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

Luke Murphy Excerpts

2nd reading
Tuesday 25th February 2025 Commons Chamber

[Sir Ashley Fox (Bridgwater) (Con)]

This Bill is important for the future of technical education and apprenticeships in our country, and I accept that the Government’s intention is to streamline the governance and management of skills. However, I believe that, in its current form, the Bill threatens to centralise the system to such an extent that it may undermine the independence and effectiveness of our skills system.

The Institute for Apprenticeships and Technical Education was established with the clear purpose of ensuring that apprenticeship standards and assessments were determined with the input of employers, education providers and industry experts. I fear that by abolishing this body in favour of a group of civil servants appointed by the Secretary of State, the Government will make technical education less responsive to the needs of the labour market. The Bill removes the requirement to publish regular reviews of occupational standards and apprenticeship assessment plans. The Government say that removing this duty allows for much greater flexibility, but they are doing so without ensuring that the views of employers, educators and other relevant bodies will continue to be heard and considered.

The Bill grants the Secretary of State power to determine the standards and assessments that will be used to measure progress in technical education. No longer will these decisions be made by a broad group of stakeholders, including employers and sector specialists. What does all this mean for our workforce, and what does it mean for learners? It means that we are at risk of creating a system that is more distant, less responsive and potentially less effective. When decisions are made by civil servants without the input of those on the ground—those directly impacted by these decisions—we risk losing touch with the realities of the skills landscape.

[Luke Murphy (Basingstoke) (Lab)]

I am afraid the hon. Member and the shadow Secretary of State speak as if the Institute for Apprenticeships and Technical Education was an unblemished success. Between 2018-19 and 2023-24, apprenticeship starts in England per capita dropped by 16%, so how is it a responsive system? I think the House would be better served if Opposition Members acknowledged that. I understand why he is focused on structures, because that is in part what the Bill focuses on, but surely we should also be focused on outcomes, on which the previous Government were not delivering.

[Sir Ashley Fox]

The pandemic clearly had something to do with that reduction. I would not say the system is perfect, but I fear that replacing it with a committee of civil servants appointed by the Secretary of State is likely to be less successful still.

Amendments have been made in the other place to address some of these concerns. Specifically, a one-year delay was added between the establishment of Skills England and the commencement of the Bill, which would allow for a more effective transition and give Skills England a better chance of getting up and running. It is crucial that we do not damage the very real progress that was made on technical education under the last Government. During the general election, my party pledged to raise the number of people in high-skilled apprenticeships by 100,000 per year, representing a 30% rise. This was to recognise that, for many young people, apprenticeships represent a better way to enter the workplace than some university degrees.

Bridgwater and Taunton College, based in my constituency, is the UK’s largest provider of apprenticeships, supporting thousands of learners in achieving their career ambitions. With over 120 apprenticeship programmes, the college offers exceptional opportunities for individuals to gain hands-on experience and develop the skills needed for today’s competitive job market. BTC’s success is reflected in its recent achievements, such as its registered nurse degree apprenticeship, which recruited 53 apprentices in the 2023-24 academic year alone. The college’s commitment to employer engagement and industry-aligned training is at the heart of its success. It has strong partnerships with employers of all sizes, ensuring that its apprenticeship programmes meet local and national skill needs.

While BTC welcomes the streamlining of the management of apprenticeships, it is clear that these changes must not reduce the quality of education and support provided to apprentices. As it rightly points out, it is crucial that these changes do not compromise the wellbeing of students or the high standards of education they have come to expect. I hope that the new framework will continue to uphold these standards and ensure that the needs of both students and employers are met effectively. It is this type of local, industry-focused and employer-engaged approach to skills training that we should be fostering.

In conclusion, while I understand the desire to create a streamlined, more efficient system, the Government must be careful not to sacrifice the effectiveness and independence that have been the hallmark of our apprenticeship and technical education system. This Bill, in its current form, grants perhaps too much power to the Secretary of State with too little accountability. It risks diminishing the role of employers and learners, and weakening the checks and balances that have served us well, so I will continue to scrutinise this Bill as it proceeds through Parliament.

