Baroness Neville-Rolfe
Main Page: Baroness Neville-Rolfe (Conservative - Life peer)Enterprise Bill [HL]
Baroness Neville-Rolfe Excerpts
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills and Department for Culture, Media and Sport (Baroness Neville-Rolfe) (Con)
My Lords, I am grateful to the noble Lord, Lord Stevenson, for his clarity and succinctness, and for the other comments that have been made in this debate. If I do not answer all the points exactly, I hope to do so during the course of a series of amendments that we have; for example, I shall have some more to say on quality a little further on. I shall try to look at these amendments in the round.
Amendment 50 seeks to remove part of the definition of the term “public body” from the clause, which relates to bodies that are not public authorities but have functions of a public nature and are funded wholly or partly from public funds. The definition gives an overview of the types of bodies that might be covered by the duty. The Government think it right in principle—and I think that there is agreement—that public authorities and other bodies performing public functions should be capable of being subjected to targets. However, this is only a power to prescribe; it does not oblige all those that fall within the other public bodies category to be subject to a target. Therefore, a particular body will be subject to targets only when the Secretary of State makes secondary legislation—just to be clear. Our intention is that bodies with a workforce in England of more than 250 employees will be subject to the duty.
My noble friend Lord Hodgson is absolutely right that bodies are entitled to clarification as to which bodies are in and which are out, and we will set out the full list of public bodies affected in a consultation at that we intend to publish during the passage of the Bill. That will be an opportunity for those affected to respond to the consultation. I am sure that it is not yet available, but this Bill starts in this House, and there is an interplay between what we are doing here, which is perhaps relatively narrow, and the emerging policy on apprenticeships, which coincides with it. The list of bodies will be set out in regulations, and we will bring those forward for debate in both Houses, following the passage of the Bill.
Lord Hodgson of Astley Abbotts
So it is going to be a very long list of a series of charities and voluntary groups, and it will not be available until after the Bill has passed. Is that what the Minister just said, because that is not terribly satisfactory?
Baroness Neville-Rolfe
I shall try to answer on the specifics, to give a feel for bodies that will be in and those that will be out. A key concern was that, for example, bodies as small as Kids Company could be caught, but the receipt of the grant that it used to have, should it still exist, would not suffice to bring the body into scope. That is my understanding.
To respond to a point made by the noble Baroness, Lady Sharp, we are going to use the ONS definitions as a starting point for considering which bodies should be in scope. However, as I have said, we will be consulting. We appreciate that a body may feel that it has good reasons for not being in scope. For example, I know that the noble Baroness, Lady Warwick, is concerned about smaller housing associations. Following the ONS’s announcement on Friday, the Government have confirmed that they will,
“bring forward measures that seek to allow housing associations to become private sector bodies again as soon as possible”.
That would take them out of the scope of this duty, and we will take account of that when preparing our consultation. It is a fast-moving area, so I appreciate the complications, but I am happy to engage with people to give them as much clarity as we can. The scope will be set out for consultation, and the limit of 250 employees will help to some extent to make people less concerned about bodies that might be brought in.
Lord Hodgson of Astley Abbotts
One area causing particular concern is that of the larger charities providing overseas aid, and distributing it for DfID, which come above the 250-person ceiling or floor and are operating not in the United Kingdom but overseas. It would help if officials or the Minister could let us know whether they as a category will be included in the need for apprenticeships.
Baroness Neville-Rolfe
As I said, the list will be available for consultation. It will be available during the passage of the Bill. I can give that undertaking. We will also consider any requests for removal as part of that consultation. However, it is important, for the careers of employees and the effectiveness of public institutions, that the public sector delivers its fair share of apprenticeship growth. We will give some further thought to my noble friend Lord Hodgson’s point, to see whether we can give any greater clarity, but I can give an assurance that we will be consulting.
To respond to the point made by the noble Lord, Lord Stevenson, which was picked up by the noble Lord, Lord Young, about local authorities, officials in the BIS/DfE apprenticeships unit are in active discussion with the DCLG about the public sector target and its application to local authorities. We will consult on the level of the target and who should be in scope. We cannot speculate on the figure, but to do so just as an indication, we are currently working towards 2% to 3% for consultation, but that will be subject to confirmation.
Baroness Neville-Rolfe
Of employees.
To respond to the noble Lord, Lord Young, central government departments will be in scope. We agree strongly that the Civil Service should play its part. Indeed, I have an apprentice in the Bill team. I think that that is leading the way.
I turn to Amendment 49DA, which would remove the power of the Secretary of State to make regulations to set targets for public bodies. I do not think that that is the intention of these probing amendments, but I will say that investing in apprenticeships makes economic sense. In June 2015, research on further education in England indicated that adult apprenticeships at level 2 and level 3 deliver £26 and £28 of economic benefits respectively for each pound of government investment, measured on an NPV basis— the difference between gross benefits and costs. As for the apprentices, to pick up another point, individuals with a level 2 apprenticeship earn on average between £48,000 and £74,000 more over their lifetime than similar individuals with level 1 or 2 qualifications only. Higher apprenticeships could earn £150,000 or more on average over their lifetime, compared with those with equivalent vocational qualifications.
Amendments 49EA, 49EB and 50AB come together. They would extend the scope of Clause 18 to place apprenticeship targets on private sector companies in the UK. They state that the target should be achieved via higher-level apprenticeships. As I have always agreed with the noble Lord, Lord Young, apprenticeships are jobs and depend on employers offering opportunities to young people. Finding the right opportunity is vital for any young person starting out on their chosen career. There will always be competition for the best places, as there is for the best universities. Employers will naturally take the best candidate for the job that they offer. Figures show that, of the 851,000 people participating in apprenticeships in 2013-14, 185,000 were aged under 19.
The positive effects of apprenticeships are clear. They have an economic and social benefit for individuals and society as a whole. The public sector employs fewer apprentices as a proportion of its workforce than the private sector. The Government are therefore keen to place targets on the public sector.
However, we are against red tape and feel we should be careful about imposing new burdens, especially when the desired objective can be achieved in another way. Therefore, 1.3 million private sector organisations that employ people should not suddenly be required overnight to take on apprentices. Instead, via apprenticeship reforms, we are putting employers at the heart of the apprenticeship programme so that they are encouraged and incentivised to employ apprentices. We also judge that it would be administratively impractical for government to monitor whether employers were having “due regard” to the targets and take action where this was not the case. Firms would have to set up a whole compliance system for this, and we believe that their efforts are better used elsewhere.
I shall come to quality on another amendment, but I shall say something about career guidance because I agree with the noble Lord, Lord Young, that it is very important. That is why we have set up the employer-led Careers & Enterprise Company. This area is rightly being actively pursued by DfE, with Ofsted taking a great deal of interest in careers in its inspections. We have discussed before the problem of getting into schools and I will feed back the noble Lord’s observations to my noble friends in the DfE. Like him, I go to schools and, like him, I always mention apprenticeships. As government, we can do a lot, but we can also do a lot individually to help encourage careers in schools.
Noble Lords made a number of observations. We will come on to quality elsewhere. I hope that the readiness to consult and my indications of where we are heading have been helpful and will enable the noble Lord to withdraw his amendment.
