Lord Stevenson of Balmacara
Main Page: Lord Stevenson of Balmacara (Labour - Life peer)Enterprise Bill [HL]
Lord Stevenson of Balmacara Excerpts
Lord Stevenson of Balmacara (Lab)
My Lords, as we move on to this session on apprenticeships, I want to reassure the noble Baroness the Minister that we are very supportive of what is being planned here generally. We will make a few points and ask some questions of a probing nature, but we do not intend to do anything that would in any sense be too aggressive, and I hope that our comments will be taken in the spirit in which they are intended.
I am slightly short-handed today because, unfortunately, my noble friend Lord Mendelsohn is unable to be here—although I hope he will join us later—so I am largely on my own. I shall be slightly scrabbling to make some of the points that I had thought that others might be making, so your Lordships may find that today has a slightly surreal feel to it, as I gloss over some of the more difficult and trenchant issues. However, I shall be heavily reliant on others who put their names down against the amendments and who, I am sure, will be equally testing and trying for the Minister.
On the group of amendments starting with Amendment 49DA, in which we have a number of amendments and which is on the generality of the new approach to apprenticeships that the Government say that they wish to take—which, as I said, we are broadly in favour of—I wish to make three main points.
First, Amendment 49DA, which is a probing amendment, picks up on an issue that has been raised with us by a number of local government bodies and other agencies. They feel that the powers being taken to set targets for public bodies on the number of apprentices that the Government would wish them to have appointed by the end of the Parliament, in pursuit of this very ambitious target of 3 million new apprentices within that period, will cause real problems. Could the Minister therefore explain what negotiations and discussions she has had with local government and other agencies on these points?
For example, one issue that has been raised with us is that there is quite a range of development in the sector in terms of who is ready to take on an increased number of apprentices and who is not—and we are talking about a very significant increase if we do the calculations. What figure do the Government have in mind overall for the sectors concerned, and would they be receptive to having further negotiations and discussions with those bodies in order to try to arrive at an equitable basis on which this could operate? We are not against the proposal—it is a good thing that everybody should be set stretching targets—but we slightly regret that there is not more in the Bill tying the increase to contracts, procurement issues and other activities in which, in previous Bills, we have discussed how one could lever up the numbers of apprenticeships. Specifically on the target for public bodies, we would like to have a bit more information about how it will work in practice.
Secondly, it is glaringly obvious that the Government feel strongly that apprenticeships will flow only if targets are applied to the public sector—we did not know that targets had come back into fashion, but that is obviously a nice thing to see in a Bill of this nature—but it has been pointed out that there is no target for the private sector. Why is this? Is there some other force here that we are not aware of that is preventing the Government taking what seems to be the logical step? If we are to get to the 3 million target, there surely has to be an obligation—we would perhaps put it no stronger than that—on the private sector, which will carry a large proportion of this. Of course, money will flow in support of those, so there should be no net cost to them in relation to how the targets will be reached. I am sure that it would be to the benefit of the country as a whole if both the public sector and the private sector were jointly engaged in this process.
Thirdly, on Amendment 49EB, there has been a lot of concern, expressed very often by my noble friend Lord Young, about the quality of apprenticeships. Indeed, he mentioned it in the debate in this Room only a few days ago in relation to a statutory instrument that had been put forward. The numbers are one thing but the quality is very much another. Obviously, the quality will be tackled, through the Bill and the Act, by creating the term “statutory apprenticeship”, and that is a good thing. However, the amendment suggests that there may be more return if the restriction on statutory apprenticeships could focus on the higher-quality and the higher-skilled elements. In other words, they should be at levels 4 and 5 in the training schemes and not at levels 1 and 2.
I am sure there are other points that others will wish to make on that, but that gives the flavour of the way in which we want these amendments to be considered. I beg to move.
Baroness Sharp of Guildford (LD)
My Lords, I rise to speak to our Amendment 50 and to the other amendments in the group. Before doing so, I should declare my interests. This is not at present in the list in the register because it is very new, but I am very recently president of the AoC Charitable Trust. I am also an honorary fellow of the City & Guilds Institute and a patron of the 157 Group.
I think we have similar probing questions about this clause and, in particular, about the definition of precisely what is and what is not a public body. That is really what Amendment 50 is about. It raises questions about the slightly odd wording at the end of new Section A9, which says that,
“‘public body’ means … a public authority, or … a body or other person that is not a public authority but has functions of a public nature and is funded wholly or partly from public funds”.
There are difficulties with such a definition. For example, Kids Company is largely funded by public funds. Is that a public body? A lot of charities are largely funded by public funds for one reason or another. Are they public bodies? I certainly would not have thought of them as being public bodies. Or are you going to take the ONS definition? The ONS, for example, is now classing housing associations as public bodies, although a lot of the money they receive does not come from the public sector. However, equally, the ONS does not class the Student Loans Company as a public body in spite of the fact that the Student Loans Company receives all of its funding from a public body. Therefore, as I say, that definition strikes us as being extremely loose, and I think it is necessary to know precisely what the Government have in mind when giving such a definition in the Bill.
In general, I share very much the view of the noble Lord, Lord Stevenson, in asking questions about how far the Government should go in setting targets here, there and everywhere for public bodies—so much for localism, if I might say so. To provide that “The Secretary of State shall set such targets” leaves very little discretion to the locality. One would hope that, actually, the whole thing was done very much in conjunction and consultation with localities. A great many local authorities, such as in Birmingham, work very closely with local enterprise partnerships and do set targets for themselves. Indeed, as I shall go on to explain later, they also set targets for vulnerable young people who should be taken into apprenticeships. This clause raises lots of questions on which we need some clarification.
