Apprenticeships and Skills Policy

Judith Cummins Excerpts

Tuesday 8th January 2019 Westminster Hall

[Judith Cummins (Bradford South) (Lab)]

I beg to move that,

This House has considered apprenticeships and skills policy.

It is a pleasure to serve under your chairmanship today, Sir David. The title of the debate is as broad as possible so that colleagues may join in and give their own perspective. I will address the problems in the apprenticeship levy and regional skills imbalances in our country; the mismatch between the skills system and the needs of the economy; and the need to give tools to places such as Bradford to help us to close the productivity gap between us and London.

In June last year, I held a business and jobs roundtable in my constituency. Business leaders and representatives of trade unions, the Bradford Economic Partnership, the Northern Powerhouse Partnership, Bradford chamber of commerce, Bradford University and Bradford College all attended, as well as my hon. Friend the Member for Bootle (Peter Dowd). The overall theme for the roundtable was how we could boost economic opportunity for all in Bradford South. Although the discussion ranged over a number of issues, a significant amount of time was spent discussing schools, training and apprenticeships. Later in my speech, I will address the specific issue of the apprenticeship levy, but first I will briefly outline the challenges and opportunities facing Bradford.

Bradford is a great northern city with a proud industrial heritage. That heritage was created by successful businesses, which used new technologies and the city’s pioneering drive to build a world-leading economy. We are still home to many successful and enterprising businesses. In my constituency of Bradford South, we have a strong manufacturing sector. Bradford has 1,200 manufacturing businesses, employing more than 25,000 people in the district, which accounts for 13% of all employees locally compared with 8.3% for Great Britain as a whole.

We face a significant challenge with the interconnected problems of low skills and low wages, and I will give a few figures relating to my constituency to illustrate that. In Bradford South, 15% of the working-age population have no qualifications compared with the UK average of 8%; 14% of our working-age population are qualified to degree level and above, compared with 31% nationally; Bradford South has 600 jobs per 1,000 people in the working-age population, compared with 840 nationally; average weekly workplace earnings stood at £480 in April 2018, compared with a UK average of £570; and Bradford South ranks 520th out of 533 constituencies in England in the social mobility index from the House of Commons Library. Many people in my constituency do not have the skills they would need to access good-quality, well-paid and secure jobs.

[John Howell (Henley) (Con)]

I understand the point that the hon. Lady is making about her constituency. Does she believe that schools in her constituency have something to contribute to redressing the imbalance she is describing?

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[Judith Cummins]

I agree that schools have a lot to offer when it comes to redressing the imbalance. I will address schools a little later in my speech, when I will speak about the specific situation in Bradford and the specific project that we have there.

That situation is something of a vicious cycle. The lack of skills makes Bradford a less attractive place for businesses to locate and invest in. A good example is Her Majesty’s Revenue and Customs, which cited the lack of appropriate skills as one of the reasons to relocate its offices from Bradford. That is why getting the skills policy right is essential to give places such as Bradford the economic boost that they so badly need.

The issue is becoming ever more urgent as we face the impact of new technologies in the world of work. The Future Advocacy report places Bradford South in the top 40 constituencies that are likely to be affected by automation in the coming years. It also says that 35% of jobs in Bradford are in occupations that are likely to shrink by 2030. It is clear that Bradford will need to adapt to secure good-quality and sustainable jobs.

[Mike Amesbury (Weaver Vale) (Lab)]

The Federation of Small Businesses has raised concerns about the 40-day requirement for placements associated with T-levels. Is that a concern for employers in the Bradford South constituency?

[Judith Cummins]

That certainly is a concern for employers in my constituency.

[Mr Jim Cunningham (Coventry South) (Lab)]

My hon. Friend has mentioned that modern technology plays a major part. Does she agree that the restoration of the education maintenance grant would help students in relation to apprenticeships? Furthermore, cutbacks in further education do not help—it seems to be treated as a Cinderella industry.

[Judith Cummins]

I thank my hon. Friend for the wise words and I certainly welcome them. I say to the Minister that now is the time that we must act to create a better skills and training system if we are to prevent disruption further down the line.

[David Simpson (Upper Bann) (DUP)]

One of the problems we face in my constituency with training centres is that 20 to 25 students will start training, but only four will finish. How can we encourage young people to stay in apprenticeships, or is the apprenticeship scheme not fit for purpose?

[Judith Cummins]

That is a very interesting and pertinent point. I know that some apprenticeships are paid so poorly and offer so little training—apprenticeships are supposed to be jobs with training—that they are not really worth the paper that they are written on. In my view, they should not be called apprenticeships.