Lord Young of Norwood Green
The Minister did not respond on public sector contracts, and I would welcome a response. I do not think I am going to be surprised by it, but I would like one.
I do not disagree with the Minister’s point about the difficulty of setting targets for every company, but we should surely be concerned that we never seem to have got a lot further than something like one in four or one in five companies taking on apprenticeships. We never seem to be able to push the needle on the dial much further than that. If we believe, as I know the Government do, that the vast majority of these apprenticeships should be coming from SMEs, it is vital that we make some impact on them. What plans do the Government have? I heard the Minister say that employers are at the heart of this and will determine the skills required. I do not quarrel with that. The Government have introduced new funding arrangements which not every employer is happy with. That is a bit of a worry because they feel that they will have to claim back. I have heard from employer organisations that there are real concerns about that. That is the problem we face if we want to get significant numbers of young people. Although I heard the figures the Minister quoted, I still think that that will be the challenge and that getting them into these small and medium-sized enterprises will be vital.
Baroness Neville-Rolfe
We will come on to discuss contracting out, which is the subject of the next amendment. I hope it will enable me to reassure the noble Lord on that point. SMEs also come up later. His points are extremely well made. This is a very important area. There is a lot of cross-government consensus that we need to have a step change in apprenticeships. Germany and Switzerland have classically done a better job. With the levy, the change and the move to proper frameworks and at least a full year for every apprenticeship, we are trying to move into a different place.
The provisions in this Bill do not answer all the questions, but they do some useful things. With the noble Lord’s agreement, I hope we can move on to the next amendment and talk about what we are going to try to do for contracting out.
Baroness Sharp of Guildford
Before the Minister sits down, perhaps I could interject briefly. I wondered whether the noble Lord, Lord Young, had actually looked through the list of amendments and noticed that we had the following one, as was rightly said, on public procurement, and the subsequent one, which is on small and medium-sized enterprises. However, I put it to the noble Baroness that she says there is a lot going on with apprenticeships at the moment. I think a very real problem has arisen, which is that the Government are constantly changing the goal posts in relation to apprenticeships and this poses a real problem for a lot of companies.
As is very clear indeed from the Ofsted report that came out last week, what has been happening is not satisfactory and needs to be changed. One of the problems facing the whole sector is constant instability. We have a situation in which the employer ownership pilots were going on, and we have the trailblazer pilots going on, and then suddenly the Government intervene with the apprenticeship levy, which changes the whole game once again. The whole thing is thrown up in the air and a lot of companies are very uncertain as to quite where they are going to be going. Take the construction industry: there is already a construction industry levy—is the other levy to be on top of that? I know there have been consultations about it, but we do not know yet what is going to happen. Therefore, I put a plea to the Government and the Minister: please try to establish a broad framework for setting apprenticeships and then do not fiddle with it for about three years to give it a chance to bed down.
Baroness Neville-Rolfe
I have to say I agree that having a good vision and a good framework for this important area of policy is essential. Obviously we came back in May—to the surprise of some of us—and we are trying to move forward with a new approach to apprenticeships, which does include a levy because we think that that is a good way of getting funding into this absolutely vital area. Of course I, like everybody who used to be a huge employer in their former lives, recognise the importance of certainty for employers. However, I do not think that we should apologise for trying to improve the framework. We should do that. We should then give the new arrangements a clear run. However, we are at that point in the process where policy is being formed. We are bringing in a levy, which is still the subject of consultation. We are rightly in the Bill trying to move forward on a couple of small and important issues, including this business of the definition of apprenticeships, where I feel that having sanctions, as there are for degrees, will actually help to improve the recognition of this vital employment category.
Lord Stevenson of Balmacara
I thank all noble Lords for contributing to the debate. It has done what we wanted, which was to begin to open up this whole area and to get a sense of where the Government are going, and to try to see through to the vision and the framework, which the noble Baroness mentioned.
I think the slight problem we all have around the Room is that we are not quite sure what the vision actually is because we have not seen some of the detail of it. We have some doubts about whether the framework is going to be sufficient to get the country to the point where we can say that we have a competitive environment similar to Germany and others who have been at this for some time. The noble Lord, Lord Hodgson, is quite right to bang on about whether or not large charities doing work for local authorities are going to be included. It will make a huge difference to them. We need to know a bit more about who will be on the list. If the Government are, as we know, changing around the definitions to housing associations so that they are in but they could be petitioned to come out by some other piece of legislation, this is not going to provide the basis of what we are talking about.
I suppose we were being a bit cheeky in trying to delete the first subsection of the first new Section in the clause, but we wanted to draw out from the Minister the rationale behind what we are doing. She says that it makes economic and social sense for bodies to recruit something like 2% to 3% of their workforce, even if they are charities, and that the burden should be on the larger—presumably, the 250 employees threshold will become the standard, as that is the target for small and medium. So it is largely going to be on those that are not SMEs, which is interesting but nevertheless understandable in the circumstances. Where we disagree is that, although it seems to the Government to make economic sense for those bodies to be involved, that does not read across to the productive sectors of the economy, for which there will be challenges and obviously lots of things are still to happen but for which the case is still very strong that there should be some engagement. After all, if the Government are going to levy them for payment of the apprentices that they are going to take on, presumably they are already in contact with them—presumably, they have to write to and communicate with them—so it would not be very difficult to put a target in place in return for the money.
However, a lot of this will come up later. We have had a good start to today’s debates. I am grateful to all concerned. I beg leave to withdraw the amendment.
Lord Stevenson of Balmacara
My Lords, we have three amendments in this group. The first follows up what the Minister said in response to the earlier debate. Apprentices are in jobs, and if they are in jobs, they should be paid as if they are in jobs, and if they are making a contribution, that would be a good thing to do, so our suggestion is that that should be paid the living wage. I would be interested to hear the argument against that. It has to be not only a training but a way of living. Anybody who does an apprenticeship will get the training, we hope, that will get them into remunerative employment. We heard the figures about how much it will benefit them over their lifetime, but they have to start somewhere. Starting below the current living wage will not be a great advertisement for these areas.
Baroness Neville-Rolfe
Sorry, I had thought that the living wage amendment was in a different group.
Baroness Sharp of Guildford
I regrouped it. Today’s list is different from the one that was circulated at Friday lunchtime.
Baroness Neville-Rolfe
Can we clarify what we are planning to speak about, so that I can answer in due order? I would be extremely grateful.
Lord Stevenson of Balmacara
My only excuse is that, as I explained, I am a bit underbriefed, having been thrown into the spotlight. I am also working from an earlier version. Since the Minister was in a not dissimilar situation in the previous group, perhaps she will bank my comments and reply to them at the appropriate point, if that would be convenient for her. Amendment 49H will come up later.
I want to endorse the points made by the noble Baroness, Lady Sharp, and, in a previous group of amendments, by my noble friend Lady Corston in relation to quality. There will be a transition to the new scenario sketched out in the Bill and put into force by the Act, but at the moment we are starting from a very low background. There are good areas of activity. We have all heard about Crossrail’s good record on this, and there are other employers who do a lot of good. The Olympics are a gold standard for the aspirations we have in his area. However, these groups make the point that it will be important to try to find a way of bridging between the current system and the new system so that only good-quality apprenticeships that extend learning and training opportunities for the young people taking them will be able to benefit from them.
