Apprentices: Financial Support Debate
Full Debate: Read Full DebateGordon Marsden
Main Page: Gordon Marsden (Labour - Blackpool South)Department Debates - View all Gordon Marsden's debates with the Department for Education
(7 years, 8 months ago)
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It is a great pleasure to serve under your chairmanship, Ms Ryan, and to speak in this debate in the middle of National Apprenticeship Week. I begin by paying warm tribute to my hon. Friend the Member for Luton North (Kelvin Hopkins) and congratulating him on securing the debate. He has modestly mentioned before, and again today, his experience in this area. Colleagues who served with him on the Public Bill Committee for the Technical and Further Education Bill—new colleagues in particular— will have recognised his breadth, depth and wealth of experience in this area, having been an FE tutor, a governor, and a chair of the all-party group on further education and lifelong learning. Latterly, as the Minister and I know, his contributions in that Bill Committee were excellent.
I am delighted to take part in the debate. This week is an opportunity for all MPs, regardless of party, to celebrate the tens of thousands of individual successes—from young beginners to older workers acquiring new skills, and the successes of the colleges, training providers and employers who inspire them. I was privileged to speak yesterday at the celebration of apprenticeships conference, which was organised by Lindsay McCurdy and her team from Apprenticeships 4 England to pay tribute to the huge number of talented and hard-working apprentices up and down the country.
I thank my hon. Friend for his kind words. When apprenticeships are successful, many apprentices go on to have highly skilled jobs, overtaking even those who have been to university, including graduates, and they are ahead both in promotions and earnings by the time university students get started.
My hon. Friend makes an excellent point, which could reverberate usefully around the Chambers of this place thanks to individual MPs and Ministers—I know that the Minister who is here today talks about that frequently. Those who pursue that route of learning while they are earning, to use that phrase, can be enormously successful.
As Members know—including those of us who have sat on Select Committees, where we listen to hours and hours of discussion, debate and evidence—sometimes little things stick with us. I remember well something that happened 10 years ago, although the illustration is still relevant. I worked on a Select Committee inquiry comparing apprenticeships with higher education. We heard from a young man who worked at BAE Systems. He was not my constituent but came from a neighbouring constituency. I will not mention his school—it was outside Preston—but he said, “When I was at my secondary school, most of my mates ended up going to university and I did not feel that I either could or would. They used to say that I was a bit of thicko, but I got this apprenticeship with BAE Systems.” He spoke about where he was in the process, and of course BAE Systems supported him through his degree. He also said, “I will have the last laugh on them, because I will come out with a very skilled job and a degree, and no student debt.”
Today is not the day for me to engage in discussing spiralling student debt, least of all with a Minister who is not responsible for it, but that point is important. The more that the costs of higher education rise, the more important it is to get the message across to people that it is not a question of having apprenticeships or higher education. The two can dovetail extremely well, but to do so, people need the financial support and encouragement that we are debating today.
I was very happy to speak at the celebration of apprenticeships conference. On Monday I also met people from the motor industry, which has been effective and successful in this regard. We talked about the sector skills council that is associated with it—the Institute of the Motor Industry—and the Society of Motor Manufacturers and Traders. The industry has been very successful in supporting Government programmes such as the apprenticeship trailblazers, and in giving apprentices support—sometimes financial support and sometimes information, advice and guidance. There are some very bright sparks in a number of different sectors.
My hon. Friend mentions the motor industry. Vauxhall is a leader in that industry, and I know Vauxhall well, being from Luton. In recent years it has encouraged young people from local schools and colleges to tour the factory to see what life is like in manufacturing, and it has recruited new apprentices. Vauxhall found that its workforce was ageing, but now it is getting younger again, because it is taking in many more young apprentices and is showing the way forward for positive companies. If other companies were as positive as Vauxhall, we might do rather better.
My hon. Friend makes an excellent point. It is about the process involved, and I will talk later about the barriers to doing that sort of thing that young people experience in schools, for instance. It is important that various sectors act.
