Skills and Post-16 Education Bill [HL]

Lord Aberdare Excerpts

Committee stage
Thursday 15th July 2021 Lords Chamber

[Baroness Morris of Yardley (Lab)]

May I say to whoever’s job it is, it would be useful to have list of people who have withdrawn from speaking; it is really difficult to know when we are about to be called, but that is a different matter. I rise to support the amendments, particularly Amendment 24, and to agree with my noble friends Lord Watson and Lord Liddle.

I understand completely why the Minister and the Government want local voices to have a say in what the nature of the partnership should be. That absolutely makes sense. Our country is very rich in diversity, with urban areas, rural areas, clusters of villages and small towns. I can see that see that the same model for everyone might not work. If the starting point is trying to let local people feel that they have ownership of this, I can see that and I share that starting point. What I think is a recipe for disaster is not to offer any guidance and to explore with everybody exactly what the criteria might be to determine what the local partnerships are.

I am not sure whose job it is to propose what “local” means. Does it have to be negotiated locally? That could take some time. Anybody who has been to a constituency Boundary Commission review will know how tempers can rise when talking about anything that has a boundary. I am not sure who it is who comes up with the idea in the first place of what the local area is. I am not sure what the criteria are that they have been advised they should make their decision against. I am not quite sure of the process by which somebody somewhere says, “Yes, that local partnership is local and covering the right areas.” I am not sure what happens to any geographical area that no one wants and has not managed to get a place in any partnership. There are, very often, left-out areas. There will be some areas that are really popular, and everyone will want them in their area; there will be some that are really tough and challenging, and no one will want them. I am not sure how all that is to be sorted out.

What I would be looking for is to keep that idea of not forcing the same on everybody, but within a much stronger framework of guidance than we have at the moment and a clear idea of process. It puts me in mind of when, some years ago, the Government—I think it was the coalition Government actually—set out regional schools commissioners. They decided to have no regard to any existing boundaries. So, instead of following the local authority boundary or a government office boundary, they made it up as they went along. It was an utter disaster, and there were some poor people having to negotiate with more than one regional commissioner at any one time. All that happened was that bureaucracy flourished. With the number of hours that were spent by one local authority that had schools within two regional schools commissioner boundaries, it just was not a model to follow. The Government, very sensibly, got rid of it and, I think, made sure—I may be wrong about this—that it followed the government office regional boundaries. I may be wrong about that, but it certainly makes sense now, and I know we are not spending as much time trying to chase appropriate regional school commissioners.

Therefore, I cannot see any example of where this decide-it-yourself, let-us-see-what-happens, get-on-with-it model actually works. It might not be something people like but—to be honest—let us get on with the job. Let us not set up a system where we will spend hours fighting about the nature of the structure that delivers it, rather than using our resources, energy and effort on what should be delivered.

[Lord Aberdare (CB)]

My Lords, the noble Baroness, Lady Berridge, has rather pre-empted some of what I intended to say in support of Amendment 24. I very much welcome the announcement of the first group of trailblazers. It is, of course, the intention that all areas of the country should, in due course, be covered by a local skills improvement plan. I very much agree with some of what the noble Baroness, Lady Morris, and the noble Lord, Lord Liddle, have said about how we make sure the whole system works.

Now that the first employer representative bodies have been designated, and the local areas for which they are responsible defined, it will surely still be necessary for the Government to provide and update guidance on the criteria against which further bids will be evaluated, as required by this amendment and as we learn about the experience of that first group. There needs to be a broad package of guidance addressing all the issues that we have discussed so far in our debates. That is not just on how local areas should be organised to ensure there are no not-spots, as mentioned by the noble Baroness, Lady Morris, but also on who should be involved in LSIPs, what their role should be, what resources are available to them, what reporting and monitoring is required and so on.

It remains rather difficult, at least for me, to assess the merits of LSIPs in the abstract. I was very taken by the suggestion from the noble Baroness, Lady Neville-Rolfe, last week that the Government might share one or two model LSIPs with us to help us in our scrutiny of the Bill. Will the Minister clarify as much as she can, in her response, what plans there are for guidance to be provided, not least in time for the next stage of our own debate?

