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

Neil O'Brien Excerpts

2nd reading
Tuesday 25th February 2025 Commons Chamber

[Neil O’Brien (Harborough, Oadby and Wigston) (Con)]

I start by paying tribute to the work of Mr Speaker and the Deputy Speakers in driving up the number of apprenticeships in this House. Not only is that creating brilliant opportunities, but it is setting a brilliant example, so I pay tribute to them for the work they are doing.

We have heard some brilliant speeches today, and not just from right hon. and hon. Friends on the Conservative Benches. We have heard really important questions from the Chair of the Select Committee, the hon. Member for Dulwich and West Norwood (Helen Hayes); from the chair of the APPG, the hon. Member for Chesterfield (Mr Perkins); and from the hon. Member for Ribble Valley (Maya Ellis). We also heard a great speech from the hon. Member for St Neots and Mid Cambridgeshire (Ian Sollom). We do not always agree with the Liberal Democrats about everything, but a strength of the liberal tradition is suspicion of centralisation, which is what is in front of us today.

We have three main concerns about this Bill. First, there were good reasons why standard setting was put at arm’s length and closer to employers. As we have heard from Members across this House and in the Lords, this is centralisation, and alongside the other changes that the Government are making, it will risk directly damaging the status of these qualifications.

Secondly, the Government are doing several things that will make it less likely that businesses will take on apprentices, but rather than fixing those problems, the Government are reorganising. Skills England will be the 13th skills body in 50 years—it is yet more reorganisation, rather than a focus on the real issues, and from the Secretary of State’s comments earlier, it sounded as if there might be a further reorganisation later to boot.

Thirdly, we have real concerns that this reorganisation of the machinery of Government will lead to harmful delays in addressing some of the most important strategic issues that we face. Those concerns are borne out by the Government’s own impact assessment. As with the schools Bill, this Bill is highly centralising and does not address the real issues. There are multiple things in the skills system that we need to address, but I am slightly baffled as to why the Government are starting by creating a new agency within the DFE and abolishing IfATE.

It is worth explaining how we got to IfATE in the first place. For decades, people said that they wanted to make apprenticeships more prestigious, and part of the answer was growing higher apprenticeships. The number of people on higher apprenticeships went up from just over 3,000 in 2010 to over 273,000 last year—a huge increase—and the hon. Member for Erewash (Adam Thompson) was absolutely right to talk about how good those degree apprenticeships are. They are great routes into good jobs. Indeed, the latest data shows that the median first degree graduate earned £29,900 five years after graduation, whereas a level 4 apprentice earned more—£33,800 on average.

As well as creating and boosting those higher apprenticeships, the other big change was a shift from a frameworks-based approach to a standards-based approach, and those standards meant a shift to a higher quality. They were led by employers, they had a longer duration—at least a year—and they had more off-the-job training and rigorous final assessments. That was much needed. In 2015, an Ofsted report found that even though some apprentices had been on the job for more than a year, they were not even aware that they were on an apprenticeship, such was the problem of quality. Things were being funded that did not ultimately benefit young people, but did allow employers to pay a lower wage, which was obviously concerning.

The apprenticeship levy was designed to give employers much more ownership of the skills system, and making IfATE independent of Government was a big part of that, creating a properly employer-led system. I pay tribute to the work of IfATE—the Secretary of State did not thank it for its work, but I will do so. IfATE has created and maintained around 690 apprenticeships, supporting around 750,000 people on apprenticeships last year. It created 21 T-levels and 174 higher technical qualifications and enabled employer leaders to set a strategic direction for schools in their sector, and its website is an amazing resource.

However, we now see the Government completely reversing the direction of policy. While we lengthened apprenticeships, they have cut the length of an apprenticeship to eight months. While we grew higher apprenticeships, they are abolishing most level 7 apprenticeships, and by abolishing IfATE and bringing it in-house at the DFE, they are eroding independence and employer ownership. Why are the Government suddenly moving in a reverse direction?

[Peter Swallow]

Does the hon. Gentleman not see that the Government are doing so because this is precisely what businesses are calling for?

[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.

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

Neil O'Brien Excerpts

Committee stage
Thursday 13th March 2025 Public Bill Committees

[Janet Daby]

It sounds as though that college is doing excellent work. The Bill is part of the process of delivering Skills England. It is our intention, following the Bill’s Royal Assent, to make commencement regulations promptly to bring into force the provisions that transfer IfATE’s functions, as well as the powers to transfer its assets and liabilities to the Secretary of State and to deliver those services through Skills England.

