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Richard Graham (Gloucester) (Con)
It is a pleasure to be here under your chairmanship for the first time, Mr Davies.
I am delighted that my hon. Friend the Minister has been able to find time at short notice to join us for this debate on a subject that lies at the heart of two of the greatest challenges for the coalition Government: first, how to increase growth in our economy and, secondly, how to reduce unemployment and, in particular, youth unemployment. Today’s debate on the take-up of apprenticeships by small businesses is therefore critical. During the next few minutes, I will lay out the structure of the debate in which I hope that as many hon. Members as are here today—there are many—will participate.
First, I intend to touch on the present Government’s approach to apprenticeships in general. Secondly, I will consider how successful that has been overall in the first year of the new coalition Government. Thirdly, I will examine the relative take-up of apprenticeships by large, medium-sized and small businesses. I hope that in today’s debate we will all focus to a large extent on businesses that are often described as micro-businesses—those employing 12 people or fewer. Of course, it is relevant that all of us in Parliament are in effect small businesses ourselves, employing typically between three and five people. I will come on to that aspect of the issue towards the end of my speech. Thereafter, I want to consider the obstacles to small businesses in taking up apprenticeships, how we might overcome them, what the challenges to overcoming them will be and what aspects of Government policy would help the process. Finally, I will bring all that together in specific recommendations.
The first question is the present Government’s approach to apprenticeships. The Government’s announcement immediately after the election last year that they would provide 50,000 additional apprenticeships, followed up later by a further 75,000, making a total of 150,000 new apprenticeships, was warmly welcomed by all of us who want to see business growth. That announcement sent a powerful message, especially to our manufacturing sectors, that this Government are determined not only to talk about rebalancing the economy, but to deliver by doing something practical to help that to come about.
Of course, apprenticeships today are not only about manufacturing. They are not the cliché of, on the one hand, hairdressing for women and, on the other hand, blokes in dirty overalls. They are about a much wider selection of opportunities. One of the things that I hope will come out of today’s debate is the breadth of opportunity—the breadth of training providers and sectors that offer apprenticeships. All my hon. Friends are seeing that in their own constituencies and of course have the possibility of taking on apprentices themselves.
There was a firm commitment right at the beginning of this Government to providing significant funding —hundreds of millions of pounds—for additional apprenticeships. That has been widened further. There have been significant efforts, led by the Minister, who has been a champion of vocational employment—[Hon. Members: “Hear, hear!”] That has been warmly welcomed, as you can tell by the response from everyone here, Mr Davies.
Let me run through some of the detailed figures. Nationally, there are many more apprenticeships now than there were in previous years. Locally, as far as Gloucestershire and my own constituency of Gloucester are concerned, we have seen a significant take-up of apprenticeships; there were about 30% more apprenticeships in 2010 than there were in 2008. The general picture is therefore very encouraging. Of course, that is complemented by Government programmes to create, for example, 100,000 work experience placements and additional commitments to help 10,000 vulnerable young people, which I am sure all of us welcome.
Julian Smith (Skipton and Ripon) (Con)
I pay tribute to my hon. Friend for securing the debate. Does he agree that in addition to the number of apprenticeships increasing, the type of apprenticeships available has shifted under the present Government? The previous Government left thousands and thousands of people in the classroom; the present Government are committed to the provision of work-based apprenticeships. Does my hon. Friend agree that that is much better for young and older people who are undertaking an apprenticeship?
Richard Graham
My hon. Friend is absolutely right in what he says, although at some point in the debate we should touch on the removal from employers offering apprenticeships of the freedom to have the training element provided in the workplace. The new rules require 30% of the time to be spent away from the workplace, which for some employers is not necessarily practical. My hon. Friend and others may wish to comment on that as the debate continues.
The National Apprenticeship Service has provided the key facts. There are now more than 85,000 employers nationally offering apprenticeships in more than 130,000 locations, with almost 200 frameworks. That is highly encouraging. The statistics about employers who take on apprentices finding that it is a worthwhile thing to do are even more encouraging, with 80% agreeing that apprentices make their workplace more productive, which of course is ultimately the test in terms of the business growth element of the equation. Some 83% of employers who employ apprentices rely on those apprenticeship programmes to provide the skilled workers whom they need for the future.
The question for this debate is whether the take-up of apprenticeships by small businesses is quite so encouraging. I do not have the range of national statistics to argue the case as strongly as I would like to today, but I am sure that the Minister will share with us some of the Department’s research. I know that the Federation of Small Businesses has estimated that take-up by small businesses is only 8%. Anecdotally, in my own constituency and my own county, it is true that it is much harder to persuade a small business with fewer than 12 employees to take on an apprentice than it is to persuade, say, a company with 100 employees.
James Morris (Halesowen and Rowley Regis) (Con)
My hon. Friend is making a very important point. One of the things that I have been trying to do in Halesowen in my constituency is to work with the further education college to develop specific engagement programmes for small business to overcome the barrier that my hon. Friend has correctly identified. I still see a very important role for FE colleges in reaching out to the small business community in local areas.
Richard Graham
Yes. My hon. Friend is absolutely right to say that FE colleges have a critical role to play, as do some of the smaller, specialist training providers. A question for us all to consider—I am sure that my hon. Friend has done this in his own constituency—is the extent to which courses offered by further education colleges can be effectively tailored to the requirements of small businesses. Quite often, some of the courses—this is where the questions of the framework structure and the sector skills bodies come in—are fairly specific and technical, and small businesses often require an apprentice to take elements of a business administration course, elements of a marketing course and elements of other courses. So there is a question about whether there is an adequate structure of training to cater for small businesses, but I absolutely agree with my hon. Friend that further education colleges have a crucial role to play.
Moving away from apprenticeships in general and their take-up nationally, and coming on to the small businesses sector specifically, I believe that there are just less than 5 million small businesses in the UK, of which more than 3.5 million have sole proprietors. An astonishing statistic is that 97% of UK companies employ fewer than 20 people, and 95% of them employ fewer than five people. That shows us that one of the key drivers in all our constituency economies is the extent to which small companies that employ fewer than five people feel able to take on an additional person.
Justin Tomlinson (North Swindon) (Con)
As a former small business owner myself, I recognise the challenges. For nine years, I wanted to get an apprentice, but I did not understand how to do so. The Government can play a proactive role in providing information to explain just how easy it is to recruit an apprentice. My suggestion, which I have raised on a number of occasions, is doing it through the annual business rates bill. All the information can be provided at a relatively low cost.
Richard Graham
That is an interesting suggestion, and one that I am sure the Minister will want to respond to in due course. The idea of using the annual business rates bill as an opportunity to explain how simple it is to take on apprenticeships would, I think, be widely appreciated. My hon. Friend the Member for North Swindon (Justin Tomlinson) is right, and I was just about to come on to the question of education and information. There is undoubtedly a gap that needs to be filled.
Esther McVey (Wirral West) (Con)
I want to add some personal knowledge as someone who has had an apprentice since last October and as the owner of a small business. It is the cost that concerns small businesses. What can the Government do to incentivise them to take on apprentices? We need to look at the cost to employ one and the payroll costs.
Richard Graham
My hon. Friend is absolutely right to raise those points. The incentives—the carrots—to encourage more small businesses are a crucial part of the argument, which I will come on to. May I take the opportunity to congratulate her? She has helped a number of us to take on our own apprentices, demonstrating the local and national leadership that she is renowned for in her constituency.
Richard Graham
I will give way in a moment, if I may. It is interesting that so many hon. Members from the coalition side of the House are here today. They are firmly focused on the importance of apprenticeships, are leading by example and have their own experience as small business men and women. It is disappointing to see the complete absence of any representation from the Opposition, apart from the shadow Minister, the hon. Member for Blackpool South (Mr Marsden).
Chris White
I recently met the Warwick and Leamington branch of the Federation of Small Businesses. Skills were an important issue that was touched on, but the issue that caused most concern was the lack of information. Although I am sure that my hon. Friend agrees that it would be good to have extra funding, the Government can do more to promote the apprenticeship training agencies, as proposed by the FSB, so that businesses can be more aware of the help that they could receive and the benefits for both themselves and the community at large.
Richard Graham
My hon. Friend is absolutely right. The situation in his part of Warwickshire is not dissimilar to that in my own neighbouring county of Gloucestershire. The small businesses in the world of the bear and ragged staff have similar issues, which we will certainly come on to.
Mr Hayes
I would not normally interrupt my hon. Friend’s peroration, but he made a comment about the number of colleagues across the House who are taking on apprentices. Does he agree that it may be appropriate to hold some kind of reception when we feel that we have reached a critical number, so that we can celebrate that, use it as a way of advertising the apprenticeship brand and send out a message that we are leading, as he has described, by example?
Richard Graham
I am grateful for the Minister’s remarks. He has brilliantly anticipated the climax of my speech, which was to come a few minutes down the line. The part of my speech that he may not necessarily have anticipated, or will necessarily appreciate, is about the funding of the great celebration that I have in mind, which he has so kindly already agreed to host. He is quite right to mention our own involvement in apprenticeships. I will come round to that, because a number of hon. Members present will want to make their own points and contribute with their own work in the field.
Returning to the question of small businesses and their contribution to both our local economies and collectively the national economy, I mentioned earlier small businesses that employ fewer than five people and their contribution to the UK economy. Small and medium-sized enterprises account for, astonishingly, almost 99% of all enterprises and almost half the country’s private sector turnover. Therefore, the essential argument that I want to start with today is that we cannot underestimate the extent to which small businesses will be the drivers of growth—or of stagnation, should the economy falter, which we all fervently hope it will not, and believe it will not. The question that we have to debate is how we can stimulate, encourage and exhort small businesses to think that taking on an apprentice is the right way forward.
Richard Graham
I will give way with pleasure to my hon. Friend the Member for Cambridge (Dr Huppert), now with his royal duke.
Dr Huppert
I am afraid that the duke is not able to be here for various reasons. Does my hon. Friend agree that small companies now, particularly within the rapid growth sectors, such as many of the high-tech industries in my constituency, are the bigger companies of the future? Is he aware that many small companies in my constituency, which receive support from the excellent Cambridge Regional college, say that their biggest problem is not about finding excellent scientists and people to work at that level, but about finding technicians who can do things? Is he also aware that a good apprenticeship scheme at a high level is exactly what small businesses need to grow and become the large companies of the future?
Richard Graham
My hon. Friend is, as so often, exactly on the money with his observations about small businesses. It is quite true—the cliché of acorns growing into oak trees is exactly what businesses are all about. He and I, and others here today, can give strong examples of businesses that started with virtually nothing and no one and have grown into great economic successes for our country. To use one illustration from my constituency, we have a successful hairdressing business that has now expanded into other constituencies in Gloucestershire, and which I believe is advancing on Worcestershire as well. Blushes is now a company with a multi-million pound turnover and multiple sites, and it is driven by the recruitment and mentoring of successful apprentices. Small businesses are undoubtedly, as I am sure all hon. Members present will agree, the foundations of tomorrow’s businesses. The purpose of taking on apprentices for small businesses is precisely to help businesses achieve growth.
Dr Huppert
My hon. Friend’s acorn-to-oak-tree analogy was so good that I should highlight that one of the companies that I was thinking of was Acorn, which was a company set up in Cambridge. It grew not into an oak tree, but into ARM, which is a massive designer of computer chips. There are now more ARM chips in the world than human arms, and it is a huge success, growing from a small, garage-type company into a FTSE 100 company that is transforming the world.
Richard Graham
There can be no better illustration of the acorn-to-oak analogy than the one given by my hon. Friend. We all agree that small businesses are the future, that large businesses dominate the opportunity for growth in the private sector and that that is an area on which we should therefore all focus.
