Apprenticeships

Liam Byrne Excerpts

Wednesday 4th February 2015 Commons Chamber

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

I am delighted that the Opposition have chosen apprenticeships as the topic for this debate. The motion’s opening line is an admirable statement of what we are trying to do:

“That this House believes that more high-quality apprenticeships are essential to the future prospects of young people and future success of the economy”.

“Hear, hear” to that. It offers a good definition of what the Government have been doing: the number of apprenticeships has doubled from just over 1 million to 2 million over this Parliament, and as the hon. Member for Streatham (Mr Umunna) has emphasised quality, I should say that the proportion of advanced and higher apprenticeships and longer apprenticeships has risen systematically as a result of our reforms.

We are therefore very comfortable debating apprenticeships. Indeed, the only subject that we would be more comfortable debating is job creation, which I think the Opposition have chosen for next week—the hon. Member for Streatham is very brave. I was trying to understand their thought processes in approaching the question. I suspect that they said to themselves, “Well, the Government actually have a pretty good record on all this stuff, so let’s try to find a negative number to debate. It doesn’t matter what it is, so long as it’s negative.” They did find a negative number. In 2013-14, for one year, and for one age group, there was a slight reduction—4%—in the number of apprenticeship starts. That fact is quite correct, but the argument built around it is utterly specious.

Let us look at that age group—19 to 24-year-olds—because it tells a good story about what has actually happened. I do not want to dismiss older apprenticeships, as the hon. Gentleman did, because many of them are extremely valuable in raising the productivity of the labour force. The time series gives us a good analysis of what has happened during our time in office. In the year before we came into government there were 114,000 apprenticeship starts for that age group, and in the last year for which we have records, 2013-14, the figure was 159,000, which means there was a 40% increase in the age group he defines as the most important. As has already been pointed out to him, there has been a 60% increase in Streatham, and a 75% increase in Hodge Hill.

The number of starts is one way of measuring apprenticeships, but in some ways participation is a better measure, because it captures the benefits of longer apprenticeships and fewer drop-outs. The situation with participation is even stronger. It suggests that over that period the numbers grew from 210,000 to 309,000, which is a 46% increase. Overall, participation in apprenticeships grew by 73%, and for advanced apprenticeships—level 3 and above—participation has grown by 90% under this Government.

[Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)]

I thank the Secretary of State for giving way; he is being characteristically generous. I am glad that he has focused on the fall in the number of apprentices under the age of 25. Does he think that that trend can be reversed with the budget that the Chancellor has set out for his Department, as implied by the fiscal path for the years ahead? He knows as well as I do that if the science budget is protected, that implies a 44% cut for the Department. Does he think that it will be possible to reverse the fall in the number of apprentices with that kind of settlement?

[Vince Cable]

It is certainly possible, as I think we shall see when we get the 2014-15 figures. I agree with the right hon. Gentleman that we should be investing more in apprenticeships, not less. That is certainly my clear objective. He might not have noticed, but the autumn statement included a commitment to £40 million extra for higher and advanced apprenticeships over the next two financial years, so we have every reason to be optimistic about achieving continued growth.

The figures I have cited, which I do not think are disputed, actually understate the improvement achieved, and for precisely the reason that the shadow Secretary of State emphasised: the necessary shift to longer apprenticeships and higher level apprenticeships. When we came into government, the share of level 1 was above 40% for that age group, and it is now only 10%. We decided in 2012 not to include level 1 within the definition of an apprenticeship. As the hon. Member for Liverpool, Walton (Steve Rotheram) pointed out, that was entry level. We now call those traineeships, so there is progression. It is valuable to have level 1, but we no longer describe it as an apprenticeship. If we take out the very short courses, in particular, which tended to dominate in the earlier period, we see that the number of people in the 19-to-24 age group has actually doubled, because of the preponderance of very short courses in the apprenticeship programmes we inherited.

Let us look at the higher level apprenticeships. For level 3 the number of starts has doubled. For higher—level 4, foundation degree and above—we have seen a tenfold increase since we came into government, from 1,700, which was negligible, to 18,000. There is an important point to make about levels. I think that the hon. Member for Streatham dismissed too easily the value of level 2 apprenticeships.

