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

Lord Watson of Invergowrie Excerpts

2nd reading
Tuesday 22nd October 2024 Lords Chamber

[Lord Watson of Invergowrie (Lab)]

My Lords, I offer my congratulations to my noble friend Lord Beamish on an excellent maiden speech. It is clear that he is going to be a real asset to your Lordships’ House.

It is probably not unfair to say that there have been few more uncontroversial Bills presented to your Lordships’ House than the one we are discussing this evening. That is not at all to denigrate this Bill, which is an important cog in the wheel that will power the development of the skills needed to drive the economy in the uncertain years ahead.

There is little that I want to say about the Bill itself, other than perhaps to ask my noble friend to say a little more about the additional powers being given to Ofqual around accrediting technical qualifications for the first time. The Secretary of State will have the power to ask Ofqual to do so, and it would be helpful to have some clarity as to when that power might be exercised. There is another issue that I want to raise, which I will speak to later.

Skills England is not mentioned in the Bill, but I follow other noble Lords in using this as a convenient means of welcoming the formation of a new body and considering what role it might play in a future likely to be dominated by AI. I envisage Skills England being key in developing a new post-16 skills strategy, co-ordinating engagement across government with key agencies and devolved bodies.

I must say that it is a pleasure to be on this side of the Chamber for a change when debating skills provision. Several noble Lords, not least the noble Baroness, Lady Barran, who is here today, were involved three years ago when the skills Bill was making its way through your Lordships’ House, demonstrating to the then Government that we felt their plans lacked the breadth and depth needed to address the shortfall in providing for training and skills development.

At that time, local skills improvement plans were identified as the means of achieving the spreading of opportunity more evenly across the regions. Many noble Lords, including some on the then Government Benches, submitted amendments to the skills Bill. They highlighted that, with a disproportionate role given to employers, existing structures were being ignored, such as metro mayors, combined authorities—many with democratic accountability for local skills and economic regeneration —local enterprise partnerships, trade unions, universities, FE colleges and training providers. All were originally excluded, and only university and training providers were eventually allowed a meaningful say. It is refreshing that the current Government appreciate the contribution to be made by a wide range of bodies and are willing to empower them to coproduce local plans in recognition of their unique feel for priorities and skills development in their areas.

I like the description given to Skills England by the Association of Colleges in its briefing to noble Lords for this debate. It describes it as a “new social partnership body” bringing together business, FE colleges, training providers and unions with national and local government to ensure we have the highly trained workforce needed to deliver the industrial strategy announced last month.

On the subject of FE colleges, if they are to be able to play their full role in delivering the Government’s missions and in helping to ensure that Skills England is a success, it is vital that the long-term underfunding of the sector compared to schools and higher education is addressed. With that in mind, I was one of a number of Labour peers who wrote recently to the Chancellor emphasising that point and asking that greater funding for the FE sector be a feature of the Budget.

Following the UK’s departure from the EU, skills shortages are a major problem. Indeed, one third of all job vacancies are due to the lack of people suitably skilled to fill them. That is an indictment, surely, of the previous Government’s record, and it is not acceptable simply to cite the pandemic or exiting the EU as reasons.

Skills England has not allowed the grass to grow beneath its feet. The organisation had been in existence for just two months when it published its first report. Its title, Driving growth and widening opportunities, is certainly relevant and it included an index, ranking the demand for each occupation across the UK labour market.

I studied economics, but I had never come across something called an SSVD—a skills shortage vacancy density. Worryingly, the report revealed that the sectors with the highest vacancy density are construction, information and communications, and manufacturing, with health and social work and education not far behind. All those sectors are pillars of any economy, essential in achieving the growth everyone is searching for.

That report noted that much of the UK economy is dependent on skills gained in higher education. Future job projections suggest that occupations requiring higher education are expected to see the most employment growth over the next decade. Addressing shortages in higher-level skills is therefore essential to achieving government missions to drive growth and widen opportunity, making universities critical delivery partners to Skills England. What role does the Minister envisage for universities in the development of Skills England?