The Federation of Small Businesses data show that only 8% of small businesses have taken on an apprentice in the past year, and that is an area on which we need to focus.
Mark Pawsey (Rugby) (Con)
Like my hon. Friend the Member for North Swindon (Justin Tomlinson), I ran a small business for 25 years. At no stage during that time did it even cross my mind to take on an apprentice; we just had this notion of bureaucracy and cost. The critical thing is to get the message out to the 92% of businesses that have not taken on an apprentice and to pass on the information from the 8% that have done so successfully. That is the Government’s biggest challenge. Those businesses that have taken on an apprentice recognise the great value of doing so.
Richard Graham
My hon. Friend is absolutely right. He, too, has brilliantly anticipated some of the themes that I want to bring up. He is right to focus on two key elements, one of which is administration and the second of which is cost, which also brings in the crucial factor of value. Let us delve deeper into the question of bureaucracy or administration. There are perceptions out there that taking on an apprentice is a time-consuming business; those of us who have done so know that it is not.
Stephen Lloyd (Eastbourne) (LD)
I commend my hon. Friend for his tremendous generosity in giving way so often. It shows the passion and support that there is in the Chamber for this debate. I also congratulate him on calling the debate.
Before I ask my question, I thought that I would give my hon. Friend some good news. Many of us are making a real difference in the area of apprenticeships within our own constituencies. Two weeks ago, with the support of the NAS, I launched an Eastbourne initiative to recruit 100 apprenticeships in 100 days. That was 17 days ago. I got a call yesterday from the training providers to say that we have hit 103. I am now going back to Eastbourne to say that I want 200 apprentices in 100 days. That demonstrates the real hunger that is out there for apprentices from both small and large businesses.
My hon. Friend used to be a colleague of mine on the Work and Pensions Committee until he was promoted to grander things. He will know that the Work programme, which was launched by the Department for Work and Pensions, is an enormous, costly and laudable effort to help people into work, but it appears somewhat disconnected from the Department for Business, Innovation and Skills, which runs the excellent apprenticeship programme. Does my hon. Friend agree that it would make sense for both programmes to link up, so that we can improve job opportunities for everyone?
Philip Davies (in the Chair)
Order. May I advise Members that interventions should be brief?
Richard Graham
I am grateful for your remarks, Mr Davies, not least because my capacity to absorb all the points at such rapid fire is limited. My hon. Friend has rightly congratulated his local paper in Eastbourne for promoting the “100 apprentices in 100 days” campaign, which was first started in my own constituency by Gloucestershire Media. The citizen who originally launched the scheme in 2010 is now involved in a second one, which is similar to the one that my hon. Friend mentioned. The third scheme, which is not time-capped, involves 100 apprentices being taken on by companies that have never taken on apprentices before. Other Members, including my hon. Friend the Member for Worcester (Mr Walker), who have had similar successes may wish to comment on other such schemes.
Mr Robin Walker (Worcester) (Con)
I congratulate Worcester News on its “100 apprentices in 100 days” campaign and volunteer to sign up one of the apprentices, because all hon. Members should play a role in supporting such positive campaigns. Does my hon. Friend believe that the media has an important role in promoting the breadth of apprentices, and does he think that we should urge other hon. Members to use the media in promoting the jobs that are available for apprenticeships?
Richard Graham
My hon. Friend and near neighbour is absolutely right to congratulate the media in Worcester for taking forward the scheme. I congratulate him on making his commitment to take on an apprentice himself. When I outline the target that I have set for Members of Parliament, the Minister should note that we may be able to achieve it in fewer than 100 days, but I will deal with that towards the end of my speech.
My hon. Friend is right to say that the media has an important role to play. I should also stress that local radio can be extremely helpful, too. About six months ago, I held the Gloucestershire apprenticeships fair, jointly with the NAS, which is admirably represented in Gloucestershire by my friend Gina Johnson whom I was hoping to see here today. We had terrific support from Gloucestershire Media, which is something that could be replicated in Worcester, Eastbourne and elsewhere, and from Radio Gloucestershire. I strongly recommend my colleagues in the House to organise an annual apprenticeship fair; the national apprenticeship week is in February, which would be quite a good time to do so if they want to tie it in with national themes.
My hon. Friend the Member for Eastbourne also mentioned the co-operation between DWP and BIS. That is an inter-departmental question on which I will leave the Minister to comment in due course.
Julian Smith
Inter-departmental issues are coming up in the Government’s review of employment law at the moment. May I ask my hon. Friend to urge the Minister to ensure that all Departments focus on how we can create jobs and take on people, whether through apprenticeships or full-time employment?
Richard Graham
I am grateful for that intervention, and I am sure that the Minister will have noted that point and will come back on it in due course.
Developing the themes of our debate today, we now have to consider the obstacles that small businesses face in taking on apprentices. I have touched on the two key areas of bureaucracy and cost. On bureaucracy, the challenge for those of us who want to promote apprenticeships is that there are so many different ways of taking on apprentices. For example, it is generally the case that the training costs for 16 to 18-year-olds are entirely funded by the Government and those for 19 to 24-year-olds are half-funded by the Government. Members will find in their own constituencies that we have training providers who will provide certain training courses for 19 to 24-year-olds entirely free of charge. On the one hand, that gives the 19 to 24-year-olds a competitive advantage, and on the other, it offers to small businesses the opportunity to take on a slightly more experienced individual at a lower cost than might be the case normally.
Jim Shannon (Strangford) (DUP)
The hon. Gentleman mentioned two schemes—I think that one of them was for 16 to 24-year-olds and that the other was for 24 to 27-year-olds—but some people lose their jobs and have to retrain. Does he not think that opportunities should be given to those who want to diversify into other jobs? Should they not be given apprenticeships as well, even if they are past those ages?
Richard Graham
The hon. Gentleman raises an interesting point about the ways in which we can get people back into work. The Work programme is starting this week. I am sure that he is already in touch with both the contractors and sub-contractors in his own constituency. Working closely with those who are rolling out the Work programme offers the best chances of getting older people back into the workplace. What we are really talking about today is apprenticeships that are focused specifically on the 16-to-24 age group. I acknowledge the hon. Gentleman’s general point, but I think that it ranges wider than today’s debate, although the Minister might want to comment on that.
I will return to the obstacles for small businesses and quote from the NAS in Gloucestershire, which works with hundreds of SMEs on a daily basis. We know that the definition of an SME can include businesses that, on a constituency basis, are really quite large. Companies employing 250 employees are big employers as far as I am concerned, but they are categorised as SMEs. One of the challenges for the NAS, which is resourced by one representative per county, is to engage with the small businesses that we are discussing today, which would technically be called micro-businesses. I do not use the term “micro” because I do not think that companies enjoy being called “micro”—they do not relate to that word. We are talking today predominantly about companies with fewer than 12 employees.
The NAS in Gloucestershire has spoken to more than 15,000 small businesses in the past five months. That is an astonishing achievement, and I pay tribute to its hard work in spreading its tentacles so widely among small businesses in our county. Its experience has shown that it has been able to spread the word about apprenticeships and their role.
As hon. Members have said, the role of the media and further education colleges has also been critical in spreading the word, but it can be very difficult to reach businesses of the size that we are discussing today. Many people
“simply don’t have the time to come out of their businesses”
to attend events. Such companies—often one man, one woman or a family working together—do not have the sort of people who typically sit on the committees of their local Federation of Small Businesses. We are fortunate if we can persuade them to come to an event, a lunch or a supper to discuss topical issues.
There are some breakfast clubs for very small businesses—I have certainly been to them, as have other hon. Members. They are quite good at doing business-to-business with each other, but the process of filling in forms, searching on websites, discussing with training providers and working out whether to go to the further education college or a more specialist training provider is quite time-consuming for people who are dealing with customers minute by minute in their shops.
To try to ensure that very small businesses get the opportunities to incorporate apprenticeships into their companies, the Department and the NAS are therefore supporting projects among group training associations and apprenticeship training agencies. In response to a letter that I wrote him, the Minister highlighted that
“recently, Group Training Association and Apprenticeship Training Agency models have been proving successful in making it easier for small business to take on apprentices.”
I hope that the Minister will share some examples of those successes with us, whether they are geographical or sectoral, and share with us how we can help him to promote GTA and ATA models in our own constituencies, as a way of helping small businesses to overcome the apparent obstacle of administration.
It is true, for example, that the South West Apprenticeship Company in my own constituency is able to provide the legal ownership of apprentices taken on by small businesses should there be future employment law concerns with an apprentice who has not worked out. Many of us will know that the business of finding the right apprentice is the single most important thing and often a very hard thing for a small company to do. As far as employment law is concerned, ownership of the apprenticeship is with the training provider, which can be enormously helpful to small businesses.
The next stage covers what sort of carrots might be offered to very small businesses as part of the incentive to take on an apprentice. I start from the presumption that if we were all able to persuade half the small companies in our constituencies to take on one apprentice each, we would have solved the youth unemployment problem in this country by that step alone. The opportunity, if we were able to seize it, would be enormous. The goal would be considerable, so how can we get closer to achieving it? We could consider two or three things, the first of which is to provide a financial incentive. In March 2010, there was an apprenticeship grant for employer scheme—AGE—which gave a straightforward cash amount of £2,500 to employers taking on their first apprentice. As a result of that incentive, which was offered for a limited period of three months, 5,000 unemployed 16 to 17-year-olds were taken on during that time.
It is right to ask ourselves whether that incentive was entirely motivated by a long-term solution for youth unemployment or by a short-term concern to keep teenagers off the unemployment statistics in the run-up to a general election. It is also right to ask whether cash incentives for taking on a first apprentice, without necessarily a time commitment on how long that apprentice will work, will always generate good long-term results, or whether that is a very short-term way to enhance small business profitability without necessarily leading on to career opportunities for 16 to 17-year-olds, but it is something on which perhaps the Minister might comment today.
A slightly different thought offered to me by the chairman of the FSB in Gloucester was to look at ways to subsidise apprentices over a three-year period. For example, when a company takes on an apprentice for the first time, a percentage of the amount paid by the employer could be reimbursed by the Government at the end of the first year. A smaller amount would be reimbursed in the second year, and in the third year all the cost would be absorbed by the company. That is a slightly different and more interesting model to look at, were the Government able to offer financial compensation for some of the employment costs of taking on new apprentices for small businesses.
Other ways to help small businesses to take on apprentices could be considered. One of them could be to rationalise the training costs for 18 to 24-year-olds as well as 16 to 18-year-olds. The Government have previously differentiated between the two age groups on the basis that getting people started is the most important thing and that, by the time people are 19 to 24, they should have more experience and more maturity to offer employers. But we know that that is not always the case. Some 19-year-olds and older people might still need considerable investment of time and effort by very small businesses to bring them to a stage where they can contribute to the growth of that company. The cost of that investment in time is as important to the smallest companies as the financial cost of paying apprentices for however many hours a week they are employed.
Esther McVey
I totally agree. If there is one thing that small companies have told me about the hurdles to taking on apprentices and about why they want incentivising to do so, it is that the hidden cost of spending time with a person, bringing them on, encouraging them and making them work-ready cannot be underestimated.
Richard Graham
I am grateful to my hon. Friend for making that point. She has direct experience of these things, as do so many Members here today. It is absolutely true that the smallest companies’ greatest fear on the administrative or bureaucratic side relates not necessarily to the paperwork involved in filling in an application form or designing an advert, but to the fact that a huge amount of time and effort may be required, hour by hour and day by day, to manage the apprentice. The worry is that the investment that will need to be made over a year or two before the apprentice can make a significant contribution to the business may not be rewarded at the end of that time because the apprentice might leave, might be recruited by somebody else or might not be able to deliver the return that the small business is looking for on its investment.