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[Sir John Hayes]

I am immensely flattered that the hon. Gentleman has followed my career with such assiduity. He is right: I defended Unionlearn and would continue to do so. Trade unions can play a vital part in ensuring the outcomes that the Government say that they seek and that I certainly believe in. Indeed, I went on a delegation to Germany—this is a minor digression, Madam Deputy Speaker—to look at their apprenticeship system with employers and trade unions, because I know that the combination of trade unions and employers was critical to driving the skills agenda. Again, it would be useful to hear from the Government what they think about that. How will they engage with the trade unions? Because trade unions are not mentioned in the Bill at all, we are left to wonder what will happen, as my right hon. Friend the Member for East Hampshire said in his excellent speech, when the Secretary of State seizes control of apprenticeships from the current structure.

There are a number of other questions to be put. The hon. Member for Chesterfield (Mr Perkins) made a very good point about SMEs. One challenge when I was a Minister, and for subsequent Ministers and this Government, was in engaging more SMEs. I am not sure that we were successful in that. I launched a review of how we might do that; it was typically by making the system regulatory and trying to review some of the paperwork. Again, as the Bill moves forward, what more will we hear about how to engage more SMEs? If we say to someone in my constituency that there are really good engineering apprenticeships in Derby, which I am told is in the same part of the country—or in the same region at least, whatever that means—we might as well be saying that there are apprenticeships on Mars, because they will not be able to get to Derby to study. We really need the spread of apprenticeship accessibility, which SME involvement provides. It is the only way of creating the reach that is necessary to engage more young people and adult learners in acquiring those skills.

I have one or two further questions, with which I hope the Minister can deal. I have already spoken about employers. On the status of the new body, is it the Government’s intention, as the Secretary of State implied— but no more than that—for it to become a non-departmental body in the end, or will it always be an in-house body? Anyone who has been close to government will know the significance of those two options. It needs at the very least to be a non-departmental body if it is to have the necessary freedom and independence to respond to employer need and changing economic circumstances. The Secretary of State hinted that that might be the direction of travel, but we do need to know more when the Minister sums up.

[Luke Murphy]

Conservative Members are making quite the noise about IfATE’s independence, but I remind the House that this is a precedented move. The Conservative Government established the Standards and Testing Agency, which is currently the Executive agency and was formerly a non-departmental body. That is exactly the same status as IfATE, which performed very similar functions for many other kinds of qualifications and tests. Why was it okay for the right hon. Gentleman’s Government to do that in 2011? It seems that the Conservatives are more focused on the process point—a process similar to that undertaken by their Government—and not on the outcomes that will deliver for working-class kids interested in learning a trade.

[Sir John Hayes]

As I say, I am not an unbridled advocate of the Institute for Apprenticeships and Technical Education, which the Bill abolishes. I did not set it up during my stewardship. As I have already described, I would have preferred a different, guild-based model. Guilds would, by their nature, have been independent from Government. If we look at the German model, the guilds are sovereign, and they are closely tied, by the way, to the trade unions of the particular sectors for which they are responsible. I am simply saying to the Government, “Here is the chance to do something better.” One learns from experience and one learns from government experience, to be honest and straightforward about that.

Certainly, there is the issue of standards. How will standards be determined and delivered? Will that be done by an independent body or a series of independent bodies, perhaps in different parts of the business community, or will it be done directly by the Department? What about the figures in the impact assessment, which says that there would be a reduction in the number of apprenticeships? We are already at a pretty pitifully low level. As I described earlier, the number of apprenticeship starts in 2023-34 stood at 340,000. We can do much better than that, but the Government have certainly suggested in their impact assessment that they expect that number to fall, at least in the interim. By how much do we expect it to fall—5%, 10%, or 25%? We really need to know a little more about that.

The Secretary of State spoke about, as the Labour manifesto detailed, work with the Migration Advisory Committee and others. Can we hear a little more about the detail of that? Certainly, it will be required before we vote on Third Reading, because it is inconceivable that the Government would not want to be more straightforward about how those structural links will work and what role those other bodies will play in helping the Government to deliver their objectives.