Baroness Neville-Rolfe
I am very grateful to the noble Baroness, Lady Sharp, for explaining her amendment so clearly and for regaling us with the examples. I agree that the Olympic legacy was amazing in many respects, particularly in relation to apprenticeships and the partnerships in east London that she described. There is a debate on the Olympic legacy on Thursday, and I am sure I will be able to use the noble Baroness’s material to good effect.
My favourite example of good practice is Crossrail. I have been down the tunnel. I do not like racing cars, but I like Crossrail. What Valerie Todd said to the committee was extremely well put. Crossrail is good not only at apprenticeships but at giving contracts to firms outside London and to SMEs, so there are three good things coming together there.
I am also extremely grateful to the noble Lord, Lord Stevenson, for agreeing that I may answer on quality under a later grouping. Groupings moving around makes life difficult for those of us who are trying to shine a light into the proposals we are discussing in this Committee.
Amendments 49E and 50A relate to employment by subcontractors. They allow the employment of apprentices by subcontractors of a public body to be included in targets set for the public body. They also allow a public body to set apprenticeships targets for its subcontractors. There is a broad definition of subcontractor. Clause 18 will improve the capacity and capability of the public sector, ensuring that it benefits from the same positive impacts that apprentices bring to the rest of the economy.
Baroness Neville-Rolfe
I think the answer is that we do not have the information with us. Perhaps we could take that away in the usual way and see what we can do in terms of an estimate and come back.
While I have the Floor, I will respond to the point about charities that was raised under the previous amendment but is also relevant to this because in the public sector work is often contracted out to charities. To be clear, if charities are not on the ONS list for the public sector, current thinking and emerging policy is that they will not be in scope. In practice, it is very unlikely that many charities would qualify in this process.
Baroness Sharp of Guildford
I thank the Minister for her response, and all those who have participated in this debate.
It is a little disappointing that she is not more forthcoming on this. I recognise that she has made provision for major public contracts but, first, as I understand it, that is to be negotiated with the contractors —it is not mandatory for large public contracts. Secondly, a large number of smaller contracts go through public bodies on which it would be useful for there to be some nudging. The “may” that I would have put in would very much be nudging those subcontractors to think about apprenticeships and think whether they could not carry them through. We are concerned about the lack of apprenticeships in small and medium-sized companies, and this is one way in which to encourage those companies to come up with proposals for apprenticeships. It would be an opportunity for the Government to nudge things in that direction. As the Minister made clear, big contracts began only in September this year, so we have a long way to go. What can be achieved, as is shown by the Olympic Park and Crossrail, is very considerable. I hope that we see something a little more positive from the Government some time. I beg leave to withdraw the amendment.
Baroness Sharp of Guildford
I cited the example of Birmingham City Council. Both Crossrail and the Olympic park set themselves targets.
Baroness Neville-Rolfe
My Lords, this amendment would require that, when setting public sector apprenticeship targets, the Secretary of State must also impose targets on public bodies in relation to the number of young people who were in care and those with special educational needs or disabilities. I am very grateful to the noble Baroness, Lady Sharp, for bringing the issue alive, for bringing up the findings of the Social Mobility Committee and for talking about Birmingham as an exemplar of good practice—because we must capture and celebrate good practice in all these areas. I was encouraged to hear of the improving completion rate that she mentioned.
The Government do not feel that it is appropriate to specify a proportion of the public sector target for young people leaving care or with physical or learning disabilities. We are trying to keep our targets simple. Apprenticeships are real jobs with training. As with all other jobs, employers have to make the final decision about who they hire for any apprenticeship that they have advertised. I know this having run apprenticeships myself when I was in business. Apprenticeships are employer led, so we are not able to ring-fence apprenticeships for particular groups as to do so would mean requiring employers to hire particular people for their vacancies. I am not sure that that would work.
However, although we would not want to interfere in employers’ decisions about who to recruit, we believe that more can be done to ensure that people from a diverse range of backgrounds are in the best possible place to apply for and secure an apprenticeship. The Government are committed to ensuring that care leavers are aware of the support and opportunities that are available to them. The Government provide full funding for apprenticeship training under the existing frameworks for entitled 19 to 23 year-old care leavers, and a number of local authorities already offer apprenticeships to care leavers, as has been said.
I have quite a long list of what we are doing to help care leavers, but in the interests of time I will set all that out in a letter, alongside information on what is being done in various different ways so that care leavers can access programmes such as traineeships to get the support they need to get ready for an apprenticeship. The noble Baroness also mentioned a review. In turn, I will mention Peter Little OBE, who undertook a detailed review for the Government of the inclusiveness of apprenticeships for people with learning difficulties or disabilities. Perhaps it would be helpful to set out the information I have in a rather extensive note. I have tried to explain why accepting this amendment would be a problem, but I will set all that out.
It is good to see the noble Lord, Lord Addington, here because of all that he has done on support and accessibility. Apprenticeships are accessible. In 2013-14, almost 40,000 people with disabilities or learning difficulties started an apprenticeship. We can do more. We can continue, as he said, to look at English and maths requirements within apprenticeships to ensure that they do not create a barrier, and the use of reasonable adjustments for disabled learners has been promoted through the skills funding rules. The SFA—the Skills Funding Agency—has published an evaluation of a series of diversity and apprenticeship pilots which looked at innovative ways to increase accessibility for underrepresented groups.
We judge that the measures we are undertaking can give confidence that the Government are ensuring in the right way that apprenticeships are accessible for people of all backgrounds, including care leavers and people with special educational needs and disabilities. I hope that noble Lords have found my explanation helpful and will look forward to my letter, and that on this basis the noble Baroness will withdraw her amendment.
Lord Addington
When the Minister does provide that letter, might it include some guidance about compliance with the Equality Act? People tend to say, “Oh no, that is different, that is not for us”. It needs to be stated quite clearly that the colleges and employers that are going through this process know that they are part of the legal framework and are not in some way exceptional. It is my experience that people are hiding behind the fact that we are different.
Baroness Neville-Rolfe
I will certainly undertake to look at that point and discuss it further with the noble Lord, if I need further clarification, so that I can give him a proper answer.
Baroness Sharp of Guildford
My Lords, I am grateful to the Minister for her response and I look forward to the letter that she is going to send me. I hope that she will update us on precisely what is happening in relation to the Little report. My information is that not enough has been done already and it would be very nice to see a spur applied to some of the implementation.
Again, I am a little disappointed by the Government’s response. They do not hesitate to set targets not only for local government but for all kinds of public bodies, yet they are not prepared to write into those targets a much lesser target in terms of taking on young people who we all know need to be offered these opportunities. Access is a recurring theme whenever we talk about apprenticeships and, for that matter, education and training provision for younger people. There is no doubt that access is difficult for them. Opening the doors by means of something relatively gentle in terms of a target for these bodies to aim for need not be as prescriptive as the Minister suggests; it could just nudge them in the right direction.