--- Later in debate ---

[Vince Cable]

That is one of the examples. The LEPs have demonstrated the success of devolution and there are many other models. I know that my hon. Friend the Member for Eastbourne (Stephen Lloyd) has done brilliant work locally by simply working with local colleges and local authorities. There are many local examples and that is what we should be trying to achieve.

I know that you want to bring more people into the debate, Madam Deputy Speaker, so let me make two points in conclusion.

[Mr Byrne]

Before the Secretary of State concludes, will he update the House on the potentially quite sweeping changes to how we fund apprenticeships in this country? The Minister for Skills and Equalities’ predecessor launched a wide-ranging consultation on direct payment through the PAYE system, but on 13 January the Minister of State, Department for Education, the hon. Member for Bognor Regis and Littlehampton (Mr Gibb), told the House that the process was in a state of suspended animation and that no further reform would be made. Will the Secretary of State tell the House this afternoon what on earth is going on?

[Vince Cable]

Our objective is to try to make the system of employer ownership much more extensive. We have had great success with our pilots and are anxious to extend the system. Different models have been canvassed and there has been a ministerial statement describing very clearly where we are. We are keen to do this in a way that creates incentives rather than disincentives for small businesses. The right hon. Gentleman is quite right that we are not rushing into a scheme prematurely, but are consulting. That is exactly what Governments do, and when the Government are returned, if I am still in this post, I am sure that we will see a lot of action in that area.

Let me make my two concluding points. First, the shadow Business Secretary mentioned the importance of the status of apprenticeships. That is absolutely right. For far too long we have had a two-tier system under which supposedly clever people went to university and those who failed went on to vocational courses. We need to break that down. It is being broken down and there is a change in perception. A recent survey suggested that 57% of parents are willing to recommend an apprenticeship course to their children. Many of them can see the economic advantages of such a course and the status is changing.

The big issue is the one the shadow Business Secretary started with. I agree that for the sake of the economy we need significantly increased investment in people and skills. The figure we have in the Department is that every £1 million invested in apprenticeships yields an £18 million return to the economy. It is essential that we extend rather than contract the number of apprenticeships. We have a proud record of doing that and I want to see it continue.

--- Later in debate ---

[Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)]

I am not sure which debate the hon. Member for Gloucester (Richard Graham) was in, but he certainly constructed a few windmills of his own to tilt at. No doubt, that will be of interest to his local press in what I know will be a tight contest.

This in general has been a very good debate. It has been especially heartening to see interest across the House in driving behind a shared ambition to boost the number of apprenticeships, to close the skills shortages and gaps that bedevil so much of our economy and to close the looming large productivity gap that my hon. Friend the Member for Streatham (Mr Umunna) alluded to in his opening remarks. The fact that there is now a 20% productivity gap between this country and the rest of the G7 is shocking, and it is going to make it very difficult for us as a country to earn our way out of the cost of living crisis in which this coalition Government have landed us.

It is simply impossible for us to raise wages in the way we want to unless we raise productivity rates and that, in turn, is going to require us to raise the level of skills in this country. As my hon. Friend said, we are very proud of our record in government in rescuing the apprenticeship programme from the Conservative Administration back in 1997. I think the grand total then was 65,000 apprentices, and we are very proud that we were able to raise that number to nearly 300,000 by the time we left office. We achieved that through some concerted policy measures, not least the creation of a National Apprenticeship Service, which was extremely successful in its short life. I am glad the current Government kept it on, although I am afraid it is now a somewhat eviscerated version of its former self.

We were the first Government to introduce a national apprenticeship week back in 2008, but crucially we learned the hard way—and it is a shame these lessons were not taken up in the way they could have been—that public procurement could be used to drive up apprenticeship numbers, and I was very pleased to see on Monday deep below Tottenham Court road the extraordinary work that Terry Morgan and the Crossrail team are undertaking there. That public procurement project has now driven about 440 new apprenticeship numbers into the system. That is a very good example of public procurement being used to increase the number of apprenticeship opportunities for our young people.

A number of hon. Members have noted with appreciation that there is a degree of consensus in this debate, and the Government did do some things that sought to build on the firm foundations left by the last Labour Government. The skills strategy published in 2010 committed to improving apprenticeship standards, and the higher apprenticeship fund was a welcome innovation, as was the money for higher apprenticeship numbers that the Secretary of State referred to in response to an intervention from me.

