Apprentices: Financial Support

Kelvin Hopkins Excerpts

Wednesday 8th March 2017 Westminster Hall

[Kelvin Hopkins (Luton North) (Lab)]

I beg to move,

That this House has considered financial support for apprentices.

It is a great pleasure to serve under your chairmanship, Ms Ryan, and to introduce this important debate about apprenticeships and funding for apprentices.

Well-trained and highly skilled workers are vital for our economy, and for too long the apprenticeship route has been neglected. For years—decades even—apprenticeships and apprentices have been underfunded and poorly paid. That must change if we are to provide our economy with the skills that it needs and young workers with the opportunities and rewards that they deserve.

The Government have made some moves to boost apprenticeships, but those are too little and inadequate. Not only are apprenticeships under-resourced, but businesses, those with sector skills, universities and colleges have raised real questions about the potential quality of the new apprenticeships. Young people will be doubly disincentivised if both the incomes that they receive and the quality of their courses and experience are not sufficient.

The Government have set an arbitrary target of 3 million apprenticeship starts by 2020 and have introduced a 0.5% apprenticeship levy for any company with a payroll of more than £3 million a year. There has seemingly been little focus on the quality or content of those apprenticeships, potentially leaving young people without the high-calibre skills that they should be able to expect.

I have personally been concerned about the skills deficit in British industry since the 1980s and wrote much about the problem in those days. Research in the 1980s and 1990s by the National Institute of Economic and Social Research, led by Professor Sig Prais and others, drew comparisons with workers in continental Europe, notably Germany, and found Britain wanting. Maths skills were especially poor in Britain, and that remains a problem today.

In more recent times, the proprietor of an engineering company in Bedfordshire—my own county—has complained that he cannot find the employees he needs, despite repeatedly advertising. A motor industry supply chain manufacturer in my constituency could not find a single toolmaker in a town that used to be dominated by manufacturing, which employed many tens of thousands. We need to do better across all fields, not just in manufacturing.

Some comparisons are especially significant. Research by the National Union of Students and The Times Educational Supplement suggests that, in contrast to the benefits and finances available to higher education students, apprentices are being hung out to dry and treated like “second-class citizens”. Some apprentices earn as little as £3.40 an hour. They are also excluded from a number of means of support available to their counterparts studying in further education institutions.

[David Simpson (Upper Bann) (DUP)]

One issue that we face in Northern Ireland on apprenticeships is that 20 young people might start a course, but less than one third will finish it, whether they be electricians, joiners or plumbers. In the hon. Gentleman’s opinion, is that down purely to finances, or do we have to find another way of incentivising young people to finish their courses?

[Kelvin Hopkins]

I thank the hon. Gentleman for his intervention. I will touch on the issue of drop-outs later, but he is right that finances are a significant problem.

The research shows that a college student with one child could be eligible for more than £10,000 a year in financial support, and the families of such students could receive thousands more, but apprentices, including those on the minimum wage, earning as little as £7,000 a year, are not entitled to any of that. The Department for Work and Pensions does not class apprenticeships as “approved education and training”, and that affects the benefits that apprentices can receive. Specifically, when a young person takes up an apprenticeship, their family will become ineligible to claim child benefit and child tax credit. Further education students between the ages of 16 and 19 could be eligible for either a £1,200 a year vulnerable student bursary or a discretionary bursary. No bursaries are available for apprentices.

In many areas, students enjoy concessionary or discounted travel to college or university. For apprentices, there are some discounts, but only for the first 12 months of an apprenticeship and only for those apprenticeships leading to a serious qualification.

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

I congratulate the hon. Gentleman on securing the debate. He will be aware that, in the east of England, many apprentices work in farming or in the land economy and often have to travel long distances to work and to the agricultural colleges that provide some of the additional training for apprenticeships. Does he agree that that group might be deterred by the additional travel costs, because the car is the only option for those apprentices?

[Kelvin Hopkins]

I thank the hon. Gentleman for his intervention; that is the point I am making. According to the NUS, the average apprentice spends £24 a week on travel.