At a local level, a significant amount of work is under way to meet the challenges that I have spoken about, with the Bradford Economic Partnership setting out a local economic strategy with a focus on increasing the number of productive businesses in the district through investing in skills provision.

We recently had Bradford manufacturing week, which I was delighted to support. It aimed to show the young people in Bradford the many exciting opportunities in manufacturing that are right on their doorstep, to get them thinking about the skills that they will need for the future. Over half of our secondary schools took part. In just one week more than 3,000 children crossed the doors to get that first-hand manufacturing experience in workplaces.

Another exciting area of work that is being developed locally in Bradford involves the industrial centres of excellence—or ICE—approach to post-14 careers and technical education. ICE gives business a partnership vehicle with local schools, colleges and the University of Bradford to ensure that education and learning in Bradford meet the skills demands of businesses in the local and regional economy within given sector footprints, which opens up opportunities for our young people and improves social mobility.

Those centres are good examples of how schemes that are locally led can deliver for businesses and encourage social mobility. I would welcome the opportunity to discuss them further with the Minister, but Government policy is making it more difficult for places such as Bradford to bring about a transformative change in their labour markets. I will start with the specific issues that Bradford businesses and education providers have raised with me about the operation of the apprenticeship levy.

I fully support the principles behind the levy, but its implementation has compounded the problems of underinvestment in training rather than improving the situation. As the Minister will be aware, the apprenticeship levy aims to encourage employers to invest in apprenticeship programmes, but apprenticeship starts have been significantly down since the introduction of the levy in May 2017. In July 2018, the total number of apprenticeship starts nationally was 25,200.

[Carolyn Harris (Swansea East) (Lab)]

I congratulate my hon. Friend not only on securing the debate but on her generosity in giving way. I am sure it will help the new year planning for the keep fit programme.

Skills, education and training are devolved matters in Wales, where there has been a 23% rise in the uptake of apprenticeships—obviously, we are doing something right. I wonder whether the UK Government are talking to the Welsh Government, perhaps about sharing good practice so we can make the success in Wales a success right across the United Kingdom.

[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.

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[Anne Milton]

I do not have regrets. What matters is what we do next, and that we make sure we identify the skills we need. In case I do not have time later, let me note that the hon. Gentleman mentioned devolving skills budgets. In fact, skills budgets are devolved down to the lowest possible level: to local employers. Firms in Bradford and Hull—the levy payers—have the money at their disposal, and we will redistribute it to SMEs.

Time is short, and I do not have time to mention everything, but the hon. Member for Kingston upon Hull West and Hessle mentioned nursing, a perfect example of the pathway for progression that I want to see from level 2 right up to level 6. In construction, an employer in Gosport has done a wonderful map that shows young people where they can progress—right up to project manager and beyond. When I was in Bristol, where a lot of work is being done on diversity in apprenticeships, I saw what looked like a tube map, where people can see where they can get on and off their route. Of course, people can go in other directions: they might well do a level 2 in business admin and then go into nursing or end up doing a level 6 in a completely different discipline. That is exactly the area that I want to concentrate on. I spent a lot of time getting business working with the levy and getting the system up and running, but now what matters to me is progression.

With respect to the drop in level 2 apprenticeships, which was mentioned earlier, we are not absolutely sure what is behind the figures. Some 90%[Official Report, 9 January 2019, Vol. 652, c. 6MC.] of starts are still at levels 2 and 3, and of course employment is high, but we need to dig deeper. What matters to me is the people I meet, like the young man I met who got chucked out of college twice, got a level 2 apprenticeship with Virgin Media, skipped level 3, did a level 4—

[Judith Cummins]

rose—

[Anne Milton]

I know—you have 30 seconds.

That young man skipped level 5 and is now doing a level 6. He said to me, “I am a miracle.” That is what this is about: giving people that second chance. I am sorry that I do not have time to say any more.

[Judith Cummins]

I am really grateful to all hon. Members who took part in the debate. I agree with everybody who said that this is such an important subject and that we should concentrate much more on it, because it is about the future of our country, of our children and of our economy.

The Minister mentioned the national retraining scheme, a joint initiative with the TUC and the CBI. I look forward to seeing the details of that scheme, which will be really important.

When I said that some apprenticeships were not worth the paper they are written on, I did say “some”—I commented that I meant those apprenticeships with little or no training.

It is fantastic that we all agreed on the urgency of getting our skills policy right, to ensure that our economy delivers for everybody in all places. The jobs and skills mismatch is not down to individuals on the supply side. We have to stimulate and organise demand for skills through the Government empowering sectors and regions; it cannot just rest on the shoulders of individuals.

Motion lapsed (Standing Order No. 10(6)).