional apprenticeships. In response to that issue, and to ensure delivery on the public commitments, the legacy corporation has commissioned REDS10. I want hon. Members to remember that name. I do not want any Government Members to have palpitations; this is not a socialist programme. REDS does not refer to the colour of its politics—
Andrew Gwynne
The more my hon. Friend goes on, the more I warm towards the Mayor of London.
Lyn Brown
I am afraid that my hon. Friend is encouraging me to sit down, but I will continue.
REDS10 is a National Apprenticeship Service-approved apprenticeship training agency—isn’t that a mouthful? It is contracted to work with prime and subcontractors to broker apprenticeships and job opportunities for local people in the Olympic park transformation programme. REDS10 takes on the apprentices, pays their wages, provides their training and then places them with the subcontractors, allowing them to complete their training across different projects and under the guidance of multiple firms. Therefore, we do not need to disadvantage firms in a supply chain that are unable to provide a full-scale apprenticeship. Instead, they can contract their part of an apprenticeship scheme from REDS10 and make a contribution, which is agreed in the contract with LLDC. Smaller firms are then enabled to participate in the supply chain. Is that not a great idea? Yes.
Nic Dakin (Scunthorpe) (Lab)
It is a great idea, and it is being replicated across the country. Humberside Engineering Training Association, which I visited this time last week with my hon. Friend the Member for Streatham (Mr Umunna) to meet apprentices, is doing exactly the same thing in Scunthorpe, in Tata and elsewhere.
Lyn Brown
By not excluding small firms from supply chains, we can set up vehicles that enable them to compete in the same way as larger firms. The apprenticeships requirement that the Bill would enable authorities to deliver will not preclude smaller firms from participating.
The ATA model has allowed the creation and delivery of apprenticeship opportunities that would not otherwise have been created. To date, it has seen a peak of 60 apprenticeships on site, the highest number on a single site in London in 2013. I am sure that we all congratulate them. The project has now moved into its follow-on phase, with the LLDC and REDS10 working closely with prime and subcontractors that have recently commenced work on site to secure opportunities for existing apprentices who are completing initial placements with contractors. By September 2013, 15 apprentices had been successfully moved to new placements and five had been moved into permanent employment. That is something we all want to see.
To deliver on its public commitments and support contractors, the LLDC set up a transformation job and apprenticeship brokerage project. The project is overseen by a construction operations group, chaired by the LLDC and with representation from key employment and skills service providers in east London. Since October 2012 the project has supported contractors, who in many cases exceeded their contractual commitments, because they see the benefit of training people not only in the skills they want them to have, but in the company ethos.
Once employers get engaged in such an organisation and become more au fait with having apprentices and the support of bigger organisations to enable the admin and those bits of the apprenticeship programme that they cannot deliver, they see that there is a genuine benefit for themselves. In order to reach that stage, however, employers need to be convinced that this place has legislated to enable the overall authority to provide such a programme. That is why the Bill is so relevant.
Mr David Hamilton
Midlothian council is the second smallest land-locked authority in the UK. It is currently building 1,500 council houses. One of the great things we found was that the contractors want a level playing field, because good companies that take on apprentices do not want to be disadvantaged by others not doing so. That would be supported by the Bill.
Lyn Brown
I absolutely agree, and I am grateful to my hon. Friend.
The London Legacy Development Corporation is aware of the transient nature of the work force in sectors such as construction and has asked its contractors to monitor the length of their workers’ residency. When we were building in preparation for the Olympic games, we were keen to make sure that local people, who were being severely disadvantaged by the construction process, were able to take advantage of the opportunities that came their way.
We set up lots of monitoring schemes to find out whether the people getting the jobs and apprenticeships came from the area. Unsurprisingly, people moved into the area to take up the jobs and apprenticeships and then moved out, taking with them their skills and spending power. That, obviously, is not great; we wanted to transform the local area and make sure that local people had the advantages.
Bob Stewart
Has the hon. Lady any idea of how many people who were apprentices for the Olympic build successfully moved into permanent employment as a consequence of that training? Do we have that figure?
Lyn Brown
I am not sure whether the figure is available, but I will check that out and pass a note to the hon. Gentleman as it would interest me too. However, we did discover that apprentices based in Salford, Gateshead and Newcastle came with their firms to the Olympic park to complete their apprenticeships. Although we got additional apprenticeships, the Olympics provided opportunities for companies based elsewhere in the UK to bring their work forces down and keep them employed while we waited for the worst of the recession in building to move on or for additional work to be found.
Barbara Keeley
I want to return to my hon. Friend’s earlier point about young women. There is a question about young people moving on to permanent jobs. I do not know whether my hon. Friend is aware of it, but a report out today states that three times more young women are employed in low-paid, low-skilled jobs. The proportion of the group about whom we are worried, the 16-to-24 year-olds, in jobs such as cleaning offices and hotels—of which there are plenty in the area of London my hon. Friend is talking about—has increased from 7% to 21%. Sadly, only 1% of the young women are working in skilled trades, compared with 20% of the young men.
Is there anything in the regeneration around the Olympic park that gives hope that those young women will not carry on in those unskilled trades of cleaning offices and hotels, but get opportunities through apprenticeships to do something more skilled?
Lyn Brown
I am happy to tell my hon. Friend that the LLDC has reported that its targets for BME communities, women and people who have been unemployed for a long period have all been met. It did say that employment for disabled people had been slightly under target, mainly due to non-declaration at the point of induction; people are not recorded as disabled in an apprenticeship because they do not self-identify at the point of application. The LLDC has done a sterling job.
Andrew Gwynne
My hon. Friend is making a compelling point. Apprenticeships are not a silver bullet in respect of employment; there is no guarantee of a job at the end of them. However, the real benefit is that upskilling the work force, giving them experience, skills and more advanced qualifications, opens so many more doors for them.
Lyn Brown
That is absolutely true, as many of us will know from people we meet in our surgeries and at our tea and coffee mornings. We also know it from the history of our own families. That has become of great relevance to me since I began to research my family tree following the speech I made in this place about the match-women’s strike. I was absolutely convinced that my mother must have had personal knowledge of the strike through oral history given the amount of detail she gave about it. I am still trying to get there, but I am absolutely sure that I am going to find that one of my family had at least a connection with those amazing and heroic women. So yes, I do agree that, as we know from our own experience in our own families, apprenticeships can be the essential first step on the rung of a ladder to a successful career.