Practical accomplishment is something dear to my heart. William Morris—rarely quoted in this House except by me, which is a sad indictment of the modern Labour party—said:

“a man at work, making something which he feels will exist because he is working at it and wills it, is exercising the energies of his mind and soul as well as of his body.”

Morris understood what I know many, from their contributions to this debate, understand too: that it is time to again elevate the practical. This is, of course, about our ambitions for the economy, but it is also about the people who acquire those skills—the way their lives are changed because their life chances are changed.

I started by speaking about John Ruskin and his view of these things. Ruskin said:

“The highest reward for a person’s toil is not what they get for it, but what they become by it.”

Yes, this is about the economy, but it is also about the difference we make to individuals who, through gaining new skills, grow and develop and become proud of what they can do for themselves, their family, their community and their nation.

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[Luke Murphy (Basingstoke) (Lab)]

For too long, our skills system has not delivered due to policies that simply have not worked. Businesses have struggled to recruit the skilled workers they need, young people do not have the opportunities they deserve and investment in training has gone backwards. The previous Government talked a good game and introduced measures such as the apprenticeship levy with big promises, but in reality their approach was slow, bureaucratic and failed to deliver.

It is worth noting, as I said in my interventions on Conservative Members, that I feel their criticism of the Bill today has focused far too much on structures, not outcomes, but since they have done that, I think it is worth reiterating this point. The Standards and Testing Agency sets the statutory assessments for school pupils, and it develops professional skills tests for trainee teachers. It is an Executive agency, just as Skills England will be, and it was formally a non-departmental public body, just as IfATE was. However, the Standards and Testing Agency was set up in October 2011, so I am not sure that criticisms of structures actually hold any merit; rather, they are a distraction from the record of the Conservative party. On its watch, investment in skills fell and apprenticeship starts dropped. Critical sectors are still facing chronic skills shortages, and employers up and down the country have been left navigating a system that just does not work for them. That is why this Bill is so important. It is about fixing what is broken and making sure that our skills system actually works for workers, businesses and the wider economy.

To celebrate National Apprenticeship Week, I visited Basingstoke College of Technology to talk to its current class of carpentry and joinery apprentices, and to speak to college leaders. It was a particular privilege for me because my dad was a carpenter. He left school at 15 with no qualifications, but in the trade that he learned on the job he had skill and pride in his craft. He did not have the opportunity that many young people I met last week in Basingstoke have, with the fantastic support structures around apprentices today and more that we are going to build, as well as all the brilliant ways in which apprenticeships can help turbocharge the careers of so many talented and skilled young people.

One thing that was made very clear to me from my visit to BCOT alone is that it is massively oversubscribed for many of the apprenticeships it offers. That worries me, because it shows that too many young people are not getting access to the resources they need to learn a trade and are being left behind by more than a decade of failure to deliver. So I am pleased that this Government, through this Bill, are working harder and faster—with their very first education Bill to be introduced—to cut red tape and give people greater opportunities to start apprenticeships.

With 1,250 apprentices currently training in Basingstoke, 310 just starting and 110 having just completed their courses, the Labour Government are already making progress, but there is much more to do. I want Basingstoke to be the best place for someone to learn a trade, start a career and build a life for themselves, and I believe this Bill will help to deliver just that, laying the groundwork to establish Skills England and taking a step towards a more joined-up and responsive approach.

Skills England will replace the current fragmented system with one that properly assesses national and regional skills needs, which will be absolutely crucial if we are to meet the challenges of the future. That will ensure we are training people for the jobs that actually exist in the places where they are actually needed. This is not just about cutting red tape; it is about making sure that our approach to apprenticeships and technical education is fit for the modern economy. For years, the system has been tied up in rigid, outdated rules that make it harder to respond to the fast-changing needs of industries such as digital, green energy and advanced manufacturing. The changes in this Bill will allow for a more flexible, forward-thinking approach that actually meets the needs of employers and workers alike. A big part of that is replacing the old apprenticeship levy, which has been too restrictive, with a new growth and skills levy, which will give employers the freedom to invest in a wider range of training opportunities.

