Apprenticeships and T-Levels

Clive Jones Excerpts

Wednesday 20th November 2024 Westminster Hall

[Damian Hinds]

I am sure it is. I will come to apprenticeships in a moment, but I was just talking about industry placements in T-levels.

From speaking to young people who are doing T-levels, colleagues will know that their most popular feature is probably the fact that young people get to do a real role in a real workplace. The placements are also popular with the employers that provide T-levels: first, the employers are investing in the next generation and helping develop all the things the lack of which they sometimes complain about—soft skills and workplace skills—and secondly, the placements are the most fantastic, longest-ever job interview, when employers get to see the people who may come and work in their company over an extended period. I appeal to Ministers to carry on the great work of shouting about T-levels and talking about these great opportunities and the upgrade they represent.

There were two big changes to apprenticeships. The first ensured that there were minimum standards. Previously, as colleagues will recall, some apprenticeships were so thin and flimsy that the apprentices did not know they were on one. After minimum standards came in, apprenticeships would last at least one year and involve at least 20% of time off the job. As with T-levels, there would be an end-point assessment, which would feature standards set by employers.

The second big change was the introduction of the apprenticeship levy. That has always been controversial with some employers, but it was there to do two things. First, it raises the funds needed to pay for a big upgrade in apprenticeship provision. Secondly, it deals with the free rider problem, with which we will all be familiar: some companies in a sector have always strongly invested in young people, but three years later those young people leave to work for another employer that can offer to pay more but has not made the investment in the first place. The apprenticeship levy deals directly with that free rider problem, as economists call it, so that every sizeable company contributes properly.

The new Government plan to change the scope of the levy and to introduce two new types of apprenticeship, which it is fair to say we do not know a huge amount about: foundation apprenticeships and shorter apprenticeships. There is an argument that we already make the word “apprenticeship” do a lot of work—it covers a wide spectrum. Arguably, there are three types of development of self and training, which have different needs: someone may be a career starter, career developer or career changer, and the specifications of the courses and qualifications are different. For example, a 50-year-old who is changing career does not need to learn as many things about what it is like to enter a workplace for the first time as an 18-year-old does. In truth, only one of those types of training is what a normal member of the public associates with the word “apprentice”: we think typically of people who are young and starting out on their working journey.

It is totally legitimate to look at changing what the levy covers, and it is good to refocus on young people—career starters. It is also reasonable to say that the levy could cover some things that are not apprenticeships, such as management development or traineeships, but there is huge value in maintaining integrity around what we mean by the word “apprenticeship”, and keeping a minimum length and quantity of college or off-work content.

Whatever the Government do with the levy, they need to find a way to deal with the free rider problem. The Government will always be lobbied by companies saying, “We should be able to use the levy for this, that and the other”, but if “this, that and the other” means training that they would have paid for anyway, then the levy will not have achieved its goal. It has to be something that creates a net increase in the amount of training and development available.

That brings me to Skills England. Now, Ministers like shiny new things, and some people will always lobby for things to change. A sweet spot is found in public policy when the two coincide: Ministers get lobbied to do something, and they think they have come up with a shiny new thing that sounds like it will achieve those ends. Skills England is one of those things; I am afraid that, without major design change, it is doomed to failure. I have no doubt that plenty of people who lobbied the Government when they were in opposition said, “We need a different approach to skills. We need to think about them across Government, take the long view, listen to employers, listen to young people and have an integrated approach.” The Government have come up with this thing called Skills England, which they think will do that.

Skills England will be the 13th new skills agency in five decades. If all it took to solve our skills and productivity problem was a change in the machinery of government, do the Government not think that one of the previous 12 might already have managed it? The instinct in difficult circumstances is to break glass and reach for a quango, but Skills England is not even a quango; it is nada—not quasi-autonomous, but a non-accountable departmental agency—and there is no reason to think it will be any better at working across Government, let alone across the economy, in solving these issues.

If the Government were serious about creating something new to join together the Home Office, the Department for Business and Trade, the DFE and everybody else, they would put it in the Treasury or perhaps the Cabinet Office. They would not just make it part of the DFE management structure. Worse than that is the loss of independence compared with the Institute for Apprenticeships and Technical Education.

There is legislation currently going through the other place that ostensibly creates Skills England, but it does no such thing. All it does is abolish the independent institute and move all of its powers into the Department for Education. The Secretary of State will now have responsibility for standards for T-levels. Imagine if that were the case for A-levels. If it is not all right for A-levels, why should it be all right for T-levels?

[Clive Jones (Wokingham) (LD)]

Will the right hon. Member give way?

[Damian Hinds]

If the hon. Member will forgive me, I will continue.

There is also no guarantee that business will continue to be involved in setting those standards. I am afraid that public and business confidence is set to be eroded—rightly, because everybody knows that the easiest way for the Government to increase the numbers of people doing anything in education is to erode standards to get more people through.

I believe the Sainsbury report was—and still is—a good blueprint. Of course, the Government are entitled to evolve it, but they should recognise that the principles remain sound. With T-levels, it was always going to be hard to get sufficient industry placements and to overcome powerful objections that we need to change the system rather than just add to it. With apprenticeships, there will always be, as there always have been, firms that try to game the system. We can argue about what the levy should or should not cover, but it is a good thing and it needs to be designed and maintained to encourage a net increase in investment in this area and to deal with the free rider problem.

There will always be some cost and downside when the bar of minimum standards is raised, as we did. We need to remember where we started, with the need to increase productivity and have higher expectations for all in the interests of social justice. We need to maintain those minimum standards to keep apprenticeships and T-levels equivalent, with the same levels of knowledge, skills and behaviours.

