Apprenticeships

Gordon Marsden Excerpts

Thursday 10th March 2016 Commons Chamber

[The Minister for Skills (Nick Boles)]

With permission Mr Speaker, I would like to make a statement about apprenticeships. As you know, Mr Speaker, I am evangelical about apprenticeships. We do not always agree with each other on every question, but I know that to a woman and to a man, all my right hon. and hon. Friends share this passion.

We believe in apprenticeships, because they are one of most powerful motors of social mobility and productivity growth. An apprenticeship represents opportunity, aspiration, ambition—things that we Conservatives cherish. Apprenticeships make our companies more competitive. Some 70% of employers report that apprentices help to improve the quality of their product or service. They offer people a ladder to climb, with both higher pay and a sense of personal fulfilment at the end of it. A level 2 apprenticeship raises people’s incomes by an average of 11% three to five years later. A level 3 apprenticeship delivers a 16% boost.

Apprenticeships improve the diversity of the workplace: 53% of the people starting an apprenticeship in 2014-15 were women; 10.6% were from a black or other minority ethnic background, up from 8% in 2009-10; and 8.8% had a disability or learning difficulty. An apprenticeship can take you anywhere. Sir Alex Ferguson did one. So did Jamie Oliver. And Karen Millen. And Sir Ian McKellen. So, too, did the chairmen of great businesses such as Crossrail, WS Atkins and Fujitsu.

The Government have great ambitions for our apprenticeships programme. In the previous Parliament, 2.4 million people started an apprenticeship; by 2020, we want a further 3 million to have that opportunity. We do not just want to see more apprenticeships; we want better apprenticeships in more sectors, covering more roles. The first thing we need to do is persuade more employers to offer apprenticeships. At the moment, only about 15% of employers in England do. In Germany, the figure is 24% and in Australia 30%.

We are therefore introducing a new apprenticeship levy that will be paid by all larger employers—those with an annual payroll bill of £3 million or more. This will help us to increase our spending on apprenticeships in England from £1.5 billion last year to £2.5 billion in 2019-20. Employers who pay the levy will see the money they have paid for English apprenticeships appear in their digital account. They will be able to spend it on apprenticeship training—but only on apprenticeship training—and as my right hon. Friend the Chancellor has emphasised, employers will be able to get out more than they put in.

We are also making sure the public sector pulls its weight and follows the fantastic example of our armed forces, which, between them, employ 20,000 apprentices at any one time. We plan to introduce a new target for public sector organisations employing over 250 people in England. They will be expected to ensure that at least 2.3% of their staff are apprentices. We are using the Government’s power as a customer too. Procurement rules now stipulate that bidders for central Government contracts worth more than £10 million and lasting over 12 months must demonstrate their commitment to apprentices.

We are not only committed to greater quantity; we want to see better quality too. We have already stopped the short-term, low-quality, programme-led apprenticeships developed by the last Labour Government. They made a mockery of the concept and tarnished the brand. We are now asking groups of employers to develop new apprenticeship standards that will help them fill the skills needs created by new jobs and new industries. Some 1,300 employers are involved in this process, and we have published 210 new standards so far. A further 150 are in development. We are also establishing a new employer-led institute for apprenticeships to approve these new standards and ensure that quality is maintained.

Sixty of these new standards are higher and degree apprenticeships. We want everyone making a choice about their next steps after the age of 16 or 18 to know that the decision to do an apprenticeship is not a decision to cap their ambition or turn down the chance of a degree. It is simply a decision to progress in a different way—to learn while they earn and to take a bit more time, to bring home a wage and avoid large student loans. Next week is National Apprenticeship Week. I hope that the House of Commons will today speak with one voice. Apprenticeships are for everyone and can take you anywhere. I commend this statement to the House.

[Mr Gordon Marsden (Blackpool South) (Lab)]

I thank the Minister for limited advance sight of the statement. I suppose we should all be grateful, after the turmoil of yesterday, that it did not just turn up in manuscript.