In July 2013, the LLDC carried out an on-site survey that asked over half the work force—780 people out of 1,555—what their length of residency in the borough was, and 85% said that they lived in the London borough of Newham and had been for over a year. Even if they had come to the host borough only to participate in the games, to find a job through the games or because they had got a job or an apprenticeship at the games, they were still there a year later. I realise that a year is not a massive commitment to a community. I have traced my family back to the 1880s, and they have been resident in my constituency since then; I have to say that that is not bad. I am not expecting that of the trained apprentices who came through the LLDC, but their being there for a year indicates some kind of commitment to living in the area in which they were trained and given an opportunity.
Using this model of procurement to support and sustain good-quality apprenticeships strikes me as an absolutely excellent and commendable example for other public bodies to follow. This Bill is very much needed in order for the bodies involved to be able to be confident in their interaction with their supply chain. I am so grateful to my hon. Friend for bringing it to us today.
I urge the Government—the really decent Minister on the Front Bench and other hon. Members—to support the Bill and ensure that we can provide more opportunities, more training and more apprenticeships, and get more companies involved in the regeneration of our communities. That is what we are being asked to do today, and I ask the Government please to listen. I know the Minister may have been given a brief that tells him that he should not support a Bill such as this. We went through this with his Sustainable Communities Bill. If he had followed such advice, his Bill would not have got through. I urge him to be brave: support the Bill, support apprentices, and let us do the decent thing.
Diana Johnson (Kingston upon Hull North) (Lab)
The speech by my hon. Friend the Member for West Ham (Lyn Brown) was a tour de force. She talks with great passion about an issue that is very much in her heart—the future opportunities of young people who live in and around her constituency. Many other hon. Members will be very concerned about the shockingly high rates of youth unemployment in this country.
I congratulate my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) on introducing this Bill. To be honest, it is a no-brainer: why would anyone not want to support it? It is short but very focused and clear in what it wants to do. My hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) clearly set out the advantages that local authorities and housing associations can gain in making a commitment to apprenticeships and how positive that is a for a local area. My hon. Friend the Member for Liverpool, Wavertree (Luciana Berger) spoke about the situation in Liverpool, which is very similar to the one I find in Hull. Hull has twice the national average of young people not in education, employment or training, and every Hull MP has been grappling with this issue for some time: how can we ensure that our young people get the opportunities they so richly deserve? If we can squeeze money out of the public purse without adding any additional costs and in a way that benefits our youngsters, that is the way to go.
Andrew Gwynne
I am grateful to my hon. Friend for contributing to this debate. Her points about Hull are pertinent. She will be aware that our parliamentary neighbour, my right hon. Friend the Member for Kingston upon Hull West and Hessle (Alan Johnson), is a sponsor of the Bill. When I approached him, he made precisely the same points: if we cannot procure, through public procurement, extra job opportunities for local people in Hull, when can we?
Diana Johnson
Absolutely. My hon. Friend puts the point so well. My right hon. Friend the Member for Kingston upon Hull West and Hessle (Alan Johnson) has always been a strong champion of ensuring that young people have the opportunities that they should have. Any Member who has read his book about his early life, which tells of his disadvantaged background and lack of opportunities, will understand why he wants to stand up and fight for young people.
I want to talk about the Bill from a business perspective. When I was growing up, my dad was an electrician and he had a small business. He trained as an electrician during the second world war and when he left the forces, he set up a small business with his sister, my Auntie Betty. My dad took the view throughout all his life in business that it was incumbent on him to train the next generation of electricians. I remember growing up in my household and hearing my dad say that he wanted to give a chance to young lads leaving school. He used to say that it was outrageous that some of the other, bigger businesses in the area—his was a very small business—did not train apprentices, and yet when a young person finished their apprenticeship, those businesses would go straight in to try to poach them to work for them without going through all the hard work that my dad did to train them.
I knew from a very early age how important it was to give young people those opportunities, and how good people in business—small businesses and others as well—who had a local commitment to their area and communities understood that they were there not only to provide services, but to make sure that young folk had an opportunity to train and get the skills they needed.
Lyn Brown
Given the example that my hon. Friend has just given, would it not be the right thing to do to ensure that supply chains from public procurement reward people like her dad who do the right thing? Those firms would get the subcontract from big procurement contracts and I think that would be the right way to go.
Diana Johnson
Absolutely. My hon. Friend puts the point very well.
My dad’s business carried on for many years because he was a good business man who did the right thing, and my brother, who was an apprentice electrician and did his training, now runs the business. He is doing exactly what my dad said he should do—training apprentices and the electricians of the future—but whenever I see him, he tells me about issues with public procurement. For example, if a school needs to be rewired and the local authority is putting the contracts out to tender, some local authorities take into account whether local firms have apprentices, and that is a good thing, but they do not all do that. It is really frustrating for local businesses that are doing the right thing to feel that they are not being rewarded in the way that they should be because other companies that are cutting corners and are out to make a fast buck do not invest in local people and local communities.
Diana Johnson
Absolutely. My hon. Friend has been a champion of ensuring that youngsters have those opportunities and that businesses provide the apprenticeships that they should provide.
Barbara Keeley
It was pointed out to me last week that the Care Bill, which I hope will return to this place in a few weeks, makes commitments on health education. Health education costs £4.9 billion. Caring for older people in our communities is a vital job, which now takes place mainly in the private sector, but there is no reward of the sort that we are discussing for the few employers who bother to train people. This is a new area that is opening up as we integrate health and social care. We cannot spend a huge amount—£4.9 billion—on the health side of the equation and not train people, for example through apprenticeships, to take up a valued career in social care.
Diana Johnson
Absolutely. My hon. Friend has a great deal of experience of social care and carers. Earlier in the debate, I raised with my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) the issue of how the NHS is spending its money and whether it takes into account whether businesses offer apprenticeships. Given all the reorganisations and changes in the NHS, we need to ask whether clinical commissioning groups are doing everything they should be doing to ensure that their contractors are providing training and apprenticeships. My hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) makes the important point that we need to focus on training people in the care sector. There have been scandals in many parts of the country because people have not had the skills that are needed to care for the elderly.
I want to mention again the Hull training awards, which I attended last Friday. A number of businesses in the city have supported apprenticeships for many years. I have been going to the awards for about five years. The number of businesses is growing year on year, but many employers still do not offer apprenticeships and do not feel that it is something that they want to do.
