Institute for Apprenticeships and Technical Education (Transfer of Functions etc) Bill [Lords]

Bridget Phillipson Excerpts

2nd reading
Tuesday 25th February 2025 Commons Chamber

[The Secretary of State for Education (Bridget Phillipson)]

I beg to move, That the Bill be now read a Second time.

We are a country of incredible talent and enterprise; a country of industry and invention. Our universities lead the world. Our colleges deliver excellence to hundreds of thousands up and down the country. British companies founded on great ideas export their products across the globe. Our strengths range from research to manufacturing and from professional services to creative industries, yet there remains a wide and growing gap between where we are now and what I know our great country is capable of, because, despite our many strengths, there are skills missing from our workforce.

There are skills missed by people who want to get on in life, get better training to land that great job and earn a decent living; skills missed by our employers, with businesses, hospitals, labs and factories held back; skills missed by so many of our communities, with towns and cities left behind as industry has moved on; and skills missed by our country. Those skills are vital to the security and growth that this Labour Government are so determined to deliver.

Our latest data shows us that half a million vacancies sit empty simply because employers struggle to find the right staff with the right skills: the most since we started collecting the data in 2011. That is half a million jobs not filled, half a million careers not boosted and half a million opportunities not taken—a tragic waste that this country simply cannot afford. But I am sorry to say that this is not surprising. We have fallen behind our neighbours on higher technical qualifications—the ones that sit just below degree level, but which can lead to well-paid, fulfilling careers for software developers, civil engineering technicians or construction site supervisors.

Over 90% of employers value basic digital skills in their job candidates, but more than 7 million adults lack them. Our skills gaps deal our people and our country a double blow. They hold back the economic growth we need to invest in our public services and drive national prosperity, and they hold back the ambitions of working people who deserve the chance not just to get by but to get on. They deny them the opportunity, the power and the freedom to choose the life they want to live.

[Sir Ashley Fox (Bridgwater) (Con)]

Would the Secretary of State agree that one of the difficulties is that employers cannot spend the money from the apprenticeship levy easily, and that too much of that money is retained by the Treasury? Will she undertake to speak to the Chancellor to see whether she could make it easier for employers to spend that money on training?

[Bridget Phillipson]

I can assure the hon. Gentleman that the Chancellor is as committed as I am to ensuring that we have the right skills within the economy, because without them we will not be able to deliver the economic growth that is the No. 1 mission of this Labour Government. But we are committed to reforming the failing apprenticeship levy, reforming the system and converting it into a growth and skills levy with more flexibility for employers. As a first step, this will include shorter-duration and foundation apprenticeships in targeted sectors, making sure that we are working more effectively with employers in order for our economy to grow.

[Sir John Hayes (South Holland and The Deepings) (Con)]

I welcome the commitment to skills that the Secretary of State is articulating, but will she recognise that too often the advice given to young people, particularly from schools, is to pursue an academic career—I use the word “academic” in the loosest possible sense—rather than to engage in practical learning? That means that while the shortages she describes are profound, there are also many people who are graduates in non-graduate jobs owing a lot of money and with pretty useless degrees.

[Bridget Phillipson]

I was almost on the point of saying that I agreed with much of what the right hon. Gentleman had to say, but unfortunately he went and ruined it at the end with that comment about the value of university education and of having the chance to gain a degree. Where I do share common cause with him is that I want to make sure that all young people have a range of pathways available to them, including fantastic technical training routes, including through apprenticeships, but I also want to make sure that young people with talent and ability are able to take up a university course if that is the right path and the right choice for them.

As we were recently celebrating National Apprenticeship Week, I took the opportunity to see across the country some of the fantastic routes that are available in areas such as construction and nuclear, with really wonderful job opportunities and careers where young people are able to make fantastic progress.

[Chris Vince (Harlow) (Lab/Co-op)]

I had the opportunity to visit Harlow College during National Apprenticeship Week, and I really agree with the points that my right hon. Friend is making. Does she agree that if we are to achieve the new homes targets that we really want to achieve and get people off the streets and into those homes, we need to train those apprentices now and that Skills England can be part of that future?