Baroness Neville-Rolfe
As I said, the list will be available for consultation. It will be available during the passage of the Bill. I can give that undertaking. We will also consider any requests for removal as part of that consultation. However, it is important, for the careers of employees and the effectiveness of public institutions, that the public sector delivers its fair share of apprenticeship growth. We will give some further thought to my noble friend Lord Hodgson’s point, to see whether we can give any greater clarity, but I can give an assurance that we will be consulting.
To respond to the point made by the noble Lord, Lord Stevenson, which was picked up by the noble Lord, Lord Young, about local authorities, officials in the BIS/DfE apprenticeships unit are in active discussion with the DCLG about the public sector target and its application to local authorities. We will consult on the level of the target and who should be in scope. We cannot speculate on the figure, but to do so just as an indication, we are currently working towards 2% to 3% for consultation, but that will be subject to confirmation.
Baroness Neville-Rolfe
Of employees.
To respond to the noble Lord, Lord Young, central government departments will be in scope. We agree strongly that the Civil Service should play its part. Indeed, I have an apprentice in the Bill team. I think that that is leading the way.
I turn to Amendment 49DA, which would remove the power of the Secretary of State to make regulations to set targets for public bodies. I do not think that that is the intention of these probing amendments, but I will say that investing in apprenticeships makes economic sense. In June 2015, research on further education in England indicated that adult apprenticeships at level 2 and level 3 deliver £26 and £28 of economic benefits respectively for each pound of government investment, measured on an NPV basis— the difference between gross benefits and costs. As for the apprentices, to pick up another point, individuals with a level 2 apprenticeship earn on average between £48,000 and £74,000 more over their lifetime than similar individuals with level 1 or 2 qualifications only. Higher apprenticeships could earn £150,000 or more on average over their lifetime, compared with those with equivalent vocational qualifications.
Amendments 49EA, 49EB and 50AB come together. They would extend the scope of Clause 18 to place apprenticeship targets on private sector companies in the UK. They state that the target should be achieved via higher-level apprenticeships. As I have always agreed with the noble Lord, Lord Young, apprenticeships are jobs and depend on employers offering opportunities to young people. Finding the right opportunity is vital for any young person starting out on their chosen career. There will always be competition for the best places, as there is for the best universities. Employers will naturally take the best candidate for the job that they offer. Figures show that, of the 851,000 people participating in apprenticeships in 2013-14, 185,000 were aged under 19.
The positive effects of apprenticeships are clear. They have an economic and social benefit for individuals and society as a whole. The public sector employs fewer apprentices as a proportion of its workforce than the private sector. The Government are therefore keen to place targets on the public sector.
However, we are against red tape and feel we should be careful about imposing new burdens, especially when the desired objective can be achieved in another way. Therefore, 1.3 million private sector organisations that employ people should not suddenly be required overnight to take on apprentices. Instead, via apprenticeship reforms, we are putting employers at the heart of the apprenticeship programme so that they are encouraged and incentivised to employ apprentices. We also judge that it would be administratively impractical for government to monitor whether employers were having “due regard” to the targets and take action where this was not the case. Firms would have to set up a whole compliance system for this, and we believe that their efforts are better used elsewhere.
I shall come to quality on another amendment, but I shall say something about career guidance because I agree with the noble Lord, Lord Young, that it is very important. That is why we have set up the employer-led Careers & Enterprise Company. This area is rightly being actively pursued by DfE, with Ofsted taking a great deal of interest in careers in its inspections. We have discussed before the problem of getting into schools and I will feed back the noble Lord’s observations to my noble friends in the DfE. Like him, I go to schools and, like him, I always mention apprenticeships. As government, we can do a lot, but we can also do a lot individually to help encourage careers in schools.
Noble Lords made a number of observations. We will come on to quality elsewhere. I hope that the readiness to consult and my indications of where we are heading have been helpful and will enable the noble Lord to withdraw his amendment.
Baroness Neville-Rolfe
I have to say I agree that having a good vision and a good framework for this important area of policy is essential. Obviously we came back in May—to the surprise of some of us—and we are trying to move forward with a new approach to apprenticeships, which does include a levy because we think that that is a good way of getting funding into this absolutely vital area. Of course I, like everybody who used to be a huge employer in their former lives, recognise the importance of certainty for employers. However, I do not think that we should apologise for trying to improve the framework. We should do that. We should then give the new arrangements a clear run. However, we are at that point in the process where policy is being formed. We are bringing in a levy, which is still the subject of consultation. We are rightly in the Bill trying to move forward on a couple of small and important issues, including this business of the definition of apprenticeships, where I feel that having sanctions, as there are for degrees, will actually help to improve the recognition of this vital employment category.
Lord Stevenson of Balmacara
I thank all noble Lords for contributing to the debate. It has done what we wanted, which was to begin to open up this whole area and to get a sense of where the Government are going, and to try to see through to the vision and the framework, which the noble Baroness mentioned.
I think the slight problem we all have around the Room is that we are not quite sure what the vision actually is because we have not seen some of the detail of it. We have some doubts about whether the framework is going to be sufficient to get the country to the point where we can say that we have a competitive environment similar to Germany and others who have been at this for some time. The noble Lord, Lord Hodgson, is quite right to bang on about whether or not large charities doing work for local authorities are going to be included. It will make a huge difference to them. We need to know a bit more about who will be on the list. If the Government are, as we know, changing around the definitions to housing associations so that they are in but they could be petitioned to come out by some other piece of legislation, this is not going to provide the basis of what we are talking about.