I have talked about the importance of the motor industry, but there is also the service industry. That raises questions not only about support but about the many opportunities available. I mentioned Apprenticeships 4 England and Lindsay McCurdy. Last year she brought a great bunch of apprentices, including a talented group of young apprentice hairdressers from Michaeljohn Training in Manchester, to a meeting that I sponsored in one of the Select Committee rooms. As an apprenticeship week present, they presented me with a very lifelike model head—I still have it on my office shelf—to demonstrate their skills in colouring and styling. One of these days, if I am feeling mischievous, I suppose I might ginger up the occasional official or other policy maker who seems to think that the route to successful jobs and apprenticeships is simply through higher-level manufacturing, digital or technical areas. The truth is that if we are to achieve the 3 million target, which the Minister and his colleagues are so keen to hit, and really expand the opportunities for young people, we will need the service sectors just as much as we need manufacturing and other sectors.
Oppositions do not get much opportunity to blow their own trumpet about success stories, so I shall. I am very proud of the fact that the last Labour Government introduced the National Apprenticeship Service and, indeed, National Apprenticeship Week in 2008. They also revived apprenticeships, taking them from 65,000 starts in 1996-97 to 279,700 by 2009-10. Those increases have continued under successive Governments.
The last Labour Government also linked the creation of apprenticeship placements to public sector contracts across a range of Departments and projects, including Crossrail. Such infrastructure projects will remain a crucial conduit for apprenticeship expansion, as I have said. As well as financial support, informal encouragement is extremely important for widening the diversity of the apprentices who take part in those great projects. I was fortunate enough to see that two years ago when I went down the construction tunnel at Farringdon and saw some of the people working on it. They were young Londoners, including a couple of young women and a young man from a BME community who had started off selling ad space and was now proud of his tunnelling qualifications. It is worth remembering that 60% of the construction work on Crossrail is outside London, so there is a lot of scope in the supply chain for many more opportunities for young people. Projects such as Crossrail and its commitment need to become a vital part of our regeneration and productivity across the UK.
My hon. Friend makes an excellent point. Closer to home, I was able to visit the cellars of this very place to see the amount of work that is needed on the restoration and renewal project for Parliament. A great range of people across the country contributed to building this great building. There are immense opportunities for apprentices to be involved in the restoration project across the country and learn new skills that we have lost. That needs to be a key part of the project.
My hon. Friend makes an excellent and highly relevant comment. I remember having the same experience many years ago when I served on the Advisory Committee on Works of Art, looking into the repair of stuff in this place. The project is important because a lot of bespoke skills will be needed, not least those relating to architecture. There are some very challenging issues—logistics, wiring and God knows what else—that will potentially engage a whole gamut of people.
That is what it is all about; it is about economic impact, but it is also about improving the careers and life chances of hundreds of thousands of young people—and, indeed, older people. We talk a lot about apprenticeships, but we have not always talked enough about apprentices and their individual issues and challenges. The need to increase the focus on improving access and social mobility, which I know the Minister feels strongly about, as I do, is a crucial part of the equation.
My hon. Friend the Member for Luton North has already referred to the Government’s continuing failure to address or understand apprenticeships. The fact that the Department for Work and Pensions does not class apprenticeships as approved education or training is leaving many individuals and families thousands of pounds worse off. I pay tribute to a survey that appeared in The Times Educational Supplement on 10 February under the headline “Apprentices ‘treated like second-class citizens’”. It was carried out by the National Union of Students, via the National Society of Apprenticeships, which it sponsors.
My hon. Friend read an important but slightly dispiriting list of the ways in which apprentices are financially disadvantaged in comparison with students. If the Government hope to reduce the growing skills gap in this country with a push to create 3 million apprenticeships, why are apprentices and apprenticeships not included as approved education or training? There has been spirited discussion about that in the House of Lords recently, which I will come on to shortly. The Government need to make progress on this.
The Times Educational Supplement article states:
“Research by the NUS and TES has revealed that…some apprentices earn as little as £3.40 an hour”.
That figure will rise to £3.50 in April. There is a separate issue, which we probably do not have time to discuss in detail today, about how many more employers could go the extra mile, over and above the existing rate. That rate can sometimes be particularly difficult for younger apprentices to exist on, given their personal family circumstances.
