Apprenticeships (Small Businesses)

Marcus Jones Excerpts

Thursday 9th June 2011 Westminster Hall

[Mr Marcus Jones (Nuneaton) (Con)]

It is a matter of concern, particularly when I visit manufacturing businesses in my constituency, that the employees have an average age between 45 and 60. Is that not a worry?

[Gordon Birtwistle]

I agree. That was to be my next point. A company in Burnley called Aircelle makes thrust reversers for the Trent jet engine. Three years ago the company employed 350 people; it now employs 800 people and has work for 15 years. Aircelle has been offered work from Boeing and other aircraft manufacturers, but has to turn it away because it does not have the skills.

I used to work for the company when it was called Lucas Aerospace, which was a long, long while ago. I walked around the place, and I said to the managing director, “I look at some of the people here and I remember them working here when I did, and I’ve been retired for three years. Some of these guys must be coming up for retirement.” He replied, “The age profile is a big concern because more than 80% of the work force is 40-plus.”

Another big problem for the company is that young people coming into the industry want to be designers and technicians, working on computers on the other side, and the guys who put the aircraft engine parts together are in short supply. It is a problem getting skilled fitters and process workers to come and do the job. The company is now a world leader in composites, but it is very difficult to get people to come and work on composite design and manufacture. Fortunately, it is using a lot of young ladies to do that now; because of the dexterity of their fingers, they are able to mould things in carbon fibre. I agree entirely that this is an issue that the Government must pick up. We must ensure not only that we train people to do the real top jobs but that we train young people to come in and do the jobs that involve physically making things.

As I said, at Burnley college we are having a manufacturing summit on 20 June. The council there has worked with the college. We spent £100,000 from the working neighbourhoods fund, and three years ago the college put in a further £100,000 to buy three Mazak advanced machine tools. The hon. Member for Worcester (Mr Walker) will know of Mazak because the company is based in his constituency. The college ran an engineering course but could not get anyone to go on it, but as soon as we put in the Mazak machine tools the course was overwhelmed, because young people see that they can work in an office and a workshop and design a product, go on a computer and feed the design into the machine, and then make the product on the new CNC—computer numerical control—machine. They can see that it is a great job for the future. The days of what I call the garage on “Coronation Street” with engineers in blue overalls with oily rags in their pockets have long gone.

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[Mr Marcus Jones (Nuneaton) (Con)]

Thank you, Mr Davies, for allowing me to make what I hope will be a short but important contribution.

I congratulate my hon. Friend the Member for Gloucester (Richard Graham) on securing this extremely important debate. He has made a positive, well-thought-out and comprehensive contribution, which goes to show just how much he cares—as, it seems, do a number of Government Members—about this extremely important subject.

I also want to take this opportunity—I do not often do this in my contributions to debates—to congratulate the Government, and particularly the Minister, on grasping the nettle and backing apprenticeships in this country. It will be an absolute honour to welcome him next week to the excellent North Warwickshire and Hinckley college in Nuneaton, where I am sure he will promote apprenticeships with the same vigour and enthusiasm with which he promotes them in the House. I am proud of that.

I am proud to support apprenticeships, because it is apparent that they are extremely important. Some 80% of people who employ apprentices say that the workplace is a more productive place as a consequence, and 81% of consumers favour using a company that employs apprentices. People of all ages understand the concept of an apprenticeship and, importantly, it is an excellent vehicle for getting young people into a proper career.

Bearing in mind the importance of tackling the huge problem of youth unemployment in our country at the moment, I will focus my comments on younger people. It is a real pity that that problem was not properly recognised by the previous Government, who presided over a huge increase in youth unemployment and a huge increase in the influx of foreign labour, which filled the skills void that we had when the economy was in better shape, leaving thousands of our young people on the scrap heap. I commend the shadow Minister for his attendance here today, but it is a damning indictment of the lack of seriousness and enthusiasm on the part of Opposition Members that none of them, apart from him, is here today.

While extolling the virtues of apprenticeships we must also acknowledge that not all is totally well in the proverbial rose garden. A large rump of employers in our country consider apprenticeships inappropriate for their organisations. I have been looking into that and, according to the Chartered Institute of Personnel and Development, 68% of companies say that that is the case. In some instances, those companies may be correct, and there are a number of situations in which it is wholly inappropriate for businesses to employ apprentices. However, I suspect that in many others instances that is not the case, and that there are many situations in which apprentices could be taken on. Employers and business people view most things on the basis of risk, and they take a view looking at the particular risks of taking on younger people and at the barriers to employing apprentices and to developing their talent.