I look forward to the Minister’s letter and may return to this issue once I have read it. I beg leave to withdraw the amendment.
Baroness Neville-Rolfe
My Lords, I welcome all noble Lords’ comments. It was good to have the contributions of the noble Baronesses, Lady Byford and Lady Golding, and the noble Lord, Lord Snape. I think there is a large element of agreement in the Room that quality is important. I will come on to how we are going to achieve that.
I will start by addressing Amendment 49G, on the living wage. As I have made clear previously, we believe that apprenticeships provide the chance to gain new skills and knowledge, which employers really value. The Government are committed to improving living standards, particularly for the low paid, and from 1 October 2015 the national minimum wage rate for apprentices was increased to £3.30 per hour, which was significantly higher than the £2.80 per hour recommended by the Low Pay Commission and represented a rise of 57p per hour for the apprentice. It is estimated that 75,000 apprentices will be covered by this new rate.
However, that is not a guide to what employers should pay, and employers are encouraged to pay higher where they are able to do so, with many employers choosing to pay more than the minimum rate. But we must recognise that apprentices are, at least initially, less productive than other workers. We do not want to stop apprenticeships—especially in sectors such as crafts, which are close to the heart of noble Lord, Lord Young—by making them unaffordable to employers. As an economist by background and a businesswoman, I assure noble Lords that that can be a risk.
Everyone who is entitled to the national minimum wage should receive it. We recently announced measures that will strengthen its enforcement. The new national living wage is an essential part of moving to a higher-wage, lower-tax, lower-welfare society. Work must pay for hard-working people in the UK. The national living wage will be introduced from April 2016 and will be set initially at £7.20 per hour. Apprentices aged 25 and over who have completed their first year will be entitled to this rate of pay. It will of course be properly enforced.
Amendment 49H is intended to enable the Government to make regulations to put in place apprenticeship training for supervisors of apprenticeship programmes. As my noble friend Lord Courtown said in his famous letter, complaints can also be made to the Skills Funding Agency, which is responsible for running the National Apprenticeship Service, which helps employers deliver apprenticeship programmes within their organisations. This includes a website and a helpline designed to support both employers and potential apprentices. Through the website, both small and large businesses can find a detailed breakdown of how they can best work with training providers to deliver an apprenticeship programme, including what the terms for offering an apprenticeship are. For businesses with fewer than 250 employees, the National Apprenticeship Service has a dedicated small business team, which specialises in meeting and supporting the needs of smaller employers.
Of course, we must remember that the majority of apprentices are, first and foremost, employees, as was emphasised by the noble Lord, Lord Snape. Employment and health and safety law apply to these apprentices just as they do to other employees—I am glad to have the opportunity to say that today—but we want to ensure that apprenticeships are as simple for businesses to offer as possible, as we know that this will lead to more opportunities for young people.
Amendment 50AA would require the Government to make regulations setting out further minimum standards for apprentices within 12 months of the Act being passed. I thank my noble friend Lord Hodgson for his support in this area, and I look back with approbation at the points made by my noble friend Lord Baker of Dorking at Second Reading in this important area about how we change things for the better and how we get quality right.
Turning to quality, it is worth saying that the Government have already taken steps to improve the quality of apprenticeships. Short-duration apprenticeships have been removed from the system; apprenticeships must provide substantial and sustained on- and off-the-job training and last a minimum of 12 months; apprenticeships must be real jobs, leading to competency in an occupation; and they need to deliver transferable skills, including English and maths, so that people can progress their careers.
I do not agree that apprenticeships have to be old-fashioned. I have been struck by the way employers are developing new standards to ensure that apprenticeships meet the skill needs of their sectors and provide quality. The published trailblazer quality statement sets out a range of measures to retain and improve quality, including the requirement for all apprenticeships to last at least 12 months. The new standards will replace existing complex frameworks with short, simple, accessible standards written by employers in language they understand.
The noble Lord, Lord Young, and my noble friend Lord Hodgson rightly referred to the Ofsted report. It criticises the quality of provision as it has been, not that which is being designed and put in place through our reforms. As I was explaining earlier, we are in transition. Putting an end to poor-quality training lies at the heart of our reforms. Ofsted’s report backs up the findings of our 2012 review and provides further evidence in support of our decision to put employers, rather than trading providers, in the driving seat.
My noble friend Lord Hodgson asked if he could offer a bright researcher an apprenticeship. An employer can offer an apprenticeship, providing that the employer satisfies the Skills Funding Agency’s rules and requirements to the approved English apprenticeship standard. People can always complain to the SFA if they are not happy. On the face of it, I think my noble friend should be encouraged, but clearly the apprenticeship must be of the right quality and duration; he must be a model employer.
We are also introducing more rigorous testing and grading at the end of the apprenticeship to ensure that apprentices are reaching full occupational competence—again, the detail was set out in the letter from my noble friend Lord Courtown. I can also confirm that, from 2018, we will use apprenticeship outcomes data to produce performance tables for 16 to 19 year-olds. This will sit alongside apprenticeship success rates, which are already published by BIS, and will help to inform choice for young people and employers and drive up the quality of provision.
The success of the minimum standards and the further provisions to improve quality is beginning to be borne out by apprenticeship evaluation reports. In 2014, they found that 89% of apprentices and 82% of employers were satisfied with the apprenticeship respectively. I mention that, but I do not think that we should rely on it; the quality points raised are important. We do not judge that the Government should be committed to placing further requirements within a set framework. It is important that employers, providers and apprentices have the time to engage with the apprenticeship reforms.
On Amendment 50AC, the information requirements as currently set out in the clause enable the Secretary of State to understand whether public sector organisations are meeting their targets and to ensure that the bodies are publishing that information to increase transparency. The Government intend to minimise the administrative burden associated with reporting under the clause. Any additional information prescribed by the Secretary of State will be related to the apprenticeship target.
We have been discussing the need for more quality here, but people out there are also concerned about potential bureaucracy in the new arrangements, and we must have a balance. We are unable to agree that it is appropriate to mandate public sector bodies to provide and publish the additional information.
Finally, the noble Baroness, Lady Golding, asked about the link with prompt payment. There is no link—except that they are in the same Bill, which is good for us to reflect on—between the apprenticeship clauses and the late payment provisions, but they are both designed to promote enterprise and growth.
I hope that in the light of those comments noble Lords will feel able not to press their amendments this evening.
Lord Morris of Handsworth (Lab)
I bring to the attention of the Minister and, indeed, the Committee that of those affected by the closures in the steel industry among the worst sufferers are hundreds of apprentices. They have not got the same facility or ability to change and move employment. In the periphery of this debate, I ask the Minister to take a very good look and have some consultation on how apprentices can be placed, or give some measure of support for continuity of, if not the practical dimension of their learning, at least the academic dimension.
Baroness Neville-Rolfe
I am extremely grateful to the noble Lord, Lord Morris, for intervening. I can certainly say that this is a very important point. I know that the task forces set up to look at what can be done for employees who, sadly, lose their jobs are on to this point on apprenticeships. I know that in Redcar some new jobs have already been found, but I am certainly happy to talk to the noble Lord further. I am happy to put that on the record.
