Apprenticeships

Bill Esterson Excerpts

Wednesday 4th February 2015 Commons Chamber

[Mr Umunna]

My hon. Friend is absolutely right about that. I congratulated him at the time on his Bill, and we should continue to remind this House of the efforts that were made then and the wasted opportunity to which he refers. The reason he introduced that Bill was clearly because he read the OECD’s review of vocational education and training, which found that few countries achieve strong engagement in vocational education and training without a strong apprenticeship system. Now, that will not automatically happen on its own. Government must play an active role, not in a top-down, command-control fashion, but by using their convening power in an enterprising, entrepreneurial way, working in partnership with business to address the problem and to increase productivity. Before I explain how we aim to achieve that and consider what the Government have done during this Parliament, when I will touch on that 2 million figure, I want to say something about our record, because I am sure it will be referred to.

I accept that when Labour left office there was an outstanding need to increase the number and improve the quality of apprenticeships in our country, but before Government Members get too excited, I should say that it would be wrong to claim we did not make any progress. In government, we more than quadrupled the number of apprenticeship starts from a woeful 65,000 under the previous Major Government in 1996-1997 to 280,000 starts in our final year in office. Apprenticeships were simply not on the radar when we entered office; they were very much on the radar when we left office. We used the weight of government to begin the culture change we need. So from the 2012 Olympics to Building Schools for the Future projects up and down the country, we linked the creation of apprenticeships to public procurement across a number of Departments. We set up a dedicated National Apprenticeship Service to support and expand apprenticeships. I speak to many young people who tell me that they were signposted to the apprenticeship they are now doing by visiting the service’s website. Of course, it was also Labour in government that established national apprenticeship week in 2008, and the week is now an annual event in the national calendar. I am proud of our record. I am proud that this Labour party rescued apprenticeships from the scrapheap.



The current Government have sought to build on the foundations we put in place. They say that since we left office they have overseen the creation of 2 million new apprenticeship starts, and the hon. Member for Gloucester referred to those. I do not think there is any point boasting about numbers if the apprenticeships are not of sufficient quality. I will come to that in a moment, but first let us look at their claimed numbers. How many of the 2 million apprenticeships are really new apprenticeships and how many have emerged as a result of rebadging—in other words, re-labelling existing work a person is already doing in the workplace as an apprenticeship? A very large proportion of additional apprenticeship places created by this Government have come in the post-25 age brackets. The largest percentage rise in apprenticeships under this Government has actually been among the over-60s, where the increase has been 520%. According to the 2014 apprenticeship pay survey, 93% of adult apprentices already worked for their existing employer before starting their apprenticeship. That would suggest that many existing training schemes, such as those delivered under the old Train to Gain programme, have simply been rebadged and re-labelled as apprenticeships.

That is the situation on apprenticeships for adults. The shortage is perhaps most acute among young people, so what is happening to apprenticeship starts there? The number of 19 to 24-year-olds starting an apprenticeship has fallen by more than 6,000 in the past year. In fact, the number of 19 to 24 apprenticeship starts is currently falling in every single region outside London. Overall, the share of apprentices who are under 25 has fallen from 84% in 2009-10 to 64%, and the share of apprentices who are under 19 has fallen from 43% in the last year of the Labour Government to 28% under this one. So the simple fact is this: for all the boasts, there has been some jiggery-pokery with the numbers. The bottom line is that we need many more apprenticeships and we need to raise employer demand for them. Half our large employers do not offer any apprenticeships at all in Britain today—that is totally unacceptable. As my right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne), the shadow skills Minister, has said previously, when it is harder to get an apprenticeship with Jaguar Land Rover than it is to get into an Oxford college, it is pretty obvious that more needs to be done.

The numbers are one thing, but I said that I would say something about quality. In most other northern European countries apprenticeships are level 3 qualifications lasting between two and five years, and they include at least one day a week of off-the-job learning, as well as significant on-the-job training. In England, most of the growth of apprenticeships in recent years has been at a level that would simply not be recognised in those countries. Just 35% of our apprenticeships are at level 3 or above, and just 2% are at level 4. In fact, according to the Department’s own figures, published in its apprenticeship pay survey, one in five apprentices does not even receive any formal training at the moment. The figure increases to almost a quarter of those in the 19 to 24 age bracket, who are not being properly trained. If we truly want to ensure more parity of esteem between the academic and the non-academic—between the way people view university degrees and the way they view these types of vocational and technical qualifications—how can we hope to do that when they are not of sufficiently good quality? We have got to raise standards. Even where apprentices are receiving training, far too many of them are still not receiving the appropriate minimum wage—15% are paid below the appropriate national minimum wage, with the figure rising to 20% for 19 to 20-year-olds.

I will come on to address how we intend to encourage more private sector employers to provide more and better quality apprenticeships appropriate to their needs, but surely government, as one of the biggest employers in the country, should be setting an example, both in recruiting as many apprentices as possible and in providing good-quality apprenticeships. The civil service apprenticeship scheme hired just 200 apprentices in 2014. That is 200 out of more than 400,000 civil servants, which is just not good enough. Never mind the Departments themselves, Government should be doing more in this area. They should use their clout as a procurer of goods and services to get more employers in the private sector to provide apprenticeships.

Our Labour colleagues in local government have already been leading the way in utilising procurement to boost apprenticeship numbers. Newham, Knowsley, Sheffield and Manchester have all developed strategies to use procurement contracts to create apprenticeship opportunities for young people locally. Central Government should do the same, as those opportunities are simply not happening to the degree and on the scale required.

[Bill Esterson (Sefton Central) (Lab)]

My hon. Friend makes the point about the importance of using the procurement system and Government money to drive improvement in apprenticeships. Does he agree that we need do that all the way through the supply chain so that smaller businesses, and not just larger ones, can and do take on apprentices?