I want to highlight two issues in relation to risk. First, employers see a risk in taking on a young person who is untried and untested in the workplace. As Members of this House, we need to acknowledge that although many young people take to the working environment like a duck to water, many do not, as my hon. Friend the Member for Gloucester has mentioned.

[James Morris]

My hon. Friend is making a series of powerful points. On young people not being ready to take up apprenticeships in small businesses, it is important that we consider the potential role of the voluntary sector. For example, the YMCA and other organisations enable young people to develop skills before they take up apprenticeships, which is an important part of the mix.

[Mr Jones]

As usual, my hon. Friend has made a pertinent comment, which brings me on to my next point. Useful work experience can be obtained in voluntary organisations. Similarly, I am a firm believer in part-time work, in which I was active in my younger days, particularly when I was at school and college. Part-time work is invaluable to young people in developing soft skills—my hon. Friend the Member for Gloucester mentioned that earlier—and in relation to integrating into and learning about the workplace environment, which, to be perfectly frank, is completely different from a school or college environment. Young people going into a workplace are not dealing with teachers or their peers; all of a sudden, they are working with people who have been involved in the industry for many years and are not accustomed to somebody fresh and green from a school environment.

We must acknowledge that opportunities for part-time work for our young people, although important, are extremely limited. Although I acknowledge that we must do all that we can to keep our young people safe and ensure that they are not exploited in any way, we must consider the regulations that many employers face when employing youngsters part-time, which go far beyond health and safety. I received a useful briefing on employing children from the House of Commons Library, and I was astounded by the number of regulations that it contained. I would be surprised if many employers knew those regulations. If they did, it would frighten them to death to take on any young person part-time.

For example, the document states that young people may not deliver milk or work in a butcher shop. When I was that age, many of my peers did such work. I delivered milk with the Co-op milkman—I am not sure whether the milkman should have allowed me to deliver milk with him, but I went out and delivered it all the same. Many of my peers at school used to work for one of the local butchers part-time, and they gained invaluable experience. If we are to enable our youngsters to gain such invaluable experience now, we must ensure that we look carefully at the regulations to ensure that we put barriers in the way only when absolutely necessary. We must also consider removing a great deal of the bureaucracy, including what appears to be a draconian reporting culture, that employers must undertake. Does the Minister think that it is a healthy position effectively to bar youngsters from taking on many part-time jobs? Does he not agree that we should free up regulations in a sensible way?

[Gordon Birtwistle]

I had occasion a couple of years ago to question some young people about what they wanted to do when they finished school. One of them said that he wanted to be a benefit claimant. Does the hon. Gentleman think that working part-time for somebody might take that idea out of that boy’s head and help him change his view, so that he wanted to go into work rather than being a benefit claimant for the rest of his life?

[Mr Jones]

I totally agree. That is part of the problem, which my hon. Friend has highlighted. There is a culture in certain parts of this country in which work is frowned upon. I am glad to say that we now have a Government who want to get this country and our young people working and create a culture of work, rather than one in which being kept—staying at home and collecting benefits—is a job choice, not a safety net.

That brings me to the other risk that employers in my constituency tell me about, which concerns employee retention after several years have been spent training a young apprentice. Obviously, the costs of that training are borne by the Government, in the main, but there are also costs to the employer in training people on the job. Employers are concerned that a young person will come in, serve an apprenticeship and leave. In certain trades, including the craft trades such as bricklaying, plumbing and so on, people can quickly set up as self-employed workers, and employers are concerned that they will invest their time and money in training young people who will either get a job elsewhere or set up on their own. We must address that, whether through an incentive scheme for employers or by other means. We must do all that we can to encourage employers to take people on and overcome those risks.

