Draft Public Sector Apprenticeship Targets Regulations 2017

Gordon Marsden Excerpts

Monday 27th March 2017 General Committees

[Gordon Marsden (Blackpool South) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Nuttall, and to respond to the Minister’s speech. As he said, there has been cross-party consensus on this issue. We are broadly in support of the principle. How could we not be? The Minister made it clear that the Government are drawing on the 2009 Act, which was passed under a Labour Government, in inserting these proposals for targets. That was of a piece with our proposals on procurement in the 2010-15 period, which the Government, after some scepticism under the coalition, have now come round to taking forward.

We welcome the principle, but we are dealing with a very diverse collection of public bodies, not to mention the varieties of Government Department that will have to deal with this measure. As the Minister said, bodies in the scope of the regulations include Government Departments, local authorities, NHS trusts, fire and police services and local authority-maintained schools. The Houses of Parliament, further education colleges, the BBC, Channel 4 and the Post Office are exempt from the requirements. I will leave hon. Members to wonder about the criteria on which those bodies were grouped. Perhaps the Minister would like to confirm why they were exempted.

This measure is clearly a big deal for the Government. As I understand it, they expect that 16.2% of the 3 million apprenticeship starts they have pledged to deliver by 2020 will come from the public sector, because that is the percentage of public sector workers in the total workforce. As the Minister was good enough to acknowledge, the proposals have not been without questioning and some criticism. The Institute for Fiscal Studies said that, as currently devised,

“the focus on targets will distort policy and lead to the inefficient use of public money.”

It also said that

“This potentially costly policy is largely designed to hit the government’s target for 3 million new apprentices, not as a way to increase the quality of public services. It should be removed”

and that the one-size-fits-all approach to large public sector employers in England is

“clearly not a sensible way to encourage more apprenticeships, or to help deliver efficient public services.”

Some might think that is a sweeping—and possibly sharp—judgment. However, no matter how good the intentions are, we are led to ask some significant questions about whether the broad sweep of that delivery will do quite what the Government intend. I will focus my questions on the process and particular pinch-points in that area.

One such pinch-point was identified by the Local Government Association—again, these are specific issues in specific places on which the Minister might like to respond. In particular, the London boroughs made the point that they would have to increase their creation of apprenticeships by more than 570% to meet the target. The general secretary of the National Association of Head Teachers said that the target was

“unrealistic in the current climate.”

That is the important point: it is about putting the aspiration alongside what Government Departments can deliver in the current climate, and what local government can deliver. Of course, that may vary between local government areas in the same way as it does between Departments, depending on whether funding is more protected or otherwise from the Treasury.

Again—this has been a feature of the criticism of some delegated legislation proposed in recent months—there has been criticism of the lack of an impact assessment for this measure, because, as the Local Government Association said, it seems

“likely to impose significant costs on local authorities in terms of workforce planning, administration…and compliance with apprenticeship quality standards.”

As the Minister indicated, the Government’s response did acknowledge those concerns, but they largely rejected any proposals to counter them—though he touched on a number of mitigation measures. Schools will continue to be included in the apprenticeship target, which, as I understand it, will continue to be based on headcount rather than full-time equivalent numbers.

It has taken some time to develop the process. My hon. Friend the Member for Cardiff West (Kevin Brennan), the then Business, Industry and Skills shadow Minister, had a lively exchange with the then Small Businesses Minister, the right hon. Member for Broxtowe (Anna Soubry), on the matter in a Bill Committee in February 2016. On that occasion, he said that measuring by full-time equivalent would ensure that any mandatory target for the public sector reflected the actual size of the workforce. She said that, during consultations, she would look at whether full-time equivalent should be used instead of headcount. However, as we have heard, ultimately, that option was rejected.

In that Bill Committee, Labour Members raised other issues. My hon. Friend talked in particular about whether local authorities should be allowed to include apprenticeships generated in their supply chains. I do not want to stray from the focus of this Committee, but there is an interesting echo there of the discussion we are having about how widely firms and businesses should be allowed to look at other factors to cover some of their apprenticeship levy costs. In that Bill Committee, my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) asked—I do not think the Government have addressed this—whether excluding supply chains may encourage local authorities to keep services in-house when they could find better cost-value in outsourcing.

