Apprenticeships and Skills (Public Procurement Contracts)

Catherine McKinnell Excerpts

Tuesday 14th September 2010 Commons Chamber

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

I beg to move,

That leave be given to bring in a Bill to require certain public procurement contracts let by public authorities to include a commitment by the contractor to provide apprenticeships and skills training; and for connected purposes.

On Friday, I met 19-year-old Chris Haugh, who was starting his last day as an apprentice motor technician at Newcastle international airport in my constituency. He began his placement when he left school at the age of 16 and has earned himself a permanent position, which he started yesterday. During our chat, he described his three years’ training as the best time of his life, and he told me about the fantastic support he had received, the friends he had made and how he is looking forward to taking an active role in bringing on the next apprentice that the team takes on. Chris is one in a line of successful apprentices at Newcastle airport. I also spoke to his senior supervisor, Derek Morgan, who was the first apprentice ever taken on at the airport and he has worked there for more than 40 years.

At opposite stages of their working lives, both those individuals perfectly illustrate the benefits of apprenticeships and the reasons why I want to introduce this Bill. I am hopeful that the ideas I present today will meet with the support of hon. Members. My early-day motion 692 on the issue has been signed by 50 MPs, representing five different parties, and I am certain that the political will exists to tackle this subject. What I am proposing is a small legislative change that would make a big difference to the lives of millions, improving aspirations and offering training and high-quality careers.

The aim of the Bill is to introduce a requirement upon successful bidders for high-value public contracts to demonstrate a firm commitment to skills training and apprenticeships. Guidance published by the Office of Government Commerce in April 2009 aimed to encourage departments to address skills and apprenticeship issues through their procurement policies. The Bill aims to build on those guidelines, ensuring that organisations help to develop skills in their work force through these large-scale public contracts.

The economic case is clear. First, expanding access to apprenticeships will help to bridge the current employment and skills shortfall. That is particularly important in the current financial climate. Because it is the Government who award these prized contracts, they are uniquely placed to ensure that those profiting from public money are giving something back. With an annual expenditure in 2008-09 of £175 billion, public procurement is the ideal tool to encourage organisations to develop their apprenticeship plans.

This is a simple principle that draws strong and broad support. The TUC, Unite, the Federation of Small Businesses and many other groups have all publically stated their support. The FSB in the north-east has told me that it builds upon its work, pushing for the public sector to play a more strategic role in stimulating the growth of apprenticeships. In the words of Frances O’Grady, deputy general secretary of the TUC, these companies must “do their bit.” By their doing their bit, the financial investment required to expand training will be shared by the taxpayer and private firms making profits from public contracts, and that is a significant advantage. Government spending is declining, yet the need for jobs and training is higher than ever. According to Department for Business, Innovation and Skills figures, 240,000 apprenticeships were taken up in 2008-09, which demonstrates the high demand for apprenticeships. However, the current supply of quality apprenticeships is clearly not sufficient to meet demand and that was highlighted this year when BT received 24,000 applications for only 221 places on its apprenticeship programme.

The relatively small cost of training an apprentice can be contrasted with the clear financial benefits to both the firm and the individual over the longer term. A report commissioned by the then Department for Education and Skills in 2007 estimated that the added financial benefit to an apprentice over their lifetime of completing a level 3 apprenticeship is about £105,000 in higher wages and a significantly higher likelihood of employment. A separate report produced in 2008 by Warwick university also showed that the majority of employers recouped the cost of their investment within two to three years. As the report found that apprentices usually stay with the firms that trained them for far longer than that, those employers enjoy access to highly skilled employees who know their business and feel a personal commitment to its success. That improves efficiency and productivity as well as generating non-financial benefits such as increased morale and commitment to the organisation.

By expanding access to apprenticeships we can create a more tailor-made training system in which employers, who know their industries better than anyone, identify the skills that are needed and train their apprentices to suit them. That will lead to less surplus and shortage in the labour market, quicken our return to prosperity and ensure that Britain has the intelligently trained workers that we need for our recovery.

As well as being convinced by the economic case for the Bill, I also have personal experience of how apprenticeships change lives. Aside from meeting inspiring people such as Chris and Derek, I grew up with my grandfather’s building company and had the opportunity to see at first hand the human dimension of what it means for people to get into work. Yesterday, I met up with Tony Hall, who started as an apprentice with my grandfather in 1972. He now runs his own business and his son has just started, at 17, as an apprentice at a stainless steel fabricators—White Bros Ltd—in my constituency. The economic benefits really are only half the story of why this Bill matters.

Being in employment or training does not just mean that a person has a bit more money to spend. It changes the way people view themselves and gives them increased pride and self-esteem. Apprentices are perhaps the best means to tackle the increasing number of people who are not in employment, education or training and we have the perfect opportunity to use apprenticeships to show that in order to be successful, higher education is not a prerequisite, and that equal if not greater rewards can be gained through entering the workplace as an apprentice.

Although companies will be obliged under the Bill to demonstrate a general commitment to providing apprenticeships and training, steps will be taken to ensure that it is always proportionate and continues to guarantee value for money. Small businesses should not be adversely affected by the proposals due to limits on the size of the contract and the number of apprentices required by the Bill. More than this, the stipulation could not be enforced at the expense of discriminating against contractors from other EU states.

Increasing access to training and boosting the availability of apprenticeships are matters on which Labour in government made real strides and so I am pleased to see that they remain declared goals of the coalition Government. I was also pleased to read of the Minister for Further Education, Skills and Lifelong Learning’s praise for apprenticeships during his recent visit to the Nissan car plant in Tyne and Wear. His declaration that “apprenticeships matter” gives, I am sure, hon. Members on both sides of the House great hopes for the direction of future policy in this respect.

There is a widely recognised need to increase apprenticeships and I am convinced that a simple way to do that is for those who profit from public contracts to do their bit. Given the support that has been expressed for the proposal not only in Parliament but by industry groups and trade unions, I ask hon. Members to support the small change brought in by this Bill and to play a part in making a statutory obligation on the public procurement process that will benefit individuals, businesses and the country. It is a long-overdue requirement that will create a comprehensive national apprenticeships programme, central to lower-cost, high-quality skills training in the UK. It is a small change that will make a big difference, and I commend it to the House.

Question put and agreed to.

Ordered,

That Catherine McKinnell, Mr Charles Kennedy, Ms Angela Eagle, John Healey, Tony Lloyd, Jack Dromey, John Cryer, Grahame M. Morris, Mrs Sharon Hodgson, Tony Cunningham, Geraint Davies and Mr Iain Wright present the Bill.

Catherine McKinnell accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 11 February and to be printed (Bill 70).