We need to consider the barriers to career progression that make things more difficult for employers, particularly those who have younger employees. That was highlighted to me on a visit to MES Systems in my constituency, which has two fantastic young apprentices whom I met. One of the apprentices had just finished his time and had qualified as an installer of security equipment, but unfortunately that young man will have to spend this coming year working for somebody else, not because he cannot do the job independently but because the company could not get insurance on the van that he needed to drive to get around independently. That is a major impediment not only for the young person who is not getting the experience of working independently but for the employer, who knows that additional work is available but is hamstrung by the fact that that he cannot send a person out to do that work, allowing him to take on another apprentice. That is the type of barrier that we need to think carefully about.

To touch on another constituency scenario, I spoke to the principal of a firm of accountants several weeks ago. The Minister will be glad to hear that he is looking to take on four apprentices as trainee accountants, but I am sad to report that to date, he cannot fill those vacancies, which is a sad indictment of careers advice and the link between employers, schools and FE colleges. It is important for the Government to tackle that issue. I hope that the all-age careers service will help with the quality of advice that our young people get, so that they can have proper careers and receive independent advice based on getting a job rather than on trying to meet exam targets or school or college league table targets. To many youngsters, that is important, but to some it is not as important as getting straight into employment.

[Mark Pawsey]

There has been pressure on young people in recent years to go to university. I have teenage boys who are very motivated to go to university, because that is what their peer group does and that is what they have seen happen. It is the entire emphasis of our education system. Those with practical application who are willing to get their hands dirty are discouraged or looked down on as not doing so well in life. Will my hon. Friend comment on how the Government can deal with that, and how a change in attitude might go some way to stimulating more apprenticeships?

[Mr Jones]

My hon. Friend has highlighted the flawed ethos of the Labour Government and their target culture of wanting to get 50% of our youngsters into university. Although that has been useful for many of our young people, and we should certainly not decry the importance of a university degree, it has led, as he has said, to a culture where people frown on youngsters who have not gone to university, which has left those youngsters feeling dejected and undervalued. That is a poor position to put ourselves in.

To refer back to the comments made by my hon. Friend the Member for Burnley (Gordon Birtwistle), we need to fill the gap in the skills sector, and there are many younger people who would be better off taking the skills route rather than going to university and perhaps doing a degree that is not necessarily recognised by employers or that is not relevant to getting into the labour market.

[Richard Graham]

My hon. Friend is developing a powerful case for the role of apprenticeships in general. Does he agree that the statistic that 15% of employment in the private sector is provided by sole proprietorships shows that if we were to persuade sole proprietors to take on a single apprentice each, it would make an enormous difference to take-up in the country as a whole?

[Mr Jones]

I agree with my hon. Friend’s important point. Another point is that many people who have traditionally taken the skilled route and come from small businesses have ended up as the entrepreneurs of the next generation. They are the ones who have taken forward their work for an engineering business, for example, started their own business and employed a number of others. It is important that youngsters get a good grounding, whether that be by getting a good degree at a good university or by going straight into employment and getting the right skills with an employer, through an apprenticeship, which will give them not just a meaningful career, but, potentially, a business through which they can support the economy by employing a number of other people.

In conclusion, I urge the Minister to consider how we can give our small businesses far more confidence to employ apprentices and break down some of the prohibitive barriers that I have mentioned. I am absolutely sure that, if he does that, it will add great value and complement the sterling work that he is undoubtedly doing to give our youngsters the skills to drive our economy not only for today, but for the future.

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[Mr David Ward (Bradford East) (LD)]

I congratulate my hon. Friend the Member for Gloucester (Richard Graham) on securing the debate and thank him for enabling us to discuss this important subject.

My father left school at 14. He benefited from an additional year at school, but he had very little in the way of qualifications and he served an apprenticeship for seven years before becoming a master plumber. I suppose that I served a kind of apprenticeship when I was articled as an accountant. Apprenticeships have almost disappeared from the industrial scene. The value of them coming back can be found not only in the many things that we have discussed today, but in the concept of a young person’s commitment to achieving something specific and focused over an extended period. Of course, a business or an organisation must also show commitment to sticking with an individual and seeing them through.

[Mr Marcus Jones]

My hon. Friend talks very powerfully about apprenticeships. He has mentioned some of the history of apprenticeships and the apprenticeship that he went through, which was not unusual a number of years ago. Does he think that we need to change the culture, so that apprenticeships are far more valued? Should we perhaps return to some of the older values and have freemen of towns and cities and passing out ceremonies, where apprentices go along to the city hall or town hall and receive their papers from the mayor or lord mayor?