Parents of students are eligible for child benefit of up to £1,066 a year for the oldest child, but parents of apprentices are not eligible for child benefit. Parents of students are also eligible for child tax credit of £2,750 a year and up to £3,324.90 a year for the first child under universal credit. Parents of apprentices are not eligible for either child tax credit or universal credit for them. Care to learn grants are available to student parents but not apprentice parents. Those amount to £160 per child per week. Students are often offered bank accounts with such benefits as an interest-free overdraft; those are not available to apprentices. Finally, students are entitled to either a full exemption from, or a discounted rate of, council tax. That is available only to some very low-paid apprentices taking a course leading to a recognised qualification.

One effect of the travel costs is that some young people do apprenticeships that involve shorter travelling distances, in preference to the apprenticeships that they really wanted to do. With all the comparative financial disadvantages, it must be the case that some young people for whom an apprenticeship might be appropriate and the best route to qualifications and skilled employment are persuaded to take other courses of study, as students rather than apprentices. There may even be pressure from their families to do so. That is more likely in less affluent families.

Then there is the question of diversity. The Learning and Work Institute points out that people from black, Asian and minority ethnic backgrounds are half as likely as other young people to secure access to apprenticeships. Women, too, are more likely to be apprentices in low-paid sectors, entrenching the gender pay gap, and young people eligible for free school meals are up to half as likely to undertake advanced apprenticeships. Those significant equality issues must be addressed. There is also a regional dimension: 40% of the firms that will pay the apprenticeship levy are based in London and the south-east.

Colleges play a major part both in educating young people and in supporting apprentices, but the Association of Colleges is concerned that the Government’s 3 million target could drive quantity over quality, and the Government’s existing approach to financial support means that many young people from disadvantaged backgrounds face barriers to accessing apprenticeships, with a key reason for students dropping out being the lack of financial assistance.

I have laid out some of the significant problems holding back apprenticeships, most of which are financial. I could spend much longer dwelling on some of the other disadvantages, but other hon. Members will wish to add to what I have said, so I shall soon conclude. The Opposition sought to make changes to the Technical and Further Education Bill in Committee and on Report, and I had the pleasure of serving on the Committee and making a contribution there, too. However, it is now in the Government’s hands to address all the problems, to make better financial provision for apprenticeships, to better fund our colleges and to incentivise employers to sustain apprentices and apprenticeships. That is vital for our young people and vital for our economy, and I ask the Minister to respond positively to what I have said.

--- Later in debate ---

[Marion Fellows]

To that end, a lot of money from the Scottish Government is going to local colleges that are mandated to work with local employers. As I said, I have previous experience of this area. Now the focus has moved from being on when a large company goes bust and people need retraining, to getting business owners and companies in and saying, “What is it that you need?” and then planning courses around that.

[Kelvin Hopkins]

It is not for me to praise the Scottish National party or the Scottish Government, but is it possible that the British Government serving England and Wales could learn something from Scotland?

[Marion Fellows]

Of course I agree with that. In this case, there is a lot to be learnt because of the positive way forward and how the Scottish Government understand and realise the necessity of training a highly skilled workforce to move us forward with lots of economic opportunity. We have a different agenda—I will not go into that now—but it is important for economic growth that every country looks at how it best trains and prepares.

As a former further education lecturer, I understand only too well the difficulties young people have when they are in any kind of education, and how important it is that they are properly resourced. It is also true in Scotland that apprentices do not fare quite as well as others. Although the rates are higher, they have the same issues and do not qualify for some things—again, that is a DWP issue to do with child benefit and so on. I would like the Minister to look at that because it is important.

I am the product of an academic route, as are many people in this room. I know the academic route does not suit everyone, and even if someone goes down the academic route, it does not always guarantee them a job. In Scotland we have the graduate apprenticeship scheme, which is proving really useful because it gives people real, hands-on experience and makes them much more employable. The whole idea of apprentices being cheap labour, serving their time and then being paid off has to end.