Lord Snape
Will the Minister disabuse either me or the noble Lord, Lord Hodgson, on our progress today and say whether we intend to move on to the clauses that refer to the pub companies, in the way that the noble Lord obviously feels that we are about to do?
Baroness Neville-Rolfe
Is the noble Lord asking about the target for today’s discussion?
Baroness Neville-Rolfe
I think we are trying to get to Amendment 52Q, not to pass it—so he can go to the pub.
Lord Snape
We can go to the pub after Amendment 52Q, as the noble Baroness said, but I am grateful for that clarification. I hope that the noble Lord, Lord Hodgson, is not too disappointed.
Lord Young of Norwood Green
I do not know whether the noble Baroness has a copy of the letter that the noble Earl, Lord Courtown, sent to us, but in it he says:
“In addition, the Skills Funding Agency … runs the apprenticeships helpline which was given an expanded remit in the summer, enabling anyone involved in an apprenticeship—not just the apprentice—to raise concerns about any element of how the apprenticeship is being delivered”.
I did not get a response on the concerns expressed in the Ofsted report and in anecdotal accounts. The letter goes on to say:
“The SFA have rigorous checks in place and have embarked on a programme of staff training to ensure that these issues are dealt with effectively”.
I like the promise. I would put against it “CAD”—“check against delivery”. How will it do it, given the vast number of apprenticeships? That is not to dismiss the fact that Ofsted will also do some work on this, but there is a commitment in that letter.
Setting the standards is one thing. Having a defined framework in understandable language is great. The problem we have is those employers that might do that, but fail to deliver. It says in the legislation that they will be punished and fined. I am interested in that because it might help, but I am far more interested in seeing whether the Skills Funding Agency has the ability to monitor apprenticeships to ensure that they are delivering on quality as well as quantity and how it will do it. If the Minister does not have an answer that is okay; I am quite happy to accept it in writing. However, it is a part of the Government’s commitment to raising quality as well as quantity.
Baroness Neville-Rolfe
My Lords, I stand by what my noble friend Lord Courtown put in his letter. I will not delay the Committee by repeating it, although people are very welcome to a copy. Obviously, we understand that ensuring quality is an absolutely key part of our reforms. That is what we are saying. The SFA has an important part to play here. As I have said, Ofsted also has a part to play. We will be bringing in the quality control system that was described.
Although some people were concerned about the changes to apprenticeships, we are changing the system and we will have to make sure that the surrounding infrastructure is appropriate and appropriately resourced —we can certainly discuss that further—but that is why I did not repeat the points my noble friend made about the introduction of registers and quality control over training providers.
Lord Stevenson of Balmacara
I thank noble Lords for contributing to this debate. It has certainly raised a number of issues, which we will probably have to come back to on Report. In the interim, of course, we will look forward to seeing what is now becoming a voluminous correspondence from the Minister. In the previous Parliament, she had to take on the very difficult task of matching the noble Viscount, Lord Younger, who set standards beyond any we had seen before. We look forward to her matching that.
We have given this area a good look. Although we may come back on one or two issues, I beg leave to withdraw the amendment.
Baroness Neville-Rolfe
My Lords, I am grateful for these amendments and for the noble Baroness, Lady Sharp, saying that there is much that is good. Actually, it is not only at the top end—the engineering apprenticeships that she described—but some of the retailers and the hospitality companies produce superb apprenticeships, which take some of the poorest and least well educated people in society and allow them to get on and progress in an awesome way.
We have discussed many of the issues underlying Amendment 49J because it talks about quality as well as quantity and, of course, Amendment 52 mentions funding. The Chancellor announced the Government’s intention to introduce the apprenticeship levy in this summer’s Budget—a surprise announcement, I think. It will be used to fund and improve the quality of apprenticeships. We need a reversal, as we have all been saying, in the trend of employer underinvestment in training, which has seen a decline in the amount and quality of training undertaken by employers over 20 years. This was highlighted in the report by the noble Baroness, Lady Wolf, published in July this year, which recommended the introduction of a levy to fund the apprenticeship programme.
Past approaches to tackle this decline have relied on voluntarism and a significant government subsidy aimed at encouraging private funding. However time spent by employees in training has continued to decline. The levy is a model that is working successfully in more than 50 countries around the world, which is why we have decided to adopt it here. We will be putting employers directly in control of their apprenticeship training. Employers are currently leading in the development of apprenticeship standards. With the levy, they will be able to decide to which apprenticeship training providers they wish to direct funding.
The Government consulted on the key levy proposals during the summer and we received more than 700 responses. We are currently analysing them and will use what employers and others have told us to try to address concerns and meet employer aspirations for growth and quality. The Chancellor will be announcing further details on the levy as part of the spending review announcement later this month. I believe it is premature to seek to impose a reporting schedule on the impact of the levy. The levy will not be introduced before 2017 and there is further work to be done on the detailed implementation of the policy. At this stage, seeking to impose new reports within a 12-month period would be unlikely to provide robust evidence.
However, I can say today that we will continue to publish comprehensive quarterly data on apprenticeships through the Government’s published statistical first releases, published by the SFA, which include data on learner numbers by age, as well as by region, gender, ethnicity, disability, level and sector. We also publish research into the impact of apprenticeships on employers, including the employers’ survey, which monitors the extent to which apprenticeships are meeting the needs of employers and identifies aspects that are under- performing, with the next survey due in 2016.
When we introduce the apprenticeship levy, we are proposing to put in place a full and structured evaluation programme and publish the results. We expect this to address the points raised by noble Lords in relation to the impact on employer investment, the mix of programmes being delivered and their quality. I ask for patience, as we intend to publish more details on the levy shortly. Amendment 49J also referred to funding for non-apprenticeship schemes; funding for those will also be a matter for the spending review. The noble Lord’s Amendment 52 relates to apprenticeship schemes in England and Wales. While apprenticeships in England are the responsibility of the Secretary of State, apprenticeships in Wales fall within a devolved area of policy.
Lord Stevenson of Balmacara
I hesitate to interrupt, but I want to make sure that I have got my point across correctly. In relation to the non-apprenticeship spending, I was not asking what the Government are spending on that. It was a question of the quantum of spending across the country, which obviously largely is sui generis to every company. The worry is that the impact of the Government taking what is effectively a tax on apprenticeship training may impact badly on that. Although it may be very hard to get since responsibilities are split between BIS and DfE, in the figures that the Minister is talking about, it would be very helpful if there could also be some reporting of the exact quantum at the moment and how that will change over the next few years. I am sure it would be a good thing to do anyway.
Baroness Neville-Rolfe
We always like to do post-implementation reviews. We like good evidence and good figures. The point is well made. Where responsibilities are shared between departments, that can sometimes be difficult. I cannot emphasise more strongly that we are trying to create a successful policy, which will require us to see what is happening. Clearly, the past is the past. We have been spending something like £1.5 billion a year on apprenticeships. In the future the system will be different. There will be a levy. I will certainly try to ensure that in our evaluations we find out how things are changing and how effective that has been. We should be learning on the job.
Lord Stevenson of Balmacara
I thank the Minister for her comprehensive response. I beg leave to withdraw the amendment.