I hope my hon. Friend does not mind my interrupting his flow. He talks about companies; one of the problems with companies, particularly small companies, is that they sometimes have short lifespans and then apprentices are lost. The great advantage of big projects such as Crossrail—which I, too, have visited and been impressed by—is that they give long-term certainty to apprentices, who spend a long time doing a job and then come out with a lot of experience and with high skills that set them up for the future. We have to try to focus apprenticeships on those areas in particular, so that apprentices do not lose out and suddenly find themselves unemployed and having to get a job without skills.
I hear what my hon. Friend says. He is absolutely right about the contribution that larger employers and large long-term projects can make. However, we are all products of our individual constituency circumstances and experiences. My experience as a Member of Parliament in Blackpool is that, although a lot of people go and work for large organisations outside Blackpool, such as BAE Systems, there are also a huge number of very small businesses and microbusinesses. In my experience, if we can engage small and medium-sized employers, particularly in areas where there is a close-knit SME community—there are obstacles to doing so, such as hiding the wiring for them and ensuring that there is back-office support, but they are outwith the debate—those SMEs are sometimes the best advocates for other colleagues and small businesses taking them on board. I think it is about both, not either/or, but my hon. Friend is absolutely right to point out the importance of the support that can be given by those organisations and the supply chains that contribute to them.
The article about NUS research states:
“Disadvantaged apprentices are missing out on thousands of pounds in support available to students”.
The National Society of Apprentices took up that point in its written evidence to the Technical and Further Education Bill, which stated that
“upon taking up an apprenticeship, a young person’s family will become ineligible to claim child benefit and child tax credits. This will inevitably have a negative impact on that family’s household budget, which is not covered by the earnings made by an apprentice’s salary given the apprentice minimum wage is barely over £3 per hour”,
as it was at the time.
Shakira Martin, the extremely active and feisty—I say that with approval—NUS vice-president for further education, has elaborated on that point. The article quotes her as saying that
“the idea that apprenticeships were a desirable way to ‘earn while you learn’ was ‘far from the truth’”.
She said:
“Apprentices are treated like second-class citizens, as workers and as learners. Financial support like Care to Learn [for apprentice parents], and Child Tax Credits for parents of apprentices, is not available…If apprenticeships are going to be the silver bullet to create a high-skilled economy for the future, the government has to…support apprentices financially to succeed.”
Otherwise, we will fail to capitalise on the benefit of expansion.
In the update that it circulated to Members today before the debate, the NUS elaborated on that point: “Apprentices are not necessarily eligible for council tax exemptions in the same way as other students. While those paid under £195 a week are exempt, many are unaware of this. Often councils do not advertise this discount on their website, and we are increasingly becoming aware of apprentices being wrongly charged council tax. Additionally, one of the implications of the apprenticeship reforms is that fewer apprentices will be eligible for this discount, not because they are being paid more, but rather”—this is a really important point that I would like the Minister to grasp—“because apprenticeships are no longer required to include a qualification which is necessary for the exemption. Apprentices earning over this amount are obliged to pay council tax.”
I referred earlier to the fact I had spoken at an event on Monday organised by the Society of Motor Manufacturers and Traders, the Sector Skills Council for Science, Engineering and Manufacturing Technologies, and the Institute of the Motor Industry. That event was preceded by a seminar in which there was discussion of all aspects of the apprenticeship levy, the introduction of the Institute for Apprenticeships and so on. One thing that came out, both in informal conversations and in the speeches that were made at that event, was how worried and concerned a body of employers remain about the issue of qualifications not being properly included, from their perspective, in the new standards that have come out of the skills plan and the Sainsbury review. That is a vexed issue, and I would not expect the Minister to want to dilate in detail on it today, but if he has not heard about it already from people in the industry, I am sure that he will hear about it presently.
I do not want to go on too long about this particular aspect, but it is crucial. I refer again to the debate held in the Lords on 27 February as part of the proceedings in Grand Committee on the Technical and Further Education Bill. My colleague, Lord Watson of Invergowrie, pressed the Government on this issue and tabled an amendment. Baroness Buscombe, the Front-Bench spokesperson who spoke on behalf of the Minister in the other place, said that some of the issues that had been raised were outwith the scope of the Department for Education. She was right; they are, because they are Department for Work and Pensions issues, and indeed the issues around council tax are for the Department for Communities and Local Government. Of course, that does not stop Ministers in either House having discussions with their colleagues in other Departments.