[Kelvin Hopkins]

I thank the hon. Lady for giving way again and apologise for interrupting her speech. Like her, I used to teach in further education and one of the problems that occurred was young people being pressurised by parents to stay in inappropriate education courses because it was financially advantageous for them to do so. Such students were not only in the wrong courses, but unhappy in the courses and sometimes disruptive in class because they were not meant to be there. Will the hon. Lady comment on that problem?

[Marion Fellows]

I also have experience of that. For funding, the students had to be kept in colleges, but I used to do a lot of student counselling and I would counsel them to finish the course, even if they did not like or enjoy it, so that they could then move on to other employment and say, “Look, I hated this. I absolutely hated it, but I got there.” That shows proof of purpose and the fact that they can learn.

It is vital that across the UK we look at apprenticeships in a totally different light. This goes back to what I said earlier. Apprenticeships should not be cheap labour, but should be seen as a progressive and forward-looking thing for parents to consider. From my experience on the Education Committee, I know that there is often a real dearth of good careers advice for young people in schools; students are channelled into the academic route and schools want to promote that, and there is not enough good careers advice to show that some young people, especially those who are less academic, would benefit from a career starting at 16, 17 or 18.

Some of the young people I spoke to yesterday were highly qualified and had very good A-levels, but their peers and some of their families were horrified that they had not gone to university. They had chosen that route within the building and architecture sectors; it is an interesting and wide-ranging course, and those young people saw it as what they wanted to do. We need more of that across the UK.

When I studied to be a further education lecturer, I did a comparative education course. I looked at Germany, which the hon. Gentleman referred to, where there is true parity of esteem between the academic and non-academic routes, and that is reflected in the funding as well. We really need to promote that view across the entire UK. Apprenticeship is not a second chance or second choice, but is something we should actively encourage our young people to do because it will lead to good, well paying jobs that benefit the economy.

--- Later in debate ---

[Gordon Marsden (Blackpool South) (Lab)]

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.

[Kelvin Hopkins]

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.

[Gordon Marsden]

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.

[Kelvin Hopkins]

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.

[Gordon Marsden]

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.

[Gordon Marsden]

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.

[Kelvin Hopkins]

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.

[Gordon Marsden]

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%.

[Kelvin Hopkins]

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?

[Gordon Marsden]

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.

[Kelvin Hopkins]

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?

[Gordon Marsden]

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.

[The Minister for Apprenticeships and Skills (Robert Halfon)]

I congratulate the hon. Member for Luton North (Kelvin Hopkins) on securing this debate. I met him briefly in passing in the corridors of the House last week, and I said I was pleased that he had put in for and got this debate in National Apprenticeship Week. He has an unrivalled knowledge of apprenticeships, skills and further education, and he made a significant contribution to the Technical and Further Education Bill as it went through the House.

I will come on to the issues that the hon. Gentleman raised, but he will know that in his constituency, apprenticeship starts increased by 19% over the course of the previous Parliament, which I am sure he welcomed. Overall, apprenticeships have increased to 900,000, which I think is the highest number on record. He raised a number of issues that I would like to touch on, including resource, equality, the skills deficit, wages, the cost of living—the shadow Minister also touched on that—social mobility and social justice.

Before I start on all those things, the shadow Minister mentioned some of the things he has been doing in National Apprenticeship Week, which is a wonderful week to celebrate apprenticeships. It is very important as one of the rungs on the ladder of opportunity is increasing the prestige of apprenticeships and skills. It goes back to what the hon. Member for Motherwell and Wishaw (Marion Fellows) was saying: unless we increase the prestige of skills, we will have the situations she described.