--- Later in debate ---

[Lord Aberdare (CB)]

My Lords, I support these three amendments in the names of the noble Lord, Lord Lucas, and others. It is particularly important that the views and aspirations of individual learners should be taken account of by LSIPs, not least those who find that their ambitions cannot be met by existing employers or employment opportunities within their current environment or circumstances, and those who wish to start their own businesses. LSIPs need to be aware of opportunities relevant to wider national skills needs, as Amendment 33 requires.

I was very struck by the comment of the noble Lord, Lord Baker, last week on the views he had heard from unemployed young people. They may need specific personalised help and support to prepare themselves for work and get into the skills system at all after long periods of unemployment or, perhaps, no previous employment. This is most likely to be provided by independent training providers, often within the frame- work of schemes such as Kickstart, but it is not clear to me whether the Bill makes provision for funding such extra support; perhaps the Minister could say how she expects that need to be met.

I also share the view expressed by many noble Lords of the need for a national skills strategy to provide a clear and coherent framework for the education and skills system. The national strategic skills audit proposed by Amendment 85 would be an important part of developing such a strategy, and I hope the Minister will be able to confirm that the Government are planning something along those lines to underpin the new system which they intend to create and for which the Bill provides a framework.

I imagine that this may well be another part of the remit of the skills and productivity board, which the Minister has mentioned from time to time, so I found the comments of the noble Lord, Lord Lucas, on his attempts to find out more about the board somewhat disturbing. I hope the Minister may be able to tell us more about that.

[Baroness Garden of Frognal (LD)]

My Lords, as last week, I have added my name to Amendments 15 and 33 in the name of the noble Lord, Lord Lucas, and I support his Amendment 85. He set out very clearly why those amendments are needed and, on the principle that I do not repeat things just because I have not yet said them, I will not go into detail on that. We have already explained why potential students should be taken into account.

Amendment 33 would add a clause to ensure that the employer representative body is required to be aware of skills in demand nationally which may not be in demand in the local area. If young people or adults are enthusiastic to learn skills which may not be available locally but are in demand elsewhere, it is really important that national demand should be recognised and skills training made available, even if the skills are not, or not yet, required locally. If a young person or adult is desperate to become a farrier or an aeronautical engineer but there is nothing in their locality, they should be enabled to follow their talents and interests. We must have a national picture of skills training and, if need be, there should be help with travel for those who want to pursue their skills out of area.

The amendments make it clear that skills needs and shortages must be seen in a national context, even if that means that those training need to move to find work. Again, let us never forget distance learning, which can be valuable in such times and has no barriers.

The noble Lord, Lord Liddle, made the valid point that we must do some blue skies thinking about what will be needed in future, and Amendment 85 mentions medium and long-term national skills. Who would have thought two years ago that we would all have needed to become proficient in Teams and Zoom? It is quite a wonderful advance really, but I do not think anyone predicted it, and we must always respond to unpredictable events in future.

My noble friend Lady Sheehan has given our support to Amendment 85 in this group, because a national strategic skills audit would be an invaluable tool to assess how our skills shortages are being addressed, alongside the invaluable task of working towards net-zero future jobs. This need not be an excessively cumbersome or costly exercise, but having a body with an overview of skills is surely effective for jobs and training. I know that the Government are always reluctant to set up new bodies, but this one would have a co-ordinating role which could prove invaluable in generating skills in the right places. I hope that the Minister will see that this group of amendments is well worthy of government support.

--- Later in debate ---

Moved by

[Lord Aberdare]

27: Clause 1, page 2, line 33, at end insert—
“(8) The Secretary of State must publish a response to the local skills improvement plans published by the local designated bodies across England.(9) The response must include—(a) a national skills map based on the skills needs identified in the local skills improvement plans, and(b) an action plan outlining how the Secretary of State will support local areas to address the skills needs in their area.”Member’s explanatory statement
This amendment aims to ensure that there is not only a feeding in of national policy into local skills improvement plans, but also that local information and information about skills gaps is fed back into national policy making. This is to ensure that government can identify national skills shortages more easily and more quickly, and act accordingly.