May I point out to the Minister, not that I think he is unaware of it, that the response of the supply chain, both in the public sector and the private sector, to Government initiatives, whether this initiative or the apprenticeship levy, is critical. In many sectors, as he will know, the effect of involving the supply chain, and many of the small businesses that go with it, can be twofold, threefold and, in some cases, fourfold that of a large employer. Therefore, there are still some significant questions to be addressed in that regard. It would be helpful if, in his response, he touched on that and the continuing concerns.

I go back some time in this place, so I remember well the controversy in the early to mid-2000s about the Labour Government’s Train to Gain programme, which members of the Conservative party, which was then in opposition, were highly critical of. Indeed, the Select Committee on which I served looked at some of those issues and whether Train to Gain had encouraged employers simply to rebadge existing employees. I am not suggesting that that will automatically be the effect of this initiative, but it is the case that there are some challenging targets to be met not only in London schools, where it is more difficult to rebadge existing employees as apprentices, but in other large public bodies, not excluding Government Departments.

If I were of a mischievous frame of mind and if episodes were still being made of “Yes Minister”, an interesting episode might be written on the challenges of various Government Departments to compete with other Government Departments. I say that in jest, but it is a serious point. In implementing this measure, the Government need to be careful that people are not rebadged for their existing training. The Government need to ensure that the apprenticeship contribution is a genuine, new contribution that empowers those individuals in the public sector not simply—the Minister will have heard me comment on this before—in terms of the bespoke skills that they need for the job they are doing in the public sector at that point, but in terms of the more analytical skills that they will need—this is particularly true for the large number of women in the sector—as the way in which we deliver services and administer things in the public sector begins to change. That is true in general terms, as well as in terms of the specifics about automation, which we have read quite a lot about recently.

The Minister spoke about the targets and the particular focus he wanted to have. I know he feels strongly about this issue, and I applaud him for that. He talked about the £60 million for local government to support apprenticeships in deprived areas. I ask him, as always, what scope will there be to increase that further? Those deprived areas and the local bodies in those areas—particularly local councils—have often been hit the hardest in that respect.

The Government may or may not go along with what I was speaking about in Birmingham at the FE Week conference last Thursday. I said that we want to consider committing ourselves to targets for increasing the number of apprenticeships for people with disabilities, care leavers and particularly—this is a new suggestion—veterans. I know from my own experience, as chair of the all-party parliamentary veterans group, that a number of younger leavers from the armed forces are leaving with skills that are not easily passportable into civvy street or recognised, and in some cases are leaving with very poor skills. That is an area to look at. Perhaps the Minister can tell us how that could tie into public sector apprenticeship targets.

How will the Government encourage and incentivise local authorities to increase their apprenticeship starts amid a series of cuts to funding? The figures are bleak. The Local Government Association has estimated that councils will face an overall funding shortfall of £5.8 billion by 2020, and budgets have been cut by £18 billion in real terms since 2010. My own local authority in Blackpool has taken some of the biggest hits for a small unitary. This is not simply an argument about the Labour party’s position on cuts as opposed to the Conservative party’s position. If Government are not careful, this will impair and undercut the impact of what they are trying to do.

Some three years ago, I was privileged to work with my hon. Friend the Member for City of Durham (Dr Blackman-Woods), who is now in our party’s Communities and Local Government Front-Bench team, on a pamphlet with the Smith Institute called “Apprenticeships—how local government is making a difference”. In that pamphlet, we cited a number of local authorities that were doing some very good stuff. In 2013, Lewisham Council was offering 74 apprenticeships for its 2013 intake. My own council in Blackpool was employing 45 apprentices, as well as a further 47 apprentices with its partners in the construction industry. Newcastle City Council was maintaining its commitment to apprenticeships, with a target of 500 new ones. Plymouth City Council, which is smaller, was nevertheless employing 49 young apprentices and 21 adult apprentices. In that year, it met and exceeded the Government’s target of 2.3% of the workforce being apprentices, because its figure was equivalent to 2.6% of the workforce.