Baroness Buscombe also said that she could not change the definition of apprentices. As one or two Members of the Lords asked, if the Government cannot change it, who can? Perhaps the Minister could change it. If he cannot do so, or does not feel that it is his role to do so, powers could be given to the Institute for Apprenticeships so that it could change the definition, either by an amendment in the Lords, or in the Commons if any amendments come back from the Lords for us to discuss further on the Floor of the House. Or, I would argue, that could be done by delegated legislation. I will leave it at that, but I would like the Minister to consider some of those issues, because they are quite significant.
The Association of Colleges is also concerned about the discrepancy between the current national minimum hourly wage rates of £7.20 for those aged 25 and over and only £3.40 an hour for apprentices. Someone aged 22 in the first year of an apprenticeship is entitled only to that apprenticeship rate, whereas in any other area they would be entitled to the minimum hourly rate of £6.95 for 21 to 24-year-olds. That is a disincentive, which is an issue we really need to take on board. I think the Minister and I share common ground on this, but I believe that attracting more 19 to 24-year-olds into apprenticeships is extremely important, because many of them have life skills that 16 to 19-year-olds do not possess. However, many of them have had difficult circumstances that have meant they have not been potential apprentices. If they come from that sort of background, the financial disincentive—the disparity that I have set out—is really significant.
The National Society of Apprentices has said that the existence of a low apprenticeship national minimum wage is unnecessary and complicated for both apprentice and employer. It says that it is possible for someone to be on three different minimum rates during a four-year apprenticeship. That increases the risk of accidental underpayment of apprentices—that is a concern for employers—and apprentices have said that it demeans the value of the work that they contribute.
The Minister will be relieved to know that I am coming to the end of my section on finance issues. Of course, this is a good day to discuss finance, because we have the Budget coming up later. There may be nothing in the Budget about these issues—I am not expecting a last-minute conversion between now and half-past 1—but in all seriousness, they will continue to concern people, and I hope that he, his colleagues and indeed all of us will continue to press the Treasury hard on them.
As I said, the Government have talked about their apprenticeship programme being as inclusive as possible, which means that we must ensure that the most disadvantaged young people are not put off becoming apprentices. However, a report published by the Learning and Work Institute this week says issues to do with that expansion are not being addressed as strongly as they need to be. Particularly in respect of black and minority ethnic young people and care leavers, we tabled amendments to both the Higher Education Bill—that is outwith this morning’s discussion—and the Technical and Further Education Bill. Those amendments would have ensured that the new Institute for Apprenticeships set targets for improving access to apprenticeships and progression within them. After all, the Office for Students has a mandated responsibility for addressing access issues under the Higher Education Bill, so why does the Institute for Apprenticeships not have a similar responsibility? The Learning and Work Institute has called for the new Institute for Apprenticeships to have that responsibility, and we wholeheartedly agree.
There is also the issue of how people are put off becoming apprentices because of their low-income background. Teach First said in its progress report in 2016 that in every region in England, young people from a low-income background were less likely than their wealthier peers to become apprentices, and it suggested that financial barriers for those from low-income backgrounds were part of that. That is consistent with the finding reported by the Social Mobility Commission that youngsters from poor families took up only 10% of apprenticeships even though they accounted for 13% of those completing GCSEs.
In its briefing for this debate, the AOC said that it fears that the Government’s existing approach to financial support means that many young people from disadvantaged backgrounds face barriers to accessing apprenticeships, which is a disincentive for them in applying for apprenticeships in the first place.
I want to touch on gender issues, which is appropriate on International Women’s Day. The AOC has said that women continue to struggle financially on apprenticeships. A recent report by the Young Women’s Trust showed that women receive an average of £4.82 an hour compared with the male average of £5.85. According to a survey by the Association of Employment and Learning Providers, the proportion of apprentices reporting an increase in pay continues to be dominated by men. Unsurprisingly, therefore, the Young Women’s Trust was concerned by the fact that 16% of women were out of work after their apprenticeship compared with 6% of men. It said that the differences in occupational segregation by gender have hardly changed in more than a decade. For example, the proportion of construction apprentices who are female has only risen from 1% to 2%.