[Lord Aberdare (CB)]

My Lords, I am pleased to move Amendment 27, originally in the name of my noble friend Lord Patel, who is unable to be here this afternoon. He has kindly shared with me the points that he wished to make and I will make full use of them. I will also speak briefly to Amendment 30.

Amendment 27 aims to ensure that, in addition to national policy feeding into local skills improvement plans, local information about skills gaps and local skills challenges is also fed back into national policy-making. Real-time labour market data, as well as insights into what is happening locally around education and skills options for young people and those wanting to retrain, is vitally important to ensure that the Secretary of State and his department have the insights and evidence needed to make strategic national decisions about education and skills policy.

I hope the Minister can give us some more clarity about how the LSIPs proposed in the Bill will feed into the work of the DfE and BEIS to develop a strategic approach to addressing the skills gaps on a national level. How will information within LSIPs help shape and inform national industrial policy? How will the Government use the reforms in the Bill to identify and respond to regional skills needs important to the overall strategic goals of the UK, such as specialised engineering skills?

Several proposed amendments to this Bill aim to ensure that LSIPs will take account of national strategies and policy—as they should—but what is missing is a feedback loop from the local to the national, which is what this amendment seeks to achieve. Local skills improvement plans have the potential to provide rich insights into what is going on locally around the skills businesses need and the difficulties they may or may not have in accessing them locally. They should, one hopes, provide insights into how local areas will address any skills shortages and how effective these measures prove to be in the long run.

Local skills improvement plans will provide detail and data that should enable the Government to get a much better picture of the skills situation in this country and allow them to map out where there are potential issues. This will foster an understanding of whether particular skills gaps are localised, and therefore need to be addressed locally, or whether there is a pattern across the country that may require national policy interventions in addition to local action.

This amendment is asking the Government to provide a response to the LSIPs as a whole, including a skills map and an action plan. This is surely a reasonable proposal that can only help to further the Government’s ambitions around productivity and joined-up thinking. Ensuring that there is a functioning feedback loop from national to local and from local to national will enable government, both local and national, to identify and address skills shortages more easily and quicker.

Turning to Amendment 30, in the name of the noble Lord, Lord Watson, which I also support, I am rather surprised that it should be needed at all and that the publication of LSIPs is not already in the Bill. Every LSIP needs to be available, not only to all interested parties in the education and skills system within the area it covers, as specified in the amendment—particularly providers of careers guidance—but also more widely, both so that others can learn from different approaches being taken and as input to national skills policy-making.

Apart from the essential publication of the LSIPs, as in the amendment, there needs to be a process for regular progress and performance reporting, not least to promote the sharing of experience and good practice, as well as for monitoring and accountability purposes. This is yet another element of the framework that is not clear. It is not clear if that feedback loop is going to be there, what sort of performance monitoring is going to be in place, and what happens if LSIPs do not reach the standard one might hope from them. I beg to move.

[Lord Young of Norwood Green (Lab) [V]]

My Lords, I find myself in a difficult situation with these amendments. I listened carefully to the Minister responding to the last group of amendments, and I feel that she was right: a lot of what noble Lords are rightly concerned about ought to appear in the guidance. I do not want the Bill to be overly complicated, with every prescriptive concern, but I do want an assurance from the Minister that the guidance will address some of the valid points made by the noble Lord, Lord Aberdare, and others.

While I have the Floor, I am concerned about the view that, somehow, employers will not be looking ahead. That is not my experience of dealing with employers. They are concerned; they have had to look ahead. Like hanging, the pandemic has concentrated their minds wonderfully, but it was also happening beforehand. Look at all the work in establishing new standards, where employers are involved; they are taking into account their future skills needs and that new green skills will be required.