The question I have for the Minister is not where are the snows of yesteryear, but where are those apprenticeships now? Many of them, sadly, have gone because those local authorities, which were very ambitious and took that forward, have simply not had the financial base—particularly given the doubts as to what the financial base will be by 2020, in terms of the variability of benefiting from retaining business rates—to continue pressing on that. If the Minister wants local government to walk the walk, as well as him talking the talk, he has to take up that issue with his colleagues in DCLG.

I have already said that we still believe that the target should, in most cases, be based on full-time equivalent—FTE. What ability will the Minister have to monitor how effective that is and how it is taken forward? I am conscious that the target is very ambitious and will involve a lot of ambitious monitoring. Who, in Government, will do that monitoring? The Minister will probably know what is coming, but anything to do with apprenticeships could be monitored, in theory, by the Skills Funding Agency, by the Institute for Apprenticeships, which will launch next month—I have said on a number of occasions that I, and many others, have concerns about its capacity and numbers—or by another body. I invite the Minister to tell us who will be doing the nuts and bolts of monitoring what happens between various Departments, for example.

The Minister talked about publishing information on take-up: how will the Government address that, regarding Departments and the other public bodies—the smorgasbord of organisations that produce their accounts at different times? He also mentioned the standards and cited a couple of positive and encouraging examples of Departments collaborating to produce particular apprenticeships and particular standards—there were always going to be one or two good examples. How will the Minister monitor particularly closely—perhaps this is an issue for the Cabinet Office as well—the performance and delivery of those areas?

As I have said, Labour Members approve of the direction of travel of the regulations, which is why we will not oppose them, but the devil, as the Minister will no doubt tire of hearing from me, is in the detail. Our questions, and the Government’s asks of the many public bodies, some of which are extremely vulnerable in a local context, need to be responded to.

--- Later in debate ---

[Robert Halfon]

FE colleges are corporations or companies, for the most part; universities are regarded as independent bodies and were not seen as in the public sector or managed in the same way. However, there may be universities subject to the levy, depending on their wage bill, so they will be required to have apprenticeships or the levy will be used to fund apprenticeships elsewhere.

An impact assessment was done for the whole Enterprise Act 2016. Neither an impact assessment nor an equalities impact assessment was prepared for the regulation, because the measure affects only publicly funded bodies, with no costs to business. The Better Regulation Executive confirmed that no impact assessment is required in relation to the regulations but, as I have said, one was done for the whole Act.

The hon. Member for Blackpool South asked whether a number of areas in public services would be able to have apprenticeships, and perhaps I can give some examples, beginning with the national health service. The public sector target is 27,500 new apprentice starts for 2017-18. That is estimated to deliver 100,000 apprentices in the course of the Parliament. The information from Health Education England is that almost 20,000 apprentices were employed in the NHS in 2015 and 2016. I have met many healthcare apprentices when visiting colleges and apprenticeship training providers. We are developing pathway apprentice standards—level 2 healthcare support worker leading to level 6 nursing apprenticeship.

I recognise that schools are a difficult issue. First, it is important for councils to share their levy pot fairly. We have issued guidance to schools. The Department for Communities and Local Government is keen that the levy pot should be shared fairly. The whole purpose of the levy is to change behaviour and create an apprenticeship and skills nation. Why cannot a teaching assistant in a school do a teaching assistant apprenticeship, a cook in a school do a hospitality and catering apprenticeship, or someone who is doing business administration do a business administration apprenticeship?

[Gordon Marsden]

The right hon. Gentleman is responding with particular examples to what I said about problems and pressures for schools. None of those is a bad example, but the issue is whether the apprenticeships will lead to any progression or improvement in career status. I am concerned, as others may be too, about whether, particularly in strained financial circumstances, schools will rebadge people doing existing relatively low-level jobs—I put it mildly—to achieve the target.

[Robert Halfon]

There is an important point here. I have acknowledged in the past that there will always be some gaming of the system and I accept that once the levy comes in we will not know how much, for a while. However, if someone is doing a teaching assistant job why should they not be offered an apprenticeship and a skill? They certainly will not be able to progress without a skill. With a skill and an apprenticeship they will have a much better chance of progressing. If someone is a school cook, why not give them the chance to do a hospitality and catering apprenticeship?