Skills England will be very different from IfATE, as I have mentioned. It will bring IfATE’s functions together with others that are not currently in statute to identify skills needs and to work with regional partners to ensure that they are being met. By bringing together those different functions in a single organisation, we can make a more responsive skills system that acts fast on the evidence to address skills gaps, uninterrupted by organisational boundaries, administrative hurdles and imperfect data flows. That would not be possible if the key functions were split across Skills England and IfATE. Clauses 1 to 3 are essential to achieving that transformation, so I commend them to the Committee.

[Neil O’Brien (Harborough, Oadby and Wigston) (Con)]

It is a pleasure to serve under your chairmanship, Sir Christopher. The Opposition have three main concerns about the Bill, which are all relevant to this group. First, there were good reasons why standards setting was put at arm’s length and closer to employers. As we heard from Members on both sides of the House of Lords, this Bill is a centralisation. Alongside other changes that the Government are making, it risks directly damaging the status of the qualifications.

Secondly, the Government are doing several things that will make it less likely that businesses will take on apprenticeships. Rather than fixing the problems, the Government are reorganising. Skills England will be the 13th skills body in 50 years. The Government are abolishing IfATE, which was created only seven years ago. This is yet more reorganisation, rather than focusing on the real issues. IfATE will now follow a long list of predecessors, including the Manpower Services Commission, the Learning and Skills Council, the Skills Funding Agency, skills advisory panels, the UK Commission for Employment and Skills, training and enterprise councils and more, into the lengthening history of skills acronyms. We have a bad history of institutional churn in this country generally, and particularly in this area.

Thirdly, we have real concerns that this reorganisation of the machinery of government will lead to harmful delays in addressing some of the most important strategic issues that we face. Those concerns are in fact borne out by the Government’s impact assessment.

As the Minister just said, the first three clauses are all about abolishing IfATE. Clause 1 introduces schedule 1, which transfers functions from IfATE to the Secretary of State. It does not transfer them to Skills England, but to the Secretary of State.

The words “Secretary of State” appear, amazingly, 90 times in this short Bill. That is one reason why the Bill has come in for criticism from a number of different sides of politics. Instead of setting up Skills England as an independent body, which is what a lot of people—including many in the Labour party—assumed it would be, it is going to be part of the Department for Education.

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”.

Obviously, those two points are linked. If it is going to be cross-government, it is easier for it to be independent of the DFE rather than part of one Department.

The CITB makes an important point. IfATE existed to serve all employers, both public and private, and across every Department. In contrast, Skills England will be firmly part of the DFE. The chief executive officer of Skills England will be a job share between the two civil servants who currently run the post-16 skills bit of the DFE.

Likewise, the Institute of the Motor Industry, representing employers and professionals across the UK automotive sector, says in its evidence to this Committee that it has

“significant concerns about the abolition of the Institute for Apprenticeships and Technical Education…and the transfer of its functions to Skills England.”

[Pam Cox (Colchester) (Lab)]

Did the shadow Minister note the submission from the Association of Colleges, which offered very strong support for the Bill? As it represents a large proportion of providers of this education, its views should be taken into account.

[Neil O’Brien]

I saw that, and I wonder whether the hon. Lady noted in that submission the organisation’s pretty strong criticisms of the Government’s decision to cut adult skills spending. That is an example of what I was just talking about. Instead of addressing the real issues, we have reorganisation. I was not going to bring up the document from the Association of Colleges, but I am glad that the hon. Lady has.

Let me return to the Institute of the Motor Industry. Its evidence states:

“Without dedicated attention to the unique challenges faced by the automotive industry, Skills England risks creating further disconnection between education policy and real-world workforce demands.”

It talks about the risk of losing employer-led standards:

“Transitioning to Skills England could introduce additional confusion and delays, undermining apprenticeship approvals and disrupting funding streams critical to maintaining employer confidence.”

In fairness, that is what the Government’s impact assessment said. It stated that the issues around transition are likely to lead to delays, which will have a real-world impact. I will come back to that point in a second.

The criticisms from different people in industry of the move away from independence and employer ownership —those two things go hand in hand—take us back to the origin of IfATE. It was set up alongside the introduction of the apprenticeship levy. It was, in a sense, a quid pro quo. There was employers’ money and, in return, employer ownership of the system, for the first time. The move away from this being something independent and properly arm’s length to it being run by a bit of the DFE, by just some DFE officials, is a move away from that sense of employer ownership.