According to surveys, more than 80% of those who employ apprentices agree that they make the workplace more productive and 81% of consumers would favour a company that takes on apprentices. More than 200 types of apprenticeship are available, offering more than 1,200 job roles. Among employers who employ apprentices, 92% believe that apprenticeships lead to a more motivated and satisfied workforce, and 83% rely on their apprenticeship programme to provide the skilled workers they need for the future of the company. One in five employers is hiring more apprentices to help them through the tough economic climate.
I started by saying that offering apprenticeships was a no-brainer. Why would a business not choose to do it? The facts and figures suggest that every employer should at least consider hiring an apprentice. Money from the public purse should be spent on companies that provide more than just the service or the widget by investing in communities and young people.
Andrew Gwynne
My hon. Friend is making the case for smarter public procurement. It is not just the cost of the contract that must be considered, but the wider impact on the community. Does that not demonstrate why the Bill is right to insist that local job opportunities should be promoted in the local area?
Diana Johnson
That is absolutely right.
Research shows that, on average, an apprentice earns more than £100,000 more throughout their lifetime than other employees. We need to get such facts out there. Given the decimation of the careers service, we need to get the message across to youngsters about what an apprenticeship can mean and how it can enhance people’s opportunities. Of course we want young people to go to university if that is what is most appropriate for them, but apprenticeships are also valuable qualifications.
Andrew Gwynne
My hon. Friend is making another pertinent point. No doubt in her constituency, as in mine, the vast majority of young people will not have the opportunity to go to university or a higher education institution. The best way in which those people can get a higher education level qualification, as well as on-the-job training, is by doing a higher or advanced apprenticeship.
Diana Johnson
My hon. Friend is absolutely right.
Before I finish, I pay tribute to Mark Walker, whom I took on as an apprentice in my office several years ago and who has proved all the points that I have just made. He has added value to the office, made it more productive and made it a more motivated and satisfying place to work. I have experience of apprentices in my constituency office, and I also have the experience of my dad, which says it all for me—if he thought apprentices were worth investing in, it is absolutely the right thing to do.
I am really pleased to be here today to support my hon. Friend’s Bill, and I hope that the Front Benchers will give it a fair wind so that we can move on to Committee.
Mr Iain Wright (Hartlepool) (Lab)
I thank my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) for his passionate and compelling argument. I fully support the Bill and believe that we should give it a fair wind and take it to Committee. I hope that the Minister agrees.
It is vital that the British economy succeeds, thrives and grows. That success should be based not on making a fast buck, cutting corners, thinking of the short term or cutting employment rights and training opportunities in a race to the bottom, but on well-paid, secure and skilled jobs. That is how Britain can pay its way in the world in the 21st century—with an emphasis on a high-skilled, well trained work force. To help achieve that objective, we need a skills system that meets the needs of our country, our society, the economy, employers and young people. My hon. Friend’s Bill would provide that and be central to having a good, resilient, productive and efficient work force for the future.
My hon. Friend rightly said that in many ways, the previous Government helped to revalue apprenticeships. There were something like 65,000 apprenticeships when the Government came into office in 1997, and when we left office in 2010—I was the Minister responsible for apprenticeships at that time—there were 240,000. The current Government have carried on that good work to some extent, and I want one characteristic of apprenticeships to be that they transcend party politics and Parliaments and work in the long-term interests of what this country needs. It is clear that we need good, strong apprenticeships.
As my hon. Friend said, even in these financially straitened times, it makes common sense, economic sense and social sense, when both central and local government spend money—often billions of pounds—for skills and training opportunities to be provided when contracts are granted. He mentioned the 50:50 scheme in his constituency, which particularly interested me, and other hon. Members have mentioned similar schemes. My hon. Friend the Member for Liverpool, Wavertree (Luciana Berger) said that 926 apprenticeships had been put in place through Liverpool city council, and we heard about other initiatives. In an excellent speech, my hon. Friend the Member for West Ham (Lyn Brown) talked about what is going on in London. Of course, in programmes such as Crossrail, Building Schools for the Future and so on, Labour established the idea of procurement as a lever to bring in additional training opportunities.
There remains a huge issue to consider. Although the number of apprenticeships has gone up, I am particularly concerned about the statistics on under-19-year-olds. In 2011-12, there were 129,900 apprenticeship starts by those aged under 19, but that represented a 1.4% decrease year on year. There were 95,400 intermediate-level apprenticeship starts, which was a 2% decrease. We fail our young people if we do not get them a good first step on the career ladder, and we all know about the crisis of youth unemployment that this country still has. In the quarter June to August 2013, 958,000 young people aged 16 to 24 were unemployed, making an unemployment rate of 20%—up by 0.1% on the previous quarter and 0.5% on the same period last year. The unemployment rate for 18 to 24-year-olds is 19.1%, but what really concerns me—it is linked with the decline in apprenticeship starts for under-19s—is that the unemployment rate for 16 to 17-year-olds is 36.3%. That should be a national scandal.
We are failing our young people and not giving them the employment and training opportunities they need. We will suffer the consequences of that for decades to come. If we do not get our 16 to 19-year-olds on to a career ladder and thinking about skills and training, and if they cannot get employment, the chances are that they will suffer low-paid, low-skilled jobs for the rest of their careers.
Not only will the careers of those people and the prospects for their families suffer for decades, but the long-term economic potential of the country and how we compete in the modern, fiercely competitive world, will be compromised. We need to address that. I suggest that ensuring we can link training opportunities and apprenticeship places with public procurement is an exceptional way to go.
Barbara Keeley
I want to tie in my hon. Friend’s point with the wage benefits of completing an advanced apprenticeship, which I have mentioned. Does he agree that, in areas such as Salford, where we have such a lot of long-term unemployment and unemployed young people, wage benefits are the important factor? If we can get people in to apprenticeships, particularly advanced apprenticeships, we can ensure that they can earn 22% more than similar young people.
Mr Wright
I am glad my hon. Friend has contributed to the debate. I know how much she is passionately committed to giving young people a chance, particularly with apprenticeships. I have fond memories of going to Salford as Minister with responsibility for apprenticeships. We had launched the apprenticeships grant for employers. I met a tree surgeons firm in her constituency—I do not know whether she remembers. It could not afford to take on a young person, but we provided a £2,500 grant. I thought it was to help to pay the wages of that young apprentice, but it provided the equipment to allow them to scale up the tree and do the work required. That small firm wanted to help to bring on young people and to ensure that it gave young people a chance, making a difference—as I recall, it took on a 17-year-old. The Bill can do exactly the same.