The question, however, is whether the scale of this Government’s ambition is anywhere near the level that is needed to get this country out of the hole into which they have put us. It has been argued this afternoon that there are four or five important areas where the Government’s apprenticeship reforms have fallen short. First, there is the question of whether there is enough training in the apprenticeships that are available today. The Secretary of State did an heroic job of defending the data his Department published, but the truth is that nearly a quarter of the 19 to 24-year-old age group do not receive any formal training, which means an apprentice in England gets under seven hours of training a week. We do not think that is good enough, and neither do the Secretary of State’s own advisers. In fact, the Doug Richard review set the target at 20% for off-the-job training each week so, on the Secretary of State’s own data and by his own measures, his Department is failing to deliver the right level of training for apprentices. That obviously has a knock-on consequence for pay. I am glad the Secretary of State acknowledged that 15% of apprentices not receiving the minimum wage was a scandal and was not good enough and more action needed to be taken to end that abuse. If young people know that an apprenticeship is something that is not properly paid and where the Government are content to look the other way when they are abused by employers, it is going to be harder, not easier, to draw young people into apprenticeships. The level of ambition in driving out low pay from apprenticeships is not good enough, and I am afraid we did not hear enough on that front from the Secretary of State this afternoon. I hope the Minister will correct that deficit when he winds up.

It is pretty clear to us that apprenticeships are currently too short. Approximately a third of English apprenticeships last under 18 months—a shortcoming compared not simply with international standards but with other parts of the United Kingdom. In Northern Ireland only 12% of apprenticeships are that short, and only 17% are in Scotland. So the Government have much further to go in increasing the length of apprenticeships just to match other parts of the United Kingdom.

The measures undertaken to increase the number of higher apprenticeships are welcome, but the truth is that only 2% of apprentices go on to degree-level skills. There is no vocational, professional and technical path to a degree-level skill worth its name in this country, and we are absolutely determined to change that.

A number of Members rightly pointed out that underlying many of these shortcomings are problems in not just the apprenticeship system but the education system. The fact that we do not require everyone in our country to do English and maths up to the age of 18, as we recommend, is a problem. The fact that there is no gold-standard technical baccalaureate at the age of 18 is a problem. The fact that this Government have undertaken the wholesale destruction of our careers service is a problem, and the Chair of the Business, Innovation and Skills Committee, my hon. Friend the Member for West Bromwich West (Mr Bailey), and my hon. Friend the Member for Sefton Central (Bill Esterson), were absolutely right to point the finger at that problem, which we will be determined to fix.

Our young people face the challenge of a world in which one in six of their peers is still out of work. If they want to go to university, they will graduate with a bill of £44,000—a debt that, on average, they will not pay off until they are in their 50s. Not enough apprenticeships are available to them because the numbers are going down, and neither are there a meaningful number of opportunities to take them on to degree-level skills. The fact that only 2% of apprentices go on to acquire degree-level skills is a major problem that employers, particularly in engineering and science, argue is holding our country back. Many companies are not re-shoring jobs because of the skills shortage. Mike Wright, chief executive of Jaguar Land Rover, said in an independent review commissioned by my right hon. Friend the shadow Chancellor that we are graduating only approximately half the number of engineers we need to make good the skills gap. That means that we have to transform the number of technicians coming on line each year through the apprenticeship system. Right now, the Government simply do not have plans in place to fix that imbalance.

The Secretary of State was sanguine about the fiscal outlook for his Department, but the truth is that if the Chancellor gets his way and the science budget is protected, the BIS budget will be cut by some 44%. The Secretary of State knows as well as I do that that is not deliverable—certainly, his civil servants do; it is not a fiscal settlement that will allow him to build the bigger, better apprenticeship system that we need.

A different level of ambition is needed. We should set a goal of sending over the next 10 years as many young people into a high-quality apprenticeship as head on to university. That is the level of ambition we need in this country, and if we are to deliver on it, we need to get several things right. First, we need to ensure that our apprentices can compete with the best in the world, which is why level 3 is the right level of ambition. Level 2 is an important step on the road to that qualification, but if we want to compete with the best in the world and close the productivity gap, we need to set our standards high, not low. We therefore need radically to expand the number of higher-level apprenticeships. That is why the Leader of the Opposition has said clearly that our priority in expanding the university system is to create thousands of new technical degrees that would allow apprentices to go on and study up to degree-level skills. Those are the kind of skills that our science-based businesses are asking for.