As other Members have said, we must put an end to the snobbery around skills and apprenticeships. For too long, highly skilled and essential trades have not been given the recognition they deserve. Too often they have been seen as somehow less valuable than the careers that require a university degree, despite being just as vital, just as skilled and just as valuable to our economy and society. I am proud that this Government are changing that narrative. We need these skills to drive growth, build the homes and infrastructure that we need and deliver energy security. We have the opportunity here to fix the mistakes of the past and to build something better. I urge colleagues to support the Bill, because a strong skills system is not just good for business and the economy, but good for everyone.

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[Neil O’Brien]

I will come on to what businesses are saying in one second. The Government are doing two things that are going to be very bad for apprenticeship numbers. First, while apprentices are exempt from national insurance, the Budget—particularly its £25 billion increase in national insurance contributions—is cutting hiring and leading to job losses across the board. What employer groups are saying about that is pretty damning; be it the Institute of Directors, the Federation of Small Businesses or the Chartered Institute of Personnel and Development, they are warning of serious job losses as a result of the Budget. That tax increase, and the damage it is doing, is focused on exactly the type of jobs that apprentices might traditionally get, so apprenticeships are being hit by the backwash from the Budget.

Secondly, the Government are planning to move funding from apprenticeships to other areas. In opposition, Labour talked about allowing employers to spend 50% of their apprenticeship levy funds on other things. As the election drew nearer, that commitment seemed to be disappearing. On 20 November, the Minister said that the commitment to 15% was “currently being reviewed”, but just weeks later, on 9 December, the Secretary of State said that the Government were still committed to “50% flexibility for employers”. It would be interesting to hear from Ministers whether that 50% still stands now.

Given that the levy funds £2.5 billion of spending, 50% is a lot of money to potentially move out of apprenticeships. We can argue about whether that is desirable, but all things being equal, it will certainly cut funding for apprenticeships. We might also be wary that it will undercut the purposes of the levy and have high dead-weight. In fact, the Institute for Fiscal Studies has pointed out:

“In principle, this could help employers to pay for other forms of training that they and their employees would find valuable. But the history of these wider training subsidies, such as the former Train to Gain programme”—

a programme under the last Labour Government—

“suggests that the result is often that much of the spending goes on training that firms would have provided—and paid for—even without the subsidy.”

The apprenticeship levy, whatever its flaws, did at least attempt to address this problem of dead-weight and discouraged freeriding by large firms, so that firms that invested in their workers did not lose out to those that did not. Since the levy was introduced in 2017, real-terms spending on apprenticeships and work-based training has increased in real terms by about a quarter, from £2 billion to £2.5 billion.

In a written answer to me, Ministers have confirmed that the Department has a forecast for the number of apprenticeship starts, but they have also said that they will not publish it. If it was published, it would surely show that removing possibly half of the funding would lead to a substantial drop in the number of apprenticeships. Perhaps that is why we are not allowed to see it. Those same reasons are why the Government are going back to shorter apprenticeships and away from the higher level, reducing quality and cutting length to try to offset the hit to numbers from other Government policies.

There are bits of this agenda where we share the same goals. We all want to see more SMEs offering apprenticeships and more young people getting apprenticeships. Although on average twice as many people started apprenticeships each year under the last Government as under the previous Labour Government, we still wanted that to be much higher. Although we are interested in the same questions, we have quite different ideas for how we address them. Part of the Government’s answer is to abolish the highest level of apprenticeships in order to redistribute the money.

The level 7 apprenticeships that the Government are axing currently account for just 9% of apprenticeship spending, but a lot of good things will potentially be lost by abolishing them. I have been contacted by firms worried about the abolition of the solicitors apprenticeship, which is a great way into the law for people from less privileged backgrounds. One firm worried about that is Bolt Burdon Kemp, which told me:

“This will really impact social mobility into sectors like law, accountancy, and consulting. The traditional route into law is expensive and therefore without the apprenticeship scheme many would not be able to afford to do so. We also believe it will have a wider detrimental impact on the reputation of apprenticeships.”