[Mr Umunna]

We should do everything that we can to encourage all businesses to take on apprenticeships. We need to be mindful of the fact that sometimes that can be a bit more challenging for smaller businesses, and we should think how we can better support them to take on apprentices. It seems to me that, if there were fewer frameworks and more sector-driven apprenticeship frameworks, we could make the system less bureaucratic. But, absolutely, we should do as much as we can to make it easy for businesses to take on apprentices.

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[Vince Cable]

I am not disowning the report; it clearly exists. [Interruption.] Perhaps the Opposition could be a little less silly and just try to follow the argument. The key is in the word “formal”. Many people do good apprenticeships in business that involve informal work in the workplace, and many people define good training in that way. The survey that we conducted, which the hon. Gentleman is having a little giggle about, tells us very clearly that 90% of those trainees are satisfied with their apprenticeships, while 72% are very satisfied. Ninety-seven per cent. said that they had been trained—sometimes informally, sometimes formally—and 90% got a job. Perhaps most crucially, there is a very high earnings premium. I have quoted the figure for level 2, and for level 3 it is significantly higher—about 16% three to five years after graduation. The proof of the pudding in is in the eating: these apprenticeships do provide satisfaction, jobs and higher salaries for the people who do them.

Let me address the minimum wage. The survey shows that 15% of people are not being paid the minimum wage. That figure is clearly too high, and unacceptable. The motion says that it is “one in five”. I am not sure who did the maths on this, but one in five is not 15%. Perhaps we need compulsory maths for Opposition Front Benchers as well as apprentices. The key point is that 15% is way down on the 30% figure that we inherited. As the hon. Gentleman knows, because he has been part of these debates during the past year, we have significantly improved enforcement measures. We have increased penalties from £5,000 per firm to £20,000 per person, we have introduced naming and shaming, and we have increased the enforcement budget by 30%. We do take the minimum wage seriously. We believe that it must be enforced and that it should apply to apprentices as it should to anyone else.

The hon. Gentleman is right that procurement is a lever for the public sector to employ. We already have many examples of good practice in public sector procurement. Crossrail is a company that has really committed itself to high levels of apprenticeships. There are a couple of practical problems, as I hope he recognises; I think he hinted at one of them. First, for small and medium-sized enterprises and social enterprises, where we are trying to increase the share of public procurement, there is a conflict of objectives. Do we regard getting SMEs into procurement as more important than increasing their number of apprenticeships? There is no clear answer to that. Secondly, companies that are required to introduce apprenticeships would simply add that to the cost and it would be passed on to the public sector, so instead of a direct subsidy through our 50:50 payment system we would be providing indirect subsidies. These are not crippling objections. We need to reflect on how we can better use public procurement, but crude legislation and compulsion is probably not the best way. I accept that public procurement is a good vehicle, and we have to work on this.

[Bill Esterson]

I agree that it is a real challenge, given the current situation, to enable more SMEs, particularly the smallest businesses, to take on apprentices. Does the Secretary of State agree that countries such as Germany have cracked this problem over many years, and that there are things we can apply from Germany and elsewhere to achieve the goal of getting more small businesses to take on apprentices?

[Vince Cable]

The hon. Gentleman is right. There is a German model that seems to work for that country, and Austria is another example. Their approach is different from ours, but it has given them consistently high levels of skills in manufacturing industries, in particular. We should learn from that. There is an element of compulsion and levying that we have moved away from in the UK. However, I am certainly happy to learn from Germany on this and other things.

--- Later in debate ---

[Bill Esterson (Sefton Central) (Lab)]

I am glad that the hon. Member for Eastbourne (Stephen Lloyd) mentioned the important role played by training providers in supplying the off-the-job learning that is such a crucial factor in apprenticeships. Hugh Baird college in Sefton does a fantastic job in partnership with the employers who look after the apprentices, across a range of sectors.

When I visited Michelin Tyre in Stoke a couple of years ago, I met engineers who were in their late 40s or early 50s. They were the youngest engineers in the company until a year or two ago, when the company suddenly realised that it had no way of replacing its engineers. We heard the same story from the hon. Member for Rossendale and Darwen (Jake Berry). Michelin now employs a number of young, high-quality apprentices, who are doing fantastic work and developing the skills that the company needs. As we have heard, that is a familiar story.

The construction industry in the north-west needs 1,500 new bricklayers and 1,500 new roofers each year. Where are those skilled jobs to come from unless we get the apprenticeship agenda right? I hear from schools in my constituency that fewer pupils are studying vocational subjects such as design and technology. Of course we need to encourage young people to go to university, but all too often we value academic learning and qualifications at the expense of vocational learning and qualifications. The culture needs to change, but I fear that we are far from reaching that point. Whether deliberately or not, we distinguish between the two, and that absolutely has to change. As I said in an intervention, it is simply not an issue in Germany, where the vocational and academic paths run alongside each other. As is implied in the motion, the technical baccalaureate is important in enhancing the status of technical education and qualifications, as well as addressing the shortage of skills in the STEM subjects.

Concern was expressed to the Education Committee about the damage caused by the reduction in the number of professional careers advisers, and the removal of work experience as an option for many young people. Businesses have told me in my constituency, as well as in evidence given to our Committee, about the difficulties that that causes in preventing young people from being exposed to the fantastic opportunity that is presented by apprenticeships.

We must increase the number of apprentices. We need to make it far easier for businesses to take them on. We also need to make apprenticeships far more attractive to young people, and to ensure that vocational qualifications and learning in this country are regarded as being of the highest standard and value. That is why the motion is so important. I hope that it is passed, so that both our young people and the country as a whole can benefit.