Lord Young of Norwood Green
My Lords, I support the amendment. To pick up the last point made by the noble Baroness, Lady Sharp, about group training associations, I went round a number of them while I was a junior Minister. The Government ought to encourage them. The noble Baroness is right: although the bigger employers use their supply chains, the benefit of the group training associations is that they bring in a much wider group of small and medium-sized employers. I would welcome hearing what steps the Government are taking to encourage the development of more group training associations.
Baroness Neville-Rolfe
Small businesses are of course the cornerstone of our economy, and high-quality training opportunities such as apprenticeships can be key to supporting their growth and success. It is essential that the apprenticeship system works for those employers as well. The majority of existing apprenticeships are in fact with smaller businesses. Significant progress has been made in ensuring that apprenticeships are accessible to them.
Small businesses are directly involved in all phases of the process to develop apprenticeship standards. When new standards are submitted, evidence is required that small businesses have been involved and that they support the development of that standard. I know that from the work that I have done in the electronics sector. A variety of mechanisms is used to engage small business throughout that development—face-to-face consultation events for automotive standards and online consultation for electrotechnical standards. Small firms have been actively involved in the craft trailblazer. We engage with representative organisations that represent smaller businesses. We have even made a small travel fund available, which smaller employers can use to attend meetings to develop standards.
Most important of all, the apprenticeship grant for employers also provides employers with fewer than 50 employees with a £1,500 incentive payment for up to five new apprentices aged 16 to 24. This will continue to be available until 2015 at least.
There is also a wide range of apprenticeship training agencies—ATAs—and GTAs, as the noble Baroness, Lady Sharp, made clear. They employ apprentices and place them with host employers who may be unable to commit to employing an apprentice directly. For employers, this makes it easier to take on an apprentice. Good-quality ATAs will be able to continue to operate once the apprenticeship funding reforms have been introduced. The SFA also runs an apprenticeship helpline.
There are also lots of good examples, including case studies of apprentices and employers, on the SFA’s “Find an apprenticeship” website. I have various publications here which I am happy to share.
We believe that this is the right approach to SME support. We think it would be complex and confusing to require public sector organisations to duplicate the effort and provide additional resource to facilitate small businesses entering into apprenticeship agreements. We are putting small business at the heart of the way we are going forward. For the same reason, we are unconvinced of the merits of involving the Small Business Commissioner, whose main role is to address payment issues, particularly late payments, and to focus on that until we bring about a serious culture change. I hope noble Lords will have found my answer helpful and that the noble Baroness will feel able to withdraw her amendment.
Baroness Sharp of Guildford
I think there is a problem that is missed by the current arrangements; that is, within any locality there are quite often small and medium-sized businesses that are put off by the bureaucracy involved and do not get picked up by any of the current arrangements. Yes, there is masses of information and you have to be proactive in seeking it out. The amendment is very much a “may” amendment rather than a “must” amendment but in some rural areas and areas that fall between the core cities—in which the push is going forward because they are taking over skills—this is often not the case. I see it where I am, in Guildford, because we fall betwixt and between the Coast to Capital LEP and the Enterprise M3 LEP. However, many small and medium-sized businesses might well benefit if they were pushed a little bit in this direction. Neither the independent training providers nor the colleges are really being encouraged at the moment to pick up the tab of going to seek out people to provide apprenticeships for, in the switch to the employment ownership pilots. This is an area where a particular public body—local enterprise partnerships are an obvious example—could be useful in providing the initiative.
I will withdraw the amendment for the moment but we might return to this issue on Report because I am not really convinced that this is an appropriate answer.
Lord Young of Norwood Green
I support the noble Baroness’s amendment. She is right about the need to increase the number of higher-level apprenticeships. As I understand it, from a briefing I had from SEMTA, part of the problem is getting young people to see that this is not an either/or choice between a vocational and an academic route. People with the highest level of qualification feel that, if they are to progress to a degree, they have to go down the academic route. There are lots of opportunities for them to go down the higher-level apprenticeship route. The apprenticeships are there; we are not getting the take-up. This is another point on which to emphasise the importance of career guidance if we are to solve this problem.
The noble Baroness is right to draw attention to this part of the regulation. It is a useful and necessary emphasis. I referred earlier to the number of engineering and STEM apprenticeships that will be needed over the next five to 10 years. It is estimated to be 830,000. Not all of those will be higher level, but a significant number will.
Baroness Neville-Rolfe
My Lords, this amendment seeks to require that a person, when offering a statutory apprenticeship scheme, must stipulate whether it is a higher-level apprenticeship. This is already a non-statutory requirement for the “Find an apprenticeship” service and is covered through an apprenticeship agreement. The amendment would insert a new subsection into new Section A11 of the Apprenticeships, Skills, Children and Learning Act 2009 to provide that a person commits an offence if, in the course of business, they offer a course of training and describe it as an “apprenticeship”, unless the course or training is a “statutory apprenticeship”. I do not believe that that is the right thing to do.
Improving quality is central to our reforms, as we have agreed. Employers are developing new standards to ensure that apprenticeships meet the skills needs of their sectors, in exactly the areas that the noble Baroness, Lady Sharp, spoke about: engineering, STEM and construction. In STEM, for example, apprenticeships have increased by 42% between 2009-10 and 2013-14. The starts at age 19-plus are up 83%. This is a long-term change programme. We all know how long and difficult those are.
The published trailblazer quality statement sets out a range of measures to improve quality, including the requirement for all apprenticeships to demonstrate progression and to involve sustained and substantial training of at least 12 months. The Government are committed to the expansion of higher apprenticeships, with a fivefold increase in higher apprenticeships since 2009-10. To date, there are more than 50 higher apprenticeships available up to degree and master’s level in areas such as life sciences, law and accounting. We need to get the message out that there are these possibilities and that they can create just as good a career as going to university if someone has the appropriate bent for apprenticeships.
In the circumstances—it is getting late—I ask the noble Baroness to withdraw the amendment.
Baroness Sharp of Guildford
I thank the Minister for her reply. I think that we are very much in agreement here that this is an area where we wish to see expansion. I also agree that it is a slightly strange place in which we have managed to put this amendment. With that, I beg leave to withdraw the amendment.
Baroness Sharp of Guildford
My Lords, the noble Lord, Lord Stevenson, has already made the case for Amendment 51A. When I read this part of the Bill, I was jolted and thought, “Good heavens, why trading standards?”. In the briefing that it provided for us, the LGA was very unhappy about it being trading standards. It said:
“We are concerned about the proposal (clause 19 (7)) in the Bill to make local trading standards teams responsible for enforcing the protection of the term ‘apprenticeships’. The LGA has consistently highlighted the expanding number of statutory duties that trading standards teams are responsible for, at a time when budgets and staff in the service have reduced by an average of 40 per cent over the last four years. Government has recognised the issue and is currently undertaking a review of trading standards with a view to identifying key service priorities, yet in the past month alone it has introduced two new statutory duties for the service”.