The Minister was right to remind us about the vitally important work that jobcentre coaches are doing. I would not say that I am absolutely satisfied they have got all of that right, but they are on the right track to ensuring that young people are aware of the skills that they will need in a job market that is changing significantly. We know what some of these are already; we know they need a reasonable standard of maths, English and digital skills—they are absolutely essential. Some of them are fully equipped, certainly on the digital skills front, while others will need some extra assistance and training. The Minister referred to lifelong learning, and we also have traineeships and Kickstart, so there are a number of things the Government are providing. Is everything working absolutely right? No, there are things that I believe—as I have said in a previous debate —need reform, and the apprenticeship levy is one.

I urge the House to be wary of trying to load up the Bill with every single detail. The Minister was right when she said that there is a role for guidance. If there needs to be a reference within the Bill to the fact that some of these points will be covered in the guidance, that is all well and good. I attach a lot of importance to the guidance.

I do not share the pessimism of some that this is a badly framed Bill that will not involve local people as it should. Of course we are going to go through a learning curve, as the participants in creating the local skills improvement plans develop the technique of doing this. What the Government should do on a national level is encourage best practice, looking at examples of where it has been done really well and passing that kind of information on. I suspect I may be in the minority here, but it is no bad thing to have a range of views. I hope that, when the Minister responds, she will take into account the points I have made—she has also made them before—about the balance of what is in guidance and what needs to be in the Bill.

--- Later in debate ---

[Baroness Berridge (Con)]

My Lords, I am grateful to be able to speak to this group of amendments relating to publication and response to local skills improvement plans. We expect them to be an important resource to inform decision-making by local providers, stakeholders and national policymakers.

On publication, in Clause 1(7) it is clear that a local skills improvement plan means one that has been

“approved and published by the Secretary of State”.

I presume that that will be on GOV.UK. I cannot prescribe that, but I do not think that we need to go into any further detail in relation to that, or to put such matters in the Bill. I am grateful for the comments of the noble Lord, Lord Young, about what we do and do not put in a Bill and what goes into statutory instruments—and then, of course, what is published in guidance.

Amendment 27 talks about how local skills improvement plans can inform national policy on skills. As outlined previously, we expect the plans to be informed by, and in turn inform, national skills priorities highlighted by the Skills and Productivity Board. This is envisaged to be a two-way relationship. In relation to the collaboration between employer representative bodies and the co-ordination point, which has been quite a theme throughout a number of amendments, the Secretary of State can set terms and conditions for the employer representative body and, should it be necessary, they can be used to mandate in the approval that they collaborate—but, obviously, one would hope that that will not be necessary.

On the point from the noble Lord, Lord Liddle, I hope that the trailblazers will reveal whether his doubts will materialise about whether the appropriate national skills priorities are taken into account.

On the approval process by the Secretary of State, it is not about the Secretary of State second-guessing the priorities and actions agreed by local areas but about ensuring that a robust process has been followed. In Clause 3, there are provisions that enable the Secretary of State to remove the designation if he sees fit: if terms and conditions have been broken, if the body is no longer impartial or reasonably representative or if it does not have regard to the guidance. Of course, when one talks about process, one normally thinks about judicial review—but, if a plan says that we are going to invest in coal mining in an area, for example, there might be a case for such a priority that is way outside. But it is a process that he will be looking at; he will not be second-guessing the choices and priorities decided by the employer representative body.

As I have said, we expect the LSIPs to complement the funding system reforms outlined in the Skills for Jobs White Paper. The consultation that I mentioned was launched today, aiming to give providers more autonomy to use government funding to meet the skills needs of local employers, including those articulated in LSIPs. We expect these plans to be a relevant factor for the Secretary of State to consider when making decisions about funding and support for local areas. Again, implicit in that is a co-ordination point as well.

Turning to Amendment 30, in the name of the noble Lord, Lord Watson, concerning the publication and distribution of LSIPs, I have mentioned Clause 1(7). The ERBs will lead the development of the plans, and the Secretary of State will approve and publish them. Obviously, if they are defective, there is the remedy I outlined for the noble Lord, Lord Aberdare. They will be published on a website to ensure that relevant bodies across England can easily find and access them, and this will be publicised through appropriate communication channels. The department has good relationships with stakeholders, as I say.

