Apprentices: Financial Support

Dan Poulter Excerpts

Wednesday 8th March 2017 Westminster Hall

[Kelvin Hopkins]

I thank the hon. Gentleman for his intervention. I will touch on the issue of drop-outs later, but he is right that finances are a significant problem.

The research shows that a college student with one child could be eligible for more than £10,000 a year in financial support, and the families of such students could receive thousands more, but apprentices, including those on the minimum wage, earning as little as £7,000 a year, are not entitled to any of that. The Department for Work and Pensions does not class apprenticeships as “approved education and training”, and that affects the benefits that apprentices can receive. Specifically, when a young person takes up an apprenticeship, their family will become ineligible to claim child benefit and child tax credit. Further education students between the ages of 16 and 19 could be eligible for either a £1,200 a year vulnerable student bursary or a discretionary bursary. No bursaries are available for apprentices.

In many areas, students enjoy concessionary or discounted travel to college or university. For apprentices, there are some discounts, but only for the first 12 months of an apprenticeship and only for those apprenticeships leading to a serious qualification.

[Dr Daniel Poulter (Central Suffolk and North Ipswich) (Con)]

I congratulate the hon. Gentleman on securing the debate. He will be aware that, in the east of England, many apprentices work in farming or in the land economy and often have to travel long distances to work and to the agricultural colleges that provide some of the additional training for apprenticeships. Does he agree that that group might be deterred by the additional travel costs, because the car is the only option for those apprentices?

[Kelvin Hopkins]

I thank the hon. Gentleman for his intervention; that is the point I am making. According to the NUS, the average apprentice spends £24 a week on travel.

Parents of students are eligible for child benefit of up to £1,066 a year for the oldest child, but parents of apprentices are not eligible for child benefit. Parents of students are also eligible for child tax credit of £2,750 a year and up to £3,324.90 a year for the first child under universal credit. Parents of apprentices are not eligible for either child tax credit or universal credit for them. Care to learn grants are available to student parents but not apprentice parents. Those amount to £160 per child per week. Students are often offered bank accounts with such benefits as an interest-free overdraft; those are not available to apprentices. Finally, students are entitled to either a full exemption from, or a discounted rate of, council tax. That is available only to some very low-paid apprentices taking a course leading to a recognised qualification.

One effect of the travel costs is that some young people do apprenticeships that involve shorter travelling distances, in preference to the apprenticeships that they really wanted to do. With all the comparative financial disadvantages, it must be the case that some young people for whom an apprenticeship might be appropriate and the best route to qualifications and skilled employment are persuaded to take other courses of study, as students rather than apprentices. There may even be pressure from their families to do so. That is more likely in less affluent families.

Then there is the question of diversity. The Learning and Work Institute points out that people from black, Asian and minority ethnic backgrounds are half as likely as other young people to secure access to apprenticeships. Women, too, are more likely to be apprentices in low-paid sectors, entrenching the gender pay gap, and young people eligible for free school meals are up to half as likely to undertake advanced apprenticeships. Those significant equality issues must be addressed. There is also a regional dimension: 40% of the firms that will pay the apprenticeship levy are based in London and the south-east.

Colleges play a major part both in educating young people and in supporting apprentices, but the Association of Colleges is concerned that the Government’s 3 million target could drive quantity over quality, and the Government’s existing approach to financial support means that many young people from disadvantaged backgrounds face barriers to accessing apprenticeships, with a key reason for students dropping out being the lack of financial assistance.

I have laid out some of the significant problems holding back apprenticeships, most of which are financial. I could spend much longer dwelling on some of the other disadvantages, but other hon. Members will wish to add to what I have said, so I shall soon conclude. The Opposition sought to make changes to the Technical and Further Education Bill in Committee and on Report, and I had the pleasure of serving on the Committee and making a contribution there, too. However, it is now in the Government’s hands to address all the problems, to make better financial provision for apprenticeships, to better fund our colleges and to incentivise employers to sustain apprentices and apprenticeships. That is vital for our young people and vital for our economy, and I ask the Minister to respond positively to what I have said.