My hon. Friend the Member for Denton and Reddish was right to highlight the importance of driving up quality. However, he also mentioned the need to expand opportunity. Often, we do not tell young people of the difference apprenticeships can make. People will be paid more over the lifetime of their career if they become apprentices. I am therefore baffled by the debate on clause 2, which is on the advertisement of work force vacancies. When there are opportunities, we should communicate them as much as possible. That is a no-brainer. Where better to do so than in the jobcentre? Clause 2 is essential. I want the Bill to pass on Second Reading, but, in Committee, we need to widen and expand it to ensure that schools, colleges, teachers and others are aware of apprenticeship opportunities.
Andrew Gwynne
My hon. Friend is right that we could go further. I struggle to see what the problem is if Stockport, Tameside, Newham, Hull or Salford councils promote public procurement and apprentices through public procurement in their areas. Why should they not advertise those opportunities to young people in those areas?
Mr Wright
My hon. Friend is right. We have an enormous opportunity in my patch in the north-east. In Hartlepool, we have the makings of a great renewable energy and offshore wind supply chain. I know that the area my hon. Friend the Member for Kingston upon Hull North (Diana Johnson) represents is in the same position.
We have had public procurement tenders, including for the Teesside offshore wind farm, in which no local firm got the work, meaning no local apprenticeship opportunities. What a scandalous waste of potential. I fail to understand why we should not use the opportunities from the public purse to give young people those chances and why those opportunities should not be advertised locally so that people in Hartlepool, Hull, Stockport and elsewhere can know about them. My hon. Friend the Member for West Ham made an eloquent and passionate contribution about the impact of the Olympics, a major project that should have benefited east London. It did benefit east London, but not as much as it could have. Those benefits should have been maximised.
I was very interested in the hon. Member for Shipley (Philip Davies). I always knew he wanted to take us back to the ’50s, but I did not realise he meant the 1550s and the Elizabethan age. He made an important point. He said that the Bill would undermine best value for the taxpayer because the additional apprenticeship opportunities would make procurement contracts more expensive. I disagree. One of our problems—with the Government, with the country—is this short-term, silo-driven approach. If we spend or save £1 in one area, no consideration is given to the impact elsewhere on the public purse. For example, no one considers the long-term consequences of cuts to local government for access to A and E or social care. We need to take a longer-term view. If, using the public procurement route, we can help to train our work force of the future, we will create many more opportunities and our economic potential will be greatly increased.
Andrew Gwynne
In terms of total spend, does not public procurement often make one of the largest contributions, if not the largest contribution, to the local economy, and is it not baffling, therefore, that Statler and Waldorf on the Tory Benches seem to think it falls outside the remit of the public domain to expect more training and skills opportunities?
Mr Wright
I found it astonishing too. I was particularly concerned by the 55-minute speech of the hon. Member for Bury North (Mr Nuttall). I am sure that those 555 18 to 24-year-olds in his constituency will be surprised to hear that he did not want apprenticeship opportunities advertised in his local jobcentre.
Mr Nuttall
With the greatest of respect, I never said that I did not want job opportunities advertised in the Bury jobcentre—incidentally, my office is just around the corner from it. I just think it should be left to employers to decide where they advertise their jobs.
Mr Wright
But does the hon. Gentleman not agree that, in order for the opportunities to be cast as wide as possible, young people should be made aware of them. There could be teachers, schools and colleges who are not aware of what is on offer. As I just said, I am keen to see these opportunities advertised in jobcentres, but I am also keen to table amendments in Committee to ensure that schools, colleges and others in the community are made aware of them.
Lyn Brown
I find it remarkable that some Government Members do not seem to understand that the taxpayer’s pound should be made to go further. Normally, we hear quite a different argument from them. Why can they not see that taxpayers’ money should be enabling young people to get the skills they need to find work?
Mr Wright
Absolutely. In these straitened financial times, why are we not squeezing the taxpayer’s pound still further, for the long term, to ensure that young people have a good career decades into the future? I cannot understand it either. I share my hon. Friend’s disbelief.
Philip Davies
I wonder why Labour Front Benchers have so little faith in employers that they feel that they cannot be trusted to advertise in a jobcentre, and must be mandated to do so by the Labour party. The hon. Gentleman talks of value for money, and says that we should look at the bigger picture rather than seeing things simply in terms of pounds, shillings and pence. Can he explain what was the great benefit to the country of his Government’s leaving it with an annual deficit of £150 billion?
Mr Wright
Oh dear me. I think that the Bill describes exactly what we need to do in order to secure the country’s economic success. When those in government—centrally or locally—spend money, they should look to the long term, and ensure that they can provide the skills and training opportunities that are needed for the future by giving young people a chance. I believe that that is central to what we need to be doing.
I fully support what my hon. Friend the Member for Denton and Reddish is trying to do, and I hope that the Minister does as well.
The Minister of State, Cabinet Office (Mr Nick Hurd)
This has been a very good debate. The speeches have been passionate, honest, often rooted in personal experience and, for the most part, gratifyingly free of tribal politics in relation to an issue that really should cross the party divide.
We have heard about some fantastic models of intelligent procurement, such as REDS10. We have heard about people in Liverpool, Humberside and other parts of the country who are demonstrating how procurement can be used to squeeze out the maximum value for the taxpayer, with the full encouragement of the Government. We also experienced the seismic revelation that the hon. Member for West Ham (Lyn Brown) enjoys a bit of my hon. Friend the Member for Shipley (Philip Davies) on a Friday morning. I think that my friend and colleague earned the admiration of the House for his composure at that moment. He had to take some time out from the debate, but he retained his composure sufficiently to make an excellent speech, as did my hon. Friend the Member for Bury North (Mr Nuttall). I think that the shade of Eric Forth would have been proud to hear both speeches. They conveyed warmth and cross-party support on the need for more apprentices when they posed the fundamental question of why this law is actually needed, which is the job that we, as legislators, must do.
First and foremost, I must genuinely congratulate the hon. Member for Denton and Reddish (Andrew Gwynne) on his speech. It seems a very long time ago, but it was absolutely brilliant—not least because he secured harmony in the Gwynne household this weekend with his rhapsody about Denton community college, of which his wife is a trustee.
