Apprenticeships and Skills Policy

Dan Poulter Excerpts

Tuesday 8th January 2019 Westminster Hall

[Judith Cummins]

I thank my hon. Friend for making that point, which is definitely one for the Minister to address.

As I was saying, in July 2018 there was a total of 25,200 apprenticeship starts nationally, which represents a 43% drop from July 2016. Starts in Bradford South have fallen from 1,370 in 2015-16 to just 680 in 2017-18 —very nearly a 50% drop. Several Bradford firms have told me that the complexity of the system is a major barrier to entry, and that seems to be a particular problem for small and medium-sized businesses. That was clearly set out to me when I had the privilege of attending the apprenticeship awards evening at Bradford College late last year. While we were discussing the fantastic successes of apprenticeships at the college, it raised a number of difficulties facing both the college and the many small and medium-sized enterprises it works with. Many of the latter find the administrative demands of the new apprenticeship system extremely difficult to manage, and the college itself is experiencing cash-flow difficulties, caused by changes to the apprenticeship contract and the digital payment process, with payment times having increased to an average of 14 weeks from an average of seven before the reforms. The college has had to create four new posts to help it to navigate the changes and support its employers.

In his recent Budget, the Chancellor acknowledged some of the shortcomings identified in the current apprenticeship policy. For example, he announced his intention to reduce the requirement to contribute to the costs of off-the-job training from 10% to 5% for non-levy employers, which should help a little. In Bradford South, I have levy employers asking if the same 5% reduction in fees will apply to them once they have exhausted their levy funds. They currently deliver the extra apprenticeships under Solenis, which also requires a 10% core contribution from employers.

I recognise that a new system takes time to bed in, but the Government’s approach needs more than just a little fine tuning. We need a more radical overhaul of our skills policy to help places such as Bradford get the growth and prosperity we deserve. We have a situation where public policy, whether intentionally or unintentionally, has turbo-charged the London economy to the detriment of other towns and cities outside the capital. The Government need to address the failure over decades to tackle persistent regional skills imbalances. We need a mechanism to support industries and individuals in areas that face economic decline and need help to adapt to the demands of the global economy.

The jobs of the future will require people to work more closely with advanced technologies. Workers will need support to adapt and retrain, to secure decent and sustainable work; otherwise, in many places in the UK we will face a lasting legacy of low qualifications, low productivity and low pay. Yet the Government have no convincing strategic framework for identifying sectors and areas in which large numbers of jobs are at risk from technological and economic change. In fact, the apprenticeship levy contributes to further regional imbalances, as more funding is raised per head in London and the south-east than in the rest of the country. London has the lowest skills need in the country, yet the levy will raise more funds there, as the capital has both a greater proportion of workers employed by large employers and far higher pay. The Social Mobility Commission’s “State of the Nation 2017: Social Mobility in Great Britain” report identifies that as an emerging risk, and the commission urges the Government to develop education and skills policies to better support disadvantaged young people in areas such as Bradford South, stating that that could be done

“by targeting any used apprenticeship levy funds at regions with fewer high-level apprenticeships”.

According to the commission, apprenticeships are a more common path into employment for young people in many youth coldspot areas, where there are higher barriers to social mobility than in hotspots, but those apprenticeships are often of lower quality than in the hotspots. If we are to rebalance our economy, we urgently need reforms to the apprenticeship levy to ensure that it meets the needs of the most disadvantaged areas and those with a legacy of underinvestment, such as my constituency of Bradford South.

A debate about skills policy must not be just about how to support young people to enter the workplace; it also must consider those who are already working. To achieve a sustainable supply of skills with the flexibility to meet the ever-evolving needs of business, industry and the public sector, the UK must maximise the potential of its existing workforce. That is why the 45% reduction in spending on adult education since 2010 is so short-sighted and damaging to our economy. If Government want business and individuals to see training as an investment and not as a cost, they must lead by example. To meet the wider training need of the economy, we need more focus on how the apprenticeship levy can be used to tackle the overall skills shortage.

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

I agree with a number of the hon. Lady’s points, but while I accept what she says about individuals gaining access to education as adults, does she not agree that employers have a duty to their staff to ensure that they are properly trained, that their careers are developed, and that appropriate adaptions are made if they transition into another career or a different role in the organisation? It should not necessarily be down to the Government to do that. Employers have an important role and a moral obligation to their staff.

[Judith Cummins]

Yes, everyone has a wider responsibility to train and retain. Lifelong learning is, in fact, a mantra going back some decades.

The Chartered Institute of Personnel and Development comments:

“The Government should consider broadening the apprenticeship levy into a wider training levy. The training levy could be reconfigured to cover a much broader range of organisations…whereby all businesses with more than 50 employees would contribute, with larger businesses contributing more to the pot.”

That would allow levy funds to be used to fund people with low qualifications to access pre-apprenticeship training.

A wider problem that has affected this country for decades is overreliance on individual learners to make informed choices about their training in an environment that is not well structured and where independent advice is not freely available. Unlike much of Europe, we do not have a strong industrial sectoral voice to drive collective action from employers. To pursue the high-skills route to business success, more effort must be made to develop that voice. The Government must no longer rely on responding to individual employers and instead work to build up strong sector skills bodies, which will be more able to forecast skills needs and encourage the collective commitment to skills that we have heard about in the debate.

Sectoral institutions should include a range of key stakeholders able to build a wider commitment through an entire industry. That model is found in other western European countries, such as Germany and France, where it is common practice for employers, civil society groups and trade unions to co-operate to achieve mutually agreed goals. Achieving that requires the Government to take both a more active and a more supportive role and to devolve greater power and responsibility to key sectoral bodies. Places such as Bradford need more tools and resource to close the productivity gap with London. Investing more in skills and devolving more to our cities would be a significant step forward in building an economy that works for everyone.

In conclusion, I ask the Minister to answer my questions about apprenticeships and skills. In particular, will the Government reduce the administrative burden and the costs of operating the apprenticeship system to the pre-May 2017 levels? What will she do to address the regional imbalances that are built into the apprenticeship levy? Does she intend to develop a strong sectoral voice to articulate and stimulate the demand for skills?

If we get the skills policy right, we can give young people the tools they need to secure high-quality jobs, and we can boost productivity and rebalance the economy so that it works for all places and all people in our country. That must be our absolute priority, and I hope that today’s debate and the Minister’s responses will contribute to getting that right. Finally, I would like to place on record my thanks to the Minister for her welcome interventions in helping to secure a future for Bradford College. I very much look forward to working with her.