[Melanie Onn (Great Grimsby and Cleethorpes) (Lab)]

Will the shadow Minister explain why he does not think that the rationalisation of unelected and largely unaccountable arm’s length bodies—quangos—is a bad thing? Why should the Secretary of State not be the person who is held accountable for post-16 skills education?

[Neil O’Brien]

That is a perfectly good question. Of course, this Government are a big fan of quangos and have, I think, created—net—28 more quangos since it came to office. Some can be the right thing to do, so I am not necessarily criticising the Government for that. In this case—I cannot remember if the hon. Lady was around when we were creating the apprenticeship levy—the reason why it was made independent of Government and an employer-owned body was that we were, for the first time, creating something that is quite common in the rest of Europe, the apprenticeship levy.

The levy is intended to stop—to be blunt—good employers who invest in their workforce and the skills of their workforce being taken advantage of by those who do not. That meant doing something controversial, which in effect was requiring them to pay into the levy—in many ways, it is like a tax—but they could get their money back through the apprenticeship levy. However, in return for that big change, requiring larger employers to put their own money into skills, we wanted to ensure that the whole thing would be truly employer-led, rather than politician-led.

Of course, current Ministers are brilliant—this is not any criticism of them—but we legislate for the ages, not for whoever is currently the Minister. Ministers change, and sometimes there have been instances—I am horrified to tell the Committee—where politicians have foibles or funny ideas of their own, which are not necessarily reflected in the wishes of employers and what they want from the skills system. That was why we put the system more into the hands of employers.

[Peter Swallow (Bracknell) (Lab)]

It is interesting to hear the shadow Minister speak about business’s view of the apprenticeship levy. When I speak to businesses in my constituency, they tell me that the apprenticeship levy was not flexible enough and was not working, and it was preventing them giving opportunities to young people. That is exactly why so many businesses have welcomed the changes that this Government are bringing in. Has he not heard the exact same from businesses in his constituency?

[Neil O’Brien]

Even before we set up the levy, I always heard employers expressing concerns about the idea of a levy of any kind. In many instances, they would prefer just to keep their money and not spend it on skills at all. The fact that they were not spending on skills is the reason why we brought in a levy—it was quite a contentious thing, and quite a centrist thing in lots of ways.

As the Institute for Fiscal Studies pointed out in its recent paper on the Government’s proposals to change the levy, the danger, if we start to make these things too open-ended, is that we completely collapse the concept. It notes what happened with things before, such as Train to Gain, where what we end up with is pure dead-weight—we get zero additionality.

To reduce the idea to absurdity, if we were to say that employers can spend the apprenticeship levy on whatever they like, there is no point in having a levy, is there? That is because we would have just gone around in a circle. There is no point taking money off people and saying, “You can do whatever you want.” The whole point of containing that expenditure to apprenticeships was, as well as wanting to prioritise apprenticeships, to avoid the very real problems that the Institute for Fiscal Studies pointed out with previous schemes such as Train to Gain, where we ended up with huge amounts of dead-weight. It did not work, and the amount of money spent by employers on such things went down.

I am absolutely ready to hear criticisms of, and improvements to, the idea of the levy. In a moment, I will talk about some of the challenges that will be thrown up by the Government’s proposals to move large amounts of money out of apprenticeships through the reforms to the levy.

[Leigh Ingham (Stafford) (Lab)]

On the shadow Minister’s previous point, I spoke to businesses in my constituency of Stafford, Eccleshall and the villages, and one pointed out to me that 90 pieces of paperwork were required, with multiple contract stages, just to get, for example, a plumber apprentice to take part in any scheme. The college in my constituency, which is outstanding and has a 72% completion rate compared with the national average of 58%, is doing strong work, but the businesses, in particular the small and medium-sized enterprises, are saying that the apprenticeship levy does not work for them and has excluded them from skills development. I am interested to hear what the shadow Minister has to say about that.

[Neil O’Brien]

As I said, I am absolutely ready to hear detailed thoughts and to have the detailed discussion about how one improves all these different things, and I am pleased that the hon. Lady’s local college seems to be highly successful in delivering these things. Every year, on average, twice as many people started apprenticeships under the last Government as started them under the previous Labour Government, so we did get a lot more of them, as well as higher quality. I do not know what the 90 bits of paper are, but I am absolutely ready to hear and to talk about ways we could improve those matters.