The hon. Gentleman spoke with real passion and conviction of his concern about the level of youth unemployment, which, at 7.6%, is clearly unacceptably high. As he knows, and has heard from Government Members, everyone recognises that the Bill is extremely well-intentioned. My hon. Friend the Member for Harlow (Robert Halfon) spoke to me personally about his support for it. We have taken it very seriously, and the context could not be more important. It is shocking that we as a country are wasting the potential of a million young people. The hon. Member for Hartlepool (Mr Wright) was right to speak about that with passion and anger.
The country faces a huge challenge. I am not making a party-political point when I say that the fact that youth unemployment rose by 40% under the last Administration during good times is a source of real concern, and raises serious doubts about the skills and work-readiness of our young people. That has been reflected in survey after survey of employers. The fundamental question is this: how can we ensure that our young people benefit from the gradual recovery in the jobs market? That is a national challenge, and should be seen as such. It is a challenge not just for my party, the Labour party or any other party in the House, but for the private sector, the education system and civil society. So many people care about it that it is a challenge for funders such as the Big Lottery Fund and its Talent Match. So much good will needs to be harnessed to move the needle. That is why the whole debate about academic standards, access to informal learning opportunities for young people—I speak as the Minister for youth—the quality of career guidance and the success of new traineeships, which I greatly welcome, is so important. But the fundamental point of this debate—our level of ambition on the status and priority attached to apprenticeships—is important. It is fundamental, because there has been a missed opportunity; the status of apprenticeships has been too low over time, particularly as they are a win-win—the hon. Member for Worsley and Eccles South (Barbara Keeley) spoke well about that. The evidence is clear that apprenticeships are good for employers, as well as for employees. The evidence shows that those on advanced apprenticeships earn, on average, between £77,000 and £117,000 more over their lifetime, and 72% of employers reported that apprenticeships improved the productivity of their organisation.
Andrew Gwynne
I am fully with the Minister in his argument, so far. Does he agree that if we are seeking to drive up the standards of apprentices, as well as to extend the capacity of apprenticeships, it is not wrong to give an empowering facility, as my Bill does, to public bodies to say to contractors, “We expect there to be a proportion of higher and advanced apprenticeships as part of this contract because it is good for our local economy”?
Mr Hurd
I have some reservations, which I am going to express, despite the shameless flattery that has been heaped on me, not least by the hon. Member for West Ham. I wish to give the hon. Member for Denton and Reddish some reassurance, not least because of the reservations we have about the need for this particular law, that the ambition he seeks on apprenticeships already exists. As my hon. Friend the Member for Bury North mentioned, this very week the Prime Minister was in Oxford talking about our ambition to be the best in the world. The hon. Gentleman will know that given the fiscal constraints we are under, what we choose to spend our money on does reflect our priorities. The fact of the matter is that we have spent £5.7 billion on apprenticeships since 2010; we have grown them by 1.5 million; and in 2012-13 the current provisional estimate is for about 500,000 apprenticeships. That is building on work that has gone before, but let us be clear: that is double what was available in 2008-09. As my hon. Friend the Member for Shipley said, it is not just about numbers and growth; robust quality is also important.
Andrew Gwynne
The Minister is right to say that this is about how we spend the money. That is true of not only central Government, but other public bodies, so does it not empower local government, which does not provide many services directly itself but buys in services from contractors, if it is able to say, “This is what we expect because these are our budgets that we are handing over to you as contractors, and this is what we want in return”?
Mr Hurd
The point is that local authorities already have that power. This proposed law does not change anything in terms of regulation or the permission that the system gives to contractors at the moment.
I wish to finish making my point about quality. It is important, and we have put statutory standards in place to ensure that apprenticeships are real jobs and lead to recognised qualifications. I hope that that enjoys the support of the House. We want this to be employer-led. We want to encourage employers because it is absolutely in their interests, and that is how we sustain the momentum behind this as Governments come and go. That is why we have introduced incentive payments of £1,500 for smaller employers, because the attitude of small and medium-sized enterprises is important, to take on up to 10 new apprentices aged 16 to 24. As we have announced this week in the implementation plan, there will be trailblazer projects in the aerospace, automotive, digital industries, energy and utilities, electrotechnical, financial services, food and drink, manufacturing and life sciences and industrial sciences sectors. I hope I have convinced the hon. Gentleman that the ambition that he wants to see is there, not only to build on what was done before, but to take it to a different level.
Andrew Gwynne
I have no doubt that the ambition is there, but the Minister will have heard earlier about SETA in the Stockport part of my constituency, an organisation that was established by industry to get apprenticeships and training in a range of high-skill areas. It has raised concerns with me that the apprenticeships are not coming through in the rail industry, the nuclear power industry and so on. There is a role for public procurement in this.
Mr Hurd
I certainly agree that there is a lot more to do in supplying apprenticeships and pushing, nudging, encouraging and incentivising various sectors of the economy to be more ambitious and think more intelligently about how they can structure such opportunities.
I want to show the Bill the respect it deserves, and I do so as someone who has been in the same position as the hon. Gentleman and promoted a private Member’s Bill. I want to make it quite clear to him that the ambition he seeks is there. The question we need to ask ourselves is whether we need this law. As I was sitting here during the debate, I could almost see Eric sitting over there, getting ready to speak and to ask that question in a forensic way. We need to get beyond the good intentions; we are legislators. We need to ask ourselves with each snowflake that we add to the mountain of regulation whether we can justify it, whether it will make a difference and whether it will serve its purpose, however well-intentioned the promoter.
Andrew Gwynne
Of course, there has to be a problem if we are to address it through good intentions. I contend that there is a problem. Too few apprenticeships are coming through the public procurement route, which is why this Bill is absolutely necessary.
Mr Hurd
There is a problem, and we are wasting the potential of 1 million young people in this country. Apprenticeships are part of the response to that, as I have said, and the Government are very proud that we have effectively doubled the number of apprenticeships each year compared with 2008-09. We are in no way complacent, because as Labour Members have said, there is still a great deal more that can be done.
As for whether the law is needed, the point was powerfully made by Government Back Benchers that the existing law and procurement policy give the permission that the hon. Gentleman seeks. I would go further than that. A private Member’s Bill that I, as a Minister, picked up and championed, the Public Services (Social Value) Act 2012, extended that permission. The Act, which came into force in January with cross-party support, places a requirement on commissioners to consider the economic, environmental and social benefits of their approaches to procurement before the process starts. They must also consider whether they should consult on these issues. I put it to the hon. Gentleman that that process, with which contracting authorities around the country, particularly Liverpool and Birmingham, are very engaged, could include consideration of the benefits of any potential apprenticeships to be created under the contract. That is another tool in the box for those who are seeking to develop intelligent models of procurement and trying to squeeze as much value as possible out of every public pound that they are spending. That is exactly what we are trying to encourage.