I hope that my remarks in relation to these amendments have provided some reassurance to noble Lords. One noble Lord who requested a meeting—it may have been the noble Lord, Lord Lucas—in relation to these matters. Of course, I am happy to engage with any noble Lord to give further detail outside of Committee. I hope to be able to report to the House on the progress of the trailblazers, but they are not due to conclude until March 2022. I therefore hope that the noble Lord, Lord Aberdare, will feel comfortable in withdrawing his amendment and that the noble Lord, Lord Watson, will not feel the need to move his when it is reached.

[Lord Aberdare (CB)]

My Lords, I thank all noble Lords who have spoken and the Minister for her response. This is a Bill whose aims I strongly support. It is absolutely focused in the right direction, and it has lots of great ideas in it. My occasional frustration is that I do not quite see how it is going to work in various aspects that have been raised by a number of noble Lords. I take the point made by the noble Lord, Lord Young, that it may well make sense to answer a lot of these points in the guidance rather than in the Bill itself, but we do not have the guidance and we do not know what is going to be in it so all we can do is say “We want this to be dealt with somewhere” and keep asking how it is all going to work in practice. Having said all that, I live in considerable hope and expectation, and I am happy to withdraw my noble friend’s amendment.

Amendment 27 withdrawn.

--- Later in debate ---

[Baroness Neville-Rolfe (Con)]

My Lords, it is an unexpected pleasure to follow the noble Lord, Lord Addington, with his straight talking. I rise to support the noble Lord, Lord Storey, in introducing a greater degree of flexibility in the use of employers apprenticeship levy funds.

I am particularly glad to see the involvement of the noble Lord, Lord Aberdare, who brings practical experience of what works from running a training business and of the red tape—my words, not his—of complying with regulatory conditions, which I fear this Bill increases too much. The backdrop to all this is a dramatic fall in apprenticeship numbers in recent years—exactly the opposite of what we wanted and promised to achieve. A great deal of effort has been put into improving the quality and level of apprenticeships but I fear that, perversely, this has excluded many who would have benefited from the discipline and recognition of a successful apprenticeship, for example in my old industry of retail. However, my noble friend the Minister may have a better explanation for the decline and be able to reassure us that the fall has come to an end.

I was at the birth of the apprenticeship levy as the Minister who took the legislation, the child of Nick Boles, through our House. As noble Lords may have sensed earlier, I am passionate about apprenticeships, which were beginning to be a lost art, but I did have some carefully disguised doubts about the design of the arrangements for administering the levy. The system is a bureaucratic one and was led by education, rather than employers, so bigger employers paid a substantial levy. This often came off their existing training budgets; they were then unable to fix their training into the mould laid down by the Civil Service, so the levy ended up as a tax.

Perhaps my noble friend the Minister can explain why things are better now. In particular, where a company has surplus levy credits, can these be allocated to their supply chain or pledged to other companies without the levy payer having to become responsible in any way for the training in that other firm? That requirement was a real barrier to good practice and spreading the levy into the supply chain. What is the current cap on the new arrangements in percentage or other terms? Has the inevitable move to digital made the system more efficient, with fewer requirements to keep unnecessary records for inspection and more trust in employers to lead and train their apprentices? Or have more requirements been laid down in the digital world because, in theory, it is so very easy?

Amendment 39 seems to suggest that the levy funds could be diverted in other ways, which I might be more concerned about if it led to pressure for a rise in the levy. Companies can ill afford a levy increase at present, especially those whose training budgets have been hit hard by Covid. Before we reach Report, I would like to understand better what is planned for apprenticeships. Apprenticeships provide a passport to mobility from one job to a better one. They provide a route to advancement to people who do not need or want to go to university and incur debt doing so. If we could massively increase their numbers and their status on the German model, that would contribute to happiness and to growth.

