Technical and Further Education Bill

Baroness Pidding Excerpts

2nd reading (Hansard): House of Lords
Wednesday 1st February 2017 Lords Chamber

[Baroness Pidding (Con)]

My Lords, we are going through an age that will be remembered in years to come as one of great upheaval and change in the global economy. We face a multitude of challenges in our changing world. Rapidly growing countries such as China and India have more bright students than we have students. So that we do not get left behind, and can continue to be a world economic leader, we need to respond to this change.

Reform in our systems is vital, particularly in training up our young people before they enter the workforce. Like all noble Lords who have already spoken this afternoon, I am passionate about apprenticeships and our young people. If done properly, apprenticeships are of huge value, not just to those doing them but also to the companies taking on those young people. Unfortunately, people sometimes look at apprenticeships as somehow less valid then university education or other training. Yet these same people look across the channel to Germany with its history of on-the-job learning and see it as an equally valid pathway. I want our system to be held in as high regard.

I am supportive of the Bill and am encouraged by the consensus across the Chamber today. The Bill aims to reform the system, so that young people can see clearly that their work will lead somewhere and to something. I am delighted that the Government will be setting up the Institute for Apprenticeships and Technical Education, a body led by an independent chair and board. This will rely on the knowledge and experience of those working in the private sector to set out the right knowledge, skills and behaviours needed by our apprentices.

Our economy needs to respond to the challenges that lie ahead for us, and the Bill encourages employers to feed into that system. If we want to create worthwhile increases in growth and productivity, we need to ensure that the private sector is involved. As a country, we need more highly skilled people. Given the challenges and opportunities that lie ahead after our vote to leave the EU, we need to ensure that young people, who will be the drivers of our economy, are given the best opportunities to succeed in the workplace. Simply, their success is our country’s success.

The Bill is vital as it seeks to address our productivity gap through the institute’s inclusion of business leaders and employers, who know what skills they are looking for and will develop apprenticeships with those in mind. It is built around a clear framework of skilled occupations. With such a complicated system on offer at the moment, reform is critical. It will show young people that apprenticeships are an equally worthwhile option that will lead to long-term employment.

However, if we want to create a ladder of opportunity, rather than a missed opportunity, we need better career advice provision in schools on apprenticeships. As I have made clear, my interest is that apprenticeships are seen as the valid option that they are. Like so many other noble Lords, I urge the Government to look at how to promote that option in schools. This is particularly pertinent given the challenges that I have discussed, and I am very interested in the amendment that my noble friend Lord Baker of Dorking has suggested.

Overall, this is a well-thought-through Bill that builds on the Wolf review, which criticised the bewildering array of qualifications. It also implements all the recommendations of the Sainsbury report. The Bill will provide specific roads into employment and clarify the current system, making it easier for the Government to police quality. This will ensure that young people are taking up worthwhile qualifications that will benefit them and our economy in the long term. I believe that this will make the apprenticeship pathway more desirable for young people.

This is legislation for the long term. We are the builders and, with this reform, we will be the architects of our tomorrow.

Technical and Further Education Bill

Baroness Pidding Excerpts

Report stage (Hansard): House of Lords
Monday 27th March 2017 Lords Chamber

[Lord Aberdare (CB)]

My Lords, I too will speak mainly on Amendment 16, spoken to by my noble friend Lady Wolf, although I regret that I am not able to support it, so I hope that that is not the end of a beautiful noble friendship.

I am concerned that Amendment 16 would make it harder for independent training providers, which provide a significant proportion of the technical education we so desperately need, to compete on fair terms with FE colleges. I should perhaps declare an interest as having been an independent training provider in the distant past.

The effect of the amendment as worded would be to increase the price of such courses offered by commercial and charitable contract-funded providers in order to cover the cost of underwriting the loans made to students with an external financial institution. This would mean that the cost incurred by the vast majority of loan recipients, who will not suffer curtailment of their studies due to insolvency, would increase, even if only by a relatively small percentage. It might also discourage high-quality independent providers from offering loan-funded courses, not just because of the extra cost but because of the extra administration and bureaucracy involved, thereby limiting the range of options available to learners and, as the noble Baroness, Lady Cohen, said, providing a barrier to entry for potential new providers.