I met incredible apprentices and young people learning skills at Bridgwater and Taunton College. One was learning to be a luthier to fix violins. EDF apprentices are helping to build Hinkley C. I met older apprentices, including a 47-year-old apprentice who was working for EDF. I met lab technicians doing apprenticeships. I asked to meet the Premier Inn apprentices in the hotel where I was staying in the first two days of my travels around the south and south-west. They were young 23-year-olds doing level 3 or level 4. One was very young and had already become an operations manager. I pay tribute to all those organisations, including the excellent college, the Premier Inn, Sunseeker—I went to visit its apprentices in Poole—EDF Energy and Hinkley Point, and I pay tribute to all the other apprentices I have met so far during National Apprenticeship Week. They show the best of apprenticeships.

The shadow Minister is right that we need to make the distinction between apprenticeships and apprentices. I often get told off for using the word “apprentices” rather than “apprenticeships”. He is looking at the individual, and that is very important. I am glad to see that almost everyone in the Chamber is wearing the new apprentices badge, which we have launched as part of the ladder of opportunity. We believe that apprenticeships offer young people that ladder of opportunity to increase the prestige, to meet our skills needs and to help those with social disadvantage to ensure that we get the jobs, security and prosperity that we need.

[Official Report, 20 March 2017, Vol. 623, c. 9-10MC.]The hon. Member for Luton North said we were not resourcing apprenticeships, but I take issue with him on that. By 2020 apprenticeship spending will have increased to £2.5 billion, almost double what it was in 2010. We have introduced a levy not only to change behaviours but to make sure we have funding for big businesses and small businesses to have apprentices.

[Kelvin Hopkins]

I thank the Minister for giving way. It is a pleasure to listen to him speaking. I said in my speech that the Government have made some moves but not enough. The outcome will be successful if we achieve the number of apprenticeships, trained apprentices and skills that we require for our economy. If that works, what has happened will be enough, but I suspect it is not yet really enough.

[Robert Halfon]

The hon. Gentleman is absolutely right. One of the rungs on the ladder of opportunity is widespread quality provision, which I will come on to. Although we have a huge amount of work to do—and the work is never done—statistics show that roughly 90% of apprentices get a good job afterwards, often in the place where they did their apprenticeship, or go on to additional education, which they may not otherwise have thought of. That is a pretty good sign of the way things are going, but I do not deny there is a lot of work to do.

Within the funding framework, millions of pounds go to employers—I could list them all here—and providers. Special help ensures we do everything possible to incentivise SMEs to take on 16 to 18-year-olds, and they pay no training costs if they have fewer than 50 employees. Huge amounts of money are spent on trying to encourage businesses, employers and other organisations to take on apprentices with learning difficulties and disabilities. Amazingly, in the construction industry, 10% of apprentices have disabilities. I was astonished when I first saw that statistic, which is a credit to the construction industry and shows that the things we are trying to do in terms of incentives for the trainer, provider and employer are having an effect. Given the funding pressures that the country faces, the money that is going into apprenticeships is a significant amount and it is something I strongly support.

The hon. Member for Motherwell and Wishaw said the Select Committee went to Gateshead College, which is an incredible and outstanding place. I went there a few weeks ago as part of the industrial strategy launch. The college embeds careers advice in every single part of the course. It does huge amounts of work for LDD apprentices and huge amounts of work to encourage people into apprenticeships. It is an outstanding college that does a lot of work on mental health. I am glad the Select Committee visited, and our job is to find out how to replicate what the college does across the country.

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[Robert Halfon]

The hon. Lady spoke thoughtfully in a previous debate on apprenticeships in this Chamber. She is completely right. I ask every single apprentice I meet—I have met a few thousand since being in post—“Did you get any apprenticeship or skills advice in your school?” and nine times out of 10 they did not. If they say yes it is usually because they have been to a university technical college or a place that specialises in technical work. That is depressing. I have mentioned before the story that Gateshead College told me about its own degree apprentice students and how the college was not allowed to talk to them about apprenticeships in their schools. It was the same with Heathrow airport and other apprentices I have met. That is shocking. We are reviewing our careers strategy and hope to publish a serious careers strategy in the coming months. We want it to be more focused on schools, and we are looking at the best way to incentivise schools to teach students about apprenticeships and skills, as not enough are doing that.