On the point about SMEs that the hon. Lady raised, that is exactly why last March we moved to 100% funding for SMEs—to make things easier for them. I agree with the hon. Lady: there is a lot to do to make it easier for SMEs to participate in the levy-led system. I am just not convinced that any of the concerns she raises will be addressed by shutting down IfATE or setting up Skills England. She might hope that they will be—I hope that they will be—but I do not see anything in this legislation that will fix any of the problems that she complains about. Obviously, we hope that collectively we will solve the problems in the system.

There are quite a lot of concerns—including concerns among those on the Labour Benches, which I will come on to—about the transfer of IfATE’s powers to the Secretary of State compromising the independence with which apprenticeships and wider technical qualifications, such as T-levels, are accredited, and diluting the voice of employers. As numerous people have pointed out, we would not and do not accept that on the academic side, where we have both independent exam boards and Ofqual creating and monitoring specifications and exams. This is yet another example of our treating the academic side—the route that most of us went down—differently from the technical side. As the Labour peer Lord Knight has pointed out:

“The problem that some of us have with the Bill is that it feels like the second half is missing. The second half is the establishment of Skills England as a statutory body…Being subsumed within a division of the Department for Education…is problematic. The Minister needs to reflect on it.”—[Official Report, House of Lords, 21 November 2024; Vol. 841, c. GC87.]

As another Labour peer, Baroness Blower, pointed out,

“the appropriate move from where we are would be to a statutory body”.—[Official Report, House of Lords, 21 November 2024; Vol. 841, c. GC90.]

Stephen Evans, chief executive of the Learning and Work Institute, said that giving Skills England legislative backing

“would…cement the body’s independence.”

In contrast, the Bill originally introduced by the Government did not even include the words “Skills England”. The very act of a further reorganisation, even if one thinks it is a good idea, is likely to further compound the effects of the Budget and the decision to move apprenticeships money to other things. I will just rehearse that for a moment. Obviously, the Budget saw a £40 billion overall tax increase and the largest part of that is a £25 billion increase in national insurance, which is squarely targeted on part-time and lower-income workers. It hits exactly the tier of the workforce that is typically the apprenticeship kind of tier. Of course, apprenticeships do not require payment of national insurance, but when we see lots of employers, as we do now, shedding jobs in that tier, that is inevitably bad for the number of apprenticeships.

That is compounded by what the Government want to do in terms of taking money out of apprenticeships. There has been some confusion about that, because safely before the election, Labour in opposition had the idea that it was going to let employers take 50% of the money from the levy and spend it on things that were not apprenticeships. Then, as the election drew nearer, that idea seemed to disappear and did not feature any more. Lots of people assumed that it was gone. Then I assumed it was definitely gone, because I asked the current Minister—whom we have here today—in Westminster Hall whether the 50% target still stood, and the Minister said that the policy was under review. Then a couple of weeks later, in oral questions, when we asked the Secretary of State whether the 50% target still stood, she said that it did, even though lots of people in industry think that that is not the plan.

This whole question about how much of the money will be taken out of apprenticeships and put elsewhere is shrouded in confusion. I would love it—I would be delighted—if the Minister could talk about that point today and tell us whether it is still 50%. It is a binary thing: it either is 50% or is not. I would love the Minister to tell us the answer one way or another. At the moment, the levy raises about £2 billion a year. If the Government take 50% of that money out, they might think that is a good thing. They might say, “Yes, we want employers to be able to spend a billion quid on other stuff.” But if they take all that money out of apprenticeships, one thing they will definitely have is fewer apprenticeships. They could say it is fine—

[Melanie Onn]

The shadow Minister references the number of apprentices, and he pointed to the previous Government’s record on that, but, in my constituency, apprenticeship starts fell year on year under the previous Government. Lots of young people have been completely disenfranchised, having had their apprenticeships end early without getting to completion. There has to be some kind of change so that we are not failing young people. There has to be a review of the levy, which employers have said is far too restrictive. The hon. Member’s points do not actually bear scrutiny when we get down to constituency-level data, do they?