I want now to raise a few of the points that the FSB has raised with me, which it believes are relevant to the promotion of apprenticeships in the smallest businesses. On the promotion of ATAs to help small business, one advantage of such agencies is that they would employ the apprentice in the same way that the training company I mentioned in my constituency does. The ATA would deal with issues such as employer compulsory liability insurance, and help of that kind with modern administrative requirements would be useful.
On skill recognition, GTAs could provide an effective route for solving the problem I raised in answer to the point about tailoring the training of apprentices to companies’ requirements. GTAs might well be able to help design new training programmes for specific companies to meet their requirements. Component manufacturers in the engineering sector, for example, which are an important employer in my constituency, may have more concerns and requirements regarding training than we realise. There might be small businesses out there that need something like a GTA to help them design the appropriate training course.
Perhaps I can bring that point alive with an anecdote. In my constituency, we have two makers of high-quality shirts; in fact, when I made my maiden speech in the House last year, I was delighted to be wearing a shirt made in Gloucester. Their shirts are made from high-quality English cotton and sometimes cotton from abroad. They are made in England, but one of the firms is increasingly taking on workers from Poland, where there is a high-quality sewing qualification. People arriving here with that qualification can immediately be put on the factory floor to contribute to the making of high-quality English shirts. It appears that this country does not yet have a similar qualification, which could easily provide the basis for a new form of apprenticeship with shirt manufacturers in my constituency and elsewhere.
I have also touched base with the British Chambers of Commerce, and it is important to recognise its remarks on the take-up of apprentices among small businesses. It believes that there is a case for better marketing to businesses of the resources that are available to them and of the benefits of apprenticeships. If we follow the suggestion of my hon. Friend the Member for North Swindon (Justin Tomlinson), such issues could be covered in what would, effectively, be a marketing flyer. Indeed, it could be designed by the company that he used to run in Swindon. That could be done at very low cost—possibly even pro bono—and the Department could distribute the details with information on business rates.
The British Chambers of Commerce also wants to place greater emphasis on the relevant agency sifting through candidates to find the right ones, rather than simply box-ticking. It says that small businesses have
“a greater fear than larger companies of the wrong candidate”.
From my own experience, I know that finding the right candidate and spending time taking them through an induction programme before offering them a job, which is difficult for a small business, will be increasingly relevant.
Two weeks ago, I presented certificates to people on an apprenticeship course in a large distribution company in my constituency. I asked the gentleman in charge of recruiting apprentices how he did it. He explained that he took all the people who applied, and who had not been ruled out because of a criminal background, on a one-day induction course in his warehousing company. He made a point of having an escorted walk through the company, which was led by a manager who explained the business as the group went through the various parts of the company. A lot of candidates were ruled out early on because they simply were not paying attention or contributing. When the group sat down later for a PowerPoint presentation on the business and what it was trying to achieve, some of those at the back of the room were texting on their mobiles or BlackBerries—something, Mr Davies, I am sure would never happen in this Chamber. In effect, there was a series of soft hurdles, which, by the end of the day, had reduced the number of candidates from about 40 to 15.
The vast majority of our teenagers do not realise how important such things are and what an impact they will have on their job opportunities. There is therefore a duty on us all as constituency MPs, and possibly on the National Apprenticeship Service, to ask employers to lay out in schools, before teenagers leave after their GCSEs or A-levels, exactly what is involved in getting a job, because it is not just about writing a CV. The NAS and the Department for Education could do something on that. The Minister wears the hats of two Departments, and he might want to comment on the way in which the Department for Education could co-operate more with employers to promote apprenticeships for businesses and, indeed, for small businesses that decide to take them up, so that school leavers really understand the challenges ahead.
Mr Hayes
Given the interest in the subject, it might be helpful if I dealt with that point now. Yesterday, in the Select Committee on Education, I was able to advertise the fact that, given my responsibilities in the Department for Education, I want to work with Lord Hill and others to encourage much greater engagement between the world of work and the world of learning by bringing employers into schools and letting people know about the employment opportunities available to them. My hon. Friend can rest assured that we are on the case.
Richard Graham
I am grateful to the Minister; it is extremely helpful to be aware of that. He will have heard me say before—others may wish to comment on this in due course—that I ask every apprentice I meet in my constituency how much help they got from their schools in winning their apprenticeship, and nine and a half times out of 10, the answer is nil, so we have a long way to go on that front.
Let me bring together some of the threads in the debate. We have covered the Government’s welcome commitment to see a vastly increased number of apprenticeships, and the Minister will confirm the figure of 150,000 additional apprenticeships, with 450,000 overall during the lifetime of this Government. We also touched briefly on the greater take-up of apprentices, particularly by large and medium-sized companies across the land in a variety of sectors, and the welcome pick-up in manufacturing, which has certainly driven forward the number of apprenticeships, for example in the crucial engineering sector. I am delighted that the Gloucestershire Training Group, a specialist engineering organisation in my constituency, is now overbooked with new apprentices for next year. I am working with the group to try to achieve new and larger premises to cater for that demand.
We also covered the take-up of apprentices by small businesses. Both the statistical and anecdotal evidence is that it is a great challenge for this, or indeed any, Government. We have looked at some of the factors that could encourage and incentivise the smallest businesses to take on apprentices: administrative and bureaucratic questions, cash incentives, and cost reductions, possibly through wider training funding for older apprentices. We touched briefly on the role of GTAs and ATAs, and I am sure that the Minister will want to say more about that. We have looked at the role of local media and at the feelings of the FSB, the BCC and some Members’ constituents.
The last part of my speech is about what we as MPs can do. I talked about how we can be champions of apprenticeships, both in general and more specifically for smaller businesses. I mentioned the role of apprenticeship fairs and having a specific sectoral focus. I have organised a job fair, which will have a large apprenticeships element, for the black and minority ethnic community in Gloucester in 10 days’ time, and there will be something similar for those with disabilities in due course. There is a large amount we can do, but there is also one specific thing. There are 650 of us in Parliament, and if we each took on an apprentice, that would be 650 additional apprenticeships. Some of my hon. Friends here today have already done so or, like my hon. Friend the Member for Worcester (Mr Walker), are committed to doing so.
If 100 MPs took on apprentices, it should be celebrated in Parliament with a reception, perhaps generously funded by BIS, with a welcoming speech to all the apprentices by the Minister who champions their cause so doughtily in Parliament and elsewhere. That would send a message across the land that we are not only talking the talk, but walking the walk in finding our own apprentices and, as small business people with fewer than 12 employees, promoting apprenticeships. That is an exhortation to my colleagues, but it is also an advance call on the Minister’s funding, to which I hope he will respond warmly.
I hope that today we send a message around the country that the Government are committed not only to increasing the number of apprenticeships, important though that is, and to highlighting their value in driving forward the future growth prospects for our businesses, vital though that is, but also to stimulating the smallest businesses in the land each to take on an apprentice, because that will both help their growth and serve their community by helping to reduce youth unemployment.
Gordon Birtwistle (Burnley) (LD)
I congratulate my hon. Friend the Member for Gloucester (Richard Graham) on securing this important debate for Westminster Hall today. He has covered most of what I was going to say, but I would like to make a few comments about my experience in the manufacturing industry and with apprenticeships.
When I was 15 years old, with no O-levels and without even passing the 11-plus, I left secondary school to become an apprentice craft engineer. I studied at night school for three nights a week until I was 25, and finished up with two higher national certificates. Those are the type of jobs that we need now. We have stacks of young people leaving university with higher qualifications but in engineering we do not have the people coming through to make the products that the academics and the people from university design.
Justin Tomlinson
I commend my hon. Friend for making that point, because the statistics show that those from apprenticeship schemes have a much better chance of securing full-time permanent employment than graduates.
Gordon Birtwistle
My hon. Friend is correct. Anyone who has a skill in running, programming and setting computer-controlled machinery will never be out of work. In fact, in Lancashire, there is a big demand for such people, and some companies are paying golden hellos to steal operators from other companies.
In Burnley, on 20 June we are having a manufacturing summit at the brand new £100 million college, which is linked to a university that is also involved in advanced manufacturing—that is a small advert for what we hope to do. I am pleased to say that the Secretary of State for Business, Innovation and Skills will be there, as will the managing director of Boeing UK, the chairman of AgustaWestland and many other big manufacturers, along with smaller manufacturers from north-east Lancashire. The event is about getting big and small manufacturers to come along to listen to the Secretary of State, but we have also asked local schools to give presentations and to bring students to listen to people in the industry, with a view to taking up apprenticeships.
At Business, Innovation and Skills questions this morning I asked about careers. It is vital that we instil in young people long before they reach 15 or 16 what the prospects in the work force are. Careers officers talking to young people at 12, 13 or 14 is important, because once they get to 15 and 16 it is too late for them to change their mind about becoming a doctor, vet, solicitor or barrister. They cannot have some careers because they do not have the qualifications, and cannot move into the subjects that might interest them in becoming apprentice engineers or entering manufacturing.
Burnley is one of the best places in the country for job vacancies. I spoke to the regional director of Jobcentre Plus, who told me that Burnley is one of the country’s brighter lights because vacancies have gone up by more than 30% since this time last year. That is a great result, but the vast majority of vacancies are for skilled manual workers, and the big problem is that we do not have a pool of out-of-work skilled manual workers. My son, who owns an engineering company, tells me that if a skilled worker is out of work now, he is no good and he will not be taken on. That is the situation, so we need people to replace those who are retiring. It is critical that apprentices come through to do the craft jobs, and work on machines for the products that go into advanced manufactured items such as jet engines and components for the nuclear and oil industries, where we are world leaders and sell across the world.
Mr Marcus Jones (Nuneaton) (Con)
It is a matter of concern, particularly when I visit manufacturing businesses in my constituency, that the employees have an average age between 45 and 60. Is that not a worry?
Gordon Birtwistle
I agree. That was to be my next point. A company in Burnley called Aircelle makes thrust reversers for the Trent jet engine. Three years ago the company employed 350 people; it now employs 800 people and has work for 15 years. Aircelle has been offered work from Boeing and other aircraft manufacturers, but has to turn it away because it does not have the skills.
I used to work for the company when it was called Lucas Aerospace, which was a long, long while ago. I walked around the place, and I said to the managing director, “I look at some of the people here and I remember them working here when I did, and I’ve been retired for three years. Some of these guys must be coming up for retirement.” He replied, “The age profile is a big concern because more than 80% of the work force is 40-plus.”
Another big problem for the company is that young people coming into the industry want to be designers and technicians, working on computers on the other side, and the guys who put the aircraft engine parts together are in short supply. It is a problem getting skilled fitters and process workers to come and do the job. The company is now a world leader in composites, but it is very difficult to get people to come and work on composite design and manufacture. Fortunately, it is using a lot of young ladies to do that now; because of the dexterity of their fingers, they are able to mould things in carbon fibre. I agree entirely that this is an issue that the Government must pick up. We must ensure not only that we train people to do the real top jobs but that we train young people to come in and do the jobs that involve physically making things.
As I said, at Burnley college we are having a manufacturing summit on 20 June. The council there has worked with the college. We spent £100,000 from the working neighbourhoods fund, and three years ago the college put in a further £100,000 to buy three Mazak advanced machine tools. The hon. Member for Worcester (Mr Walker) will know of Mazak because the company is based in his constituency. The college ran an engineering course but could not get anyone to go on it, but as soon as we put in the Mazak machine tools the course was overwhelmed, because young people see that they can work in an office and a workshop and design a product, go on a computer and feed the design into the machine, and then make the product on the new CNC—computer numerical control—machine. They can see that it is a great job for the future. The days of what I call the garage on “Coronation Street” with engineers in blue overalls with oily rags in their pockets have long gone.
Gordon Birtwistle
Are they? They are very fortunate to be on three days. In some of the big companies that make advanced products, food could be eaten off the floor because it is so clean, and young people see that.