Mr Hurd
I am obviously disappointed to disappoint the hon. Lady. That has rather spoilt my day. There is a fundamental point about value for money, which is that the processes and regulations we have set up absolutely allow what the hon. Member for Denton and Reddish wants and, as I said, the social value Act goes further in seeking that permission. We have set up a commissioning academy to support and create the space for people who are spending taxpayers’ money so that they can think more intelligently about how that can be spent. I give him my pledge that I will use what evidence I have to ensure that in my conversations about the use of that Act, and in the commissioning academy, we ask how apprenticeships can be boosted by those processes so that we can share and spread the best practice that exists and has been articulated extremely well by Opposition Members. As the hon. Gentleman generously said, the DWP has shown intelligent, forward-thinking practice by managing to get approximately 2,000 apprenticeships into its supply chain through its procurement practice.
Andrew Gwynne
I am grateful to the Minister for giving way in the last remaining seconds. But does he not understand that, laudable though his legislation may be, it does not explicitly give local authorities the power to ask for higher level and advanced level apprenticeships, or to have them advertised in the local economy? That is crucial if we are going to change the life chances of the young—
Business without Debate
First-time Employers
David Rutley (Macclesfield) (Con)
I am grateful to Mr Speaker for granting this debate and I am glad to see the Minister for Universities and Science, my right hon. Friend the Member for Havant (Mr Willetts), in his place. My right hon. Friend is a good friend to Macclesfield, and continues to provide support and advice on the long-term future of an AstraZeneca site at Alderley Park, which is much appreciated. I realise that this might not be the most popular slot in the parliamentary timetable, but, despite that, several Members have shown their support for this very important subject, including my hon. Friends the Members for Bury North (Mr Nuttall), for Bedford (Richard Fuller), for Worcester (Mr Walker) and for Vale of Glamorgan (Alun Cairns).
We often discuss in this House ways to increase employment, or support small businesses, or support large businesses for that matter. What we do less often is talk about the very smallest businesses—the one-person companies, the sole traders, the freelancers. We also tend to debate more often those issues that affect existing businesses, rather than those that are yet to exist. Today, I want to focus on how we can get more people to see running their own business as a viable career option—in particular, how we can encourage them to believe that employing their first member of staff will be easier than they think and also rewarding.
I am not particularly talking about business people with a family history of self-employment or entrepreneurialism, nor am I talking about those who have friends to call on for free advice. The debate today is to give voice to people who have set up a business against all the odds, from scratch. Is there more we can do to help them grow their business? Vitally, are we confident that the target audience for any help is actually aware of the assistance that is available? A little-appreciated fact is that the vast majority of UK businesses currently employ no one at all.
For some, that makes sense. Not everyone needs an employee for their business model to work, but for others there are barriers in the way to taking on a first employee who could help a business to grow. I would like to look at what those barriers are now, acknowledge the progress that is being made in tackling them and then suggest possible areas for further action—most notably in improving how we get the message across that support is out there for everyone, not just for those with family and friends with business experience. I am keen for children in schools in Macclesfield—and across the country—to believe that one day they can run a business and employ people if they want to, and that a Government will be there to help them, advise them and support them—not stifle their ambition and get in their way.
Let us start with the facts. The latest figures from the Office for National Statistics confirm that we are experiencing record self-employment: 4.2 million people work for themselves—some 14% of all those in employment. At the moment, self-employment is more common for men and for older people, but the dynamics are changing. The number of women in self-employment is rising fast. In Macclesfield, the percentage of women in self-employment is the highest in the north-west, and the number of young people across the country who want to set up their own business is high. One survey suggests that up to 70% have at least the ambition to set up their own enterprise, while the Prince’s Trust has found that up to 30% of young people actively expect to be self-employed.
This is good news. We need more first-time entrepreneurs, but we should be enabling those entrepreneurs, wherever possible, to take a step into what is often the unknown and become first-time employers too. Despite enthusiasm for being in business—we are currently enjoying a record number of businesses in the UK—relatively few take on an employee. The longer a sole trader is in business, the less likely they are to want to take someone on. The British Chambers of Commerce found that sole traders who have been operating for less than six months have far greater ambitions to take on staff than those who have been operating for more than two years. Why are these early hopes dashed? Why are their initial aspirations being dampened?
There was a time when it was unusual for people to have their own home or to own shares, until right to buy and public utility share offers made those steps into the unknown massively easier to take. The aim of those initiatives was not merely to shift ownership from public sector to private sector, but to shift ownership to a wider part of the population than had previously enjoyed it. Many of the people who bought their council house or took part in the utility share subscriptions had no family history of holding such property. They did not have friends who could tell them how to go about it. The success of the sales, though, showed that the ambition was there, but something had held people back, be it the tangible issue of cash or the intangible psychological and perhaps cultural issues that can act as a barrier to realising aspirations.
Some 75% of businesses currently employ no one beyond their owner. That is not to say that none of them hires freelance or agency services, such as an accountant or marketing campaigners, but 75% do not have a payroll of their own. It is not a step that their owners have taken, but if they did, it would lead to yet lower unemployment. In the light of this, David Frost of the British Chambers of Commerce has said that the key questions are: how many of these companies are interested in employing people, how do we identify them, and how we can encourage them to take the huge leap needed to become an employer?
“The first action,”
says Mr Frost, and I agree with him,
“must be to reduce the size of the leap required.”
There is indeed a leap, as I discovered recently when, with the help of the Federation of Small Businesses, I conducted a straw poll on social media asking what prevents entrepreneurs from taking on that vital first member of staff. Respondents suggested a number of barriers that can loosely be grouped, as I suggested a moment ago, as psychological or tangible. I had respondents who specifically used the word “fear”—“Fear of getting some minor issue wrong and being taken to the cleaners by the employee, fear I will get sued, fear I have to pay maternity leave when I can hardly afford to stay afloat, fear of all the legislation that is pro-employee and against employers” and so on. There is also frequent use of negative terms: “overwhelmed”, “crippling”, “uncertain”, “totally confusing”.