Of course, one of the problems is that some of the apprenticeships leading on to higher-paid work tend to be dominated by men. However, as my hon. Friend may know, there has been a campaign recently, including a meeting last week, to promote the idea of women in engineering. Does he agree that the Government ought to encourage more women to go into such areas, where they can develop skills and earn much more money?
I absolutely agree. To be fair to the Government, I think they have said that on a number of occasions. Nevertheless, if the perception of a pay gap continues, with associated career blockages, into the 2020s, that will play havoc with our aspirations to get far more women into those careers in the first place. That is why in the last apprenticeships debate I asked the Minister about the Government’s equality analysis of the funding changes to apprenticeships last autumn and how we will track improvements in apprenticeships.
People from black, Asian and minority ethnic backgrounds are also under-represented. I know that the recent McGregor-Smith review underlined that point. However, I would like the Minister to say whether it is still the Government’s target to increase BAME apprenticeships by 20%, which was the target set by the previous Government. That is important given the issues we are discussing today.
I do not have time to deal with care leavers in great detail, but when care leavers move into independent living, they often begin to manage their own budget fully for the first time. There are concerns that because of a lack of financial education and financial support, those young care leavers are frequently falling into debt and financial difficulty.
The Minister and I have both talked about the importance of traineeships, but the Government have been silent so far on what we can do to look at the negatives that still exist in the system. We need to know what progress the Department is making on the issue with the Department for Work and Pensions. A major stumbling block for the Minister’s predecessors has been the brokering of a cross-departmental deal that would enable traineeships to be more accessible and inviting for young people and employers. That goes to issues around clawback and jobseeker’s allowance, which I do not intend to talk in detail about today.
Finally, I want briefly to address travel costs. My hon. Friend the Member for Luton North touched on the issue significantly in his speech. The hon. Member for Central Suffolk and North Ipswich (Dr Poulter) made excellent points about the particular problems in rural areas, and our colleagues from the Democratic Unionist party made some good points on that as well. There are two or three areas where financial support is most at risk. We have heard the statistics about £24 a week being spent on travel, which is about a quarter of the salary of an apprentice, if they are earning the national minimum wage.
In the light of the area review process and the creation of the so-called fewer, more resilient colleges, the National Society of Apprentices is concerned that travel time will be too much for some apprentices, which will impede access to certain roles. That echoes some of the issues that the hon. Gentleman and others have talked about. That is why we tried to make changes to the Technical and Further Education Bill in Committee and on Report to enable the institute to take on board the need to improve travel concessions. We have pledged to restore the principles of the education maintenance allowance, which provided so much support for young people’s travel costs in pursuing their studies. Apprentices remain a significant proportion of those affected, with approximately 360,000 at colleges being in that category.
There are other issues and scenarios to consider. What will happen if colleges become insolvent or training providers go bust? The insolvency issue has been an important part of the Technical and Further Education Bill. Where the challenge of college insolvency occurs—hopefully it will be infrequent—that could pile up extra travel time costs for apprentices who have to change their place of study as a result. More recently, the Minister and I attended the session organised by FE Week, so he will know that there have been concerns about large providers going out of business, leaving apprentices with huge loan debts to pay and no qualifications. How do the Government plan to compensate them? I have raised those issues with the Government and the Minister, and he is aware of them.
Careers advice has been touched on, and it is an important issue. It is not directly important for financial support, but young people who get the best careers advice in college or school are more likely to be able to seek out the better apprenticeships, with better support and everything that goes with it.
The problem with careers advice has been significant for many years. Does my hon. Friend agree that just making young people aware of the possibilities when they are very young—possibly at primary school, but certainly at secondary school—is very important?