An apprentice is an investment. Companies think nothing of spending thousands of pounds on a machine but will then worry about spending a few thousand on training someone to run it. It is important that companies think of apprentices as an investment for the future, because without them they will not have any staff for the future to make their product of the future, and the profits of the future will disappear.
The Government need to carry on with what they are doing. Like my hon. Friend the Member for Gloucester, I am extremely disappointed that we have not seen anyone from the Opposition here today. That is a big disappointment because this is a big issue. They often go on about it in the House, yet when we have a debate like this they cannot be bothered to turn up. Having said that, I hope that the coalition Government will get on with it and complete the course.
Mr Marcus Jones (Nuneaton) (Con)
Thank you, Mr Davies, for allowing me to make what I hope will be a short but important contribution.
I congratulate my hon. Friend the Member for Gloucester (Richard Graham) on securing this extremely important debate. He has made a positive, well-thought-out and comprehensive contribution, which goes to show just how much he cares—as, it seems, do a number of Government Members—about this extremely important subject.
I also want to take this opportunity—I do not often do this in my contributions to debates—to congratulate the Government, and particularly the Minister, on grasping the nettle and backing apprenticeships in this country. It will be an absolute honour to welcome him next week to the excellent North Warwickshire and Hinckley college in Nuneaton, where I am sure he will promote apprenticeships with the same vigour and enthusiasm with which he promotes them in the House. I am proud of that.
I am proud to support apprenticeships, because it is apparent that they are extremely important. Some 80% of people who employ apprentices say that the workplace is a more productive place as a consequence, and 81% of consumers favour using a company that employs apprentices. People of all ages understand the concept of an apprenticeship and, importantly, it is an excellent vehicle for getting young people into a proper career.
Bearing in mind the importance of tackling the huge problem of youth unemployment in our country at the moment, I will focus my comments on younger people. It is a real pity that that problem was not properly recognised by the previous Government, who presided over a huge increase in youth unemployment and a huge increase in the influx of foreign labour, which filled the skills void that we had when the economy was in better shape, leaving thousands of our young people on the scrap heap. I commend the shadow Minister for his attendance here today, but it is a damning indictment of the lack of seriousness and enthusiasm on the part of Opposition Members that none of them, apart from him, is here today.
While extolling the virtues of apprenticeships we must also acknowledge that not all is totally well in the proverbial rose garden. A large rump of employers in our country consider apprenticeships inappropriate for their organisations. I have been looking into that and, according to the Chartered Institute of Personnel and Development, 68% of companies say that that is the case. In some instances, those companies may be correct, and there are a number of situations in which it is wholly inappropriate for businesses to employ apprentices. However, I suspect that in many others instances that is not the case, and that there are many situations in which apprentices could be taken on. Employers and business people view most things on the basis of risk, and they take a view looking at the particular risks of taking on younger people and at the barriers to employing apprentices and to developing their talent.
I want to highlight two issues in relation to risk. First, employers see a risk in taking on a young person who is untried and untested in the workplace. As Members of this House, we need to acknowledge that although many young people take to the working environment like a duck to water, many do not, as my hon. Friend the Member for Gloucester has mentioned.
James Morris
My hon. Friend is making a series of powerful points. On young people not being ready to take up apprenticeships in small businesses, it is important that we consider the potential role of the voluntary sector. For example, the YMCA and other organisations enable young people to develop skills before they take up apprenticeships, which is an important part of the mix.
Mr Jones
As usual, my hon. Friend has made a pertinent comment, which brings me on to my next point. Useful work experience can be obtained in voluntary organisations. Similarly, I am a firm believer in part-time work, in which I was active in my younger days, particularly when I was at school and college. Part-time work is invaluable to young people in developing soft skills—my hon. Friend the Member for Gloucester mentioned that earlier—and in relation to integrating into and learning about the workplace environment, which, to be perfectly frank, is completely different from a school or college environment. Young people going into a workplace are not dealing with teachers or their peers; all of a sudden, they are working with people who have been involved in the industry for many years and are not accustomed to somebody fresh and green from a school environment.
We must acknowledge that opportunities for part-time work for our young people, although important, are extremely limited. Although I acknowledge that we must do all that we can to keep our young people safe and ensure that they are not exploited in any way, we must consider the regulations that many employers face when employing youngsters part-time, which go far beyond health and safety. I received a useful briefing on employing children from the House of Commons Library, and I was astounded by the number of regulations that it contained. I would be surprised if many employers knew those regulations. If they did, it would frighten them to death to take on any young person part-time.
For example, the document states that young people may not deliver milk or work in a butcher shop. When I was that age, many of my peers did such work. I delivered milk with the Co-op milkman—I am not sure whether the milkman should have allowed me to deliver milk with him, but I went out and delivered it all the same. Many of my peers at school used to work for one of the local butchers part-time, and they gained invaluable experience. If we are to enable our youngsters to gain such invaluable experience now, we must ensure that we look carefully at the regulations to ensure that we put barriers in the way only when absolutely necessary. We must also consider removing a great deal of the bureaucracy, including what appears to be a draconian reporting culture, that employers must undertake. Does the Minister think that it is a healthy position effectively to bar youngsters from taking on many part-time jobs? Does he not agree that we should free up regulations in a sensible way?
Gordon Birtwistle
I had occasion a couple of years ago to question some young people about what they wanted to do when they finished school. One of them said that he wanted to be a benefit claimant. Does the hon. Gentleman think that working part-time for somebody might take that idea out of that boy’s head and help him change his view, so that he wanted to go into work rather than being a benefit claimant for the rest of his life?
Mr Jones
I totally agree. That is part of the problem, which my hon. Friend has highlighted. There is a culture in certain parts of this country in which work is frowned upon. I am glad to say that we now have a Government who want to get this country and our young people working and create a culture of work, rather than one in which being kept—staying at home and collecting benefits—is a job choice, not a safety net.
That brings me to the other risk that employers in my constituency tell me about, which concerns employee retention after several years have been spent training a young apprentice. Obviously, the costs of that training are borne by the Government, in the main, but there are also costs to the employer in training people on the job. Employers are concerned that a young person will come in, serve an apprenticeship and leave. In certain trades, including the craft trades such as bricklaying, plumbing and so on, people can quickly set up as self-employed workers, and employers are concerned that they will invest their time and money in training young people who will either get a job elsewhere or set up on their own. We must address that, whether through an incentive scheme for employers or by other means. We must do all that we can to encourage employers to take people on and overcome those risks.
We need to consider the barriers to career progression that make things more difficult for employers, particularly those who have younger employees. That was highlighted to me on a visit to MES Systems in my constituency, which has two fantastic young apprentices whom I met. One of the apprentices had just finished his time and had qualified as an installer of security equipment, but unfortunately that young man will have to spend this coming year working for somebody else, not because he cannot do the job independently but because the company could not get insurance on the van that he needed to drive to get around independently. That is a major impediment not only for the young person who is not getting the experience of working independently but for the employer, who knows that additional work is available but is hamstrung by the fact that that he cannot send a person out to do that work, allowing him to take on another apprentice. That is the type of barrier that we need to think carefully about.
To touch on another constituency scenario, I spoke to the principal of a firm of accountants several weeks ago. The Minister will be glad to hear that he is looking to take on four apprentices as trainee accountants, but I am sad to report that to date, he cannot fill those vacancies, which is a sad indictment of careers advice and the link between employers, schools and FE colleges. It is important for the Government to tackle that issue. I hope that the all-age careers service will help with the quality of advice that our young people get, so that they can have proper careers and receive independent advice based on getting a job rather than on trying to meet exam targets or school or college league table targets. To many youngsters, that is important, but to some it is not as important as getting straight into employment.
Mark Pawsey
There has been pressure on young people in recent years to go to university. I have teenage boys who are very motivated to go to university, because that is what their peer group does and that is what they have seen happen. It is the entire emphasis of our education system. Those with practical application who are willing to get their hands dirty are discouraged or looked down on as not doing so well in life. Will my hon. Friend comment on how the Government can deal with that, and how a change in attitude might go some way to stimulating more apprenticeships?
Mr Jones
My hon. Friend has highlighted the flawed ethos of the Labour Government and their target culture of wanting to get 50% of our youngsters into university. Although that has been useful for many of our young people, and we should certainly not decry the importance of a university degree, it has led, as he has said, to a culture where people frown on youngsters who have not gone to university, which has left those youngsters feeling dejected and undervalued. That is a poor position to put ourselves in.
To refer back to the comments made by my hon. Friend the Member for Burnley (Gordon Birtwistle), we need to fill the gap in the skills sector, and there are many younger people who would be better off taking the skills route rather than going to university and perhaps doing a degree that is not necessarily recognised by employers or that is not relevant to getting into the labour market.
Richard Graham
My hon. Friend is developing a powerful case for the role of apprenticeships in general. Does he agree that the statistic that 15% of employment in the private sector is provided by sole proprietorships shows that if we were to persuade sole proprietors to take on a single apprentice each, it would make an enormous difference to take-up in the country as a whole?
Mr Jones
I agree with my hon. Friend’s important point. Another point is that many people who have traditionally taken the skilled route and come from small businesses have ended up as the entrepreneurs of the next generation. They are the ones who have taken forward their work for an engineering business, for example, started their own business and employed a number of others. It is important that youngsters get a good grounding, whether that be by getting a good degree at a good university or by going straight into employment and getting the right skills with an employer, through an apprenticeship, which will give them not just a meaningful career, but, potentially, a business through which they can support the economy by employing a number of other people.
In conclusion, I urge the Minister to consider how we can give our small businesses far more confidence to employ apprentices and break down some of the prohibitive barriers that I have mentioned. I am absolutely sure that, if he does that, it will add great value and complement the sterling work that he is undoubtedly doing to give our youngsters the skills to drive our economy not only for today, but for the future.
Mark Garnier (Wyre Forest) (Con)
I congratulate my hon. Friend the Member for Gloucester (Richard Graham) on securing this important and useful debate. We have already heard a great deal about the issue, and I thank him for the huge amount of detail he has given on the statistics associated with this important topic. I will not try to reinforce any of those points.
I agree with everyone else present that apprenticeships are important, and I want to look at three particular reasons why they are important. First, they provide an opportunity for school leavers to get into the jobs market. As we have heard, the Government—the Chancellor announced this in the Budget—have presented an opportunity for 250,000 more apprentices to gain relevant specific training over the next four years. That applies to youngsters who might otherwise struggle or be tempted to go to university. This point was developed earlier, and I think that it is the case that the random target of getting 50% of school leavers to go to university is based on no fact whatsoever. It has led to the emergence of a market among universities, whereby they sell degree courses for things that, frankly, might be better served by apprenticeships. To a certain extent, it is our job in Parliament to highlight the fact that, if someone wants to be a photographer, there is no point taking a degree in photography when more photography graduates leave university each year than there are jobs for photographers in the whole of the European Union. It would be better to get an apprenticeship as a photographer’s assistant and learn the trade on the job.
Secondly, apprenticeships are also an important opportunity for local businesses and small and medium-sized enterprises, as we have heard. There is no doubt that small businesses that are looking to further expand or to ensure their employee succession process will benefit from apprentices who come in at the bottom end of their businesses. Apprentices can work from the bottom and grow to understand the business so that, as they develop into managers of that business, they know it from a shop-floor level.
It is also important that a district can generate a local skills set that meets the expectations of future employers. I am delighted that Wyre Forest—specifically southern Kidderminster—has been selected by the Worcestershire local enterprise partnership as the preferred bid for the LEP business expansion zone. That is incredibly important for my constituency. My constituency once had 20,000 people working in the carpet industry, which brought on many apprentices but now employs about 1,700 or 1,800 people—it is a much diminished area. In the district, 4.6% of local people are on jobseeker’s allowance, which is higher than in Worcestershire, and the area will benefit from having a business expansion zone. Although it is important that, if we are to attract businesses to Wyre Forest, we do so partly through the business expansion zone, it is just as important that we have a local skills set that meets the expectations of incoming businesses. It is incumbent on us locally to deliver those workers and apprentices, in order to meet the expectations of those incoming businesses.