Finally, the independence of the body that sets the standards, working with and for business, is key. The Government will obviously keep Skills England, but I ask the Minister to build into its design proper, full independence from her Department, and a proper, full guiding role for the businesses these occupations need to serve. I want Ministers not just to say that, but to write it into the legislation.

--- Later in debate ---

[Ian Sollom (St Neots and Mid Cambridgeshire) (LD)]

It is a pleasure to serve under your chairmanship, Sir Christopher. I thank all hon. Members who have taken part in the debate, and the right hon. Member for East Hampshire (Damian Hinds) for introducing it. I am sure we all agree that we owe it to our young people to ensure that they have access to all education and training options, and that those options are of the very highest standard. That is not always the case in the present system, which is having an impact not just on young people and their futures, but, as has been said, on the country’s economic development and prospects.

Apprenticeships, vocational education and skills are all vital if the Government are serious about their growth mission and breaking down barriers to opportunity. I think we all share those ambitions, but the system needs reform across the board, starting right at the beginning by ensuring that all young people are fully aware and informed of all their options—many thousands, as it may be—post 16 and post 18. We need to see an improvement in the quality of careers education, information, advice and guidance in schools to support them making those decisions.

[Clive Jones]

Many residents in my constituency of Wokingham are concerned about the uncertainty around T-level courses and other existing level 3 qualifications. Students in Wokingham have been looking at courses and colleges to apply to, and some colleges are currently unable to confirm existing level 3 courses. Does my hon. Friend agree that the current lack of clarity about the implementation of T-level courses is causing unnecessary stress to parents, students and teachers?

[Ian Sollom]

I absolutely agree, and I will come back to that point later.

The services that inform and offer guidance need to be informed themselves about the local and national job market, which industries and sectors are growing, and which skills are in demand in order to support students into top-quality jobs. We know that there are skills shortages, and giving higher-quality, useful information will be essential to plugging that skills gap.

On apprenticeships, the Lib Dems recognise that we not only need more apprenticeships, but that they need to be more attractive to young people. Guaranteeing that an apprenticeship pays at least the national minimum wage would be a good place to start. The Chancellor announced a welcome increase in the apprenticeship wage in the Budget last month, but even after those changes, that amount is still only just over 60% of the national living wage. That is quite a disincentive for young people to take up an apprenticeship.

We have also heard today that the apprenticeship levy is not working as well as it should, and that employers often cannot get the funding they need to train staff. In 2023-24, the levy raised £3.9 billion for the Treasury, but the apprenticeship budget, which is separate, awarded only £2.7 billion. Although £500 million goes to the devolved nations under the Barnett formula, as it should, that still leaves a shortfall of £700 million, as was pointed out by the hon. Member for Hartlepool (Mr Brash). That money has been paid in through the levy, and therefore to the Treasury, but does not reach employers; as was said, it is raised for skills but not spent on skills. That is at a time when the Government say they are keen to encourage businesses to invest in skills. We need that to be directed to skills.

Furthermore, the system was designed so that levy payers do not spend all their levy funds and so that small businesses can access the levy to fund apprenticeships. That said, 98% of the apprenticeship budget was spent each year for the past three years, and if large employers spend all their levy funds, there would be no apprenticeship funding remaining for small businesses. We know that small businesses are crucial to the apprentice system. Non-levy-paying employers recruit more apprentices each year than levy-paying businesses: last year, that was 42,000 apprentices under 19 compared with 35,000 by larger recruiters—a difference of 7,000. We are waiting for more details on the Government’s new growth and skills levy, but if they are serious about pivoting the apprenticeship system towards young people, they need to sort out apprenticeship funding.

On T-levels, the Liberal Democrats welcome the ambition to achieve equal value between academic and vocational routes—that has been a common theme across many parties for a considerable time—but we do not agree with the previous Government’s decision simply to scrap dozens of BTEC courses. Those qualifications are a middle pathway that allows many students, including those who find the T-level entry requirements simply too high, to benefit from a combination of academic and applied qualifications. Research indicates that BTECs significantly improve university entry rates for both white working-class and black students.

Many parts of industry are concerned about T-levels. For example, the hospitality sector prides itself on having no barriers to entry to those with no industry experience, and opens its doors to people with low educational attainment. That encourages a more diverse, inclusive and accessible workforce. However, the hospitality T-level requires 16 to 18-year-olds to have 5 GCSEs of grade 5 and above. That excludes a whole host of young people with many non-academic skills and talents, who could make successful careers in hospitality. It is important that we keep BTEC routes for those people.

As other Members have mentioned, there have been problems with the roll-out of T-levels, and concerns have been expressed by education providers and employers about their ability to deliver industry placements. A report by the Education Policy Institute this year highlighted issues with student retention, with nearly a third of first-year health and science T-level students dropping out of their programme. Until the new T-levels are well established, understood by students and employers, and proven to be successful, rolling back BTECs, which are successful, would be a huge mistake. The Government’s decision earlier in the year to review the defunding of BTECs was welcome. Now, however, as my hon. Friend the Member for Westmorland and Lonsdale (Tim Farron) pointed out, the delay in the outcome of that review is affecting planning for the next academic year and the opportunities available to young people. So, I urge the Government to get on and publish the outcome of that review.

Finally, with a lot of issues around skills at the moment, it seems that the answer is “Skills England”. I will echo the words of the right hon. Member for East Hampshire in his opening remarks that the King’s Speech referred to a Skills England Bill, whereas the Bill that is in the other place does not refer to Skills England at all. We would welcome the opportunity to discuss Skills England when we consider the actual legislation.