[Mr Ward]

There is a lot in that idea because the concept of working towards and developing a skill—in the old days, a craft—and a profession has been lost. The idea of sticking with something and staying with it until a body of knowledge has been achieved or a degree of experience or skill has been acquired has been lost over the years. I remember very clearly my father’s small card showing that he was a master plumber. The importance of both an organisation’s and a young person’s commitment perhaps ought to be recognised more formally.

We all welcome the Government’s drive to increase the number of apprenticeship places, particularly in areas of unacceptably high youth unemployment—for example, Bradford. In a couple of the wards in my constituency, one in eight young people are not in education, employment or training, and they are desperately in need of some sort of future. It is perhaps unfashionable in some quarters to defend one of the schemes that is still in operation but on its last legs: the future jobs fund. However, I want to talk about the importance of what has been described by others as getting people ready for apprenticeships and making sure that young people are employable in the view of those who wish to take on apprentices.

We need to be very careful not to throw away the baby with the bathwater. The future jobs fund in Bradford got off to a poor, bureaucratic and frustratingly slow start, but it did become a success, particularly with categories of young people who struggled to get into apprenticeships. It was successful both in getting young people into work and in giving them the skills and the work experience that it was hoped would help to them into employment long into the future. More than half of young people on future jobs fund placements in Bradford did not return to benefits after 28 weeks. They found some sort of career progression after, in many cases, pretty difficult young lives. A major criticism of the future jobs fund has been that a high proportion of jobs were created in the public sector but, in Bradford, around 75% of the placements were in the voluntary or community sector. That is big society at its very best.

I should like to mention the Thorpe Edge project. As you will know, Mr Davies, that is a community furniture project that had 13 future jobs fund placements over a period of years. It was apparent that, for some of the young people on that project, getting out of bed before lunch was an achievement, let alone having an apprenticeship where they were expected to arrive at half-past 8 and work through until the leaving time that night for five days a week. The people on that project were fortunate because those who were responsible for running it had experience of dealing with young people in a difficult area. If someone on an apprenticeship did not turn up at 8.30 am and perhaps came in at 10 am, they would have probably lost their job. However, through their knowledge of the young person concerned, Thorpe Edge project supervisors knew that the young person concerned probably came from a background where there was a lone parent or the person concerned was on drugs or suffered from alcohol abuse. In such circumstances, simply getting into work at all was an achievement. By providing intensive support and help for some of those young people, the programme allowed them to get into college or employment.

The focus of my comments is on those people who simply will not get those apprenticeships, however many placements we manage to generate and however many placements the Government are willing to fund. Additional apprenticeships certainly offer a good alternative to the future jobs fund or schemes of that kind in many cases, but there is space for both types of programme. We need schemes that benefit people who are employable and who will do well out of placements and people who would struggle to get on to apprenticeships at all.

There is clearly a supply-side problem in many economies. I hope that the Minister will set out some of the measures that can be used to address the shortage of apprenticeship placements. A scheme in Bradford with the local social housing provider in communities recently received more than 600 applications for just seven apprenticeship places. Evidently, demand is massively outstripping supply.

Other hon. Members have raised all sorts of issues about the barriers and why businesses are not willing to take on apprenticeships, whether because of bureaucracy and red tape—we have mentioned some of those issues—or because of a lack of awareness of apprenticeships, as hon. Members said earlier. Many people who have been in business for years might never even have considered offering an apprenticeship. We need to consider what is happening in the schools and through the careers advice service. We also need to recognise that in some communities, certainly for small businesses, cost is an issue. We need to bear that in mind.

The Federation of Small Businesses has been quoted a lot with regard to the implications for small businesses. I understand that the Government have decided not to extend an apprenticeship grant for employers that provided some time-limited financial support for businesses. We still need to consider that as necessary for certain businesses, particularly small businesses, and in certain economies with high unemployment and a small number of available opportunities.

Let us not forget that although businesses receive 50% for post-19 and a full 100% for pre-19—I understand that that might be extended in some cases—they still have to pay for the young person. For many small businesses in particular, that is identified as being the most important cost. An FSB survey identified that it is simply too costly to take on. Of all the reasons why they were not taking on apprentices, the fact that it was just too costly came out top.