It seems very odd for the Government to be introducing a statutory duty in an area where trading standards has no expertise whatever. Local enterprise partnerships have much more knowledge of what is going on with apprenticeships than trading standards. It is really rather absurd that we are looking to a body with no background or expertise in the area. We should be looking for a body that has some expertise and can do the job without too much difficulty.
It should be acknowledged that local enterprise partnerships are at the moment very sparingly funded; they do not have a vast amount of money at their disposal and, whether one likes it or not, this responsibility will require some resources, particularly if the body is required to make regular reports to the Secretary of State about what is going on. If we place that duty on local enterprise partnerships, we should know that they have sufficient resources to fulfil it.
Baroness Neville-Rolfe
My Lords, this is an important area; enforcement is always important. The amendments relate to the enforcement of the measure to protect the term “apprenticeship” from misuse. They would require local enterprise partnerships to fulfil that function rather than trading standards. Noble Lords will know the high opinion that I have of trading standards, and I am glad to be able to put it on the record again.
As the apprenticeship brand grows, so does the risk that the term “apprenticeship” could be misused to refer to lower-quality courses. Therefore, as the noble Lord, Lord Stevenson, explained, we intend to follow the precedent for enforcement that applies to unrecognised degrees, which is in the Education Reform Act 1998. Trading standards has a duty to enforce that legislation using its powers in the Consumer Rights Act 2015. That has ensured that UK-based operations with a physical presence are closed down, and there have been a number of prosecutions over the years. Since 2003, there have been successful enforcement cases against more than 18 offending bodies, with the closure of 10 and prosecution of a further three. In practice, although the duty extends to all trading standards teams, to answer the question asked, cases have tended to be concentrated in a couple of areas.
We are exploring whether it would be sensible to assign one trading standards team to act as the lead authority, with the ability to build the enforcement capability and expertise to deal with the challenge. This would be in line with the approach taken for other functions, such as the Illegal Money Lending Team, which is based in Birmingham City Council—another namecheck for that council—and tackles cases across England.
To respond to the noble Baroness, Lady Sharp, we judge that trading standards bodies would be more appropriate to enforce the measure than local enterprise partnerships because of trading standards’ specialist enforcement powers, history and experience. Trading standards will be there to carry out enforcement as a backstop, but with the SFA there—to respond to the question from the noble Lord, Lord Stevenson—to encourage compliance. As set out in the impact assessment, we anticipate that the number of prosecutions will be very few, because we know from experience of degrees that this can have a totemic effect. We are in active discussions with the Department for Communities and Local Government, the Local Government Association and the Better Regulation Development Office to ensure that the requirements of trading standards in this area are achievable, effective and proportionate. I hope with that explanation of how we plan to take these provisions forward, the noble Lord will feel able to withdraw his amendment.
Lord Stevenson of Balmacara
I thank the Minister for her very comprehensive response. Given that the Government are consulting and in discussions, would it be possible to get a bit more information before Report, and for the Minister to tell us wherever they have got to on that level? This is a recurring theme: one of the great advantages of starting a Bill in the Lords is that one gets to have first go at it but the bad news is that you do not get all the detail that would make our jobs much easier. With that slight aperçu, I would be grateful to have any more information.
Baroness Neville-Rolfe
The noble Lord summarises it very well. We will send an update ahead of Report. I think that noble Lords can see the general direction of travel, and it is fair to press us to try to make up our minds.
Lord Stevenson of Balmacara
After that gracious acceptance of my proposal, I beg leave to withdraw the amendment.
Baroness Neville-Rolfe
My Lords, I welcome the spirit of these amendments, which intend to improve the functioning of insolvency. I am delighted to be able to confirm that today a number of industry reforms to pre-packs, recommended by Teresa Graham and her review, have been introduced. I am glad to hear support for those changes from my noble friend Lord Leigh of Hurley. Creditors will inevitably lose some money when a company fails, and this is unavoidable. However, in delivering these voluntary pre-pack reforms, creditor bodies and the insolvency industry have come together in a good way to support the reforms. I agree with my noble friend Lord Hodgson that creditors need confidence that the best deal is obtainable.
Another cause for celebration is that from today a further reform introduces new guidance on marketing to ensure that creditors can be confident that they are receiving the best price for the sale of the insolvent business, but these changes need to be given time to take effect before yet further changes are considered. The Government will undertake a review once these have bedded in.
On small businesses, the redundancy payments scheme provides valuable assistance to employees when their employer enters insolvency. All employees can access the scheme. There has recently been consultation on collective redundancies and the outcomes for employees in an insolvency. The findings will be published in due course.
The existing law on the priority of payments to creditors in an insolvency seeks to ensure that there is a fair distribution of a company’s assets. Any change to give preference to the types of small business set out in the amendment would, of course, have to be at the expense of other creditors. Giving priority to such creditors would have wider consequences, such as increasing the cost of suppliers from other creditors, or higher costs of borrowing for businesses in general. The Government do not consider that an evidence-based and sufficient case has been made for changing the long-established order of priority in that respect.
On Amendment 52ZD, it is obviously important that, if a viable company is unable to pay its debts, it is given an opportunity to continue as a going concern. That is why the insolvency regime already provides for a moratorium. It is important that any extension of the existing moratoria offers appropriate safeguards and protections to creditors. Otherwise, there is a risk that businesses will find financing more difficult.
I am so sorry that the noble Lord, Lord Mendelsohn, is not here, because he has made a valuable point with his work on “debtor in possession”, elaborated in a helpful note that he sent me over the summer. I agree that viable businesses should allow sufficient time to develop a rescue plan, and I am therefore very pleased to be able to say today that, while we cannot accept an amendment to this Bill, the Government are already reviewing this area and we will announce our proposals in due course.
I hope that the noble Lord has found my explanations reassuring in this area, and on that basis feels able not to press his amendment.
Lord Stevenson of Balmacara
I cannot really call these probing amendments, because they were not really probing anything—they were really there to stick pins into people to get them to take a bit more interest in this area. But I think that my pins can now be removed. As has been said, the amendments are of interest and, where appropriate, they can be looked at again. I am delighted, and I am sure that my noble friend Lord Mendelsohn will be particularly pleased, that the ideas behind the proposal of a business debtor in possession can be given a bit more thought—and they certainly need it, since they were not meant to be finished in any form.
I was slightly trembling when the noble Lord, Lord Hodgson, said that he had a few questions that he wanted me to answer, because I am not the sort of person who can answer them, but I was lucky to have friends in the Room and did not get too far behind.
I thank noble Lords for the debate, which was meant genuinely to add something in the medium term. With that, I beg leave to withdraw the amendment.
Baroness Hayter of Kentish Town (Lab)
My Lords, like the noble Baroness, Lady Noakes, we were rather sorry to see these amendments tabled by the noble Earl, Lord Kinnoull, as we support Clauses 20 and 21, which help consumers and businesses facing delayed payment of insurance claims to get damages for resulting losses. We certainly do not want to see these provisions watered down. Indeed, as the noble Baroness, Lady Noakes, recalled, it was the Law Commission and the Scottish Law Commission which recommended that insurers should be under a legal obligation to pay valid claims within a reasonable time. I thought it was the Law Commission which drafted these clauses and I am delighted to be in the Room with the true author.