[Neil O’Brien]

I give the hon. Lady the national-level data—I think I did already—because I do not have in my head the data for every constituency. At the national level, we had twice as many apprenticeship starts every year under the last Conservative Government as we did under the previous Labour Government. The hon. Lady might say, “That’s not enough; it should’ve been even higher,” and I would perhaps even agree with her. I would have liked the number to be even higher as well.

The hon. Lady said that numbers fell. What we saw was that, even though the overall number of starts was twice as high under the Conservatives as it had been under Labour, absolutely, the shift from frameworks to standards and to a higher quality of apprenticeships did reduce numbers. It did not take them down to where they had been under Labour, but it did reduce them. However, that shift was essential, and I do not think that anyone wants to go back from standards to frameworks.

There was a damning 2015 Ofsted report, which the hon. Lady will remember well, that found that quite a lot of people—a lot of learners—had been on an apprenticeship for more than a year and did not even know they were on an apprenticeship.

[Melanie Onn]

rose—

[Neil O’Brien]

Such was the low level of quality—such was the total absence of any training or meaningful content in the apprenticeship. What we had was an abuse. What we had was employers being able to pay below the national minimum wage—below the rates even for young people—and, at the same time, not providing meaningful training and what all of us want, which is proper, high-quality apprenticeships. I do not think the hon. Lady is really going to argue for a move back to those previous frameworks—

[Melanie Onn]

rose—

[Neil O’Brien]

But, as she rises to her feet, perhaps she will tell me if she does want to go backwards to frameworks.

[Melanie Onn]

That is not what I am rising to my feet to say. It is interesting that the shadow Minister points out the differential rates of pay between young people and older people, because we have just had the Employment Rights Bill going through Parliament, during which Conservative Members were absolutely incandescent that we might seek to raise the pay of young people, equalise it and recognise fair rates of pay regardless of age.

I am interested in that 2015 report. The hon. Gentleman said “a lot of people”; was that the actual wording in the report?

[Neil O’Brien]

I am not sure what the question is. Is the hon. Lady asking whether what I said about the 2015 report was correct?

[Melanie Onn]

I was asking the shadow Minister to clarify the numbers. He refers to the report and makes a sweeping generalisation about it, so what exactly were the numbers? What is the accuracy of the report?

[Neil O’Brien]

Just to reassure the lady, the numbers are correct. Although I do not encourage people to use mobile phones in Committee, Sir Christopher, the hon. Lady can google her way to the 2015 Ofsted report. She can read it for herself and be chilled, as I was, by its description of the pre-reform system and the low level of quality that was being provided in it.

The hon. Lady tempts us off the topic to talk about wider issues. On those different rates, I would say that most systems around the world, including ours, have different rates of minimum wage by age. That is about making the so-called “bite” of the minimum wage similar for different ages. Different groups of people at different ages have different productivity levels and different typical rates of pay. Therefore, if a Government do not want to create large rates of youth unemployment—and most systems around the OECD do not—they end up with different minimum wage rates for different ages. That system has been there since the start; it was there when Labour created these things, and it was still there when we turned it into the national living wage, so none of that is novel.

I will say one thing about the Employment Rights Bill, since it has been brought up. We do not have the skills Minister herself with us, because, of course, she is in the other place, but I do just note that the Government have created a situation in which a lot of universities are facing industrial action—because the national insurance increase has wiped out all of the increases in fees, and one broken promise on fees is now being used to pay for another broken promise on tax. The Employment Rights Bill makes it easier to take industrial action. I think that a lot of universities, as employers, are dreading the impact. Having addressed that point, I will get back on topic.

--- Later in debate ---

[Pam Cox]

Will the shadow Minister acknowledge that an awful lot of preparatory work has gone on to establish Skills England already? Once the Bill goes through, we will be in a good position to set this up quickly.

[Neil O’Brien]

Sure. A shadow form exists at the moment, but that does not change the longer-term point that if we do not give it its own legislative basis and make it independent of the Department, all the criticisms and concerns about the dilution of the employer voice and so on still stand. I am not having a go at those who are setting up Skills England.

[Leigh Ingham]

On the point about independence, the chair has been announced as Phil Smith, the former CEO of Cisco. Surely that in itself is a sign of significant independence.

[Neil O’Brien]

A fantastic person—all good. It is like having NEDs—non-executive directors—in a Department; it is good to have external people. As I noted, however, the CEO of the organisation is literally not a civil servant; it is a job-share civil servant. They are people who currently work in the Department doing post-16 skills, so I am not sure about idea that this is an independent body. Can the hon. Lady tell me where Skills England is based? Physically, where is it located? Perhaps the Minister will tell us. Is it in Sanctuary Buildings, by any chance? Sanctuary Buildings is none other than the headquarters of the DFE. Is this, in fact a desk in an open plan office that is part of the DFE?