I suppose we were being a bit cheeky in trying to delete the first subsection of the first new Section in the clause, but we wanted to draw out from the Minister the rationale behind what we are doing. She says that it makes economic and social sense for bodies to recruit something like 2% to 3% of their workforce, even if they are charities, and that the burden should be on the larger—presumably, the 250 employees threshold will become the standard, as that is the target for small and medium. So it is largely going to be on those that are not SMEs, which is interesting but nevertheless understandable in the circumstances. Where we disagree is that, although it seems to the Government to make economic sense for those bodies to be involved, that does not read across to the productive sectors of the economy, for which there will be challenges and obviously lots of things are still to happen but for which the case is still very strong that there should be some engagement. After all, if the Government are going to levy them for payment of the apprentices that they are going to take on, presumably they are already in contact with them—presumably, they have to write to and communicate with them—so it would not be very difficult to put a target in place in return for the money.
However, a lot of this will come up later. We have had a good start to today’s debates. I am grateful to all concerned. I beg leave to withdraw the amendment.
Lord Young of Norwood Green
I rise to support the noble Baroness, Lady Sharp. She has quoted two contracts. I had a personal involvement with both, ensuring that there were targets and that we met them. They were both very good, but one of the last points that the noble Baroness made was that Crossrail ensured that not only the main company but its supply chain, which was distributed throughout the country, had an apprenticeship target. I would like to see a “must” rather than a “may”, but if the Government said that they accept the amendment, that would be a step forward and an important signal. I look forward to hearing the Minister’s comments.
Lord Stevenson of Balmacara
My Lords, we have three amendments in this group. The first follows up what the Minister said in response to the earlier debate. Apprentices are in jobs, and if they are in jobs, they should be paid as if they are in jobs, and if they are making a contribution, that would be a good thing to do, so our suggestion is that that should be paid the living wage. I would be interested to hear the argument against that. It has to be not only a training but a way of living. Anybody who does an apprenticeship will get the training, we hope, that will get them into remunerative employment. We heard the figures about how much it will benefit them over their lifetime, but they have to start somewhere. Starting below the current living wage will not be a great advertisement for these areas.
Baroness Neville-Rolfe
Sorry, I had thought that the living wage amendment was in a different group.
Baroness Neville-Rolfe
Can we clarify what we are planning to speak about, so that I can answer in due order? I would be extremely grateful.
Lord Stevenson of Balmacara
My only excuse is that, as I explained, I am a bit underbriefed, having been thrown into the spotlight. I am also working from an earlier version. Since the Minister was in a not dissimilar situation in the previous group, perhaps she will bank my comments and reply to them at the appropriate point, if that would be convenient for her. Amendment 49H will come up later.
I want to endorse the points made by the noble Baroness, Lady Sharp, and, in a previous group of amendments, by my noble friend Lady Corston in relation to quality. There will be a transition to the new scenario sketched out in the Bill and put into force by the Act, but at the moment we are starting from a very low background. There are good areas of activity. We have all heard about Crossrail’s good record on this, and there are other employers who do a lot of good. The Olympics are a gold standard for the aspirations we have in his area. However, these groups make the point that it will be important to try to find a way of bridging between the current system and the new system so that only good-quality apprenticeships that extend learning and training opportunities for the young people taking them will be able to benefit from them.
Baroness Neville-Rolfe
I am very grateful to the noble Baroness, Lady Sharp, for explaining her amendment so clearly and for regaling us with the examples. I agree that the Olympic legacy was amazing in many respects, particularly in relation to apprenticeships and the partnerships in east London that she described. There is a debate on the Olympic legacy on Thursday, and I am sure I will be able to use the noble Baroness’s material to good effect.
My favourite example of good practice is Crossrail. I have been down the tunnel. I do not like racing cars, but I like Crossrail. What Valerie Todd said to the committee was extremely well put. Crossrail is good not only at apprenticeships but at giving contracts to firms outside London and to SMEs, so there are three good things coming together there.
I am also extremely grateful to the noble Lord, Lord Stevenson, for agreeing that I may answer on quality under a later grouping. Groupings moving around makes life difficult for those of us who are trying to shine a light into the proposals we are discussing in this Committee.
Amendments 49E and 50A relate to employment by subcontractors. They allow the employment of apprentices by subcontractors of a public body to be included in targets set for the public body. They also allow a public body to set apprenticeships targets for its subcontractors. There is a broad definition of subcontractor. Clause 18 will improve the capacity and capability of the public sector, ensuring that it benefits from the same positive impacts that apprentices bring to the rest of the economy.
“( ) The Secretary of State may by regulations require a public body or private body to pay the living wage to those who have an apprenticeship.”
Lord Stevenson of Balmacara
My Lords, I have already spoken to the amendment but, to sum up, the point of the question is that we are asking the Minister to give us a reason why those who join apprenticeships should not be paid the living wage.
Amendment 49H in this group is about the need to ensure that managers supervising apprenticeship programmes have appropriate training. There is a well-established discourse on the question of whether management, particularly in private sector companies, is up to the job of increasing productivity, growing the economy and providing the jobs of the future. That receives its main focus around training and there is plenty of evidence on this issue, which I am sure others will wish to speak to. It would be a sensible Government who thought through all the issues relating to this new duty on the public sector, in particular, if it were also applied to the private sector, to ensure that management was up to the task concerned.