Also critical to the effectiveness of Skills England will be the re-shaped growth and skills levy. I echo the point my noble friend Lord Blunkett made about the money that goes back to the Treasury from the existing apprenticeship levy. A means has to be found to use money that has not been spent in whatever the period is—currently two years—so that it stays within the training budget and is not just returned to the Treasury, where it will be spent on anything the Treasury deems then appropriate.

Since the introduction of the levy, there has been a steep decline in apprenticeship starts for young people and a shift in starts from the most deprived parts of England to London and the south-east, as well as a decline in starts in sectors where skills challenges are most acute. Added to that is a growth in management and leadership courses and a decline in starts for those from the most disadvantaged backgrounds. It is to be hoped that Skills England will address the effects of those trends by bringing greater transparency, especially in how the growth and skills levy is spent.

Apprenticeships are essential for ensuring that young people from a diverse range of backgrounds can access high-quality training. They can also tackle skills gaps, particularly in the public sector. Across the apprenticeships landscape, almost two thirds of those who started a degree apprenticeship in the health, public services and care sector in 2022-23 were aged 25 and over, including 93% on the social worker programme and a large number of those on the nursing programme. Apprenticeships must be available to learners of all ages and at all levels to enable them to upskill and reskill, which I know is the Government’s aim.

Open University students tend to be older compared to the rest of the sector, and that is a good example of flexible lifelong learning, which is crucial to improving economic growth. Can the Minister say what steps are being planned to incentivise flexible lifelong learning? Linked to that, of course, is the lifelong learning entitlement. Can she also reveal what assessment has been made of it and its introduction, we understand, from 2026?

I turn to my final issue today as the only Scot taking part in this debate. I have given notice to my noble friend that I would raise questions relating to the assumption that, as education and skills are devolved matters, the Bill applies only to England and Wales. However, as set out in Clause 10, that is not the case. That is because the remit and responsibilities of Skills England will feed into UK-wide policy and funding agendas, resulting in both direct and indirect implications for the post-16 skills landscape and higher education in Scotland.

Both the Skills England report to which I referred earlier and the Government’s industrial strategy are UK-wide in scope. Skills England is responsible for identifying where skill gaps exist and, as my noble friend said in her opening remarks, is expected to work with the Migration Advisory Committee to address them. The MAC is, of course, UK-wide in scope.

The same applies to the growth and skills levy. The apprenticeship levy is collected at UK level by HMRC, and Scotland receives a proportion via the Barnett funding formula. The Scottish Government then have discretion as to how the levy is distributed north of the border. Without going into detail, I will just say that they do it differently.

Can the Minister say what engagement the UK Government have had with the Scottish Government on the creation of Skills England? What mechanisms are the Government considering in order to ensure strong connectivity between Skills England and the Scottish Government—indeed, all the devolved Administrations —where the work of Skills England feeds into UK-wide agendas such as the industrial strategy and the recommendations of the Migration Advisory Committee?

Ensuring that the country has a sound base of the skills needed for the demands of a fast-evolving economy should not be seen as a cost. It is clearly an investment in the future and an essential part of driving economic growth. I welcome the establishment of Skills England as a decisive step in that direction.

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

Lord Watson of Invergowrie Excerpts

Committee stage
Tuesday 26th November 2024 Grand Committee

[Baroness McGregor-Smith (Non-Afl)]

My Lords, I just want to give some context on IfATE being a statutory body, since I chair it. Statutory bodies take their responsibility very seriously when they issue reports to Parliament. First, when we go through that detail at IfATE annually, it is a rigorous and detailed process. It is absolutely evidenced and fact-checked. I would like to see that level of reporting, or even more, done in Skills England. I will not stand up and say that I am the expert on mechanisms, but I am concerned to think that that level and standard of reporting will not happen under a new, enhanced body.

