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The Minister for Skills and Enterprise (Matthew Hancock)
It is a pleasure to serve under your chairmanship, Mr Betts. I will respond to as many of the points that my hon. Friend the Member for Hexham (Guy Opperman) made in his excellent speech as I can. He is a passionate supporter of not only Hexham, but the whole north-east. He made a strong case in an important debate. One particular reason why it is good news that we are debating the north-east approach to skills and apprenticeships is that the region is blazing the trail and is at the forefront of some of our policy thinking, which I shall come to later.
I thoroughly enjoyed my visits to Newcastle college and Northumberland college earlier this year with my hon. Friend. We were photographed in an empty shell of a building and I very much look forward to seeing the college now the new building is up, running and, I understand, buzzing with learners. That is just as well, because the number of over-19s in further education in the north-east went up by 6% in the last year for which figures are available. There is clearly an increasing demand for education and skills at that level, among not only employers—we heard a lot of stories that corroborate the evidence I have on the demand from employers—but students as well.
My hon. Friend mentioned the need for university technical colleges in the area. We warmly welcome all applications for UTCs. We approve those proposed by the strongest groups in areas where new schools are needed most and those that have rigorous education and recruitment plans. I am sure he agrees that it is important to ensure that new provision is rigorous and responds to the needs of local employers, not least because UTCs provide the opportunity for employers and universities to work together, and therefore drive up the standard of technical education between 14 and 18. We are considering the south Durham UTC application, with others we have recently received, and we have interviewed the applicant group. Applicants will be notified of the outcome in the new year. Lord Nash and the Secretary of State will make the decision in due course.
My hon. Friend also talked about the need to improve standards and quality in the skills system. I strongly endorse that point. Last month’s report by the OECD, comparing skills levels across the whole developed world, was a stark reminder of how much more we need to do. We—England and Northern Ireland—were the only country in which the skill level in maths and English of our 15 to 25-year-olds was no higher than that of our 55 to 65-year-olds. In the long-running debate about whether more exam passes mean better education, that is extremely strong independent evidence that we have to stop that flatlining and start improving our standards, because every other country in the developed world is doing that. That is hugely motivating in the task of driving up standards, especially when youth unemployment is far too high, although thankfully it is now falling. At the same time, there are increasing skills shortages, some of which my hon. Friend mentioned.
We have introduced faster and more robust intervention processes for failing colleges and we driven up the quality of provision through a new and more rigorous Ofsted inspection framework. We are reforming qualifications so that we fund only those that employers sign off. I do not know whether my hon. Friend has managed to read Nigel Whitehead’s report, but its recommendations are sensible and are about driving rigour and responsiveness through the adult qualifications system.
That brings me to the proposal by the north-east LEP. My hon. Friend mentioned that it is one of three LEPs through which we are piloting a new mechanism to ensure that there is local influence over the use of the skills system. He said that he was thrilled that the north-east LEP was chosen for the pilot. I would go further: the north-east LEP invented the idea and brought it to us. We were impressed by it, and two other LEPs came on board to ensure that the mechanism was piloted in more than one area. The north-east LEP is not only a leader on piloting; it is a thought leader on how we can ensure that the skills system is responsive to local need.
My hon. Friend asked for details on how the proposal will work. The proposal is that 5% of funding for all adult provision outside apprenticeships will be allocated if, and only if, the provision is in line with LEP priorities. The LEP will have sign-off. Rather than giving 5% of the funding to the LEP, we have instead said that the LEP will have the final say over what is essentially a quality payment—the final 5% of all adult skills funding outside apprenticeships. That will ensure that the whole provision is targeted at LEPs’ needs. There is good collaboration in the north-east between the LEP and colleges, and the proposal will help to incentivise education providers to look to the strategic needs of business—not only directly but through the LEP—and ensure that the LEP focuses on that. Our job is to ensure that there is enough flexibility in the funding system to allow providers to switch provision according to the needs of local private or public sector employers. That will ensure that the system is filling skills shortages.