[Bridget Phillipson]

I agree with my hon. Friend, and I know how much he champions, in his constituency and in the House, opportunities for young people to have the chance to take on new skills, including through apprenticeship routes. Where it comes to construction, he is right to say that there are fantastic opportunities out there. It was heartening, during some of my visits during National Apprenticeship Week, to see the fantastic contribution that women play in construction, breaking down some of the stereotypes that exist about the right opportunities, and to meet some amazing engineering apprentices and bricklaying apprentices. Those women are really trailblazing in an industry that is often very male-dominated.

[Mr Toby Perkins (Chesterfield) (Lab)]

On the subject of construction, does my right hon. Friend agree that a huge amount of the construction industry is made up of small employers and that one of the biggest failings of the apprenticeship levy approach has been that small and medium-sized enterprises have been shut out? We have had a 50% reduction in the number of SMEs offering apprenticeships since the introduction of the levy. How will she increase the number of SMEs that are able to offer apprenticeships? If the major employers are the ones that have all the budget, how do we ensure that we increase the number of SME apprenticeships?

[Bridget Phillipson]

My hon. Friend has a long-standing interest in this area and has consistently raised not only the challenges faced by small businesses but the opportunities to create more apprenticeship starts and more training routes for people across our country. One of the changes that we set out during National Apprenticeship Week was to the maths and English requirements for adult apprentices, which will make a big difference to employers large and small and was welcomed by business, but he is right to say that much more is needed to help smaller employers and small contractors to take on apprentices. That is the work that Skills England will drive forward and that is why this Bill is such a crucial development.

The skills gaps that we face in our country deny people the opportunity, the power and the freedom to choose the life that they want to live. But it is not just today that we count the cost; those gaps limit our power to shape the careers, the economy and the society of tomorrow as well. Only with the right skills can people take control of their future, and only with the right skills system can we drive the growth that this country needs. It is time this country took skills seriously again: no longer an afterthought, but now at the centre of change; no longer a nice to have, but now a driving force for opportunity; no longer neglected, but now a national strength.

There is much to celebrate. Plenty of colleges go above and beyond, plenty of employers are ready to contribute and plenty of people are eager to upskill, but our system needs reform. Too many people have been sidelined and left without the skills to seize opportunity. One in eight young people are not in employment, education or training. We can, and we must, do more to break down the barriers to learning that too many people still face. We need a system that is firing on all cylinders.

[Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)]

The figure in Stoke-on-Trent is even more stark, with 22% of young people not in education, employment or training. We have a wonderful ecosystem of colleges, with Stoke sixth form college, Stoke-on-Trent college and the University of Staffordshire, but as my hon. Friend the Member for Chesterfield (Mr Perkins) said, we also have small and medium-sized organisations. Can the Secretary of State set out how this Bill will help an organisation such as the Spark Group, run by Dan Canavan, to tap into opportunities in order to spread his ability to help those young people into well-paid jobs in my community?

[Bridget Phillipson]

My hon. Friend names a fantastic business in his constituency and the contribution that it makes. There is a lot more that we need to do to support smaller employers to be in a stronger position to benefit from apprenticeships.

This Bill will bring together the many disparate parts of a very fragmented system, which employers, particularly smaller employers, often find hard to navigate the right way through, and are not always clear about the best training and qualification routes in order to find the people that they need. Also, the changes we have made to English and maths in particular will support employers to create 10,000 additional apprenticeships every single year. This was a call that we heard loud and clear from employers, and it is a simple, straightforward change that will open up opportunities for people across our country. They will still have the English and maths standards as part of their apprenticeship, but they will no longer be held back by some of the red tape that has denied them the chance to get on in life.

The skills system that we have right now is too fragmented, too confusing and too tangled up across too many organisations. There is no single source of truth, no single organisation able to zoom out and see the big problems and no single authority able to bring the sector together to solve them. The result is a system that amounts to less than the sum of its parts. For young people, it can be hard to know where the opportunities lie. Adults looking to upskill or reskill and working people hoping for a fresh start are too often met with confusion, not clarity. They are presented with a muddling mix of options when they need clear pathways to great careers.