Secondly, it is important that we do not lose sight, during the progress of the Bill, of what this transfer of powers is going to do. By transferring the powers of IfATE to the Secretary of State, we transfer the approval of technical qualifications as a whole—an end-to-end process that is understood and respected by employers and understood by colleges. Everyone must understand how qualifications will be arrived at and approved. I would like some assurances from the Minister that that process of end-to-end scrutiny with employers will continue and be enhanced in Skills England.

[Lord Watson of Invergowrie (Lab)]

My Lords, I am pleased to speak in support of my noble friend Lord Blunkett’s important Amendment 31 on apprenticeships and the growth and skills levy. Although it is important that apprenticeships are available to all age groups, thus ensuring that lifelong learning plays a key role in skills development in the years ahead, I am particularly keen that more young people should see them as a first step on a career ladder. That is clearly set out in Amendment 31.

Unfortunately, the bright new dawn that many of us expected when the apprenticeship levy was introduced in 2017 has failed to materialise. Noble Lords will be familiar with the analysis commissioned on behalf of the Association of Colleges earlier this year, which showed —I think this was for 2022-23—that some 160,000 fewer apprenticeships were started than in 2017. You might ask “How on earth can that possibly be the case?”, but it is. That decline was particularly alarming because it disproportionately impacted on those most in need of training, particularly younger people and those from disadvantaged backgrounds.

There were regional aspects to it as well, because the decline was particularly prevalent in regions of the country such as the north of England, which traditionally had high levels of apprenticeships, and among SMEs. There are particular structural issues with the levy for SMEs, but that is for another day. That decline in the apprenticeship statistics must be reversed and returned at least to the pre-2017 levels, so I was pleased to hear my noble friend the Minister say on Second Reading that foundation apprenticeships are to be developed as an alternative route for young people who may have faced barriers in the past.

The noble Lord, Lord Storey, recounted how difficult it had been to get some of his amendments tabled, because the words “Skills England” could not be used. In today’s Marshalled List, any time that “Skills England” is mentioned it is in quotation marks. It is almost as if it is some soiled rag that needs to be picked up with a glove and held at some distance from your body. It is astonishing. Why should we be so afraid to say that, when we all know what we are talking about here? Let us just be open about it.

Critical to the effectiveness of “Skills England” will be the reshaped growth and skills levy. That must be released from the straitjacket of its predecessor, whose unspent employer funds reverted to the Treasury rather than being retained in the education and training budget. I think that there was some disappointment across the House that the Chancellor had nothing to say about the growth and skills levy in the Budget. I am at a disadvantage because I have not had the opportunity to look at today’s White Paper, to which other noble Lords have referred, but I hope that my noble friend might be able to say something about the growth and skills levy in her reply in respect of this amendment, regarding the scope and level of investment that it might enjoy.

This must affect local priorities, of course, which is why the amendment stresses the role of local skills improvement plans in delivering the co-ordination needed to plug the skills gaps. LSIPs already play a role there and I retain my belief that Skills England should be established as a statutory body, rather than an executive agency, the better to co-ordinate efforts across departments to ensure that we have the most effective approach and that we develop the skills that the country needs going forward.

That said, it is encouraging that Skills England, still in skeletal form, has already published its first report. Its title, Driving Growth and Widening Opportunities, is one that it must live up to. The report to Parliament outlined in Amendment 31 should further concentrate minds in the DfE to set out the direction being pursued and to provide a clear delineation of Skills England’s role in that, having been given those tasks and—I say this only to be helpful, I hope, to my noble friend the Minister—looking to the outcome of a buoyant skills landscape, which the Government and every noble Lord here today want to see emerge.