We have other amendments on the details needed to create a better policy on apprenticeships more generally and the role that they play in the development of the economy, but Amendment 50AC sets out—I hope for public bodies and for private companies, but if companies are not included then just public bodies—the sort of information that will be needed if we are to make a good job of this. We hear too much in anecdote and we do not get enough publication. The Minister said that she will write with such a lot of information already. Maybe she has access to the sort of information listed in this amendment, but we are interested in whether we can get a bit more of a sense of the progression, success and value that people are placing on these apprenticeships. This would be a good place to start. I beg to move.
Lord Hodgson of Astley Abbotts
My Lords, I have an amendment, Amendment 50AA, in this group. It is a probing amendment but it ranges slightly more widely than the focused questions that the noble Lord, Lord Stevenson, put to the Minister.
The overall purpose of my amendment is to ensure that all apprenticeships have the appropriate level of quality—an issue that came up in various comments earlier. It does so by adding a subsection to the end of new Section A9 in Clause 18 on public sector apprenticeship targets, requiring the Secretary of State to set out minimum standards for apprenticeships. It also requires the Secretary of State to consult on what is required. In tabling this, I have been helped, advised and encouraged by the Engineering Employers’ Federation, which is somewhat concerned about the lack of clarity on the position as a whole.
That having been said, we had a debate on Tuesday last week on the draft English Apprenticeships (Consequential Amendments to Primary Legislation) Order, which the noble Lords, Lord Stevenson and Lord Young of Norwood Green, have spoken to, and which was replied to by my noble friend Lord Courtown. A number of questions were asked in that meeting, some of which cross over with what we are discussing this afternoon. I received the answer from the department as I came into the meeting this afternoon, so if I am not absolutely up to date with what the responses are to the questions raised, it is because I have only had it for about half an hour.
I very much support the Government’s policy of creating 3 million apprenticeship starts in this Parliament mentioned in paragraph 18 at page 6 of the Explanatory Notes. There is a real need for vocational training. It could equip people better for practical work and give them a more satisfying, satisfactory and long-lasting permanent job than, dare I say it, a 2.2 in media studies, which may not equip them for an enormous amount. This relates to the point made by the noble Baroness, Lady Corston, on the quality of courses available.
The Government’s ambition is very great. It is worth while pointing out that last year there were 696,000 live births in England and Wales and 56,000 live births in Scotland, so a total of around 750,000 live births. Therefore, in a five-year period you have 3,750,000 live births, if those numbers are maintained, and we are talking about creating 3 million new apprenticeships over the next five years. That is 80% of the people who will have been born. I know they are not going to be apprentices in their first few years, but it is the scale of what we are thinking about. Of those currently being born in a five-year period, 80% will be expected to take up an apprenticeship.
Baroness Neville-Rolfe
My Lords, I stand by what my noble friend Lord Courtown put in his letter. I will not delay the Committee by repeating it, although people are very welcome to a copy. Obviously, we understand that ensuring quality is an absolutely key part of our reforms. That is what we are saying. The SFA has an important part to play here. As I have said, Ofsted also has a part to play. We will be bringing in the quality control system that was described.
Although some people were concerned about the changes to apprenticeships, we are changing the system and we will have to make sure that the surrounding infrastructure is appropriate and appropriately resourced —we can certainly discuss that further—but that is why I did not repeat the points my noble friend made about the introduction of registers and quality control over training providers.
Lord Stevenson of Balmacara
I thank noble Lords for contributing to this debate. It has certainly raised a number of issues, which we will probably have to come back to on Report. In the interim, of course, we will look forward to seeing what is now becoming a voluminous correspondence from the Minister. In the previous Parliament, she had to take on the very difficult task of matching the noble Viscount, Lord Younger, who set standards beyond any we had seen before. We look forward to her matching that.
We have given this area a good look. Although we may come back on one or two issues, I beg leave to withdraw the amendment.
“( ) One year after this section comes into force, the Secretary of State shall publish a report on the impact of any apprenticeships levy associated with the new target in subsection (1) on the—
(a) quantity and quality of the apprenticeship scheme offered by public bodies and companies, and(b) the impact on existing funding for training designed for non-apprenticeship trainees.”
Lord Stevenson of Balmacara
My Lords, our Amendment 49J and Amendment 52 in the names of the noble Lord, Lord Stoneham, and the noble Baroness, Lady Sharp, are really two sides of the same coin. The worry we share, I think, is that the apprenticeship levy system, which we have already discussed and which is raising some concerns among those who will be involved in it, may have an impact on existing training and expenditure. Obviously, if the result of bringing in the levy is to reduce the overall quantum of money that is going into training, that would almost certainly be a bad thing. We want to grow the training budget, not reduce it. I look forward to hearing what the Minister has to say about that, as well as about the issues that are raised in Amendment 52. I beg to move.
Baroness Sharp of Guildford
Amendment 52 is in my name and that of my noble friend Lord Stoneham. As the noble Lord, Lord Stevenson, said, both these amendments are asking for a review. We have been talking about the quality of apprenticeships. I say in passing that although many of us have been rather negative, there are quite a number of extraordinarily good apprenticeships in operation.
