Institute for Apprenticeships and Technical Education (Transfer of Functions etc) Bill [HL]

Lord Layard Excerpts

2nd reading
Tuesday 22nd October 2024 Lords Chamber

[Lord Layard (Lab)]

My Lords, I congratulate my noble friend Lord Beamish. I warmly welcome this Bill for two reasons. The first is economic growth. That is obvious, but equally importantly—I want to stress this perspective—skills are crucial for people and their individual ability to earn a living. For those two reasons, it is highly desirable that we have a well-focused system of skills development led by a single body. That is what this Bill will provide.

However, when I read the brief from the DfE for Skills England and the first report that it produced, I immediately noticed what seems to be an imbalance. It is concentrating entirely on the first of the two reasons I gave: the perceived needs of existing employers for labour and the estimates of the new types of jobs of the future. This is very important—it is crucial that we know all that in order to have the right balance of training that fits the pattern of future jobs—but there is also the other perspective: that of the individual.

If one were thinking about the need for a particular volume of training, that would lead one to ask how many young people need to be trained to earn a decent income. I have not seen them mentioned in the documents I have read so far. It is quite impracticable to say how many people should be trained just by adding up the estimates from employers and the estimates of new jobs. If you want to think about the numbers that have to be trained, you have to think about how many people are out there. The estimates from employers and the estimates of new jobs are vital for understanding the pattern of training.

If we want to think about the total volume of training, we should start with the very simple principle that it is in the national interest that every young person achieves the highest level of skill they can and wish to achieve. It is a prime duty of the state to get every young person off to the best possible start in working life. It is a much lower duty of the state to support lifelong learning, and indeed most in-service training should be, as it always has been, paid for by employers. By contrast, getting people off to a good start in life is central to the Government’s opportunity mission, but we are currently far from achieving that.

Where is the problem? The problem is not in schools. At age 15, our young people do better in the PISA tests than youngsters in France, Germany and most other European countries. However, by age 25, they are way behind, unless they are in the group who went to university. It is after school that the real barriers to opportunity exist.

For example, in the Government’s apprenticeship matching scheme there are three times more applicants than there are places on offer, so it is no wonder that at the age of 18 a third of our young people are getting no education or training. This is a shocking state of affairs. Let me break it down. There is the 14% who are NEET—not in education, employment or training—that we often talk about, but I think just as bad is the 20% who are in jobs without training and heading for a lifetime of low pay. It is this lack of training that I consider one of the biggest problems facing our country: the people who are getting nothing beyond the age of 17. It is completely extraordinary.

That is why I am encouraged that the Government are offering young people up to the age of 21 a Youth Guarantee of education, training, or help with finding work. That is good, but it is not nearly enough. What we need for these young people is, in addition, inside the Youth Guarantee, a guarantee of training if that is what they want and are qualified for, and I hope the Government can modify the Youth Guarantee in that way.

In 2009, the previous Labour Government passed an apprenticeships Act which obliged the Government to ensure that every young person who was qualified for a level 2 or level 3 apprenticeship could expect to receive an offer. That was repealed a year later. The guaranteed offer is, of course, what we do for people going down the academic route to university. They are pretty much guaranteed a place—not necessarily what they want but a place. We have never applied it to the other 50%, and that is why we have low productivity, low pay and inequality in our country.

To apply this guarantee principle would require a major administrative effort at the centre, working through local authorities, and, if necessary, an extra element of subsidy. I suggest that every local authority would be required to assess the number of young people likely to want an apprenticeship and it would then do its best to persuade local employers to provide these opportunities. The research shows that employers like the idea of an apprenticeship guarantee. They are not averse to it. The Chartered Institute of Personnel and Development found that 85% of those surveyed supported the idea and 60% of them said that, if it was introduced, they would provide more places than they currently do.

This guarantee would be only fair to that cohort of young people, but also it is a very good investment, because, according to our calculations, within 12 years it would recoup enough in extra taxes and reduce benefits to repay the cost of the apprenticeship to the Treasury. The total cost of such a guarantee would in fact be no more than 40% of the growth and skills levy, so my proposal is that 40% of the growth and skills levy be ring-fenced for young people aged up to 21 taking an apprenticeship up to levels 2 and 3. These are mostly young people without A-levels and I think we have a prime responsibility, if we are looking for change, to focus above all on that group. Their claims must come before the claims of people doing levels 4, 5 and 6, who have already been helped through their A-levels and are now eligible for student loans.

The future of the levy is a crucial early issue for Skills England. I hope it will be interested in some of the arguments that I have put forward, but whether or not it accepts the idea of a guarantee and some ring-fencing of the levy, it is crucial that Skills England not only looks at what employers and the jobs of the future suggest but includes a serious study of the number of young people who are needed to acquire a skill—that is a crucial point. I hope we can continue to discuss that additional focus for Skills England in the later stages of the Bill. It is a vital dimension, because in the end the economy is for people and not people for the economy.