I absolutely agree. That is why I warmly welcome Lord Baker’s amendment to the Technical and Further Education Bill, which would ensure that schools have to give access to advice about apprenticeships. I also fully support the ten-minute rule Bill tabled by my hon. Friend the Member for Scunthorpe (Nic Dakin)—he was with us briefly at the start of the debate—which would allow businesses and FE providers to go into schools and let students know about the opportunities. I am encouraged by the fact that the new Ofsted chief inspector, Amanda Spielman, who I have spoken to recently, is sympathetic to Ofsted making a much stronger case in ensuring that apprenticeships rate higher in the information given in schools.
Why does that matter for financial support? It matters because in general, knowledge is power. Advance knowledge enables those who have it to be a step ahead in getting better apprenticeships. There will always be excellent employers and sharp would-be apprentices who will be able to access some of the funding, but if we want to make a step change, we have to have major change across Government in how apprenticeships are treated legally and financially. All of us want to make that progress, but it is time to tackle the shortcomings that put so many off apprenticeships or cause them to be dispirited or in trouble and therefore drop out. That must surely be a good thing to do, not simply for National Apprenticeship Week, but for all the year round.
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.
On the review—this is the first I have heard of it, but I welcome it—I urge the Minister, in connection with the points I made earlier, to look not only within the Department but at some of the broader issues, such as the 16-hour rule and the relationship with the Department for Work and Pensions.
We announced the review in November last year, with that final announcement on the levy. I am working closely with my hon. Friend the Minister for Employment at the DWP. I cannot say that we will come up with a magic solution, or that there is a magic funding pot, but there are other issues, such as those to do with benefits and so on—for example, if a single parent were working in a coffee shop but wanted to do a teaching assistant apprenticeship and the wage was literally the minimum of £3.40. We are looking at all those, although I hope that when universal credit comes through fully it will deal with some of the problems. As I say, we are committed to that. We also have a £60 million fund.
In addition, the National Union of Students has its Apprentice extra card. I helped to launch it and worked with the scheme in the previous Parliament when I was a Back Bencher. My predecessor, my right hon. Friend the Member for South Holland and The Deepings (Mr Hayes), attended the launch. Apprentices, as young people under 25, are also entitled to some rail discounts and so on.
The hon. Member for Blackpool South talked about traineeships, to which I am very committed. We have spent more than £50 million on them. There were more than 24,000 traineeship starts between August 2015 and July 2016. Fifty per cent. of trainees progress into apprenticeships and 94% of employers consider traineeships an effective way of increasing young people’s chances. Traineeships are part of the £5.4 billion 16-to-19 budget funded by the Skills Funding Agency. It is also important to note that almost 20% of those who do traineeships have learning difficulties or disabilities. I think that is a wonderful figure. We would like to increase it further, but it is pretty high already.
We also still have the target to increase black and minority ethnic take-up of apprenticeships by 20%, and we have said that publicly. We are doing everything possible to increase apprenticeships in the public sector, with a new 2.3% target. I have been asked about apprentices with disabilities and we are working hard to implement the recommendations of the Maynard taskforce, led by my hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard). We agreed with everything it suggested and our aim is to have full implementation by April 2018.
I thank the hon. Member for Blackpool South for mentioning council tax. I will discuss those matters with my counterparts in the Department for Communities and Local Government, especially if, as he says, apprentices are not getting rebates to which they are entitled. I will look into what we can do about that.
Before I conclude, I apologise, Ms Ryan. I should have said at the beginning of my speech that it is a pleasure to serve under your chairmanship.
Yes, we have a lot of work to do. The hon. Member for Luton North has highlighted how we need to continue to work on quality, to ensure that those 3 million apprentices have quality apprenticeships. He is right to highlight that we need to do everything possible to help the socially disadvantaged. I am not saying that we have all the answers, but the statistics show—the numbers show, not just me—that we are helping. The individual stories show that we are helping in human as well as numbers terms. Whenever I go around the country, I speak to as many people as possible. Almost every Thursday I go around colleges and meet apprentices. This week, had it not been for this important debate, I would probably have been in a college early this morning, before the Budget. We are investing in the skills and the quality, and we are creating and doing everything possible to create a ladder of opportunity to ensure that apprentices from all backgrounds may climb it to the jobs, security and prosperity they need.