I was recently asked to open a new apprentice training academy in Bewdley, one of my local towns. The TDM Wyre training academy offers a range of information and communication technology training for apprentices in the local community, either by taking on apprentices from local businesses that already employ apprentices but want to give them more specific training, or by taking on students and finding them apprenticeship places. My hon. Friend will be delighted to hear that I am already talking to the academy to find out how my office can best take advantage of that opportunity and employ an ICT apprentice who, even though he is an apprentice, will no doubt be able to teach me a few things about information technology, which I am a bit of a muggins at. This is an organisation that recognises the Government’s ambition and has reacted, as so many do, to market demand. It and others have not only identified the need for training, but, as I have said, are increasing the local skills set in my constituency, which is absolutely vital if we are to attract new businesses.
The Government-run NAS has recently started the 100 in 100 campaign, which, as we have heard, aims to generate 100 apprenticeship placements in local businesses within 100 days. The NAS is looking for business leaders, training providers and local media to work in partnership to influence the local business community to drive up the number of apprenticeship opportunities locally.
I am delighted that the Wyre Forest community housing group has become an ambassador for the campaign in Wyre Forest. The group has 35 placements for youngsters and claims a high number of apprentices who achieve nationally recognised qualifications and who stay on in permanent employment in the group after their apprenticeships have ended. Indeed, to demonstrate its commitment, the group is using apprentice bricklayers, carpenters, plumbers and electricians alongside qualified teams on all its new builds in Kidderminster. The community housing group scheme is important, because it draws its apprentices from a particularly challenging area in southern Kidderminster. The area has about double the district average for jobseeker’s allowance claimants and about 40% of residents are economically inactive. I hope that the Minister will take back to his Department that further reason for looking favourably at the application for the Kidderminster business enterprise zone.
Thirdly, it is important to remember that businesses are also at the forefront of new technology. We have talked about small and medium-sized businesses, but I now turn to big business in order to illustrate the importance of this issue. In my capacity as the vice-chairman of the all-party group on space, I visited Astrium at the company’s factory in Stevenage. Astrium is a global leader in the manufacture of satellites, and in addition to a tour of its Stevenage assembly plant, we were invited to the award ceremony for its apprenticeship scheme. The company is about as high tech as it gets. It manufactures satellites that are at the cutting edge of technology—indeed, one imagines that all space activities are at the cutting edge of technology. At any given time, it employs about 40 apprentices. They are youngsters who are bright kids, but in some cases they may have low aspirations. In a few instances, the company finds its candidate apprentices working in less than exciting jobs, with, frankly, limited prospects of career progression. Astrium takes them on, trains them up, gives them higher education if they want it and gives them a career path and a future. Some 50% of their apprentices go to university and half of those get first-class degrees. Many end up with high office within the company and typically they stay for an average of 25 years with this one company.
Astrium and other high-tech companies take on apprentices for a couple of key reasons. First, companies at the cutting edge of high technology have a unique and focused skills requirement that they simply cannot fill with resources off the shelf. They have to train their staff in specific ways. Secondly, they draw their apprentices locally, which provides not only a benefit to the local community, but a labour source that is loyal to the local area. That reinforces the reason why they are so keen to stay with the same company for such a long time. That is important for career progression and for resource progression, so that we know where the managers of the future are coming from. With 95% of apprentices staying on for a significant time, that is a very important point.
I shall end on a slightly more sober note. I was recently at a meeting of the Worcestershire Association of Secondary Heads with, among others, my hon. Friend the Member for Worcester (Mr Walker). Of course, we talked a great deal about education and what the Government are doing on that and, obviously, we presented a very good argument for the Government’s sterling work, as I am sure hon. Members can imagine. However, at the end of the meeting, one of the heads asked the following sobering question: how can the Government demonstrate that this generation of school leavers will not become a lost generation. My reply to him—this has been reinforced in my regular column in The Kidderminster Shuttle—is that, far from being a lost generation, this generation of schools leavers are at the cornerstone of our country’s future. Their success will determine our success as a country and as an economy.
Apprenticeships and the Government’s apprenticeship programme are a good example of how this Government are delivering on that message. The Government recognise the importance of our future generation of skilled workers, and they are absolutely committed to supporting them, because, at the end of the day, business and skills are at the heart of the economic recovery.
Mr David Ward (Bradford East) (LD)
I congratulate my hon. Friend the Member for Gloucester (Richard Graham) on securing the debate and thank him for enabling us to discuss this important subject.
My father left school at 14. He benefited from an additional year at school, but he had very little in the way of qualifications and he served an apprenticeship for seven years before becoming a master plumber. I suppose that I served a kind of apprenticeship when I was articled as an accountant. Apprenticeships have almost disappeared from the industrial scene. The value of them coming back can be found not only in the many things that we have discussed today, but in the concept of a young person’s commitment to achieving something specific and focused over an extended period. Of course, a business or an organisation must also show commitment to sticking with an individual and seeing them through.
Mr Marcus Jones
My hon. Friend talks very powerfully about apprenticeships. He has mentioned some of the history of apprenticeships and the apprenticeship that he went through, which was not unusual a number of years ago. Does he think that we need to change the culture, so that apprenticeships are far more valued? Should we perhaps return to some of the older values and have freemen of towns and cities and passing out ceremonies, where apprentices go along to the city hall or town hall and receive their papers from the mayor or lord mayor?
Mr Ward
There is a lot in that idea because the concept of working towards and developing a skill—in the old days, a craft—and a profession has been lost. The idea of sticking with something and staying with it until a body of knowledge has been achieved or a degree of experience or skill has been acquired has been lost over the years. I remember very clearly my father’s small card showing that he was a master plumber. The importance of both an organisation’s and a young person’s commitment perhaps ought to be recognised more formally.
We all welcome the Government’s drive to increase the number of apprenticeship places, particularly in areas of unacceptably high youth unemployment—for example, Bradford. In a couple of the wards in my constituency, one in eight young people are not in education, employment or training, and they are desperately in need of some sort of future. It is perhaps unfashionable in some quarters to defend one of the schemes that is still in operation but on its last legs: the future jobs fund. However, I want to talk about the importance of what has been described by others as getting people ready for apprenticeships and making sure that young people are employable in the view of those who wish to take on apprentices.
We need to be very careful not to throw away the baby with the bathwater. The future jobs fund in Bradford got off to a poor, bureaucratic and frustratingly slow start, but it did become a success, particularly with categories of young people who struggled to get into apprenticeships. It was successful both in getting young people into work and in giving them the skills and the work experience that it was hoped would help to them into employment long into the future. More than half of young people on future jobs fund placements in Bradford did not return to benefits after 28 weeks. They found some sort of career progression after, in many cases, pretty difficult young lives. A major criticism of the future jobs fund has been that a high proportion of jobs were created in the public sector but, in Bradford, around 75% of the placements were in the voluntary or community sector. That is big society at its very best.
I should like to mention the Thorpe Edge project. As you will know, Mr Davies, that is a community furniture project that had 13 future jobs fund placements over a period of years. It was apparent that, for some of the young people on that project, getting out of bed before lunch was an achievement, let alone having an apprenticeship where they were expected to arrive at half-past 8 and work through until the leaving time that night for five days a week. The people on that project were fortunate because those who were responsible for running it had experience of dealing with young people in a difficult area. If someone on an apprenticeship did not turn up at 8.30 am and perhaps came in at 10 am, they would have probably lost their job. However, through their knowledge of the young person concerned, Thorpe Edge project supervisors knew that the young person concerned probably came from a background where there was a lone parent or the person concerned was on drugs or suffered from alcohol abuse. In such circumstances, simply getting into work at all was an achievement. By providing intensive support and help for some of those young people, the programme allowed them to get into college or employment.
The focus of my comments is on those people who simply will not get those apprenticeships, however many placements we manage to generate and however many placements the Government are willing to fund. Additional apprenticeships certainly offer a good alternative to the future jobs fund or schemes of that kind in many cases, but there is space for both types of programme. We need schemes that benefit people who are employable and who will do well out of placements and people who would struggle to get on to apprenticeships at all.
There is clearly a supply-side problem in many economies. I hope that the Minister will set out some of the measures that can be used to address the shortage of apprenticeship placements. A scheme in Bradford with the local social housing provider in communities recently received more than 600 applications for just seven apprenticeship places. Evidently, demand is massively outstripping supply.
Other hon. Members have raised all sorts of issues about the barriers and why businesses are not willing to take on apprenticeships, whether because of bureaucracy and red tape—we have mentioned some of those issues—or because of a lack of awareness of apprenticeships, as hon. Members said earlier. Many people who have been in business for years might never even have considered offering an apprenticeship. We need to consider what is happening in the schools and through the careers advice service. We also need to recognise that in some communities, certainly for small businesses, cost is an issue. We need to bear that in mind.
The Federation of Small Businesses has been quoted a lot with regard to the implications for small businesses. I understand that the Government have decided not to extend an apprenticeship grant for employers that provided some time-limited financial support for businesses. We still need to consider that as necessary for certain businesses, particularly small businesses, and in certain economies with high unemployment and a small number of available opportunities.
Let us not forget that although businesses receive 50% for post-19 and a full 100% for pre-19—I understand that that might be extended in some cases—they still have to pay for the young person. For many small businesses in particular, that is identified as being the most important cost. An FSB survey identified that it is simply too costly to take on. Of all the reasons why they were not taking on apprentices, the fact that it was just too costly came out top.
An FSB survey on skills identified that 66% of businesses said that, with the right measures in place, they would take on an apprentice. Those measures include a financial incentive for taking on an apprentice, greater clarity in terms of Government contributions to wage and training costs, and a separate body, interestingly, to manage the payroll costs. That has to be a way forward for many of our young people.
For 20-odd years, I worked in a university. We have heard some comments about university today. I agree that it was wrong to specify a 50% target. For many young people, the message was that if they do not get to university they have failed, and that closed up a lot of options. I also have tell hon. Members that, as someone who worked in a university for nearly 25 years in total, many young people, especially towards the end, were there because they did not know where else to be. They were there to find themselves and to delay a decision. They were there to gain something—a qualification, which they hoped would be useful—but also to defer a judgment on what they should do with their lives.
Laura Sandys (South Thanet) (Con)
Does the hon. Gentleman think that those young people found themselves after the three years they were under his stewardship? The fundamental issue, brought up by many hon. Members, is that we do not start to talk about the world of work early enough. Many hon. Members have said that there is an issue about education and schools. I have never been impressed by the careers system and careers officers across the board, either in my era or now. Does the hon. Gentleman have any greater sense of confidence in the careers system that mentors our young people?
Mr Ward
There are measures to improve the system. It has failed in many instances. On getting information through to young people, I would add that the most important individuals for many young people as they go through their education—a blinding flash of the obvious—are the teachers, not the careers advisers. How many teachers have any experience of life outside of a school, whether in manufacturing, engineering or not being a teacher?
I am concerned that we miss a trick if we focus on developing the careers advisory service, recognising that it is a weak area that we could develop, without looking at the crucial issue of the experiences of the most influential characters in our young people’s education—the teachers themselves. Perhaps the Minister has something on that—it may not be his remit, I do not know—but exchanges between business and schools are important. When young people consider what they want to do with their lives, they should be surrounded by people who have experience of something other than going to university or being in another educational setting.