It is no better for employers. They tell us that the system is difficult to navigate and slow to respond. They tell us that they are too often shut out of course design and that their voices are too often not heard. The result is frustration. Learners and employers are frustrated, and they are right to be frustrated. Many businesses do a good job of investing in the skills of their workforce, but others simply are not spending enough.

Investment is at its lowest since 2011 at just half the EU average. We must empower businesses to reverse the trend by investing in their employees, and for that, we need to move forward. There will always remain a strong and galvanising role for competition, but where it is harmful, adds complexity, duplicates efforts or twists incentives, we will balance it with supportive co-ordination to ensure that all parts of the system are pulling in the right direction.

Here is our vision and the change we need. From sidelined to supported, we need a system that helps everyone so that businesses can secure the skilled workforce they need. From fragmented to coherent, we need a system defined by clear and powerful pathways to success and towards effective co-ordination. We also need a system of partnership with everyone pulling together towards the same goals. That is the change that Skills England will oversee.

This Labour Government are a mission-led Government with a plan for change, and skills are essential to Labour’s missions to drive economic growth and break down the barriers to opportunity. In fact, skills go way beyond that. Skills training contributes across our society, and great skills training driven by Skills England, supported by my Department, guided by the wisdom of colleges, universities, businesses, mayors and trade unions, and directed by national priorities and local communities is the skills system we need. It is a system that will drive forward all our missions. It will help us fix our NHS, create clean energy and deliver safer streets.

Skills are the fuel that will drive a decade of national renewal, which is vital for our plan for change. That is why earlier this month we unveiled our plans to help thousands more apprentices to qualify every year. That means more people with the right skills in high-demand sectors from social care to construction and beyond. We have listened to what businesses have told us. We will shorten the minimum length of apprenticeships and put employers in charge of decisions on English and maths requirements for adults.

Last November, the Government announced £140 million of investment in homebuilding skills hubs. Once fully up to speed, the hubs will deliver more than 5,000 fast-track apprenticeships a year, helping to build the extra homes that the people of this country desperately need. We are driving change for our skills system, and Skills England is leading the charge. It will assess the skills needed on the ground regionally and nationally now and in the years to come. Where skills evolve rapidly and where new and exciting technologies are accelerating from AI to clean energy, Skills England will be ready to give employers the fast and flexible support they need.

[Tom Hayes (Bournemouth East) (Lab)]

I represent a coastal community. Coastal communities have been forgotten over the past 14 years almost as much as the skills agenda. In my constituency, Bournemouth and Poole college led by Phil Sayles, who is doing incredible work, is about to open the green energy construction campus in April, which will enable solar, heat pump and rainwater capture skills to be taught to apprentices and trainees. Will my right hon. Friend join me in congratulating the college, and does she agree that colleges like that one are critical to achieving clean power by 2030?

[Bridget Phillipson]

I am delighted to hear my hon. Friend’s experience from Bournemouth. Our colleges are a crucial part of how we ensure that we have the skills we need in our economy, but also how we will drive forward our agenda on clean energy. He is also right to identify the enormous opportunities for jobs, growth and training, as well as, crucially, the imperative of ensuring that we have stability and security in our energy supply, so that never again are we so exposed to the fluctuations of energy markets that happened because of the invasion of Ukraine.

[Luke Taylor (Sutton and Cheam) (LD)]

I want to amplify the valuable skills that our colleges are teaching in renewable technologies. I recently visited South Thames college in Wandsworth, where I saw the labs it has set up to teach the installation of heat pumps and other renewable technologies. The main challenge that the college faces is finding staff to teach the classes and to take on the apprentices and all the other learners. What support will the Government give to colleges to ensure that they can recruit experienced individuals to pass on those skills to the apprentices, so that we can provide the workforces that we dearly need?