The sources of fear, among many, were being sued for breaches of employment law and, for some, the prospect of dealing with Her Majesty’s Revenue and Customs. It turns out that the British Chambers of Commerce found similar real and perceived barriers in a far more detailed survey of sole traders in 2011. It seems that more needs to be done to show potential employers what HMRC and other public bodies can do to help new businesses, or signpost other sources of help, such as Citizens Advice, not least the East Cheshire citizens advice bureau, which tweeted to me on this very subject. There are also excellent courses available from local chambers, such as the Macclesfield chamber of commerce, which I have been fortunate enough to attend. Support is available from websites such as smarta.com .
As Lord Green has pointed out about UK Trade & Investment, and Lord Young has highlighted about Government business services in general, the problem is not that the support is not there but that the target businesses often do not know about it or do not feel it worthwhile trying to find it. I have been told that there are over 100 public sector websites providing bits and pieces that will help in setting up a business. Surely a more focused message would be a better approach and improve the prospects of success.
Respondents, both to me and to the BCC survey, raised the cost of regulations, red tape and restrictions. There is a feeling that time is money, and that the opportunity cost of the time required for performing an employer’s duties could actually cause a business to shrink, not grow. Respondents mentioned a raft of issues that concern them, and the BCC has called for exemptions for the smallest businesses from such requirements. I recognise that complete exemption is probably asking too much but, as with workplace pensions, perhaps there is scope to allow the smallest businesses significant lead times in complying with regulations through phased implementation. Some commentators have also pointed to the possibility of extending the current three-year micro-business moratorium on new regulation and making it a three-year rolling moratorium with potential opt-ins. This would be important for new businesses and particularly for potential new employers going forward.
The employment allowance of £2,000 will clearly be a big boost, slashing or eliminating the national insurance liability of a business taking on a first employee. Similarly helpful is the Government's deregulatory commitment to "one in, two out". We need to be clear: regulations designed to protect people in employment should not be so onerous that they cause potential employers to shut off the option of providing employment. Deregulation at the EU level is the next step forward, and I welcome the Prime Minister's commitment to that through his business taskforce.
There is more work to do, but it is worth reminding ourselves that real enthusiasm exists about the prospect of being able to hire an employee if—I emphasise “if”—barriers are removed. The will is there, if not always the ability—perceived or real. So, what else could be done? One option is exploring "de-risking" measures more fully. The Institute for Public Policy Research and the FSB are examining several ideas to de-risk the hiring process for small firms, including the idea of appointing intermediary bodies to support employment. Instead of the small business bearing the whole risk, these bodies would directly employ the individual and place them with a host business, effectively leaving small businesses to provide work and pay wages. As the Minister will know, this model is already being used by apprenticeship training academies, and it could be extended to other categories of employee, such as the long-term unemployed, for defined time periods.
Apprenticeships have been one of the great successes of this Government. In fact, in many situations, apprentices are an ideal first employee. One of the respondents to my survey suggested that apprentice sharing between small businesses could also be explored.
I understand that growth vouchers, which were announced in the Budget and are being taken forward by the Minister’s Department, could be used to help small businesses expand their work force. I would be grateful if the Minister provided any insights on how the vouchers could be used as a vehicle for encouraging employment growth among the businesses we are discussing today.
Several respondents suggested that small businesses can, and of course do, utilise freelancers instead of employees. This may well be a solution for a number of businesses, but the fact that a business says it has taken on a freelancer understandably does not always mean that Her Majesty’s Revenue and Customs will agree. If HMRC believes a business has actually taken on an employee, it will clearly want to take action. Some businesses feel that there could be greater certainty in current employment relationships and that this lack of clarity dampens their own aspirations to grow.
The Adam Smith Institute has suggested that radical legislation is needed to enshrine the right to declare oneself freelance or self-employed. The clear risk in this situation is that employees may feel pressured into declaring themselves self-employed by employers. Commentators have suggested that one avenue that could be explored is allowing a certain limited number of employees to self-certify as self-employed. They argue that this could lead to greater clarity for both businesses and workers, and improve flexibility in the labour market.
The Minister will know that Lord Young has urged the Government to bang more of their own drums. Where there is help available, it should be communicated as effectively as possible to potential employers. The signposts for those who are thinking of taking on staff need clearly to say "straight ahead", rather than "diversion ahead" or "no entry". An engaging communications campaign could help. It should signpost the help and how-to guides on offer. It could be as simple as a leaflet in the next HMRC mailing; it could be a higher-profile campaign, such as "I'm in" for workplace pensions. It is good to see that HMRC has been moving in this direction recently. There is a new video on YouTube detailing what needs to be done to become a first-time employer. It is a useful video, but it has been watched fewer than 300 times. We now need to help more businesses know that it and other advice is available.
But this not just about public bodies. We should recognise the importance of business-to-business communications too. The work of websites such as that of smarta or the banks that provide small business advice needs to be encouraged. We should more fully engage with business about how best to communicate to business and create one-stop shops for would-be employers. There is some very good practice: the FSB, for example, provides a 24-hour helpline to business, with guaranteed advice, from just £120 a year.
Enthusiasm clearly does exist about the prospect of being able to hire an employee in many micro-businesses. The FSB recently found that small-business confidence is at a record high, and there are clear ambitions to take on staff—if barriers are removed. The will to set up is there, the will to employ is there. There are, as I have highlighted, options for further action. We now owe it to the tradition of progressive Conservatives to redouble our efforts to ensure that the will finds a way. The Minister, I know, is a great torchbearer for this tradition, and I look forward to hearing his response.
The Minister for Universities and Science (Mr David Willetts)
I congratulate my hon. Friend the Member for Macclesfield (David Rutley) on bringing this important subject to the House’s attention. May I also say how much I appreciate the opportunity to work with him on the challenges facing AstraZeneca in his constituency? He has worked incredibly hard to secure a strong and vigorous future for the Alderley Park site, and he knows that the Government will work with him on that to ensure that his constituency remains a successful and vibrant centre of enterprise.
That leads me to small businesses, which are indeed vital to our economy. We want more people to start a business and more businesses to grow, and taking on the first employee is a vital step in growing a business. Let me explain some of the ways we are supporting small businesses. We are improving their access to finance, lowering their tax burden and ensuring that business support is simpler, more joined-up and easier to access. Those are the challenges my hon. Friend has just set us, and they are absolutely the right ones for us to tackle.
We can see the progress that has been made already in my hon. Friend’s constituency. From May 2010 to September 2013 there were over 1,200 business start-ups in Macclesfield, and 330 in the 12 months to September 2013. In fact, the start-up rate for the Cheshire East local authority area in the 12 months to September 2013 was higher than that for both the north-west and Great Britain as a whole.