Women apprentices have been mentioned: 53% of apprentices are female. A survey showed that female apprentices earn more than men, so I do not accept the wage disparity point. However, very few do STEM subjects. If I go to a college that teaches healthcare, the room will be filled with mostly females and there might be one or two men, which of course is fantastic. If the subject is engineering or electrical, it is all men, and that has got to change.

There are enlightened employers. Among the Jaguar apprentices at Warwickshire College, 20% are women. There are lots of other examples of good employers and we need to encourage them, but a lot of that comes from careers advice in schools. I was told by one student yesterday that when they were given careers advice they were shown pictures. All the pictures of engineering jobs showed men and the nursing picture had a woman. That is why we face a problem. It is a cultural problem in our country, and schools need to do a huge amount more to promote apprenticeships. We are doing an enormous amount of work on that. We strongly welcome the Baker amendment, which the hon. Member for Blackpool South (Gordon Marsden) highlighted, because that will make it law that schools have to accept careers advice from further education and apprenticeship providers.

The hon. Gentleman said we were not doing enough on quality. Again, I take issue with that, although we have had a problem in the past. There were too many qualifications and an apprenticeship could mean anything. I remember speaking to people at a hotel. I said, “Have you got apprentices?” and they said, “Yes, we have got apprentices. In fact, we have a few in the kitchen who are here for a few weeks.” They were perfectly lovely people who genuinely believed they had apprentices. We have changed the situation and changed the legislation on apprenticeships. An apprenticeship has to be for a minimum of a year. Apprentices I met yesterday were doing two, three and four-year apprenticeships. They have to spend 20% of their time in training.

We have moved from frameworks to standards—we have had many discussions about that—because of the spaghetti junction of frameworks and qualifications. We have moved to standards that are primarily employer-led. From the beginning of April, subject to progress on the Bill in the Lords, the new Institute for Apprenticeships and Technical Education will design the new standards and training for apprentices so that employers will be given what they need, which has not necessarily happened in the past. Degree apprenticeships are not only about prestige, but quality. The Premier Inn apprentice I met yesterday is 23 years old. Having done levels 2 and 3 with the company, they were going on to do a level 4 and level 5 degree apprenticeship. That will transform the quality and prestige because it shows that apprenticeships are really serious and go up to different levels. They will offer students—again, as the hon. Gentleman rightly pointed out—an amazing chance to get a degree and earn while they learn. They will have no student debt and will be virtually guaranteed a job at the end of it. That is the future. That is what we need to encourage our young people to do.

When I visited Tyneside, I spoke to Accenture, which has degree apprentices, some of whom do not even have their GCSEs yet, doing coding. I said to Accenture, “How do you choose the people?” and it said, “It is attitude, attitude, attitude.” It offers people from disadvantaged backgrounds a chance to get a serious degree apprenticeship.

The hon. Member for Luton North rightly talked about the skills deficit. I have acknowledged countless times that we are way behind other OECD countries. Our skills deficit is a long-standing problem, and we highlighted it in the industrial strategy we announced a few weeks ago. That is why we put money into STEM apprenticeships and increased the frameworks by between 40% and 80%. We pledged £170 million to create the new institute of technology colleges and £80 million to set up national colleges focusing on nuclear, digital and the creative industries to try to change the skills base. We created an employer-led qualification to ensure that apprentice standards provide the skills that employers need. Through the Sainsbury reforms, which will be rolled out from 2019, every student aged 16 will be able either to continue with a traditional academic education, or to go down a state-of-the-art, prestigious technical and professional educational route. We are doing everything we can to address the skills deficit that the hon. Gentleman rightly highlights.

[Kelvin Hopkins]

I agree absolutely with what the Minister says about the importance of raising skills in STEM subjects in particular, but is it not the case that the failures are lower down in the school system, rather than at the further education or apprenticeship level? Is he saying to his colleagues in education that we have to do as much as possible to ensure that when youngsters reach the age of 16, their mathematics skills in particular are sufficiently good to make them useful apprentices and eventually good employees?