I spoke earlier about what happened at the Olympic Park, and that is an example of how apprenticeships can be created, but one only has to look at companies such as BAE Systems and Rolls-Royce, which offer an absolute gold standard in terms of apprenticeships. Other companies are aspiring to do the same, and those sorts of apprenticeships are extraordinarily good. They offer not only higher-level apprenticeships but a route to progression. Sadly, there have been some bad examples—picked up by, among others, Ofsted—and it is important that in pushing forward the number of apprenticeships, they aspire to best practice rather than picking up worst practice. The idea of producing an annual review and asking the Secretary of State to report on such an annual review is to pick up this whole notion of the quality of apprenticeships and make sure that they are the sorts of apprenticeships that one would like to see.
The other aspect of this is that this part of the Bill is expressly about creating apprenticeships in public sector bodies. Our Amendment 52 asks for a review of how far this is working within the framework of the public sector and what impact it is having in both public and private sectors. However, I think we have had enough discussion of the general issue of equality and the need to promote equality that I do not need to go any further.
Baroness Neville-Rolfe
My Lords, I am grateful for these amendments and for the noble Baroness, Lady Sharp, saying that there is much that is good. Actually, it is not only at the top end—the engineering apprenticeships that she described—but some of the retailers and the hospitality companies produce superb apprenticeships, which take some of the poorest and least well educated people in society and allow them to get on and progress in an awesome way.
We have discussed many of the issues underlying Amendment 49J because it talks about quality as well as quantity and, of course, Amendment 52 mentions funding. The Chancellor announced the Government’s intention to introduce the apprenticeship levy in this summer’s Budget—a surprise announcement, I think. It will be used to fund and improve the quality of apprenticeships. We need a reversal, as we have all been saying, in the trend of employer underinvestment in training, which has seen a decline in the amount and quality of training undertaken by employers over 20 years. This was highlighted in the report by the noble Baroness, Lady Wolf, published in July this year, which recommended the introduction of a levy to fund the apprenticeship programme.
Past approaches to tackle this decline have relied on voluntarism and a significant government subsidy aimed at encouraging private funding. However time spent by employees in training has continued to decline. The levy is a model that is working successfully in more than 50 countries around the world, which is why we have decided to adopt it here. We will be putting employers directly in control of their apprenticeship training. Employers are currently leading in the development of apprenticeship standards. With the levy, they will be able to decide to which apprenticeship training providers they wish to direct funding.
The Government consulted on the key levy proposals during the summer and we received more than 700 responses. We are currently analysing them and will use what employers and others have told us to try to address concerns and meet employer aspirations for growth and quality. The Chancellor will be announcing further details on the levy as part of the spending review announcement later this month. I believe it is premature to seek to impose a reporting schedule on the impact of the levy. The levy will not be introduced before 2017 and there is further work to be done on the detailed implementation of the policy. At this stage, seeking to impose new reports within a 12-month period would be unlikely to provide robust evidence.
However, I can say today that we will continue to publish comprehensive quarterly data on apprenticeships through the Government’s published statistical first releases, published by the SFA, which include data on learner numbers by age, as well as by region, gender, ethnicity, disability, level and sector. We also publish research into the impact of apprenticeships on employers, including the employers’ survey, which monitors the extent to which apprenticeships are meeting the needs of employers and identifies aspects that are under- performing, with the next survey due in 2016.
When we introduce the apprenticeship levy, we are proposing to put in place a full and structured evaluation programme and publish the results. We expect this to address the points raised by noble Lords in relation to the impact on employer investment, the mix of programmes being delivered and their quality. I ask for patience, as we intend to publish more details on the levy shortly. Amendment 49J also referred to funding for non-apprenticeship schemes; funding for those will also be a matter for the spending review. The noble Lord’s Amendment 52 relates to apprenticeship schemes in England and Wales. While apprenticeships in England are the responsibility of the Secretary of State, apprenticeships in Wales fall within a devolved area of policy.
Lord Stevenson of Balmacara
I hesitate to interrupt, but I want to make sure that I have got my point across correctly. In relation to the non-apprenticeship spending, I was not asking what the Government are spending on that. It was a question of the quantum of spending across the country, which obviously largely is sui generis to every company. The worry is that the impact of the Government taking what is effectively a tax on apprenticeship training may impact badly on that. Although it may be very hard to get since responsibilities are split between BIS and DfE, in the figures that the Minister is talking about, it would be very helpful if there could also be some reporting of the exact quantum at the moment and how that will change over the next few years. I am sure it would be a good thing to do anyway.
Baroness Neville-Rolfe
We always like to do post-implementation reviews. We like good evidence and good figures. The point is well made. Where responsibilities are shared between departments, that can sometimes be difficult. I cannot emphasise more strongly that we are trying to create a successful policy, which will require us to see what is happening. Clearly, the past is the past. We have been spending something like £1.5 billion a year on apprenticeships. In the future the system will be different. There will be a levy. I will certainly try to ensure that in our evaluations we find out how things are changing and how effective that has been. We should be learning on the job.
Lord Stevenson of Balmacara
I thank the Minister for her comprehensive response. I beg leave to withdraw the amendment.
Lord Stevenson of Balmacara
My Lords, we have heard a lot today about the new world of apprenticeships and the many good things that will happen as a result of this Bill, and, as I said at the beginning, we are not opposed to what is being proposed. There are questions about how it will happen—and we have talked a lot about that—but the key element that we have all agreed on is that these new statutory apprenticeships must be of high quality. However, the question is: who is going to police that and report on it, so that we maintain quality? Obviously, we are aware that the Skills Funding Agency will play a part, but it is not clear to me what its role is. I hope that, when the Minister responds, she can sketch out a little bit what the SFA’s role will be in this area.