As my hon. Friend said, one of the big challenges facing start-ups is employing staff for the first time. Let me set out what we are doing to help businesses meet that challenge. Often what people worry about in business is the complexity of what they have to do and the fear of getting it wrong. There are all the words we are familiar with: the “burden” of red tape, the “minefield” of regulation and the “barriers” they face as they try to grow and, in particular, take on their first employee. That is why we are committed to making the regulatory experience for business a better one. We are reducing the number of new regulations being introduced through the one-in, two-out rule. We are tackling the existing stock of regulations through the red tape challenge, which has identified over 3,500 regulations for reform, with almost 2,000 to be scrapped or reduced. We have introduced a small and micro-business assessment, which builds on the micro-business moratorium, to which my hon. Friend referred, providing exemption from new regulation for businesses with up to 50 staff if there is any evidence that they will result in disproportionate burdens that could impede growth.
I think that business is starting to feel the benefit of those initiatives. The FSB’s “Voice of Small Business” survey has reported a reduction in the burden of regulation felt by its members. Some 20% reported that regulation was a barrier to growth in 2012, but this year the figure had reduced to 17%. Its members also felt that regulatory costs are reducing, with 21% stating that regulatory costs were a burden in 2012, down to 18% this year. Although we are moving in the right direction, the perception of the burden of regulation remains high, and my hon. Friend made some important points about communicating what we are doing.
Let me turn briefly to employment law. We know that bad regulation can harm businesses and that the fear of regulation, even though it is often misplaced, can damage growth. That is why we launched the employment law review at the start of this Parliament. It has taken a systematic approach to testing our employment laws, addressing misconceptions and tackling real barriers to ensure that our labour market is flexible, effective and fair.
Our employment law reforms are starting to make a difference for employers. A 2012 CBI-Harvey Nash employment trends survey stated that there had been a 10 percentage-point improvement in perceptions of employment law since 2011. Our reforms cover the whole lifecycle—from taking on a person, to managing a work force, to letting people go.
We have increased the qualifying period of unfair dismissal from one to two years, as employers told us that they needed more time to make sure that they had made the right hiring decision. We also recognised business concerns about employment tribunals, so we sought to dispel myths about them. We have introduced fees to employment tribunals and streamlined the process, including judges sitting alone in unfair dismissal cases.
We recognise, however, that getting the rules right is not enough on its own; employers need to understand them. Last year, we launched a simple online tool to help first-time employers understand minimum legal requirements when they take someone on. In referring to the online tool, I am aware of my hon. Friend’s remark that there were 100 Government or Government-related sites where such information was available. Through the Government’s excellent gov.uk initiative, we are trying to make the process far simpler, with a big reduction in the number of dispersed sites with separate access and different types of data.
The “Employing staff for the first time” tool sets out the six things employers need to do when employing staff for the first time: how much to pay someone; how to check whether someone has the legal right to work in the UK; how to carry out a criminal records check; insuring oneself as an employer; advising employees on their terms and conditions; and registering with Her Majesty’s Revenue and Customs. Each should be a straightforward and simple process. The tool currently gets about 11,000 visits a month. It is highly rated in terms of user engagement and we will continue to promote it.
I turn to tax measures to support businesses taking on staff. They are important to reduce cost and make tax simpler. Again, we have put measures in place. We have increased the employer national insurance contributions threshold by £21 a week above indexation. That returns more than £3 billion a year to employers, including the micro-businesses to which my hon. Friend referred. As a result, all employers are now £150 a year better off for each employee earning above the threshold.
From April 2014, every business will be entitled to a £2,000 employment allowance to reduce their employer national insurance contributions bill each year. That will support businesses that aspire to grow by hiring their first employee or by expanding their work force. I am confident that my hon. Friend, like many Government Members—and, I hope, Opposition Members—will be actively promoting that important measure when it comes into force in April next year.
The allowance will be very simple for businesses, which will only need to confirm their eligibility through the usual payroll process. Up to 1.25 million employers—one third of all employers—will benefit, with around 450,000 taken out of paying employer NICs altogether. More than 90% of the benefit of the allowance goes to small businesses with fewer than 50 employees.
We have continued to simplify the tax system overall and made a commitment in the autumn statement 2012 to a target to reduce the annual cost to business of tax administration by £250 million by the end of the spending review period. Since April 2013, all unincorporated businesses have had the option to use cash basis accounting to calculate their tax liability. They will also be able to use the flat rates to calculate some types of expenses if they wish, rather than having to calculate actual amounts. It is estimated that up to 3 million businesses will be able to benefit from this simplification.
HMRC has taken steps to support small and medium-sized enterprises that need help in getting their tax affairs right. SME error and failure to take reasonable care contributes just under £6 billion a year to the tax gap. HMRC is increasing its educational support by tailoring and targeting its initiatives at key business lifecycle points, and SMEs can now manage their contact details and view tax liabilities and payments all in one place.
I hope that I have been able to convince my hon. Friend that we are working hard to make life easier for people hiring staff for the first time. I assure him that we continue to work with the FSB and other organisations to consider proposals such as the very imaginative ones that he has brought to the House. I am pleased to say that the Government are already doing what he proposes on apprenticeship-sharing, although he would like to go even further. We have introduced apprenticeship training agencies so that small employers who are unable to commit to the full term of an apprenticeship are still able to take part in the apprenticeship programme. ATAs act as the employer and place the apprentices with host small and micro-businesses. This approach of group trading associations and apprenticeship training agencies is something that our party worked on in opposition. I well recall the work with the Minister without Portfolio, my right hon. Friend the Member for South Holland and The Deepings (Mr Hayes), who is now safely ensconced in the Prime Minister’s office. It is good to see these initiatives coming to fruition.
My hon. Friend referred to the growth vouchers programme, which will enable micro and small businesses to take part in a randomised control trial that will test what advice might help these firms to grow. One of the areas on which they can be offered advice is expanding their work force and taking on new employees. We will be watching to see exactly how this works and will bear in mind the further proposals that he has made.
I believe that we are making it easier for people to start and grow a business. We are providing information and advice to help people to take on employees. We will continue to listen to small businesses and to my hon. Friend’s imaginative proposals on help for them. He is absolutely right about the importance of banging the drum for small businesses, and his excellent speech gave us increased enthusiasm for that task. I am very grateful to him.
Question put and agreed to.