An FSB survey on skills identified that 66% of businesses said that, with the right measures in place, they would take on an apprentice. Those measures include a financial incentive for taking on an apprentice, greater clarity in terms of Government contributions to wage and training costs, and a separate body, interestingly, to manage the payroll costs. That has to be a way forward for many of our young people.

For 20-odd years, I worked in a university. We have heard some comments about university today. I agree that it was wrong to specify a 50% target. For many young people, the message was that if they do not get to university they have failed, and that closed up a lot of options. I also have tell hon. Members that, as someone who worked in a university for nearly 25 years in total, many young people, especially towards the end, were there because they did not know where else to be. They were there to find themselves and to delay a decision. They were there to gain something—a qualification, which they hoped would be useful—but also to defer a judgment on what they should do with their lives.

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[Mr Hayes]

I will come to that in a few moments. When I announce the details of the statistical first release to the House at the end of the month, I am confident that they will show substantial progress and achievement. As hon. Members will know, provisional data already in the public domain suggest that we have made remarkable progress, despite the difficult economic circumstances in which, as has been said, some firms might not usually be expected to consider training or employing new staff.

The commitment that I have articulated was confirmed in the Budget, when the Chancellor announced a further £180 million of funding for apprenticeships. That will enable us to create 40,000 places for young unemployed people, taking them from disengagement to re-engagement, and an additional 10,000 places for advanced and higher level apprenticeships that are focused on SMEs.

The work that I am doing with the Department for Work and Pensions has been mentioned. To an unprecedented degree, I am working with my colleagues to ensure that the welfare reforms being introduced, and particularly the Work programme, marry with the work we are doing on training, skills and apprenticeships. It is important that the 100,000 additional work placements that have been secured have a close relationship with subsequent training and that the system is progressive. The experiences that people gain as they move from disengagement to re-engagement should lead to further learning and training and ultimately to work.

[Mr Marcus Jones]

Under the previous Government, there was a shocking drop-out rate in the number of apprenticeships started and those completed. In 2009-10 alone, nearly 280,000 apprenticeships were started but only 171,500 were completed. That is shocking. Will the Minister assure me that the Government will pay far more attention to that issue? Although we cannot guarantee that every apprenticeship will be completed, we should ensure that we get a far better rate of completion than in the past.

[Mr Hayes]

Even a Minister as confident as I am would not wish to disagree with my hon. Friend, because he is so highly regarded both in his constituency and in the House. None the less, I must say in fairness that the previous Government made progress on completions—I do not like to say things in the House that I cannot say with candour. Although it is true that completions, both under the previous Government and this Government have posed a challenge—as described by the hon. Member for Blackpool South—considerable progress was made by the previous Government. Furthermore, to be ever more generous and even more self-deprecating, let me say that it will be a challenge for us to maintain completion levels as we expand the programme. One risk of a rapid expansion in apprenticeships is that we will need to be careful about starts and completions. As more people are drawn into the system by the energy that we invest and the resources we provide, unless we are careful, there is a risk that the number of completions will suffer. As has been suggested, I am working closely with my officials and we must monitor the situation through the NAS and look at what measures we can put into place to ensure completions.

I do not want to move too far from the main thrust of my argument, but one such measure might be to look at outcome payments for large apprenticeship providers—in other words, to work with those large providers and ensure that payment is made on completion. I am in discussion with a number of major national companies that are extremely interested in engaging in such a system, and we will pilot such a scheme with a number of significant apprenticeship providers. That is one of the things that we can do with regard to completions, but my hon. Friend the Member for Nuneaton was right to draw that issue to hon. Members’ attention, as was the shadow Minister, the hon. Member for Blackpool South.

The difficulty for me in all this is that I have invested a considerable amount of my political reputation on the basis that we will indeed create such numbers of apprenticeships. That might be described as a bold move. The shadow Minister and possibly others would be disappointed if I was not poetic at some time in this speech—I was going to say “performance”, but I do not want to undersell myself—and it was Ezra Pound who said:

“If a man isn’t willing to take some risk for his opinions, either his opinions are no good or he’s no good.”

The risk that I have taken in respect of my opinions is indeed the risk about our endeavours to grow apprenticeship numbers dramatically, but we have to take such risks if we believe that something is right, as Pound suggested, and I do believe that this is right for reasons that I shall detail as I respond to the debate.