Gordon Birtwistle
In Burnley, we have got the big local companies involved with mentoring students in schools for the future. Is that something that the Minister will pick up, run with and expand across the country not only with big companies, but with smaller companies?
Mr Ward
I should like to conclude by coming back to the focus of my comments. I think that the figure of 8% was mentioned as the number of businesses who take on apprentices. If we look at that figure, however, the vast majority are small businesses. Those are the statistics. We know that the vast majority of businesses are small businesses—the butcher, the baker, the candlestick maker and so on. We want to fill the supply side gap. Yes, we want to get the big companies involved and that in some ways that is relatively easy. If we are to provide at a practical local level experience and apprenticeships in small businesses, we need to consider some element of wage subsidy.
Richard Graham
The figures back the hon. Gentleman up. Some 3.3 million businesses have sole proprietors; that is, 3.5 million people. That is 16% of all people in business. One apprentice for a third of those would take a million people into employment.
Mr Ward
I thank the hon. Gentleman for those comments, and for giving me time to look at my own notes.
The FSB has pointed out that two thirds of apprenticeships are offered by small businesses. Of that 8%, the vast majority are in small businesses, so we have a problem. Small businesses, certainly in areas of high youth unemployment, have been the main provider. However, small businesses in those economies are struggling the most and can ill-afford the cost associated with apprenticeships. I would argue that there may be a case for businesses—small businesses in particular, in areas of high unemployment, particularly high youth unemployment—to consider some element of wage subsidy to enable those who will simply not otherwise get into apprenticeships to be taken on by those businesses and partly fill the gap that has been left by the withdrawal of the future jobs scheme.
Mr Gordon Marsden (Blackpool South) (Lab)
It is a great pleasure to serve under your chairmanship, Mr Davies. I begin by congratulating, and not just in the customary way, the hon. Member for Gloucester (Richard Graham) on bringing an extraordinarily important subject to the Chamber today. His speech had depth and breadth; it was extremely expansive and dealt with many of the most important points. It is inevitable that the general approach we take to apprenticeships is concentrated on the challenge we face in dealing with apprenticeships in small and medium-sized businesses. Whether we call them micro-businesses, sole traders or people who are starting out on their own, the issue is magnified in that area. The hon. Gentleman has therefore done the House and the Chamber a service by the breadth of his remarks.
The hon. Gentleman talked about apprenticeships not being to do with manufacturing alone, which is true, and under the previous Government that diversification of apprenticeships, which is continuing, was important. The current Government have inherited that rising curve in apprenticeships, taken by the previous Labour Government from a base of 65,000 in 1997. The occasion is not one for trading loads of statistics or being partisan, but it is incumbent on Members to remember that the abolition of Train to Gain released to the present Government a significant amount of money, some of which they have chosen to use in the expansion of apprenticeships, which we welcome. The challenge for all of us, in whatever position, is to ensure that the expansion of apprenticeships is a success and continues.
It is important to look at the elements of policy continuity and, in particular, I pay tribute to the Minister for how he and his colleagues have continued to support Unionlearn. The routes into apprenticeship are many and varied, and we have heard today about some of those ways and how some can be improved. Undoubtedly, one of the best ways of persuading people into apprenticeships or taking up skills at whatever age is the support, endorsement and encouragement of their peers. In that respect, the work of Unionlearn has a great deal to teach us, whether or not we are talking about unionised environments. In the same way, many of the contributions this afternoon, in particular the last one, have stressed the need for such a process to be understood across the board.
The challenge we face is the one given to us by the Federation of Small Businesses, with figures on numbers and take-up that people have quoted in some detail today. Small businesses are crucial to growth. The hon. Member for Gloucester talked about that, and about the importance of taking on GTAs. He and other Government Members were somewhat sceptical about the former future jobs fund, but although we live in a three-minute universe, they ought to remember that their own Chancellor announced in the Budget earlier this year what some of us might regard as a pale imitation of the future jobs fund. We wait to see how that carries through. The hon. Gentleman made a valuable point at the end of his speech about incentives. I was particularly interested in the idea of the graduation of incentives over a three-year period, which many of us are familiar with from commercial practice, not least in hiring builders, and there is a lot to be said for that.
I congratulate other Members who spoke this afternoon. The hon. Member for Burnley (Gordon Birtwistle) talked about the importance of peer endorsement in apprenticeships and about the problem with skilled manual workers. Again, that is not a new problem but one flagged up by successive Select Committees, and it was a key issue in the Leitch report, to which all parties subscribed.
The hon. Member for Nuneaton (Mr Jones) raised issues about the careers service and the exposure of young people to the working environment, which is also important. Again, it is not a new issue. Some years ago, when I was a member of the Education and Skills Committee, we went to two places in the United States to look at training in schools, in Boston and North Carolina, which had good examples of training in units in a secondary school. In such a unit in North Carolina, most of the young people—very much from a blue-collar background—subsequently got jobs with the Bell Telephone Co., which had sponsored the unit. There are some lessons for us in that, with interesting echoes in such ideas of recent years as studio schools or the university technical colleges, of which Lord Baker has been such a strong advocate.
I was delighted to hear the contributions of the hon. Members for Wyre Forest (Mark Garnier) and for Bradford East (Mr Ward). The hon. Member for Wyre Forest was particularly interesting and illuminating on his experience with the space company, which, in terms of where apprenticeships can take someone, I have found replicated in my own neck of the woods; a large number of people in Blackpool work for British Aerospace in one capacity or another. His reminder that it is a good idea not to make a false comparator—either apprenticeships or universities—was valuable. Whatever the value of higher level apprenticeships in their own right, we ought to be putting far more emphasis on ensuring that universities accept and look at vocational qualifications, and take themselves through to that level.
It is always a great pleasure to hear the hon. Member for Bradford East, who is extremely knowledgeable and passionate in this area. I was glad to hear what he had to say about his experience of the future jobs fund. It is true that in many areas it was not simply public sector-led. The statistics for my area of Blackpool mirrored those given by the hon. Gentleman. I vividly remember visiting Blackpool football club where six young people had been taken on under the future jobs fund, giving a similar success story.
I make one more point lightly and in not too partisan a fashion: I hope that hon. Members will see that the previous Government never made a commitment to or objective of 50% of young people under the age of 30 going into university education. If we look at the detail, we see that it was about some form of training or further or higher education. I make that point and pass on, but I am proud of the work that the previous Labour Government did to bolster apprenticeships and the apprenticeship system, making them an attractive option for businesses of all sizes. As I said, the results speak for themselves.
We set up the National Apprenticeship Service in 2009, as a national body playing a key role in overseeing the apprenticeship programme, providing information to potential apprentices and helping to match them with employers. We also introduced national apprenticeship week. It is a pleasure to hear today from so many Members that they have taken advantage of the hook of that week—throughout the rest of the year as well—to promote apprenticeships in their own constituencies. It is a good opportunity for doing that.
In my constituency, in February this year, my local Blackpool newspaper, The Gazette, sponsored an apprenticeship drive across the Fylde. I spoke at the launch of the drive and supported it, and it reached the sort of target figures of 100 to 150 apprenticeships, to which reference has been made. In my work as a Member of Parliament, I have seen the success of apprenticeships not only for very large companies such as BAE Systems, but also for small and local organisations. The Blackpool Pleasure Beach has taken on a number of apprentices successfully, as have many construction firms, or the dental practice in my constituency that I visited this year, which has just taken on two apprentices.
Sometimes it is not easy for a Government of any hue to persuade small and medium-sized businesses to look at apprenticeships. I know that from my own experience of running a small business with eight employees for 12 years before I came into this place. I know, as no doubt do many hon. Members who have spoken, about the multiplicity of factors and pressures on small businesses when they are trying to decide what to do: cash flow, marketing, promotion, lease arrangements. The list gets longer every year.
Of course there must be a receptive environment for small businesses to take on apprentices, and they must believe that it is worth expending the time, but that raises big issues about the structure of apprenticeships, and whether they are sufficiently structured to be useful to and easily accessible by small and medium-sized businesses. I do not want to be misunderstood. I am not suggesting that we abandon the traditional apprenticeship structures to which the hon. Member for Bradford East rightly referred.
My father undertook a traditional apprenticeship for a large company, Crossley Brothers, which is sadly now less well known than it was. It was a major factor in the engineering world certainly into the 1960s, and to the present day. Such apprenticeships have their value, but we must also consider the new type of apprenticeship. There are big decisions to be made and discussions to have about the value or otherwise of a modular approach, about delivery of apprenticeships on the job rather than outside at a further education college, and so on. Such matters must be taken into account when considering what benefits will encourage small businesses to take on apprentices.
Despite the Government’s announced additional investment in apprenticeships, many businesses still believe that there are major deterrents. A City and Guilds survey—I was at its launch during national apprenticeship week earlier this year—showed that 80% of employers still believe that there are barriers to hiring apprentices, and one in five believe that the current economic climate makes it too risky to take on an apprentice. A couple of other statistics are relevant to what hon. Members have said today. Just under half of employers would be encouraged to have an apprentice if more Government funding were available per apprentice—whether that would be a deciding factor, of course, is always the key question—and 26% wanted the recruitment process to become simpler and less time-consuming.
Those statistics are interesting, and have been supplemented recently by a major survey of 500 employers across the board, not just SMEs, by the Chartered Institute of Personnel and Development. Its findings are interesting and specific, and slightly contradict what City and Guilds said, because they showed that two thirds of those not offering apprenticeships reported that it was inappropriate for their organisation. Again, the point about how to market apprenticeships and present them to companies comes to mind. One in six said that they were not offering apprenticeships because of a recruitment freeze, budget restraints or the economic climate. Interestingly—I am not saying that one side or the other has the last word—less than 5% said that they were put off by too much associated bureaucracy or insufficient public funding.
Whatever the case, major challenges must be overcome. It may be relevant to the example about the value of soft skills—I do not like referring to soft skills because that may suggest that they are not important; I prefer to call them enabling skills, but that is a matter of nomenclature—that the CIPD survey showed that apprentices were rated highly for enthusiasm, work ethic and presentation, but that their creativity, innovation, initiative and customer service skills were less impressive. There may be some messages there about the school system.
The statistics from the Federation of Small Businesses, as many hon. Members have said, are worrying for the reasons that have been described. It is particularly valuable that the FSB not only provides such data, but regularly monitors attitudes and feedback from its membership. I understand that the latest report is due out tomorrow, and it will be particularly interesting given the current fluid nature and uncertain prospects for growth. Similar statistics came from the CBI/EDI educational skills survey, which was published last month. It showed that apprenticeship growth is increasingly concentrated in large companies.
That is on a par with the Government’s need urgently to consider tailoring apprenticeships better towards the need of SMEs. It is a two-way process, which the Government must take on board and, with the National Apprenticeship Service, be alert to the changes and modifications that employers report. They must allow employees to complete the course-based elements of their apprenticeships. I do not exempt further education colleges from that process because, certainly in my neck of the woods, it is important, particularly when bringing in people who must do a lot of juggling with their work-life balance, that delivery of off-job apprenticeship course work is as close to their work or living place as possible.
Laura Sandys
I was pleased to welcome the Minister to my local further education college, Thanet college, which has been extremely helpful and important to me in the recruitment of an apprentice I have just taken on. FE colleges are embedded in their communities, and play an important role as ambassadors for the apprentice system. They support employers who may not understand the system effectively. Does the hon. Gentleman agree?
Mr Marsden
I absolutely agree. In my neck of the woods, Blackpool and The Fylde college has done sterling work in that area. There is sometimes an issue about colleges understanding the need to deliver some of their training closer to the workplace if possible and closer to the living space if possible of the people they are trying to reach.
Mr Marsden
I see the Minister nodding, and I suspect that as he represents a rural constituency he understands such issues.
