Apprenticeships

Lord Watson of Invergowrie Excerpts

Thursday 15th October 2015 Lords Chamber

[Lord Watson of Invergowrie (Lab)]

My Lords, I, too, join in thanking my noble friend Lady Prosser for introducing this debate and giving us the opportunity to consider these very important matters.

Like everyone else who has spoken in the debate, I welcome the Government’s commitment to create 3 million apprenticeships by 2020. The demand for apprenticeships from young people far outstrips current supply. According to the National Apprenticeship Service, more than 1.4 million online applicants competed for 129,000 vacancies posted online last year, which was up 32% on the previous year. So—as has been mentioned already in the debate this afternoon—that is an average of about 11 or 12 applicants per apprenticeship, which of course means that a great many are disappointed.

Some 3 million apprenticeships in the next five years—an increase of almost 50% on the past five—is of course a very ambitious target. However, I do not criticise the Government for that, because it is always better to aim high. The task involved is clear from the statistics relating to 2013-14, the latest available yearly figures for apprenticeships. In that year there were just over 440,000 starts, which showed an overall decrease on the previous year. With 600,000 starts annually needed to meet the 3 million target, there will need to be a very substantial increase if that target is to be met.

With that in mind, the figures published yesterday are not encouraging. At best, they show minimal growth in the number of people starting new apprenticeships—although the figures are yet to be confirmed, which means that the final position might be worse. Not enough of those who want to take up apprenticeships—young people as well as those who are older—are receiving the opportunities they need for quality training and retraining to increase career opportunities. When the next annual figures are published we will need to see at the very least a distinct upward trajectory if the target is not to disappear into the distance.

Currently, only 15% of employers offer apprenticeships. That is a mere 2% more than in 2012 and—as other noble Lords, including my noble friend Lord Bhattacharyya, have said—is very low compared with many other European countries, most notably Germany and Switzerland, where 50% to 60% of employers offer them.

The introduction of the apprenticeship levy may help to increase the number of apprenticeship opportunities but a number of noble Lords—including the right reverend Prelate the Bishop of Derby and my noble friends Lord Macdonald and Lord Haughey—have commented on the fact that questions are being asked about how the levy will operate. I am delighted to welcome my noble friend Lord Haughey to the debate. He has a great deal of experience in building up a business and developing it to include many apprenticeships, as he mentioned. I have no doubt at all that, in his typical forthright manner, he will be writing to the Government to explain to them where they are going wrong with the levy and how it might be improved to make it more effective.

A major means of boosting the number of apprenticeships on offer would be to extend the Enterprise Bill provision for apprenticeship targets for public bodies to the private sector. That would certainly encourage more SMEs to become involved. Last week, David Cameron made social mobility the centre of his conference speech, although I have to say that today’s announcement that he has decided to turn the clock back half a century by allowing the creation of new grammar schools sends out entirely the opposite message.

Apprenticeships have the capacity to make a major contribution to social mobility but to maximise that contribution they need to be offered across the full range of employment and skills, ensuring that people across the country who may have been excluded for a number of reasons have access to them. We therefore believe that the approach in the Bill to public bodies should be extended to the private sector, both to assist in meeting the 3 million apprenticeships target and to spread training across the economy and provide opportunities in different geographical areas. The Government should also publish a strategy setting out how many apprenticeships they expect to be provided from each part of the private sector. Such a strategy should include a clear indication of the role to be played by further education colleges, which are key players in this yet have suffered wounding cuts to funding, with more to follow.

Recent apprenticeship reforms have resulted in employers being given control. An entirely employer-led design of apprenticeships runs the risk of narrow training that meets the needs of employers but not necessarily those of young people, or perhaps the employment market in general. That is a point not lost on the Engineering Employers’ Federation, which said in a submission to Labour’s Skills Taskforce that it is important for employers,

“to work closely with unions, colleges and quality training providers to ensure that the partnership works for both the employer and the learner”.

The Government should acknowledge—and benefit from—the role that trade unions play in apprenticeships. They have a strong track record of supporting young people in making the transition from training into secure employment.