[Lord Aberdare (CB)]

My Lords, it is a great pleasure to follow the noble Baroness, Lady Neville-Rolfe. I suspect that her knowledge of apprenticeships is far greater than mine and I appreciate her remarks. I also strongly agree with everything that the noble Lord, Lord Addington, said at the beginning of this debate.

I have added my name to this important amendment because apprenticeships need to be an integral part of the new skills and education system which the Government are rightly seeking to create. They are employer-led and job-focused, and they cover all levels, from GCSEs up to degree level. Through the levy, they provide a mechanism whereby employers contribute to the cost of skills training—where, at times, they have been less than forthcoming.

However, as we have heard, there is a widespread recognition that the levy is not working as well as it should. Relatively few employers are able to use more than a small proportion of their levy funds. Even for major employers in the energy and utilities sector, it is only just over 50%. So, to maximise the funding they can recoup, they tend to use a high proportion of the funds for apprenticeships that are about upskilling or reskilling existing employees, rather than taking on or training new, young apprentices. This is perfectly understandable and, of course, reskilling and upskilling are good things to do—but the result is that the number of 16 to 25 year-old apprentices has not grown nearly as much as the number of over-25s. Although there are mechanisms for employers to transfer up to 25% of their levy funds to other employers who can use them, the process seems overcomplicated and take-up has been pretty low.

At the same time as levy payers are unable to use all their levy funds—with much of the unused funding going back to the Treasury—there appears to be a shortage of apprenticeship funding for non-levy payers. So the impact of the levy on the total funding available for skills training has been rather less than might have been hoped. It is not even clear whether the total amount of funding going into apprenticeships is significantly greater than before the levy was introduced.

The word that crops up most often in discussions with employers about the levy is “inflexible”. As I have said, apprenticeships will surely be a significant element of LSIPs and they need to be properly integrated. I have felt for some time that it would make sense to recast the apprenticeship levy as a wider skills levy—perhaps with a lower payment threshold to bring more employers into the net of contributing towards training. But, at least, if employers in an LSIP area are not able to use all their levy funds, why should it not be possible for those funds to be used for other, defined LSIP training priorities? In any case, what is needed is a review of the apprenticeship levy system in the light of experience to date. It must be clear how it relates to the wider post-16 education and skills system, as set out in the White Paper and now in this Bill.

Amendment 39 does no more than encourage the Secretary of State to conduct such a review. In my view, that is the answer to the argument that it does not belong in this Bill. Well, it does belong in this Bill—it is fundamental to it—and the review is to ensure that levy funds are used in a way that is integrated with the priorities of local skills plans and properly reflects employers’ needs. Of course, such a review must not reduce the amount of funding available for the apprenticeships that are so badly needed. It should seek to maximise the funding available from the levy and to optimise its use in pursuing local and national skills priorities. I look forward to the Minister telling us how this will be achieved—but the review proposed by the amendment in the name of the noble Lord, Lord Storey, would be a very good place to start.

[The Deputy Chairman of Committees (Lord Russell of Liverpool) (CB)]

We will go back to the noble Lord, Lord Young of Norwood Green, to see whether he wishes to participate.

--- Later in debate ---

Moved by

[Lord Aberdare]

72: Clause 18, page 22, line 18, leave out paragraph (b)
Member’s explanatory statement
This amendment ensures that relevant providers will not be charged further costs when a provider’s contract for services with the Education and Funding Agency already requires a contractor to maintain at its own cost a policy or policies of insurance.

[Lord Aberdare (CB)]

My Lords, this is a probing amendment intended to explore more fully the Government’s intentions in respect of independent training providers—ITPs—and their role in relation to the provisions of the Bill. I was delighted that my noble friend Lady Greengross raised this issue right at the beginning of our debate, so it has in a sense been bookended by ITPs.

According to the Bill’s impact assessment, there were 3,737 ITPs in 2019-20, about half of them small businesses. Some 700 of these are members of the Association of Employment and Learning Providers, delivering vocational learning and employability support to 350,000 employers. They train around three-quarters of apprentices and young people on traineeships, as well as delivering adult education and programmes for the unemployed.

