Apprenticeships

Lord Bhattacharyya Excerpts

Thursday 14th October 2010 Lords Chamber

[Lord Bhattacharyya]

My Lords, I congratulate my noble friend Lady Wall on securing this important debate. It was also a pleasure to hear from my noble friend Lord Sugar. I do not claim to be a celebrity apprentice, but as a former graduate apprentice I am delighted that your Lordships’ House is discussing apprenticeships. I have regularly raised this issue in many debates here. I wish that apprenticeships received a tenth of the attention devoted to graduate funding. Tony Blair once said that political interest in vocational education was so low that he could declare war on Iran during a speech on skills and nobody would notice. I am sure that the noble Baroness, Lady Wilcox, will resist the urge to test that theory today.

It is clear that this Government, like the previous one, see the expansion of apprenticeships as central to economic success—the issue is how. The previous Government did some very good things. In the mid-1990s there was not a penny in the budget for apprenticeships, while today there is more than £1 billion a year. Our policies were right and our intentions were honourable. When Ministers raid the Train to Gain budget, they should pause to be thankful that there is now a budget to raid. But we on this side of the House should not pretend that all was well in the handling of skills. It is hard to study the current system without feeling frustration and confusion. The charge made by the Higher Education Minister, Mr Willetts, of bureaucracy in the funding of apprenticeships has some force. There are too many bodies, too many processes, too much complexity and too little employer involvement. Bodies such as the Learning and Skills Council were too bureaucratic.

Despite the efforts of all parties, we still have a huge issue with the skills base in this country. We need to solve this problem. We cannot allow a lack of skills to be a hindrance to growth. The ERA Foundation recently asked leading industrialists how to regenerate British manufacturing. One of the top four issues they identified was the shortage of technicians, ahead of even corporation tax. Our Economic Affairs Committee made a similar point in its 2007 report.

When I was a graduate apprentice, businesses invested in technical colleges, and one of the conditions at that time of becoming a member of my institution, the Institution of Mechanical Engineers, was the completion of a graduate apprenticeship. However, as competition grew, there was less incentive for companies to invest. In response, the Conservative Government in effect nationalised British vocational education by creating the NCVQ. The fundamental shape of the system has not changed much since, although the bureaucracy has been recast repeatedly.

It is well past the time to move beyond shuffling the bureaucratic pack. First, better technical education at the secondary school level is vital to improving our skills base. We must devote more resources to it. The noble Lord, Lord Baker of Dorking, supported by the noble Lord, Lord Adonis, is battling to create a new generation of university technical colleges. We at Warwick have seen his enthusiasm at first hand, and I sincerely hope that there will be funding to make them a reality in my area.

The next challenge is to create more high-quality apprenticeships. This week, I attended the Rolls-Royce annual science awards, where the Skills Minister told me that he was passionate about apprenticeships. I wish him the best of luck with the CSR. Together, we saw the great enthusiasm of young people for building their technical skills. Companies such as Rolls-Royce, Dyson, Jaguar Land Rover and others are exemplars, because science and technical education is essential to their future. These companies act as ambassadors in schools for studying science and for apprenticeships. Unfortunately, too few companies follow their lead. To change this, we must go back to first principles. Why do people wish to enter apprenticeships? For a learner, it is the judgment that serving an apprenticeship will increase their career prospects. This cannot be just ticking a box and getting around unemployment. For an employer, it is an investment in the future of their workforce.

Young people are clear about which apprenticeships are valuable. The Financial Times reported in August that more than 24,000 people had applied for 220 apprenticeships at BT. When apprentices choose to learn at companies such as BT, Rolls-Royce civil aerospace, JCB and Jaguar Land Rover, they understand that future opportunities make it worth sacrificing current income. For employers, an apprenticeship is worth while if the skills that are learnt make the apprentice a more valuable employee. The key to achieving both these objectives is to hand the power of choice to the individual apprentice, so resources flow to the most successful apprenticeships programme. This is the model in Germany. The student chooses the apprenticeship that will provide the best future for them. When they secure their contract, their employer receives a “virtual voucher” that can be spent at whatever technical college the company chooses, while the cost of the apprenticeship itself is the responsibility of the employer. How might we create such a shift in a Britain with limited funding? It is simple; put funding in the hands of the learner and the whole system begins to work in the interest of the apprentice.

A recent monograph by Alison Wolf for the Institute of Economic Affairs makes this point powerfully. As in higher education, we could offer a system of apprenticeship loans to fund technical education, which would be paid back once the worker was earning at a decent level. In this model, each apprentice would make a contribution to their future success. This would create a significant budget, to be spent on high-quality technical education, which real businesses and apprentices value. We would also cut out huge swathes of bureaucracy. An apprenticeship loan would fund the apprentice’s technical education, with the state supporting the student’s aspirations via subsidised interest and deferred repayment. The company would assume the burden of apprentice wages and firm specific training, as it should. This would allow government to be the guardian of apprentices’ right to a quality technical education and not to be the dictator of national skills needs. Employers would have an incentive to design apprenticeships that are attractive to the best future employees, which would drive up standards and numbers. Of course, we also need to fund vocational education directly, but that scarce money is best spent on funding general technical education, not backing specific courses.

Apprenticeships are vital to the success of our economy. I know this from working with the automotive industry, where I have found that growth is hampered by a lack of apprenticeships. We have had 10 years of learning and skills councils and before that the techs. Why are we still bothered about skills? If we back the instincts of apprentices, we will create a stronger technical education for all. That is absolutely essential if we are to rebuild our economy on a sure and stable footing.