One of the main reasons why we in the Labour Party want to see as many apprenticeships as possible created is that we know that good training leading to proper, meaningful work can play an important role not just, as I said, in promoting social mobility but also in reducing inequality in the country. This issue was highlighted in the recent report by the Sutton Trust which several noble Lords, including my noble friends Lord Haskel and Lord Snape, referred to. Perhaps unfortunately, that report attracted most attention because of the headline that it had found that the top-achieving apprentices—the relatively few with a level 5 qualification—will earn more in their lifetime than someone with an undergraduate degree from a university outwith the Russell Group. This underscores the logic of the provision in the Enterprise Bill for apprenticeships to be given equal standing to degrees because it will protect the term “apprenticeship” in law and begin to tackle existing misuse, often by unauthorised training providers. It was telling that some 40% of respondents to the Government’s recent consultation on the Enterprise Bill said that they were aware of the term “apprenticeship” being misused. Enshrining the term in law will help to enhance the reputation of apprenticeships, which should assist in broadening their appeal to employers who have not thus far engaged.

More importantly, the Sutton Trust report carried a warning that, although the best apprenticeships offer similar financial security as an undergraduate degree, the sector needs to bring about serious change if apprenticeships are to fulfil their potential as a vehicle for social mobility. In the current system, as my noble friend Lady Morgan highlighted, the majority of apprenticeships—some 60%—are set only at GCSE standard, which is level 2. Too many of them offer little value beyond traditional work experience placements and only marginally better lifetime earnings than secondary school qualifications alone. Over the past two years—this is an important statistic—there have been only an estimated 30,000 higher apprenticeships. As many noble Lords have mentioned, the fear is that too many of the new apprenticeships being created will be no higher than level 2.

For that reason, it is important that the Government should monitor the apprenticeships target to ensure that employers are not using apprenticeships for their own benefit simply by replacing existing jobs. All apprenticeships should provide a nationally recognised qualification, which will go a long way to making sure that apprenticeships provide people with genuine opportunities to progress to full-time employment when they are completed. My noble friend Lady Prosser covered it quite neatly when she talked about the fit between the two.

The Welfare Reform and Work Bill includes duties on Ministers to report annually on progress achieved in job creation and apprenticeships. In addition, the Enterprise Bill provides an opportunity to introduce a mechanism for monitoring the quality of new apprenticeships and who is gaining access to them. I hope the Minister will be able to say something positive on that important aspect of underwriting progress towards the 3 million target.

There should also be greater focus on 18 to 21 year-olds who are leaving education and joining the workforce but who also need to continue in training. The harsh facts are that the majority of apprenticeships currently go to those in the 22 to 25 year-old age group and 45% of all apprenticeships are achieved by people over the age of 25. That is not per se a bad thing, but as far as possible apprenticeships should be made available to those who most need them. Since the economic crisis, young people in their 20’s have lost out most across a wide range of outcomes despite gaining higher qualifications than previous generations. I suggest to the Government that the targeting of future apprenticeships at 18 to 21 year-olds, who will be subject to the youth obligation and to restricted entitlement to housing support costs, would contribute greatly to the success of the planned growth in the number of apprenticeships offered.

The noble Lord, Lord Addington, mentioned the issue of equality. His comments on the Equality Act were very interesting and should, I believe, be pursued. Many noble Lords have questioned the gender aspect of apprenticeships, and it is undoubtedly true that simply having a majority of them taken by females is not enough. I will not repeat the comments made about the wage levels of the jobs that many female apprentices move into.

There are other problems with accessing apprenticeships. Only 9% of apprenticeships go to people from a BME background although that group accounts for 15% of the population. The Welfare Reform and Work Bill could be used to address this deficit. The Government should also consider ring-fencing a percentage of apprenticeships for vulnerable groups who may otherwise have difficulty accessing them, such as people emerging from care. Some 34% of all care leavers are not in education, employment or training at age 19, compared with 15.5% of 19 year-olds as a whole.

There are also, as my noble friend Lord Snape said, issues around academic entrance requirements. The Alliance for Inclusive Education has done some excellent work in this area, which has already been referred to, and if the Minister has not already seen its publications I urge him to arrange to do so. In many cases the entrance requirements are simply not capable of being met by people with some disabilities, particularly learning difficulties, and that problem has to be addressed.

This has been both a timely and an excellent debate, with contributions from many noble Lords with great experience of the subject. I am certain that everyone participating in it wants the same outcome: an extension of the apprenticeships available, leading to more real training, which in itself will lead to real, sustainable jobs. That would mean a huge amount to the many young people currently rather fearful as to what life has in store for them. I believe that we all have a duty to do what we can to create the foundations that will allow them to pursue a career and build a life that is rewarding in every sense of the word.