We need to accompany these changes with radical measures to devolve spending to city regions, which will often know their local labour market best, but above all we must harness public procurement on a completely different scale compared with the ambitions set out by this Government. That point was wisely made by the Chair of the Select Committee. I am glad that there is a shared ambition across the House on the aspiration but there needs to be a practical policy in place to deliver that aspiration, and Labour Members are determined to practise what we preach.

[The Minister for Skills and Equalities (Nick Boles)]

It came as a bit of a surprise to learn that the Opposition were proposing a debate on apprenticeships, because as we have heard during this excellent debate, the Government can point to a remarkable record of success in their apprenticeship programme. We heard from my hon. Friend the Member for Gloucester (Richard Graham) that the number of apprenticeships in his constituency was 80% higher in the past year than in the last year of the previous Government, and my hon. Friend the Member for Rossendale and Darwen (Jake Berry) told the House that, through his efforts to create jobs fairs and no fewer than three apprenticeship fairs, unemployment in his constituency was now 50% lower than it was when he was elected to Parliament. We heard from my right hon. Friend the Member for Basingstoke (Maria Miller) that her local college, Basingstoke college, was keen to invest more money every year to create more apprenticeships, and I will of course be delighted to meet her and the college principal to discuss ways in which the college can bid more effectively for money in-year when it can identify ways to grow its programme.

I was particularly pleased to hear from the hon. Member for Liverpool, Walton (Steve Rotheram), who brought to the debate the enormous advantage of having completed an apprenticeship himself. I have no idea why he chose to give up that honourable trade for the one that he is now pursuing, but I am nevertheless full of admiration for him. He made an important contribution —compared with the woolly and glib thinking of those on his Front Bench—in pointing out the crucial importance of level 2 apprenticeships, particularly in construction. It would simply be wrong to tell the young men and women who are doing a level 2 apprenticeship in bricklaying that it was no longer going to be called an apprenticeship, even though they were employed, working hard, going to college and training, and even though they were securing valuable qualifications, of which many more are needed.

We also heard from my hon. Friend the Member for Stroud (Neil Carmichael), who made the particularly important point that there was a key link between apprenticeships and the industrial strategies that the Secretary of State for Business, Innovation and Skills has brought in. He also said that we needed to work with local economic partnerships to create apprenticeships that support the local growing sectors in his constituency and elsewhere. I am sorry that I have not yet been invited to his festival of manufacturing and engineering, but I look forward to receiving an invitation to the next one when he is re-elected in May.

We have heard from my right hon. and hon. Friends about the good record of this Government. We have our record to be proud of, but Conservative Members also have a clear plan for the future. Unlike the Opposition’s proposals in the motion, our plan is fully costed and fully resourced.

[Mr Byrne]

rose—

[Nick Boles]

We will continue to improve the quality of apprenticeships through our Trailblazers programme by getting groups of employers to develop apprenticeship standards that deliver the skills that they need. We will also offer young people a clear choice: to earn or learn—to get a job or to go to university—or to combine earning and learning through an apprenticeship. It does young people no favours to let them start their lives in subsidised inactivity, neither earning nor learning, so we will restrict the benefits that young people receive and use the money saved from that and from the proceeds of a reduction in the benefits cap from £26,000 to £23,000 to fund 3 million high-quality apprenticeships between 2015 and 2020.

By contrast, what we have heard from the Opposition has been hopelessly vague. After the comprehensive demolition of the shadow Secretary of State’s policy on tuition fees by university vice-chancellors, he has clearly decided to try his luck with apprenticeships, but yet again we see that the right hon. Gentleman is better with atmospherics than with policy detail.

[Mr Byrne]

rose—

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. The Minister is not giving way, and neither did the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) when he was at the Dispatch Box. I must point out that the Front-Bench speakers in this debate have spoken for well over an hour, which is why Back Benchers have had very little time to speak. The right hon. Gentleman has had his chance. I call the Minister.