The process is a two-way one, but the Government must consider the unintended consequences of their decisions elsewhere. In their hasty abolition of the regional development agencies, many of the bodies that oversaw local skills and employment policies were swept away. The new local enterprise partnerships have no powers in those areas, as skills policy remains under central control from Whitehall.
The Federation of Small Businesses and other business organisations have been critical of the Government’s failure to give local enterprise partnerships the tools to do the job. Included in that is the concern of the Federation of Small Businesses that there are not enough representatives from small and medium-sized businesses on local enterprise partnership boards. Allowing them to have a greater voice is important in terms of real input in tailoring and structuring skills policy locally, and that includes apprenticeships. Indeed, by their nature, small businesses understand the life-changing impact of apprenticeships, and how that must be balanced against day-to-day needs. We must remember that although much has been said, rightly, about the challenge of youth unemployment, we also face the challenges of demographic shift in the next 10 to 15 years, the projections in the Leitch report, and the particular needs of work-life trade-off if we are to attract older people to become involved with apprenticeships. That includes women in particular. There are impressive models from organisations such as B&Q and British Gas, but we need to see how those good practices can be replicated to their counterparts in small business.
Finally, I want to look at pre-apprenticeship preparation, which has been mentioned by one or two hon. Members, and in particular by the hon. Member for Bradford East in the context of the first job agreement—the FJA. Information, advice and guidance is crucial to inform people about the opportunities provided by apprenticeships, and if young people do not get such advice, SMEs may be deprived of many suitable candidates. It is vital that the Government have a framework that can deliver quality information, advice and guidance. In truth, however, there are still real problems with the new all-age careers service.
I know that the Minister has done his best to take forward such issues in the Department for Business, Innovation and Skills. Nevertheless, to echo earlier remarks, the Department for Education remains singularly unfocused on the need for financial support and for the necessary information, advice and guidance to be provided face to face. I urge the Minister to press his colleagues further on that.
What proposals does the Minister have to monitor completion rates more effectively? What conversations are his officials having with organisations responsible for qualifications about the balance between modular and more traditional structures for apprenticeships? Such things will be key in determining the attitudes of small businesses when taking on apprentices. We all agree that apprenticeships have a very real worth for businesses and apprentices, but the Government must recognise that one size does not fit all. If SMEs are to help lead sustainable economic growth and recovery, they must have the tools to achieve it. We must ensure that apprenticeship frameworks and mechanisms are accessible to all the small businesses that hon. Members have quite rightly praised today, and not only to the big companies that have the money and resources to take on apprentices.
The Minister for Further Education, Skills and Lifelong Learning (Mr John Hayes)
It is an immense pleasure to serve under your chairmanship, Mr Davies, and it is always a pleasure to speak opposite the hon. Member for Blackpool South (Mr Marsden), who presents his case with typical flair and fairness.
I congratulate my hon. Friend the Member for Gloucester (Richard Graham) on securing this debate. Over the past year, he and I have had a number of discussions about apprenticeships, and whenever we have done so, he has shown a commendable interest in and enthusiasm for the subject. He has also brought to my attention a series of ideas, reflected in his opening remarks today, about how we can further our policy to expand the number of apprenticeships available. I had the pleasure of visiting Gloucester rugby club with him and taking part in an apprenticeship fair that he had helped organise. It was a splendid occasion, and I know that he plans to take that forward with a number of similar events in his constituency that will be targeted at under-represented groups. Such work is highly commendable.
I am grateful to all hon. Members who have contributed to the debate. As the hon. Member for Blackpool South said, many interesting points have been raised, and I shall try to address as many of them as I can in the time available—I have rather more time today than Ministers usually have when responding to such debates, which is welcome.
To place my remarks in context, let me stress to hon. Members that—make no mistake—apprenticeships are a flagship policy for the Government. It is true that the previous Government made progress on apprenticeships, and I shall say more about that in a moment. It is equally true, however, that apprenticeships have never been more central to public policy than they are today. The programme to build more apprenticeships in Britain than ever seen before in our history is supported by the Prime Minister, the Chancellor and all Ministers with responsibility in the area. That is not merely rhetoric—though I have nothing against rhetoric—and it is illustrated by the fact that, despite financial constraints that were, it is fair to say, unusual in their severity, over the current spending period the Government have dramatically increased the funding available for apprenticeships.
The hon. Member for Blackpool South was kind enough to acknowledge that one of the first things that I did on entering the Government was to transfer £150 million of deadweight Train to Gain funding into apprenticeships to fund an additional 50,000 places.
Mr Hayes
I will come to that in a few moments. When I announce the details of the statistical first release to the House at the end of the month, I am confident that they will show substantial progress and achievement. As hon. Members will know, provisional data already in the public domain suggest that we have made remarkable progress, despite the difficult economic circumstances in which, as has been said, some firms might not usually be expected to consider training or employing new staff.
The commitment that I have articulated was confirmed in the Budget, when the Chancellor announced a further £180 million of funding for apprenticeships. That will enable us to create 40,000 places for young unemployed people, taking them from disengagement to re-engagement, and an additional 10,000 places for advanced and higher level apprenticeships that are focused on SMEs.
The work that I am doing with the Department for Work and Pensions has been mentioned. To an unprecedented degree, I am working with my colleagues to ensure that the welfare reforms being introduced, and particularly the Work programme, marry with the work we are doing on training, skills and apprenticeships. It is important that the 100,000 additional work placements that have been secured have a close relationship with subsequent training and that the system is progressive. The experiences that people gain as they move from disengagement to re-engagement should lead to further learning and training and ultimately to work.
Mr Marcus Jones
Under the previous Government, there was a shocking drop-out rate in the number of apprenticeships started and those completed. In 2009-10 alone, nearly 280,000 apprenticeships were started but only 171,500 were completed. That is shocking. Will the Minister assure me that the Government will pay far more attention to that issue? Although we cannot guarantee that every apprenticeship will be completed, we should ensure that we get a far better rate of completion than in the past.
Mr Hayes
Even a Minister as confident as I am would not wish to disagree with my hon. Friend, because he is so highly regarded both in his constituency and in the House. None the less, I must say in fairness that the previous Government made progress on completions—I do not like to say things in the House that I cannot say with candour. Although it is true that completions, both under the previous Government and this Government have posed a challenge—as described by the hon. Member for Blackpool South—considerable progress was made by the previous Government. Furthermore, to be ever more generous and even more self-deprecating, let me say that it will be a challenge for us to maintain completion levels as we expand the programme. One risk of a rapid expansion in apprenticeships is that we will need to be careful about starts and completions. As more people are drawn into the system by the energy that we invest and the resources we provide, unless we are careful, there is a risk that the number of completions will suffer. As has been suggested, I am working closely with my officials and we must monitor the situation through the NAS and look at what measures we can put into place to ensure completions.
I do not want to move too far from the main thrust of my argument, but one such measure might be to look at outcome payments for large apprenticeship providers—in other words, to work with those large providers and ensure that payment is made on completion. I am in discussion with a number of major national companies that are extremely interested in engaging in such a system, and we will pilot such a scheme with a number of significant apprenticeship providers. That is one of the things that we can do with regard to completions, but my hon. Friend the Member for Nuneaton was right to draw that issue to hon. Members’ attention, as was the shadow Minister, the hon. Member for Blackpool South.
The difficulty for me in all this is that I have invested a considerable amount of my political reputation on the basis that we will indeed create such numbers of apprenticeships. That might be described as a bold move. The shadow Minister and possibly others would be disappointed if I was not poetic at some time in this speech—I was going to say “performance”, but I do not want to undersell myself—and it was Ezra Pound who said:
“If a man isn’t willing to take some risk for his opinions, either his opinions are no good or he’s no good.”
The risk that I have taken in respect of my opinions is indeed the risk about our endeavours to grow apprenticeship numbers dramatically, but we have to take such risks if we believe that something is right, as Pound suggested, and I do believe that this is right for reasons that I shall detail as I respond to the debate.
Mr Marsden
The Minister will be relieved, possibly, or disappointed to hear that I have no intention of swapping literary quotes with him. Before we lost the thread of the previous useful exchange with the hon. Member for Nuneaton (Mr Jones), I wanted to ask the Minister whether part of the consultations or part of the consideration of how we make progress on completions will cover whether certain structures of apprenticeship cause more problems between start and completion.
Mr Hayes
Yes, I think that there will be consideration not only of structures, but of whether there are sector-specific problems, whether there are problems with certain kinds of apprenticeship and frameworks and whether there is an issue about different ages of apprentices. The hon. Gentleman will know—indeed, the whole House knows—that we are focusing, as I described earlier, on apprenticeships as a means of re-engaging people who are disengaged. The hon. Member for Bradford East (Mr Ward) described the length—and I might say the difficulty—of the journey that some people make to re-engagement. It is a tough set of challenges for people who were failed by the system first time round. Sometimes, the path to the destination that they seek and we seek for them will be relatively stony. Small bite-sized chunks of learning, delivered in a way that is highly flexible and accessible, are often the way of dealing with that, and we may well need to consider structure in that context.
The hon. Member for Blackpool South will also know that I will announce in the autumn progress on our access to apprenticeships policy. We recognise that many young people in particular do not have the prior attainments necessary to begin even a level 2 apprenticeship. We need to create a ladder for those young people, so that they can acquire the core skills necessary for them to progress subsequently to further training and employment. He is right to say in that context that the form, character and pace of learning need to be appropriate to the circumstances of those learners.
The net effect of the commitments that have been given by the Government is, I believe, that we will create more apprenticeships than ever before in this country. To put that in firmer terms, as the Prime Minister himself has said, we expect to create 250,000 more apprenticeships during the lifetime of the spending period. That will constitute extraordinary growth in the number, compared with what Labour projected. We expect to exceed the previous Government’s target by 250,000. That is extraordinary, unprecedented growth in the number of apprenticeships.
There has never been that kind of growth in this country. However, there are precedents elsewhere. Meeting my French counterpart some time ago, I was interested to learn that the apprenticeship system in France has metamorphosed in the last 20 or so years. The French apprenticeship system was in the doldrums 25 years ago, but the concentration, investment and commitment of successive French Governments have meant that France, like Britain now, sees apprenticeships as critical to delivering the skills necessary to build a competitive economy. Therefore, we know that that can be done with political will and determination, backed by resource.
I have said on many occasions that practical skills and those who learn them remain scandalously undervalued in our society. It has been said in the debate that many people, including some employers, still view apprenticeships as somehow not quite good enough. That is partly about careers advice and guidance and the perception of the routes available, particularly to young people. The matter was raised by the shadow Minister and others, including my hon. Friend the Member for South Thanet (Laura Sandys). By the way, I was delighted to join her in her constituency when I visited Thanet college. I will take this opportunity to say that the work that that college is doing with Canterbury Christ Church university is extraordinarily important in developing a practical route to higher learning for many of the constituents whom my hon. Friend so competently represents.
The advice and guidance that people receive will shape their choices about the learning and employment routes that they take. One should not underestimate the influence that that advice has, particularly on young people, as I said. The truth is that people such as us are particularly advantaged in those terms, or at least our children are. The familial networks and social contacts that my children enjoy will mean that they get pretty good advice about the options available to them at school, college and university and in work. That is not true of the very large number of people who do not enjoy those familial and social contacts. Professional advice and guidance are very important in rebalancing the quality of the advice that is available to those who are most under-represented in higher education—those who start with the most disadvantages.
On that basis, I am determined to develop an all-ages careers service, as hon. Members know. That service will bring together careers professionals to a degree that has not been known previously, with a common set of professional standards and training and consequent accreditation, to deliver high-quality, independent and empirical advice and guidance, including advice and guidance on vocational learning options and practical and technical jobs.