--- Later in debate ---

[Lord Watson of Invergowrie (Lab)]

My Lords, I was just looking through my noble friend Lord Blunkett’s Amendments 28, 29 and 30, to which I added my name. I am sure noble Lords will be aware that, since Skills England was announced, the DfE has been using a pretty coloured diagram in five sections to describe the planned functions of the new executive agency. One of the sections says that Skills England

“identifies priorities for and shapes technical education to respond to skills needs”.

Having done that, it will need to update the necessary technical standards and work with sectoral industry bodies to develop them. Indeed, the Government will need to set out which functions currently with IfATE will be delegated to sectoral organisations and regional bodies. That is what Amendment 28 seeks to achieve.

My noble friend the Minister said in Committee last week that there needs to be “a sectoral approach” to the way that skills are developed across the economy. Of course, that is right. With that in mind, it is necessary that the Government’s plans for the powers that they anticipate will be required are set out, and this amendment would facilitate that.

Another of the sections in that DfE diagram says that Skills England will ensure

“national and regional systems are meeting skills needs”,

explaining that this will entail:

“Working with Mayoral Combined Authorities, Employer Representative Bodies, and other regional organisations to align national and regional systems with each other and with skills needs”.


All that seems fairly straightforward, but it is not clear how Skills England will achieve that without the necessary powers and some resources. We do not as yet know what these might be, so it is important that criteria for national skills priorities are set out and that the expectations of departments other than the DfE are made clear. My noble friend the Minister stated on several occasions how important the effect of joined-up government will be for the involvement of a wide range of stakeholders. Amendment 29 offers the opportunity for that to be spelled out.

Finally, there is more than a little uncertainty as to how the plethora of qualifications to be transferred will be subject to oversight. My noble friend Lord Blunkett has covered this, but I will simply say that qualifications at levels 3 and 4 are crucial in allowing young people the opportunity to build their skills in an environment in which they are not intimidated by unrealistic expectations or other barriers to entry, as has been the case too often with apprenticeships. The unfortunate tangle—let me put it no less kindly than that—that we currently have involving the introduction of T-levels and the consequent often rash and sometimes reckless defunding of some BTECs must not be allowed to happen with the transfer of the many essential qualifications validated by IfATE in its short lifetime.

[Baroness Barran (Con)]

My Lords, I will speak to my Amendment 27 and in support of Amendment 28 in the name of the noble Lord, Lord Blunkett. I start by noting that I support very much the spirit of the amendments in the name of the noble Lord, Lord Aberdare, and the aspiration of the amendment in the name of the noble Lord, Lord Addington, although I have a certain sympathy with the Minister in trying to actually deliver on that.

My Amendment 27—I thank my noble friend Lady Evans of Bowes Park for adding her name to it—aims to ensure that the Government’s strategy is up to date and relevant for local areas and that the Government do this by consulting the relevant bodies. I suggest local skills improvement partnerships and mayoral combined authorities although, in his Amendment 36B and his extremely helpful, clear and practical explanation of it, the noble Lord, Lord Ravensdale, raises the relevance of other groups and the importance of making sure that we do not miss out significant parts of the population as we try to aggregate and understand these local views.

What we are trying to do is to balance technical education qualifications that can be tailored, to a degree, and that best support the needs of a local area, with the ability to aggregate and use the data and intelligence from them to inform national policy. That needs to then feed into an ability for the Government and those to whom they devolve their powers to understand where providers are delivering efficiently on these plans and where they are not, identifying gaps and seeking to address them.

I also want to speak to the importance of the Government setting out how they intend to delegate these powers that are being centralised. As my noble friend Lady Evans said, what the Government talk about and what is actually happening in terms of centralisation rather jars, so I am glad that the noble Lord, Lord Blunkett, has brought this forward through his Amendment 28. I do not think anyone is suggesting to the Minister that this is an easy task—if it was easy, somebody would have cracked it already—but it is clearly a very important task and the more she can say about how these different groups will interact with Skills England and how there will be lines of communication from the local to the national and back again, the more confident the Committee will feel.