[Bridget Phillipson]

The hon. Gentleman is right about the challenges across the further education sector. Sadly, we know those challenges all too well after 14 years of failure under the Conservatives. We recognise the enormous opportunity that comes from investing in our fantastic colleges. That is why at the Budget we announced an extra £300 million of additional revenue for further education and £300 million of new capital investment. That also builds on our investment to extend targeted retention incentive payments of up to £6,000 after tax to eligible early career FE teachers in key subject areas. Our FE sector will have a crucial role to play in our mission for growth and opportunity, and he is right to draw attention to that.

Skills England will be ready to give employers the fast and flexible support they need. While updates to courses in the past have been sluggish and left behind by new technology, the Bill will help us keep up with the pace of change. Skills England will draw on high-quality data. It will design courses that are demand-led and shaped from the ground up by employers. Employers should be in no doubt that they will have a critical role in course design and delivery. That is why I have appointed Phil Smith to chair Skills England. Phil brings a wealth of business expertise from his two decades leading Cisco and will ensure that employers are at the heart of Skills England. I have appointed Sir David Bell as vice-chair, drawing on his wealth of experience across education and Whitehall. I have also appointed Tessa Griffiths and Sarah Maclean as chief executive on a job-share basis, with Gemma Marsh as deputy chief executive. They will provide strong, independent leadership to move the skills system forward. Skills England will be held accountable by an independent board, and the Bill requires a report to be published and laid before Parliament, setting out the impact on technical education and apprenticeships of the exercise of the functions in the measure.

The clear relationship between the Department and Skills England is governed by a public framework document, which will be published for all to see. It will be a core constitutional document produced in line with guidance from the Treasury, making clear the different roles of my Department and Skills England. Skills England will reach across the country. It will not be trapped in Whitehall but spread to every town and city, because growth and employment must benefit every part of the country, not just where it is easy to drive growth. That means being ambitious, especially in areas that have been overlooked for decades, because talent and aspiration are no less present in those places.

Skills England will drive co-ordinated action to meet regional and national skills needs at all levels and in all places. It will work closely with mayoral strategic authorities and local and regional organisations, and it will connect with counterparts in Scotland, Wales and Northern Ireland. Skills England will simplify the system by combining functions within one powerful body and pulling together the disparate strands of Departments, local leaders, colleges, universities and training providers and weaving them into a coherent offer for businesses and learners alike.

To see why the skills revolution is so important for growth and why we must take skills seriously again, we should look no further than the UK’s stalling productivity over the last decade and a half, dragging down our economy and cutting off hopes of higher incomes for workers. The skills system is central because, despite all its problems, the expansion of workforce skills drove a third of average annual productivity growth between 2001 and 2019. Here we have a chance. Here we see what is at stake. If we get this right by investing in our people and backing Skills England, we can drive productivity and get economic growth back on track. At the same time, we can give working people power and choice because that is what good skills can offer: the chance for them to take control of their careers and take advantage of the opportunities that our economy will create. That is why Skills England will work to support the forthcoming industrial strategy unveiled by the Chancellor last November. The next phase of its work will provide further evidence on the strategy’s eight growth-driving sectors: advanced manufacturing, clean energy, the creative industries, defence, digital, financial services, life sciences, and professional and business services. Added to those are two more: construction and healthcare.

Skills England will work closely with the Industrial Strategy Council, which will monitor the strategy’s progress against clear objectives.

[Mr Perkins]

I am grateful to the Secretary of State for giving way again. She is speaking incredibly powerfully and passionately about the role of Skills England, and I share her commitment and excitement about it, but as she knows, this IfATE Bill abolishes IfATE rather than creating Skills England. There were those who believed that putting Skills England on a statutory footing as an independent body, rather than keeping it in the Department, might have been the way to go. Will she explain to the House why she has taken this approach, and why she believes that Skills England will, as a body in her Department rather than as a truly independent body, have the strength and respect in the sector that it so badly needs?

[Bridget Phillipson]

I will set out the reason primarily and then say a little about the way in which Skills England will operate. First, the need to do it in this way is one of time and speed. As I hope I have set out to the House, the need to act is urgent; we must get on with this and ensure that we tackle the chronic skills shortages right across our country—there is no time to waste. The Government are determined to drive opportunity and growth in every corner of our country. Further delays to that will hold back not just growth but opportunities.