We have also heard that trading standards bodies, probably in the form of the Trading Standards Institute, will have some part to play, and that is what this amendment seeks to probe a little bit further. As I understand it, trading standards bodies have accepted a responsibility in relation to universities, but it is important that we also get the issue right here. However, I gather that the TSI’s role there, which is exercised through the individual trading standards bodies at local authority level, is to check whether a particular organisation—mainly, one that exists in bricks and mortar close to the locality of the trading standards officers who are investigating the case—is a registered university in the sense that it has a royal charter and performs all the functions required under the Act. In other words, trading standards provides an institutional check; it is not a question of looking at the individual courses that any university might provide, and it is certainly not looking at the classroom accommodation or laboratories or—heaven forfend—the social facilities that every university must have these days. It provides a one-off, tick-box exercise: does this organisation or building fulfil the requirements of a statutory university?
As I understand it, the requirement on checking whether statutory apprenticeships are working well will be to look at the particular apprenticeship in terms of the training provided both on and off the job. That will involve looking at the individual companies and the colleges that the apprentices attend, so we have a rather different job here, and it is not at all clear to me why the TSI is the right body for this. That may be why the noble Lord, Lord Stoneham, and the noble Baroness, Lady Sharp, put down their amendment suggesting that a more appropriate body might be the enterprise partnership, which will at least have a knowledge of what is happening more generally in the area and will have a concern about the employers who are operating apprenticeships and what sort of services and provision they provide.
There are a lot of questions around this. I am not sure what role the TSI will have, but if it will have a role, can the Minister explain what exactly she has in mind here? Will this duty be placed on all the weights and measures operations in every local authority across the country or will it be taken up by the new Trading Standards Institute? If it is either the former or the latter, what funding will be provided? Will the funding be on a targeted basis, will it be a lump sum, or will it be for a certain number of posts? We need more detail here. We need to be quite clear that, if there is going to be just some sort of notional adjustment to the revenue support grant that goes to local authorities, it will certainly not trickle out in sufficiently large amounts to the actual trading standards officers who will again be expected to pick up an additional duty without the resourcing required for it.
There are a lot of questions there, but the point is made in both my amendment and that in the names of the noble Baroness, Lady Sharp, and the noble Lord, Lord Stoneham, that we need a bit more detail here. I beg to move.
The Deputy Chairman of Committees
I have to inform the Committee that if this amendment is agreed to, I cannot call Amendment 51A by reason of pre-emption.
Baroness Neville-Rolfe
My Lords, this is an important area; enforcement is always important. The amendments relate to the enforcement of the measure to protect the term “apprenticeship” from misuse. They would require local enterprise partnerships to fulfil that function rather than trading standards. Noble Lords will know the high opinion that I have of trading standards, and I am glad to be able to put it on the record again.
As the apprenticeship brand grows, so does the risk that the term “apprenticeship” could be misused to refer to lower-quality courses. Therefore, as the noble Lord, Lord Stevenson, explained, we intend to follow the precedent for enforcement that applies to unrecognised degrees, which is in the Education Reform Act 1998. Trading standards has a duty to enforce that legislation using its powers in the Consumer Rights Act 2015. That has ensured that UK-based operations with a physical presence are closed down, and there have been a number of prosecutions over the years. Since 2003, there have been successful enforcement cases against more than 18 offending bodies, with the closure of 10 and prosecution of a further three. In practice, although the duty extends to all trading standards teams, to answer the question asked, cases have tended to be concentrated in a couple of areas.
We are exploring whether it would be sensible to assign one trading standards team to act as the lead authority, with the ability to build the enforcement capability and expertise to deal with the challenge. This would be in line with the approach taken for other functions, such as the Illegal Money Lending Team, which is based in Birmingham City Council—another namecheck for that council—and tackles cases across England.
To respond to the noble Baroness, Lady Sharp, we judge that trading standards bodies would be more appropriate to enforce the measure than local enterprise partnerships because of trading standards’ specialist enforcement powers, history and experience. Trading standards will be there to carry out enforcement as a backstop, but with the SFA there—to respond to the question from the noble Lord, Lord Stevenson—to encourage compliance. As set out in the impact assessment, we anticipate that the number of prosecutions will be very few, because we know from experience of degrees that this can have a totemic effect. We are in active discussions with the Department for Communities and Local Government, the Local Government Association and the Better Regulation Development Office to ensure that the requirements of trading standards in this area are achievable, effective and proportionate. I hope with that explanation of how we plan to take these provisions forward, the noble Lord will feel able to withdraw his amendment.
Lord Stevenson of Balmacara
I thank the Minister for her very comprehensive response. Given that the Government are consulting and in discussions, would it be possible to get a bit more information before Report, and for the Minister to tell us wherever they have got to on that level? This is a recurring theme: one of the great advantages of starting a Bill in the Lords is that one gets to have first go at it but the bad news is that you do not get all the detail that would make our jobs much easier. With that slight aperçu, I would be grateful to have any more information.
Baroness Neville-Rolfe
The noble Lord summarises it very well. We will send an update ahead of Report. I think that noble Lords can see the general direction of travel, and it is fair to press us to try to make up our minds.
Lord Stevenson of Balmacara
After that gracious acceptance of my proposal, I beg leave to withdraw the amendment.
“Insolvency: pre-packs
Where a company enters pre-pack proceedings the following conditions must be met in order to protect the company’s creditors—(a) the owners of the company must approach the company’s investors for approval prior to entering any pre-pack proceedings;(b) any personnel advising on pre-pack proceedings shall not become the administrator in subsequent pre-pack sales;(c) any administrator undertaking a proposed pre-pack sale to connected parties must justify that the prospective sale price represents the best value for creditors; and(d) the administrator must make provision for at least three days’ notice to be given to creditors of the terms of any such proposed sale if there has been no open marketing of the assets.”