In the past, when there have been shortages of training in one area, people have come to the Minister and said, “There is a shortage in this area. Can you fix it?” There is one thing I know for sure, and that is that I do not and cannot know, through a central bureaucracy, the skills needs of every area. It is far better to try to make the system responsive to local need, instead of trying to direct solutions to skills shortages from Whitehall. The proposal is about making it easier for colleges to respond to the needs of employers.
The proposal is also about providing capital for skills provision. Capital funding will follow LEP priorities from 2015-16. Very recently, the Secretary of State for Business, Innovation and Skills announced that we would be financing a further £330 million of skills capital in 2016-17, which provides the long planning horizons that many crave. Those horizons have been too short term in the past.
I pay tribute to the work of all those involved in getting the pilot with the north-east LEP up and running as a policy. It will hit the ground running from September 2014. That policy is part of a broader attempt at making the skills system more responsive to employers. I mentioned that it does not cover apprenticeship funding, which is because we have a broader set of reforms on how apprenticeships are funded to ensure that funding is directly responsive to employers’ needs. We will be working through employers. The taxpayer rightly pays a subsidy towards apprenticeships, because if someone is in an apprenticeship, they are not only doing the job but learning. Apprenticeships benefit the employer, the apprentice and wider society. Recognising that, the taxpayer subsidises apprenticeships. We are changing how they are delivered so that the employer has more of a say over what training happens within an apprenticeship. That will ensure that the training fits the needs of the apprentices and the employer, which will drive up standards.
My hon. Friend quoted the views of a local site manager and talked about spreading the word on the benefits of apprenticeships. As the Minister responsible, I could not agree more. It is just as competitive to secure an apprenticeship at a top employer, such as Rolls-Royce or BT, as it is to get into Oxford or Harvard.
Ian Lavery
Does the Minister, like me, welcome the announcement by Northumberland county council earlier this week that it has an ambition to double the number of apprentices linked to the council? It is looking to employ 360 apprentices directly with the council. Some 23 apprenticeships will be immediately created, adding to the total of 134 already on the council’s books already.
Matthew Hancock
I had not heard that, but at face value that sounds absolutely terrific. We have a goal of making it a norm in this country that every young person who leaves school goes to university or into an apprenticeship. Rather than trying to push them one way or the other, we want to ensure that there are good choices available on either side. Increasingly, employers, whether private or public sector—including Northumberland county council—are introducing an apprenticeship stream in addition to a graduate scheme. The civil service has just brought in an apprenticeship fast stream to match its graduate fast stream. This week, MI5 and MI6 announced that they are introducing an apprenticeship scheme in addition to their more traditional graduate recruitment. That is happening across different businesses and different parts of government. Someone can now become an apprentice spy, which is interesting, although MI5 and MI6 have not yet told me all the details that someone would learn.
We have an ambition, but we will only be able to persuade people that it is the right ambition so long as we continue to drive up the quality of apprenticeships. The very best apprenticeships are world class, but we have to ensure that quality goes up across the board. We have brought in some tough measures to increase quality by ensuring that all apprenticeships last a minimum of a year, that the English and maths requirements are stronger and that there is actually a job. In the past, some apprenticeships happened without a job attached. Those measures have meant that we have had to remove some low-quality provision. In the medium to long term, that is undoubtedly worth it and will ensure that the apprenticeship brand remains strong.
I agree strongly with the point that several hon. Members have made, including my hon. Friend the Member for Stockton South (James Wharton), that apprenticeships need to reflect the whole economy. The old industries in which apprenticeships were strong, such as engineering and manufacturing, are important, but it is also important that apprenticeships cover the whole economy as it is today. They should include professional services and computing, for instance, in a way that they did not in the past.
The north-east LEP is one of our thought leaders, and we listen carefully to its suggestions. I am watching the pilot’s progress closely to see whether it should be spread more broadly. There is no stronger advocate for the passion with which the north-east is coming together to deliver on skills training and ensure that everyone reaches their potential than my hon. Friend the Member for Hexham, although my hon. Friend the Member for Stockton South and all the other hon. Members who have spoken in this debate are strong advocates, too.