It has taken such a lot of effort to get that route going, and it would be a huge shame to lose it.

Likewise, level 7 apprenticeships are opening up great jobs and leadership roles in the public sector, too. Some 56,000 people started apprenticeships in the public sector last year. More than half of management apprenticeships at level 7 are in health and education. In fact, they were identified as having a key role in the NHS’s own long-term workforce plan. Public services will lose out, as will ambitious apprentices.

Because level 7 apprenticeships are a small part of funding, I am worried that the Government will now go after level 6 apprenticeships, which is a much bigger share of spending. A lot of employers are worried about that, too. [Interruption.] The Secretary of State sighs as I say that. Presumably when the Minister gets to her feet, she will promise that they will not do to level 6 what they will do to level 7. It sounds like Ministers will be clear when they stand up, will they not, that they definitely will not do that to level 6 apprenticeships.

The last Government moved to make it more attractive for SMEs to take on younger people. From April, 16 to 21-year-olds have had 100% funding, rather than requiring the 5% employer contribution. We need to build on that by cutting bureaucracy and making it easier and more attractive to take on young people. Building on that would be more sensible than reorganisation, centralisation and the defunding of higher apprenticeships. This Bill abolishes IfATE and gives the Secretary of State significant powers as a result, but it says nothing at all about the new body, Skills England, which is intended to be at the centre of the skills landscape under this Government. That has been a pretty unwelcome surprise to some in industry.

In its briefing on the Bill, the Construction Industry Training Board noted that this was

“contrary to the previous characterisation of Skills England that was outlined in the…King’s Speech…and contrary to the vision for Skills England to be an independent body, established in law, with a cross-governmental role”.

The CITB makes an important point. IfATE existed to serve all employers—public and private—and across every Department. In contrast, Skills England will be a part of the DFE. The CEO of Skills England will be a job share between two civil servants who are currently running post-16 skills at the Department. I am told by former Ministers that they are good officials, but this is a recentralisation into the Department—as was pointed out by both the Chair of the Select Committee, the hon. Member for Dulwich and West Norwood), and the Liberal Democrat spokesperson, the hon. Member for St Neots and Mid Cambridgeshire.

[Luke Murphy]

May I ask the hon. Gentleman a question that I asked some of his colleagues earlier? In 2011 the last Government set up the Standards and Testing Agency, whose predecessor was a non-departmental public body that became an Executive agency, like IfATE. It sets statutory assessments for school pupils and develops professional skills tests for trainee teachers. The last Government did something very similar to this. Why was it okay then, but is not okay now?

[Neil O’Brien]

That is an important question. The hon. Gentleman is tempting me to go into the history of apprenticeship regulation in England, which dates back to 1536. I will not detain the House with all the details, but suffice it to say that that was a move from one arms-length body to another, so it was different from this. None the less, IfATE was better than either of those things, which is why we ended up there.

The very act of a further reorganisation is likely to compound the effects of the Budget and the decision to move apprenticeships money into other projects. Indeed, according to the Government’s own impact assessment, there may be a drop in apprenticeship starts while IfATE’s functions are transferred to the Secretary of State. It says:

“The transfer of function from IfATE to the DfE could potentially cause a temporary slowdown in the growth rate of new apprenticeships and technical education courses due to potential delays in the approvals process resulting from the bill.”

It also says:

“This may disproportionately impact disadvantaged learners, who rely more heavily on these pathways for career advancement.”

So there you have it, Madam Deputy Speaker. The Government are moving money out of apprenticeships, and the Budget will also hit numbers, but instead of focused action to boost numbers for young people, the Government’s response has been to reduce quality, cut length and axe level 7 apprenticeships to try to prop up overall numbers. Now we have yet another reorganisation —one that takes us away from an independent, employer-led system, and one that will risk, in the Government’s own words, cutting apprenticeship numbers and hitting the most disadvantaged. Oh dear, oh dear, oh dear.