It has been said in the debate—I think that it was said by the hon. Member for Bradford East, my hon. Friend the Member for South Thanet and other hon. Members—that the advice given in schools is often inadequate. It is fair to say that it is patchy. Some schools do this rather well; many do it less well. However, what characterises the advice is that it is usually prejudiced by the academic experience of the person offering it. It is a big ask of teachers to be excellent pedagogues and also experts on every kind of career option. It seems to me to be much better for schools to secure independent advice. That is why the Government are putting a Bill through the House—it is progressing from the Commons to the Lords as we speak—that will put a statutory duty on schools to secure just such advice. There will also be unprecedented professional competence.
I am pleased to say, as I hinted teasingly at Question Time in the House earlier today—actually, it was the Secretary of State who revealed it—that we will be working with the Department for Work and Pensions to co-locate the national careers service in Jobcentre Plus from this autumn. We will pilot that process and then have a speedy roll-out. The national careers service, with separate branding, will be available to people in Jobcentre Plus, offering the very kind of empirical advice that I have described. In addition, I will hold discussions with representatives of colleges to consider co-location in our network of further education colleges.
As well as that, I am considering how funding can be provided in a way that incentivises professionals in the careers industry to be bolder and to reach out with a new commercial zeal—of course, the independent advisers are businesses, too—to provide quality advice. That will make so much difference, particularly for those who do not usually get good advice from elsewhere.
I shall say a little more about the perception of apprenticeships and practical learning. We too often undervalue vocational competence. Practical skills and craftsmanship remain objects of admiration for most Britons, but not so among the chi-chi class, the glitterati and the chatterati, who see practical skills as somehow beyond their scope or their understanding.
The Government’s will reflects the people’s will in this, and I am determined, not merely because it is essential for economic purpose but because it is right socially and culturally, to ignore the overtures and shrill complaints of what I might call the haute bourgeoisie liberal establishment—I do not mean the Liberal Democrats, of course; in this context it is liberal with a small l—and make the case for practical vocation and technical learning and practical vocational and technical competency. We must once again value craft. We must elevate the practical.
Part of this concerns the aesthetics of apprenticeships. During adult learners week, I was able to announce a range of measures designed to raise not only the status of apprentices but their self-esteem and the worth that apprenticeships confer. Those measures include the introduction of graduation ceremonies to give public recognition of apprentices’ successes and the creation of alumni networks to allow former apprentices to stay in contact and continue to exchange ideas and experiences.
My hon. Friend the Member for Harlow (Robert Halfon) made a convincing case for a society of apprentices, and we shall look closely at that. I very much welcome my hon. Friend the Member for Gloucester’s acknowledgement of the importance of celebrating apprentices and their achievements, and that was reflected in the comments of the hon. Member for Burnley (Gordon Birtwistle). Hon. Members will be glad that, later this month, the national apprenticeship awards, which I shall attend, will celebrate the achievements of apprentices and employers from all over the country.
I turn now to some of the specific raised by my hon. Friend the Member for Gloucester. He said that small and micro-businesses take on apprentices not only to drive up growth but to drive down youth unemployment. He is right. Apprenticeships are good not only for growth but for re-engagement in the economy and for social mobility, social cohesion and social justice. You know as well as any Member, Mr Davies, that social justice, in the spirit of Disraeli, lies at the very heart of Conservatism.
My hon. Friend asked for recognition of the fact that, for many reasons, including business confidence, recruiting apprentices is a challenge for small businesses. I recognise that, and I assure him that I am in no way complacent about the work that must be done to meet that challenge. That is why I have asked the NAS to report to me regularly on the progress that it is making, particularly in that field. We are constantly pushing to do more.
My hon. Friend sought a commitment that we would consider ways to increase small business take-up, possibly through group training associations and apprenticeships training agencies. The Growth and Innovation Fund will allow the development of more GTAs and ATAs. I cannot say too much about that, because the bids have not been considered yet and the results have not been announced. However, my hon. Friend will be pleased to know that a large number of applications relate to the areas that he has mentioned. I am a keen supporter of the GTA model, and I am carefully considering how, and in what circumstances, we might see further role-outs of that model to reduce the burden on small employers of taking on an apprentice.
My hon. Friend spoke about providing some form of incentive to small employers to take on an apprentice that have not done so before. He will be aware that he echoes the observations that Alison Wolf made in her report to the Department for Education on vocational education. She recommended that targeted subsidies should be issued to some employers in some circumstances. Although I cannot confirm any details today, I am not unsympathetic to that view. That will not come as a surprise given that it was in the Conservative manifesto, which I wrote before the election—I must say that I wrote that part, not the whole of it.
Had economic circumstances been different, and given that the coalition partners share a view on the matter, we might well have put measures of that sort into place, but we live in tough times, and it is not possible to do all that we might have done or might have wanted to do. Nevertheless, Alison Wolf’s proposals shed fresh light, and we will be considering them in detail, mindful of the deadweight costs that are always associated with financial support for employers.
My hon. Friend mentioned bureaucracy, transparency and flexibility in the system, and he asked for my assurances on those matters. My officials are working on plans greatly to simplify the apprenticeships system, and to make it as easy as possible for employers of all shapes and sizes to take on an apprentice. Indeed, a taskforce led by major employers has just reported to my officials on the subject. It will use the recommendations of real employers with relevant experience to make such changes a reality. As I have said, we are piloting outcome payments for large employers and developing a toolkit for smaller employers to guide them through the process. Smaller employers often say, as my hon. Friend will acknowledge, that the process is confusing; they are not sure where to turn, or which steps they need to take and when. Bringing the information together in a highly accessible form will counter some of those doubts and answer some of those questions.
My hon. Friend knows that I wrote to all Members during national apprenticeship week in February, urging as many as possible to take on apprentice in their offices. An apprentice works alongside me in my ministerial office—I was with him today—and my Parliamentary Private Secretary, my hon. Friend the Member for Bromsgrove (Sajid Javid), has just taken on an apprentice—he is a model of all that is best about the 2010 intake of Members, and I urge all hon. Members to do the same. I would, of course, be delighted to host a reception for Members from across the House with their apprentices not only to celebrate their commitment to the programme but, more importantly, to advertise the apprenticeship brand. If we take steps forward in that regard, we can reasonably ask others to do the same.
As for funding, I will refer that matter to my right hon. Friend the Chancellor of the Exchequer who will no doubt respond to my hon. Friend personally. [Laughter.] I jest, Mr Davies. I will of course look at whether my Department can fund such a reception, but the hon. Gentleman cannot expect me to give a detailed commitment at this stage. Certainly, in November, we will be hosting a parliamentary reception in partnership with the NAS for exemplar apprentices, apprenticeship employers, a number of other key partners and a selection of employers who wish to recruit apprentices.
An important factor in raising the status of and demand for apprenticeships is the perception among prospective apprentices and their employers of where an apprenticeship can lead and what an apprentice can become by engaging in an apprenticeship. That is about not only advice, guidance and the aesthetics around apprenticeships, but the promotion of apprenticeships. The kind of fair that my hon. Friend ran in Gloucester and that other hon. Members are now running in their constituencies are immensely important in raising the profile of the brand and in countering some of the mis-assumptions about apprenticeships that might prevail among employers or learners.
I warmly support the 100 apprenticeships in 100 days initiatives that have been run across the country. We will look at other ways in which to promote apprenticeships. We are always keen to be innovative, creative and imaginative, and I assure hon. Members that the NAS is considering a range of ways in which to advertise the virtues of apprenticeships in every way.
Last year, we published in the national press the names of all those people who had achieved higher apprenticeships in the same way in which we publish the names of people who achieve degrees and postgraduate qualifications. That is the kind of thing that I mean when I discuss new ways in which we can celebrate success. Such ambitions have been broadly welcomed by employers as steps in the right direction. In the final analysis, the impact of an expanded and improved apprenticeships system on learners’ lives and on our collective prospects for economic growth depend most of all on employers’ willingness to take on apprentices. Government can only do so much. We celebrate the 85,000 employers who currently take on apprentices, and we should recognise their commitment to those people—their willingness to invest in individual futures.
Many larger employers appreciate just what a boost apprentices can give to a company. During the course of this year, we have seen a welcome number of larger businesses pledging to create or expand apprenticeship programmes. My hon. Friend is right to point out that smaller employers can face particular problems in that regard. It has been said by a number of hon. Members, including my hon. Friend the Member for Nuneaton, that small businesses are critical to the success of this project, and that is because they are critical to the success of our economy more generally. They are the very backbone of the British economy. Working with very small businesses to help them to deal with some of the burdens and hurdles associated with apprenticeships is a priority for the Government.
Research has shown that SMEs tend to be less aware of apprenticeships and their benefits than larger firms. I pay tribute to those SMEs that take on apprentices, which form the majority of apprenticeships. None the less, we must go further. The remedy for some of the difficulties lies with my Department and the NAS, and we are working determinedly together to reduce to a minimum, consistent with quality assurance, the bureaucratic pressures associated with training an apprentice. We have already acted to provide special help for the increasing number of SMEs, such as those in advanced manufacturing and digital industries, which require high-level skills. The 10,000 additional high-level apprenticeships will be focused largely in SMEs. We are also offering new grant funding and will support businesses coming together as consortia to build advanced and higher-level apprenticeship schemes to address skills gaps. That could include setting up new training frameworks and delivering joint apprenticeship training.
My hon. Friend the Member for Wyre Forest (Mark Garnier) made a bold bid on behalf of the Kidderminster business enterprise zone. Although I cannot comment on the detail of that, I acknowledge his well-known commitment to his constituency.
The shadow Minister spoke about the structure of schemes. There is an argument for a modular approach. We will consider that, because it is particularly relevant to micro-businesses, the virtues of which have been advertised by many Members.
It is important to recognise that employing an apprentice might not always be possible for every small business. As my hon. Friend the Member for Gloucester has pointed out, that is one good reason to look seriously at GTAs and ATAs. Such measures will help to ensure not only that we provide more apprenticeships, but that apprenticeships are available in a wider range of companies and a larger number of specialisms than ever before. That is important for rural communities. My constituents simply cannot travel long distances to large companies to do apprenticeships, which they might be able to do more easily in an urban area. Therefore, the roll-out to more companies, especially small companies, has disproportionate significance in those kinds of constituencies.
The commitment that the Government have made to apprenticeships is unequivocal and unabated. That is good news for the people and businesses of Gloucester and for people up and down the country. Apprenticeships embody everything that this Government and I personally stand for. Politics is about ideas, but ideas stripped of feeling and heartfelt sentiment are cold, arid and sorry things. My heart-felt commitment to apprenticeships is not something for which I apologise. Benjamin Disraeli said:
“Never apologise for showing feeling. When you do so, you apologise for the truth.”
The truth is that apprenticeships deliver both for our economy and for a wider social purpose. By extending apprenticeship opportunities, we will feed social mobility. This ladder of opportunity will enable the most disadvantaged to climb to highly skilled, highly paid and respected employment.
However, in the end, what we earn is less significant than what we do and what we are. The worth and purposeful pride that people gain from an apprenticeship and from acquiring a competence that has economic value are immensely important in building a society that works. Every business can play a vital part in fulfilling this vision, and I will work to ensure that the barriers in their way are pulled down. Together we can create a society where all feel valued because each is valued. I am talking about a bolder, better and bigger nation—a British future as glorious as Britain’s past.
Richard Graham
I am grateful to you, Mr Davies, for chairing this debate and to all the hon. Members who have participated. I am grateful to the shadow Minister, the hon. Member for Blackpool South, for his contribution and to the Minister, who believes so strongly in the cause to which all of us are so committed, for delivering his response to my debate. He has reassured us about the future of apprenticeships overall. There is a renewed focus on tackling the smallest businesses and making apprenticeships accessible to them, which can only provide reassurance to the young unemployed who are seeking opportunities from the Government.
Question put and agreed to.