The amendment would not apply to FE colleges and other bodies covered by the insolvency regime being created by the Bill, so learners at FE colleges, which might be at least as likely to fail, would be protected by a special insolvency regime without any extra cost.

FE college loan-funded courses already have the additional benefit of being exempt from VAT, so most independent providers are already likely to face a 20% cost disadvantage. Apart from that, the cost and complexity of setting up the sorts of schemes proposed in Amendments 14 and 16 seem likely to considerably outweigh their effectiveness or value. If some special provision for independent training providers were needed, it would surely be better to take a similar approach to that proposed for colleges based on government underwriting, as I believe has happened in practice in the past. Of course, in some cases, independent training providers may even be partly owned by further education colleges, as was the case with the provider First4Skills, which was 60% owned by the City of Liverpool College and had to call in the administrators. I am not clear how the amendment would address a situation such as that.

Finally, I know that many independent training providers would be happy to help put a clear mechanism in place so that learners could easily transfer to another provider if their existing provider failed. For all those reasons, I believe that the amendment is not the right way forward.

[Baroness Pidding (Con)]

My Lords, noble Lords may remember that I spoke some weeks ago on this Bill at Second Reading and described the challenges that the UK labour market will face in the coming years and decades. Such times need flexible legislation, so as not to tie the hands of government, the UK labour market and private providers. I believe that it would be a mistake to complicate and overlegislate, and then expect any improvement on the current system.

I agree with the sentiment of Amendments 14 to 16. It ought to be our duty to make sure that students are not left stranded after provider failure, through no fault of their own. However, it is my fear that these amendments may do the very opposite of their well-meant intention. I am particularly concerned by Amendment 14, explicitly subsection (3). I want to stress that however well intentioned it is to demand that private providers set contingency funds that can be used only for the purposes outlined in subsection (2), it risks placing additional financial commitments and burdens on providers unnecessarily. It would also, inevitably, deter excellent private providers from offering loan-funded courses, given these extra commitments.

Given that the Government have made a commitment to helping students affected by provider failure by providing them with alternative providers, it is my belief that this well-intentioned legislative burden is not necessary. It will simply overcomplicate the system and deter private providers from offering excellent qualifications and training.

[The Parliamentary Under-Secretary of State, Department for Education (Lord Nash) (Con)]

My Lords, I am very pleased to be able today to speak about this legislation, which will help lay the foundations for transforming technical and further education, ensuring that all our young people have the same opportunities to travel as far as their talents may take them, move to a lifetime of sustained employment and provide the skills that British business needs. I am grateful for the remarks made by the noble Baroness, Lady Cohen. I share her sentiment: this Bill is the greatest engine of social change that can be imagined, or at least we hope that it will be. I also express my thanks to noble Lords for their continuous engagement in the Bill, which, as the noble Baroness said, has all-party support.

In Committee, we had some very interesting discussions on some of the broader aspects of the Bill, and on the operation and delivery that will turn this legislation into reality. My ministerial colleague Robert Halfon and I have found this scrutiny extremely helpful in refining our thinking for this next stage of the legislation—the transition. Minister Halfon was looking forward to being able to join today’s discussion, as he has done previously, but unfortunately has been called away as he needs to participate in the public sector apprenticeships debate.

I turn now to the first group of amendments, tabled by the noble Lords, Lord Watson and Lord Hunt. I welcome the sentiment behind this amendment: that young people who choose to take up an apprenticeship should not be financially disadvantaged and that, in particular, young people who leave care should be encouraged to enter apprenticeships. I believe, however, that we have already established sufficient safeguards and support to deliver these aims. Following a 3% increase in October last year, the national minimum wage for apprentices is now set to rise again to £3.50 an hour from April this year. Most employers pay more than this minimum. The most recent Apprenticeship Pay Survey, in 2016, estimated that the average gross hourly pay received by level 2 and 3 apprentices in England is £6.70 an hour. Moreover, apprentices receive training which, together with their paid employment, sets them up for increased earnings in the future.