Some ITPs are large and well resourced, but the great majority are small, demand-led specialist businesses, often in towns and rural areas not served by colleges. There are 1,186 towns in England, I gather, but only about 170 FE colleges. Employers choose them because they are responsive and fleet of foot, as my noble friend Lord Bichard pointed out at Second Reading, and reach the parts other training bodies cannot reach, filling gaps in available training provision. The quality of their training is evidenced both in Ofsted reports and in employer and learner satisfaction surveys, with generally higher ratings than FE colleges. As such, they are an extremely important part of the education and skills landscape, and should be fully involved in the development and delivery of LSIPs. They should also receive a fair share of the funding available under government-supported schemes, whether directly or, more often, as subcontractors to larger providers. This is by no means always the case: frequently the funding available to ITPs is capped or reduced, with the result that they are unable to deliver the level of training for which they have capacity, for which there is demand, and on which their business plans have been based.

The main focus of the Bill, in respect of ITPs, is on protecting students from the effects of providers making unplanned exits from the market and failing to complete delivery of contracted training. There have of course been such failures, some of them high-profile and resulting in learners being left with debt on their loans but no course to complete. Again, according to the Bill’s impact assessment, 60 ITPs made unplanned exits in 2019-20, but there are many reasons for unplanned exits and it is not clear how many involved scandal or fraud, or what impact there may have been on learners. I have seen little evidence to justify the unduly negative reputation of the ITP sector, nor am I convinced that the measures proposed in the Bill would resolve the problems that exist. On the contrary, I fear that they might have the opposite effect, by forcing providers out of business, or discouraging new entrants to the market, thereby reducing innovation, competition and availability of needed training. The Government’s own impact assessment for the Bill admits that the measures

“are likely to have a significant impact on small or micro businesses from a resource and cost perspective.”

There was no mention of a list of providers in January’s White Paper, and there has been no consultation on the proposal, although this is promised for next spring, by which time the Bill will no doubt have been passed. The Bill would create a new list of relevant providers, and to be eligible to receive government funding an ITP would have to be included on this list, which would require it to meet a series of conditions and to pay a fee. I have no problem with the idea of such a list, nor with its being a prerequisite for receiving government funding. There is already a register of apprenticeship training providers, including many ITPs, and a broader register of training organisations that, somewhat ironically, is being decommissioned at the end of this month.

I do worry, however, about the specific conditions likely to be required for inclusion on the list, and the fact that they appear, albeit only as possibilities, in the Bill before there has been any consultation. These conditions include requirements for student support plans, for insurance cover, for providers to be fit and proper persons, and for the provision of information to, and taking action on directions from, the Secretary of State. The Bill also makes provision for fees to be charged for entry on to the list. Some of these conditions seem perfectly acceptable, and indeed are already required under existing ESFA contracts—which is where I believe they are more appropriately based—but I would argue that imposing this additional level of centralised regulation and cost is disproportionate and potentially damaging. It is based on the idea of a unified system of protection for all learners, without recognising the substantial differences between small independent providers and more established publicly funded bodies, such as FE colleges and schools.

There are particular concerns over the possible insurance condition. ESFA rules already require providers to maintain a range of insurance cover, including professional indemnity, employers’ liability and public liability insurance, but the Bill’s impact assessment seems to envisage a new form of insurance to offset costs to the Government in the event of a provider failure. Such insurance does not currently exist, and it is not clear how it might work in practice, let alone what it might cost. My amendment therefore proposes simply removing the mention of insurance cover from the list of example conditions in the Bill.

--- Later in debate ---

[Baroness Berridge (Con)]

My Lords, I am grateful to noble Lords for the agreement in principle that a list of independent training providers is a requirement, as I believe it was suggested in this House in previous legislation. The noble Lord, Lord Aberdare, is correct: the core focus of the list is to protect learners and reduce the significant disruption to learners that provider failure can cause. We value highly the role of relevant providers, including independent training providers and in particular those small providers noble Lords have mentioned. We are not unduly negative at all about their role in providing a diverse and innovative learning offer. They provide a great deal of variety to many learners.