The Bill puts the current FOS practice, which is to award compensation for unfairly refusing or delaying insurance claims, on to a statutory footing. Importantly, it will provide small businesses with recourse to the courts to claim such damages. As we have heard, Amendments 52A and 52C would remove the insurance of large risks from the provisions of Clause 20. That would effectively exclude many SMEs and their risks from the very protections that the Government—in our view, quite rightly—are seeking to introduce.
As we have heard, it is not just the Opposition who resist these and indeed the later amendments, which bring insurance contracts into line with any other normal contract. Some 80% of those responding to the Law Commission’s consultation agreed that insurers should be under a legal obligation to pay valid claims within a reasonable time. Our understanding is that not a single member of the ABI was against the clause. Indeed, some were strongly supportive, pointing out that for their SME customers, a claim being paid in a few months can be the difference between survival and failure.
It is almost a legal fiction which means that the normal contract law—that is, if one party breaks a contract, the other can claim damages—does not apply to insurance law in England. It is time to change this. The Law Commission is clear that this is appropriate for the London market and it opposes the attempt in these amendments to exclude it. Any carve-out for “large risks”, as defined in Solvency II, would exclude many consumer and SME risks. I leave the Minister to take the Committee through the finer details of the Law Commission’s argument, should she feel it necessary. I would just add that, in regard to excluding some forms of large risk, the Law Commission found that stakeholders were keen to see a single regime for all non-consumer contracts and did not support defining somewhat arbitrary boundaries, which add to transaction costs.
Baroness Neville-Rolfe
My Lords, I thank the noble Earl, Lord Kinnoull, for his amendments and for taking the trouble to meet me and representatives from the London insurance market, and welcome my noble friend Lord Flight, who is an expert in this area. I am also very glad that my noble friend Lady Noakes is with us and thank her for her support for the late payment of insurance provisions; that nicely complements the discussions we have had on other days on late payment for small firms by big firms and retentions. The provisions are, as she says, intended to address a legal anomaly in the current law; that is, that insurers currently have no legal obligation to pay sums due within a reasonable time.
Where late payment does occur, however frequent or infrequent that may be in different parts of the market, it is appropriate that the policyholder should be able to recover any losses suffered as a result. That is why the Bill builds into every contract of insurance an obligation on insurers to pay sums due within a reasonable time. Breach of that obligation may give rise to damages for breach of contract on normal contractual principles.
With his Amendments 52A and 52C, the noble Earl seeks to restrict the types of contracts to which this obligation would apply, excluding reinsurance and certain “large risks”. The clauses in the Bill are the product of a long Law Commission project involving years of engagement with the insurance industry. Stakeholders argued strongly in favour of a single regime for all non-consumer insurance contracts, avoiding boundaries which, by their nature, are complex and arbitrary, and add to legal expense. If different rules applied to different types or sizes of business, insurers would have to identify which side of the boundary each prospective policyholder fell before entering into the policy. This would severely slow down and add expense to the placement process.
Lord Stoneham of Droxford (LD)
The noble Lord, Lord Stevenson, has masterfully summarised the amendments. I put my name to Amendments 52F and 52P in the interests of trying to improve the processes. In the interest of brevity and trying to improve the timescale, I am happy to give my support formally.
Baroness Neville-Rolfe
I thank my noble friends for proposing these amendments with such swiftness and efficiency, and I shall try to do them justice. The noble Lord, Lord Stevenson, has done fantastic work today in covering so many areas that are usually addressed by others on the Front Bench. As always, I thank the noble Lord, Lord Stoneham, for his involvement.
I appreciate that there are concerns, which I share, that an effective business rates system should be based on businesses having a good understanding of their tax bill, underpinned by shared and transparent information. The amendments are about sharing information with the payer. Business rates are determined by taking account of a comparison with other properties. However, it follows from this that the Valuation Office Agency collects and holds commercially sensitive data. For example, it may hold information on the precise terms of rental agreements reached for a group of properties. The VOA has a legitimate duty to protect that information and the interests of the ratepayers who have provided it. That is in everybody’s interests, so we make no apology for having a rigorous system for handling and protecting sensitive information, an important general principle in life.
Lord Hunt of Wirral (Con)
My Lords, in declaring my interests as set out in the register, I welcome the opportunity to discuss the circumstances in which HMRC may disclose information. Although Clause 22 is drafted specifically to deal with the disclosure of information in connection with non-domestic rating, there are other circumstances in which disclosure by HMRC to certain other bodies is not only necessary but desirable.
The Employers’ Liability Tracing Office is one such example. ELTO was established in 2010 to assist injured people in finding the employers’ liability insurer which covered their employer at the relevant time. Since April 2011, it has been a regulatory requirement for EL insurers to provide details of all EL policies issued, as well as some historic data. ELTO’s aim is to create a comprehensive database of insured employers and the compulsory cover provided to them. The drive behind the creation of ELTO was to build a historic record of past insurance, particularly for victims of diseases with a long latency period, such as those caused by asbestos exposure.
However, the main long-term purpose of ELTO is to create a comprehensive and easily searchable database of current policies, which can avoid problems many years into the future. In order to make the database accurate, so that in 30 years’ time a person injured by past exposure to substances at the hands of their employer can trace the right insurance cover which should meet that claim, the database needs to find what IT people know as the “unique identifier”, which confirms beyond doubt that the right company has been identified.
In the case of employers, that unique piece of information is provided by the employer registration number used by HMRC. The ERN is the number now used in the Pay As You Earn system to identify individual employers. Armed with the ERNs, the database would become truly fit for purpose. ELTO has been pressing HMRC for disclosure of ERN data, but HMRC claims that the law prevents it doing so. Assuming for the moment that HMRC may be right—it rarely pays to argue with the taxman—there is a simple solution, and Clause 22 shows us the way. Where the law is an obstacle to better working, it can be amended. That is, after all, the main purpose of this Bill.
I am therefore considering whether a short amendment to the Bill could resolve this problem. I would welcome a further discussion if the Minister and her hard-working team ever have time to do so to see how best we could proceed. The ELTO database has been introduced precisely because people suffering genuine injury in the future as a result of their employer’s negligence will need easy access to details of the insurance policy that will meet that claim.
Finally, speaking as president of the All-Party Parliamentary Group on Occupational Safety and Health, I would like noble Lords to know that the all-party group is very supportive of the need to make the database accessible, accurate and searchable.
Baroness Neville-Rolfe
My Lords, I am grateful to my noble friend for raising the issue of data sharing between HMRC and the Employers’ Liability Tracing Office. HMRC has already specifically amended its processes to provide employer reference numbers and employment histories when requested by individual applicants. Further, I believe any amendment to allow data sharing between HMRC and the Employers’ Liability Tracing Office would be outside the scope of this Bill.
I understand that, as well as the normal concerns about taxpayers’ confidentiality, HMRC is concerned that disclosing all employer reference numbers would raise issues regarding proportionality and, of course, in today’s circumstances, the potential for fraud. Therefore, I do not think the Bill is the best place to bring forward such a widespread change, but I would be happy to meet my noble friend to understand more about the issue. However, I believe that Clause 22 should stand part of the Bill.