Lord Stevenson of Balmacara
We now leave apprenticeships for the time being and turn to a familiar topic from previous engagements with enterprise and related matters: the sad side of things when matters go wrong. I am afraid that the areas covered in this amendment are familiar territory for those who were on that journey, but I make no real apology for that, although I was hoping that my noble friend Lord Mendelsohn would be here to introduce the amendment and that I would not have to do it myself. However, I shall struggle on, and hope that I shall cover the ground, even if not as well as he does.
The first amendment is on pre-packs, which comes at a rather interesting point, because there is a press release dated today that sets out arrangements for how pre-packs will be looked at by the Government on a voluntary basis, following the review carried out by Teresa Graham in 2014. Why would we want to interfere with that? We are talking about a relatively small number; the figures that I saw in the press release suggested that about 20,000 businesses went through insolvency in a year, with less than 5% involved in pre-packs. Doing maths in my head, I think that is about 1,000 instances of pre-pack in a year, so it is not a lot.
The issue with pre-packs, which is worth repeating, is that uniquely in the British insolvency system—the British insolvency system is largely admired around the world, so we do not want to attack it in generality—is that creditors have a pretty bad deal. We have argued in Committee and on the Floor of the House that more protection should be given to creditors when a pre-pack is considered. The argument made by my noble friend Lord Mitchell last time was that you can have a situation whereby, on a Friday afternoon, a company known as Smith and Jones is operating, but by Monday morning it has become Jones and Smith, with the same people running it and many of the same directors and perhaps even the same bank. But the creditors—and probably one of those creditors will be HMRC, along with a few other people—have been dumped.
The argument in favour is that businesses that have a future will continue; the bad news is that those who are involved in supporting the previous business, which is going to disappear—particularly trade suppliers and others who might be on credit terms with Smith and Jones—will not be able to pursue Jones and Smith, because it is a different company. Does that matter? I think it probably does because the creditors will probably be small companies employing people. If they are suffering, the economy is suffering as well, so there is an issue there.
Baroness Neville-Rolfe
My Lords, I welcome the spirit of these amendments, which intend to improve the functioning of insolvency. I am delighted to be able to confirm that today a number of industry reforms to pre-packs, recommended by Teresa Graham and her review, have been introduced. I am glad to hear support for those changes from my noble friend Lord Leigh of Hurley. Creditors will inevitably lose some money when a company fails, and this is unavoidable. However, in delivering these voluntary pre-pack reforms, creditor bodies and the insolvency industry have come together in a good way to support the reforms. I agree with my noble friend Lord Hodgson that creditors need confidence that the best deal is obtainable.
Another cause for celebration is that from today a further reform introduces new guidance on marketing to ensure that creditors can be confident that they are receiving the best price for the sale of the insolvent business, but these changes need to be given time to take effect before yet further changes are considered. The Government will undertake a review once these have bedded in.
On small businesses, the redundancy payments scheme provides valuable assistance to employees when their employer enters insolvency. All employees can access the scheme. There has recently been consultation on collective redundancies and the outcomes for employees in an insolvency. The findings will be published in due course.
The existing law on the priority of payments to creditors in an insolvency seeks to ensure that there is a fair distribution of a company’s assets. Any change to give preference to the types of small business set out in the amendment would, of course, have to be at the expense of other creditors. Giving priority to such creditors would have wider consequences, such as increasing the cost of suppliers from other creditors, or higher costs of borrowing for businesses in general. The Government do not consider that an evidence-based and sufficient case has been made for changing the long-established order of priority in that respect.
On Amendment 52ZD, it is obviously important that, if a viable company is unable to pay its debts, it is given an opportunity to continue as a going concern. That is why the insolvency regime already provides for a moratorium. It is important that any extension of the existing moratoria offers appropriate safeguards and protections to creditors. Otherwise, there is a risk that businesses will find financing more difficult.
I am so sorry that the noble Lord, Lord Mendelsohn, is not here, because he has made a valuable point with his work on “debtor in possession”, elaborated in a helpful note that he sent me over the summer. I agree that viable businesses should allow sufficient time to develop a rescue plan, and I am therefore very pleased to be able to say today that, while we cannot accept an amendment to this Bill, the Government are already reviewing this area and we will announce our proposals in due course.
I hope that the noble Lord has found my explanations reassuring in this area, and on that basis feels able not to press his amendment.
Lord Stevenson of Balmacara
I cannot really call these probing amendments, because they were not really probing anything—they were really there to stick pins into people to get them to take a bit more interest in this area. But I think that my pins can now be removed. As has been said, the amendments are of interest and, where appropriate, they can be looked at again. I am delighted, and I am sure that my noble friend Lord Mendelsohn will be particularly pleased, that the ideas behind the proposal of a business debtor in possession can be given a bit more thought—and they certainly need it, since they were not meant to be finished in any form.
I was slightly trembling when the noble Lord, Lord Hodgson, said that he had a few questions that he wanted me to answer, because I am not the sort of person who can answer them, but I was lucky to have friends in the Room and did not get too far behind.
I thank noble Lords for the debate, which was meant genuinely to add something in the medium term. With that, I beg leave to withdraw the amendment.