What has turned up—if I can put it this way—is a dance of the seven veils. The Minister’s statement is simply a rehash of much of what was already said in the “English Apprenticeships” document. That is what concerns the sector: fine words butter no parsnips. The procurement rules he mentions are a pale shadow of what Labour proposed in its 2010 manifesto. Most crucially, there is no further clarity for universities, other areas and large employers about what their responsibilities will be. They want to know whether the levy will be extra money or a substitute for Government funding. Will it be extra resources or simply an Osborne payroll tax?

Will the Minister confirm how much he expects the levy to raise, and whether it will be more or less than the £1 billion he said he hoped to add to spending on apprenticeships in England? The Department was supposed to respond to the consultation on the targets for apprenticeships in public sector bodies by 4 March. Has it done so? When will he do so? There is confusion and concern among local government and others about who will be affected. Will he spell out in far greater detail how small and medium-sized enterprises will benefit from the process, and what does he have to say to the Chartered Institute of Taxation, which worries that smaller businesses will be unable to use their full £15,000 allowance?

The Minister has told us that he is evangelical about apprenticeships, but Members and the business sector want to know whether he will be too catholic in the definition. Perhaps he should avoid tarnishing his own brand by cheap politicking about the Labour Government, who set up both National Apprenticeship Week and the National Apprenticeship Service, and stop sounding like some old Soviet five-year planner on his tractor targets.

With concerns about the quality of these apprenticeships, will the Minister tell us who will supervise the operation of the apprenticeships levy? Will it be the Apprenticeships Delivery Board or the board of the institute for apprenticeships? What has he to say to the Chair of the Business, Innovation and Skills Committee, my hon. Friend the Member for Hartlepool (Mr Wright), who, I am told, said this morning, “No one knows what the apprenticeship levy is going to look like. It’s coming in in a vacuum of darkness, and I am concerned that it’s just a numbers game.”

What will the Minister tell the Public Accounts Committee, which is so concerned about the direction of his Department that it has recalled the Secretary of State and the permanent secretary for a second grilling before Easter? Finally, perhaps he would like to tell us how he expects to deliver the 3 million target and implement the levy over a very short period with the number of Skills Funding Agency staffing down by 40% since 2011, more cuts to come and an accelerated decline in the number of people in the National Apprenticeship Service?

[Nick Boles]

It is amusing to be accused in a relatively short statement from the hon. Gentleman of being a Catholic, a Soviet planner and a dancer with seven veils. I will want to put that in my epitaph.

I will try to answer the hon. Gentleman’s questions. First, to be clear, in the last year of the last Labour Government, public spending on apprenticeship training was £1 billion. It is now £1.5 billion. By the end of this Parliament, it will be £2.5 billion in England. That is extra money in anyone’s book. Not a single education budget or, indeed, other public service budget is increasing as fast.

The apprenticeship levy will raise £3 billion in 2019-20, and £500 million will be needed to make adequate and fair contributions to the Scottish Government, the Welsh Government and the Northern Ireland Executive to fund, I hope, their apprenticeship programmes, but that is, of course, for them to judge. All the remaining £2.5 billion will be spent on English apprenticeships.

The hon. Gentleman asks how small and medium-sized businesses, which will not pay the levy, will nevertheless benefit from Government funding for apprenticeships. We expect them to carry on receiving Government money for apprenticeships in the same way as they do now. We do not expect all companies that pay the levy to use up all the money in their digital accounts, and there will be a great deal more money to go around, so we are absolutely determined that the level of apprenticeships provided by SMEs will continue as now.

The operation of the levy as a tax is obviously in the hands of Her Majesty’s Revenue and Customs. The operation of the digital system used to give employers control of the apprenticeship levy that they have contributed will be the Skills Funding Agency’s responsibility. The institute for apprenticeships will, as I have described, have complete responsibility for overseeing standards and quality control.

The hon. Gentleman and, indeed, the Chair of the Business, Innovation and Skills Committee—I look forward to hearing from him, no doubt—would like answers to many more questions. They will have to wait just a little. The Chancellor will make his Budget statement next week, after which more technical details will be provided, so that everyone knows well in advance how the levy will work.