When it comes to the function of Skills England and how it will operate, it will be an Executive agency of the Department for Education. It will have the independence that it needs to perform its role effectively, with a robust governance and accountability framework and a chair who brings an enormous wealth of experience from business. A strong, independent board, chaired by Phil Smith, will balance operational independence with proximity to Government. It will operate in the same way that many Executive agencies, such as the Driver and Vehicle Licensing Agency, already operate.

As with any new arm’s length body, in the next 18 to 24 months we will review how Skills England is functioning, to consider whether it still exists within the best model. [Interruption.] That is entirely in keeping with the way in which arm’s length bodies are routinely considered by the Government. I am surprised that Conservative Members are surprised, because that is simply how these things are done, as they know all too well. If they are content to allow drift and delay, they will hold back opportunity for people across our country; they will hold back the demand that businesses rightly lay at our door to get on with the job of creating the conditions in which they can deliver more apprenticeship starts, more opportunities, and more chances to learn and upskill.

Skills England will work closely with the Industrial Strategy Council, which will monitor the strategy’s progress against clear objectives. The Skills England chair will have a permanent seat on the council—that really matters. By 2035 there will be at least 1.4 million new jobs. Our clean energy mission will rely on talented people with the expertise to power our greener future. The pace of technological change, including artificial intelligence, is accelerating, and it brings huge opportunities for our economy. However, to seize those opportunities, firms need a ready supply of people with the right skills. We will nurture home-grown talent in all regions so that people have the skills they need for those exciting jobs of the future.

Skills England will work with the Migration Advisory Committee to ensure that training in England accounts for the overall need of the labour market and to reduce the reliance of some sectors on labour from abroad.

[Gareth Snell]

I thank the Secretary of State for being so generous with her time. I absolutely support her ambition of ensuring that we have the skills for the jobs of the future. Will she say a little about how Skills England will support foundational manufacturing industries, such as ceramics in Stoke-on-Trent, which will not be prioritised in the industrial strategy but still have a lot to offer our economy and are crying out for skills from local people? If we can get that right, we can grow our own economy, and that is true levelling up in my opinion.

[Bridget Phillipson]

My hon. Friend always champions the ceramics industry in his constituency. We have had many conversations on that topic, and he is absolutely right to put it into context. Skills England will benefit the ceramics industry and his constituents because we will be able to move much more rapidly to make changes to qualifications and training requirements in order to meet the needs of employers, with further flexibility, shorter courses, and foundation apprenticeships for young people for the chance to get on, including in long-standing traditional industries as well as in future jobs and opportunities.

The Bill is a crucial leap forward, bringing the different parts of the skills system closer together, and it paves the way for Skills England. It transfers the current functions of the Institute for Apprenticeships and Technical Education to the Secretary of State, not to exercise power from Westminster, but to empower the expert leadership of Skills England to drive the change we need. Bringing those functions to Skills England will place the content and design of technical qualifications at the heart of our skills system, where they belong.

Skills England has existed in shadow form since Labour took power and began the work of change in July. It set out its first “state of the nation” report into skills gaps in our economy in September. Skills England is moving ahead. The leadership is in place, and by laying the groundwork for a swift transition to Skills England, we are moving a step closer towards a joined-up skills system.

At its heart, this Bill is about growth and opportunity—growth for our economy, and opportunity for our people—and there is no time to waste. We need action, not delay. The people of this country need better jobs, higher wages and brighter futures; no more vacancies unfilled due to a lack of skills, no more chances missed and no more growth lost. We need change now, not change pushed back to some foggy future, so we are pushing ahead.

This is legislation that builds on what has come before but demands more—more cohesion, more dynamism and more ambition. That is how we break down the barriers to opportunity, that is how we fire up the engines of economic growth, and that is how we deliver the future that this country deserves—the bright hope that our best days lie ahead of us. I commend this Bill to the House.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I call the shadow Secretary of State.