“(1) An officer of the Valuation Office of Her Majesty’s Revenue and Customs may disclose Revenue and Customs information to—
(a) a qualifying person for a qualifying purpose;(b) a ratepayer for a hereditament.(1A) Information disclosed under subsection (1)(b) may—
(a) be disclosed for the purpose of providing the ratepayer with all information used to assist determination of the valuation of any hereditament for which the ratepayer is responsible for the non-domestic rating liability, and may be retained and used for that purpose, and(b) include information relating to hereditaments not owned by that ratepayer.”
Lord Stevenson of Balmacara
My Lords, I have been beguiling the Committee with the fact that I have had to act for several other proposers of amendments because sicknesses have left us a bit bereft. On this occasion, I can switch track slightly because here we are doing a decent thing in allowing some amendments on valuation to be debated on behalf of someone who cannot be present which I think he would certainly have tabled if he were here. We agree with them, so we have tabled them in our own right.
The noble Earl, Lord Lytton, has provided us with a brief which I will be drawing heavily on. However, as with the other amendments, I do not have the expertise to do justice to some of their individual elements. I suggest to the Committee that we take all the amendments that relate to valuation and the Valuation Office Agency together, which, if we do it cleverly and efficiently, will take us neatly to the witching hour of 7.30 pm, when we will be able to feel that we have done a good job. I will be imposing heavily on the good will of the civil servants briefing the Minister, but I hope that that will be sufficient. I am joined by the noble Lord, Lord Stoneham, who has put his name to one of the amendments.
The issue that unites all the amendments is that everybody involved in valuation agrees that the current arrangements for the business rates system, particularly the appeal system, are simply unsustainable. What is missing from the Bill is a balance between the need to remove ill-founded and speculative appeals with the need to preserve fair access to justice for those who feel that they have a case to argue.
At the heart of this, unifying all the amendments, is information, although I will speak specifically to the question of festivals, which arises in Amendment 52R. Therefore, most of my remarks will be about the generality of the VOA and how we may deal with it in future, but I will spend a few minutes on festivals.
We have drawn on work done by the Federation of Small Businesses, which also feels strongly about this. I think there is an alliance out there on this issue, and I look forward to hearing the Minister’s response.
Amendment 52F and those which are grouped with it, Amendments 52H to 52K and 52N, relate to whether information currently withheld by the VOA should be made available to those who have a genuine interest. I will not say much more than that, because that seems to be a point of fairness rather than a point of law: those who are being rated and having rates applied to them should be able to know the basis of that and to make judgments with their professional advisers fully informed.
Amendment 52G moves us to the billing authority and makes provision for disclosure of information about issues relating to a business improvement district scheme, which is a slightly different point but involves the same issue, which is that there is unlikely to be any way to judge what the non-domestic rates yield would be in a BID if you do not have access to that information. Again, limited disclosure would be in the best interests of all concerned.
There is no provision for an ADR ombudsman or other suitable arrangement in the VOA system, and Amendments 52L and 52P suggest that that gap needs to be filled. We would be grateful if the Minister would take that into account. Because of the way in which the UK has implemented the ADR legislation, a range of options is open, and we are not producing one solution against another, but it is fairly clear that there should be an outlet to an external agency such as an ombudsman.
The question of appeals more generally is raised in Amendment 52Q, in which we are also joined by the noble Lord, Lord Stoneham. The proposal in the Bill is that there should be an upfront fee for any appeal. That seems an odd thing to require. The people who will likely be most affected are small businesses, particularly those who are struggling to get started. It does not seem in the best interests of enterprise to require fees to be paid upfront which will not necessarily be returned if an obvious injustice is being done and redress for justice denied is not being provided.
On the question of festivals, we have become aware of the fact that the VOA has begun to raise invoices and seek money from people who have used agricultural land and buildings for cultural events and festivals. One can understand that, when previously rarely used assets are being used for a different purpose, there is obviously a question of whether fair taxation is being applied. It would be hard to argue that using land that was not being used for anything else for a business activity would raise a rateable question.
I hope that the amendment will set off in the Minister’s mind the suggestion that there is something a bit bizarre about constantly asking farmers and others to develop new ways of raising income and then, when they find one in the readymade form of a festival ready to come in on the site, not only to require them to pay rates for it but also to have a retrospective element. That seems rather unfair. I hope that, if only on the question of equity, the Minister might consider favourably the suggestion made by the festivals group that there should be no backdating. The situation may have changed, but that does not necessarily mean that those one-off festivals that have happened should suddenly be faced with very substantial Bills—we are talking about £50,000 or £60,000—when people have budgeted on the basis that there would be no such cost. In future, consideration should be given to some form of derogation for short-lived festivals of this type, when clearly there are economic benefits to the whole of the country and to the locality, and a good cultural effect that would be completely lost if the cost exceeded the income. We might be cutting off our noses to spite our faces. I would be grateful if the Minister could consider the amendment. I beg to move.
Lord Stoneham of Droxford (LD)
The noble Lord, Lord Stevenson, has masterfully summarised the amendments. I put my name to Amendments 52F and 52P in the interests of trying to improve the processes. In the interest of brevity and trying to improve the timescale, I am happy to give my support formally.
Lord Stevenson of Balmacara
I am very grateful to the Minister who I think sent a message of cheer to the association that looks after festivals. I am sure that it is delighted. Landowners, some of whom may be present, may also be very pleased at the result. That is a very good response to that issue. I am sure that there are other things touched on in the Minister’s response that we will want to look at but, again, that is a measure of progress and I am sure we can make a way forward on that. I beg leave to withdraw the amendment.