The provisions in Clause 18(7) include a requirement for a provider to have insurance for examples of conditions that may be specified in regulations that providers must meet in order to be on the list. In a similar way, subsection (10) gives examples of provisions that may be specified in regulations in connection with the keeping of the list, which would ultimately help deliver a well-functioning, transparent and fair scheme to all those involved.

We propose that the student support plans we envisage providers having will, subject to consultation—which I will mention further—follow the approach in the HE sector, where the Office for Students requires a statement of the level of risks to the continuation of study. We must remember this is study paid for by the taxpayer, and obviously it is in everybody’s interests that that course of study is completed.

I would like to allay the fears of the noble Baroness, Lady Wilcox: as the clauses require, we will consult on the conditions and provisions for being on the list, prior to making the first set of regulations, to help ensure that those conditions manage and mitigate the risk of disorderly exit. That consultation will allow us to fully take into account the views of those affected by the scheme, particularly the small providers noble Lords have outlined.

I turn to the specifics of the amendments. Amendment 72 is intended to ensure relevant providers will not be subject to further costs relating to obtaining insurance cover. The introduction of insurance, or an equivalent, may be useful in preventing or mitigating the risk of provider failure and assist with learner transfers at that point. If we were to introduce a condition in relation to insurance, the aim would be for learners to benefit from greater continuity of provision. Clause 18(9) allows different conditions to be applied for different descriptions of providers. It is not one size fits all. This would ensure that, where appropriate, we could make the scheme as flexible as possible.

Amendment 74 is intended to probe how the charging of fees in connection with entries on the list will be regulated. It is reasonable to expect that some fees may be necessary to recover the costs—I emphasise “costs”—of administering the list. It is important that we retain the ability to introduce fees if they are deemed necessary to run an effective and fiscally responsible scheme. I can, however, offer an assurance that this would be the sole purpose of any fees. They would be set to a reasonable level, with reasonable notice and with consideration of the impact on providers of all sizes. There would be no intention to make a profit at the expense of providers.

Regulations to create the list are subject to the affirmative procedure, so there will be further opportunity for parliamentary scrutiny of any conditions or provisions specified. This includes regulations relating to any requirements for providers to have insurance or an equivalent, if proposed in the regulations following consultation, as well as any requirement to charge fees. If regulations setting out the basis for charging fees were to change again in the future, those amending regulations would also be subject to the affirmative procedure.

I therefore hope the noble Lord, Lord Aberdare, will feel comfortable in withdrawing his amendment and that the noble Baroness, Lady Wilcox, will not feel the need to move her amendment when it is reached.

[Lord Aberdare (CB)]

My Lords, I am grateful for the support of the noble Baroness, Lady Wilcox, who made some good points, very strongly. I entirely agreed with her.

Despite the Minister’s hope, I am rather less comfortable with her response. This is going to have a very big impact, particularly on the smaller ITPs. The Minister talked about it being designed to avoid significant disruption to learners. What is this “significant disruption” and where are the examples? I have heard of two major cases, and a lot of others where nobody can produce any evidence at all, so I am not clear whether the problem being addressed justifies the scale of the sledgehammer being used to address it. I appreciate that the conditions in the Bill are examples, but the fact that they are there seems to make it very likely that they will turn up as conditions when the actual contracts get written. I would much rather see that left to the ESFA or the contracts, or whatever.

I think the Minister also mentioned that the approach was based on the higher education sector, but there is no comparison at all between a university and some of these small ITPs. It is just ludicrous to have the same sort of requirements placed on them as would be placed on a university. I very much hope that this consultation will be serious and deep, and taken great account of when it happens. I also hope that the fee will indeed be reasonable.

Before I withdraw my amendment, as the only Back-Bencher left standing I congratulate those on the Front Benches who remain in place, and particularly the two Ministers, on their efforts today, unhappy as I am with this final response. I beg leave to withdraw my amendment.

Amendment 72 withdrawn.