[Robert Halfon]

The hon. Gentleman is right, and he has highlighted that issue previously. My right hon. Friend the Minister for School Standards is resolute on high standards. They are his passion. I work with him and I know he is doing everything possible to ensure that students have the right qualifications in maths and English by the time they leave school. We are looking at things such as improving functional skills post-16. As I say, we are putting our money where our mouth is. We are investing in the new institute of technology and the national colleges. The Sainsbury reforms are being rolled out, and we are investing in STEM apprenticeships. We are trying to undo a 20 or 30-year skills deficit caused by Governments of all persuasions and employers not investing in training and producing the skills that our country needs.

It is important to highlight a few points about wages. The apprentice wage is £3.40 and will go up to £3.50 in April, but 82% of apprentices are paid more than the national minimum wage or the national living wage, according to data from 2016: apprentices earn £6.31 per hour on average. Wherever I go, I ask every apprentice I meet how much they get paid—I do not just look at the surveys—and most of them tell me that they get way above the apprentice minimum wage.

I want to make a wider point about the wage issue. It is important to note that apprentices are earning while they are learning. I want to do everything I can to help disadvantaged apprentices—I am going to come on to that point in a minute—but if those apprentices were in higher education or studying at further education colleges, they would not be earning while they are learning. Apprentices are earning while they are learning, and 82% of them get more than the national minimum wage or the national living wage. When we consider the benefits and that kind of thing, we need to reflect carefully on the fact that apprentices are earning money. Many of my constituents who are not apprentices—no doubt this is also true of other hon. Members’ constituents—earn the national minimum wage, but apprentices get training and education in the knowledge that 90% of them will get jobs at the end. That does not mean that there is not a problem. Some apprentices come from very low-income backgrounds—I think 25% of them come from the poorest fifth of areas in the country. It is important to put that fact on the record. I will come on to child benefit in a minute.

[Kelvin Hopkins]

The Minister is making a fair point about apprentices earning a wage, but families—particularly those on modest incomes—are acutely aware of the tipping point where the benefits that those people might get if they were in education outweigh the wage they might get if they were in an apprenticeship. When incomes are tight, such marginal differences make a difference to the choices families make.

[Robert Halfon]

I am acutely aware—I see the pressures on my constituents—of the pressures that families face, and I do not want to create disincentives for families who are working but struggling. Often, one member of the family works in the day, one works at night and the son or daughter does an apprenticeship, yet the family are struggling to keep their heads above water. I accept that. We announced that we will be doing a serious, committed review—this relates to the question that my hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter) asked—of how to get more apprentices from disadvantaged backgrounds. We have a £60 million fund to incentivise providers to take apprentices from the most deprived backgrounds, and FE colleges can use some of their bursary money to help apprentices with travel and overcome some of the other obstacles that have been raised.

--- Later in debate ---

[Kelvin Hopkins]

It has been a great pleasure to lead in this debate. I thank all those who have spoken: the hon. Member for Motherwell and Wishaw (Marion Fellows); the hon. Member for Central Suffolk and North Ipswich (Dr Poulter) who made some useful interventions; and of course my hon. Friend the Member for Blackpool South (Gordon Marsden), the shadow Minister, who made a very useful and thorough speech.

I also thank the Minister for his response. We spent some years enjoying each other’s company—I hope—on a Select Committee, and I applaud his genuine enthusiasm for his job and for apprenticeships. I hope that some of the issues that have been raised today can be advanced by him within his Department. There are still problems of finance, expressed by a number of institutions, but we have touched on them, drawing them to the Minister’s attention, and I hope for progress in future. It is very important for our future that we train our young people in the appropriate skills. We live in a highly competitive world and we have to have a properly skilled and educated workforce. I like to think that the Minister will make a contribution to the success of that in future.

Question put and agreed to.

Resolved,

That this House has considered financial support for apprentices.