--- Later in debate ---

[Robert Halfon]

The hon. Gentleman is absolutely right. One of the rungs on the ladder of opportunity is widespread quality provision, which I will come on to. Although we have a huge amount of work to do—and the work is never done—statistics show that roughly 90% of apprentices get a good job afterwards, often in the place where they did their apprenticeship, or go on to additional education, which they may not otherwise have thought of. That is a pretty good sign of the way things are going, but I do not deny there is a lot of work to do.

Within the funding framework, millions of pounds go to employers—I could list them all here—and providers. Special help ensures we do everything possible to incentivise SMEs to take on 16 to 18-year-olds, and they pay no training costs if they have fewer than 50 employees. Huge amounts of money are spent on trying to encourage businesses, employers and other organisations to take on apprentices with learning difficulties and disabilities. Amazingly, in the construction industry, 10% of apprentices have disabilities. I was astonished when I first saw that statistic, which is a credit to the construction industry and shows that the things we are trying to do in terms of incentives for the trainer, provider and employer are having an effect. Given the funding pressures that the country faces, the money that is going into apprenticeships is a significant amount and it is something I strongly support.

The hon. Member for Motherwell and Wishaw said the Select Committee went to Gateshead College, which is an incredible and outstanding place. I went there a few weeks ago as part of the industrial strategy launch. The college embeds careers advice in every single part of the course. It does huge amounts of work for LDD apprentices and huge amounts of work to encourage people into apprenticeships. It is an outstanding college that does a lot of work on mental health. I am glad the Select Committee visited, and our job is to find out how to replicate what the college does across the country.

[Dr Poulter]

My right hon. Friend is right to outline the great successes of the expansion of apprenticeships across the country. I am sure he recognises the challenge of helping people from poorer and less privileged backgrounds into apprenticeships. Can he outline what steps the Government are taking to improve that situation?

[Robert Halfon]

I promise to answer my hon. Friend’s question, but I hope he does not mind if I answer it later because I want to deal with the points made by the hon. Member for Luton North, who initiated the debate. My hon. Friend raises an important issue. One of my key motivations in my job is to make sure that people from disadvantaged backgrounds can have the same equality of opportunity as everybody else, but I will come on to that in a minute.

--- Later in debate ---

[Robert Halfon]

I am acutely aware—I see the pressures on my constituents—of the pressures that families face, and I do not want to create disincentives for families who are working but struggling. Often, one member of the family works in the day, one works at night and the son or daughter does an apprenticeship, yet the family are struggling to keep their heads above water. I accept that. We announced that we will be doing a serious, committed review—this relates to the question that my hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter) asked—of how to get more apprentices from disadvantaged backgrounds. We have a £60 million fund to incentivise providers to take apprentices from the most deprived backgrounds, and FE colleges can use some of their bursary money to help apprentices with travel and overcome some of the other obstacles that have been raised.

[Dr Poulter]

I hope my hon. Friend the Minister recognises that that is inadequate for many students living in very rural areas. Some colleges cover vast geographical areas and some students have to do 100-mile round trips daily to attend college. They also have to pay for transport or car and petrol money to get to the workplace where they are doing their apprenticeship, which is a real disincentive in some rural areas. Will my hon. Friend the Minister look at the challenges that rural apprentices face?

[Robert Halfon]

I accept the premise of my hon. Friend’s question. I have been to rural areas to meet apprentices, and the younger ones in particular say that the cost of transport is a problem. We are looking at that as part of the social mobility review for apprentices. Again, if those apprentices were just going to an FE college they would not be earning any money, and if they were at university they would have to have a loan. At least they are earning, and the vast majority of them are earning more than the apprentice minimum wage. We have to strike a fair balance between the needs of the people my hon. Friend describes, which are very real, and fairness to taxpayers on low incomes, in terms of the overall costs and benefits. It is open to colleges to give apprentices bursary funding to help them with bus travel, and many do so.