The Government can bring in good people. It is good to bring in good people. The DFE has some good NEDs, by the way, but that is not the same as having an independent institution. That is why Lord Blunkett and other Labour peers are warning that the Government are making a mistake. Those are their words, not ours. Lord Blunkett has a lot more experience of those things than me.

All I would say to the Minister and to hon. Members on the Government Benches is, instead of overturning what peers have put into the Bill, this might be one of those times when it is more sensible to listen to people on their own side, people with some serious grey hairs and a lot of experience, people in their own party, who are advising them that they are making a mistake here. Instead of overturning what they have done, the Government should allow it to stand. The criticisms being made by people in the industry and people with experience in education and skills are serious. I hope that the Government will listen to them, rather than simply overturning what they have done and ignoring them.

[Damian Hinds (East Hampshire) (Con)]

We are debating clauses 1 to 3 stand part and schedules 1 to 3. The Minister, in her opening remarks, talked a lot about the intention to create Skills England, how it will operate and so on. That is not in clauses 1 to 3.

The Bill is all about transferring functions from the independent Institute for Apprenticeships and Technical Education to the Secretary of State in central Government. Colleagues may have seen the, as ever, helpful and pithy descriptive notes from the House of Commons Library. Clause 1 introduces schedule 1, which will transfer statutory functions from the institute to the Secretary of State. Clause 2 introduces schedule 2, which will allow the Secretary of State to make schemes for the transfer of property rights and liabilities from the institute. Clause 3 will abolish the institute and introduce a schedule 3, which makes consequential amendments to the 2009 Act and other Acts.

The history of this sector is the history of many changes in the machinery of government and the creation of many quangos. There have been 12 in the past five decades. This one will be lucky—no doubt—13. My hon. Friend the shadow Minister helped us with some of the history and some of those previous bodies. I have a slightly longer list.

We have had industrial training boards, the Manpower Services Commission, the Training Commission, and the training and enterprise councils known as TECs—but those TECs were not the same as another type of TEC, the Technical Education Council, which existed alongside the Business Education Council or BEC in the 1970s. The two would merge in the 1980s to give us, of course, BTEC, the Business and Technology Education Council. There were national training organisations, the Learning and Skills Council, sector skills councils, the UK Commission for Employment and Skills, the Skills Funding Agency or SFA, which would later become the ESFA, or Education and Skills Funding Agency, and most recently LSIPs—local skills improvement partnerships—and IfATE.

--- Later in debate ---

Why is this relevant to today’s debate? It is because the independent IfATE was central to this vision. It built on the existing Institute for Apprenticeships, combining it with the college route and ensuring that employers had a central role in setting the standards, skills and behaviours that people would need. The Sainsbury report was clear that specifying standards is not a role for officials in central Government but for professionals working in the relevant occupations, supported by education professionals.

[Neil O’Brien]

I, too, pay tribute to the work of Lord Sainsbury. Those points, which were inserted into what were then called the Sainsbury routes, drew on the experience of the best technical systems in the world, particularly those in Germany and Switzerland. What characterises those systems is the unbelievable level of employer ownership and the incredible constancy of the organisations, which are external to Government, that run them. The Bundesinstitut für Berufsbildung has been around for, I think, 50 or 60 years. Are those not the characteristics of a good system—employer ownership and independence—and the things that Lord Sainsbury was talking about?

[Damian Hinds]

My hon. Friend is right. If we take the full etymology, we can go back a lot further, to the creation of guilds centuries ago, which evolved into the modern system.

[Damian Hinds]

No, I do not, but there is a definition of what an apprenticeship is. There are perfectly good reasons to have all manner of training courses, including entry-level ones, that do important things, but they are not apprenticeships. The shadow Minister talked about Germany. In our country, the minimum length of an apprenticeship is shorter than the typical length of one in Germany. The time off the job—the time in college—is shorter. As I say, we can add on other things, but we cannot stretch the definition of what an apprenticeship is indefinitely. I may come back to that later.

On the face of it, this is a simple Bill—it has 13 pages and is on a simple subject—so it should be fairly easy for a Committee to dispatch in a couple of Thursdays. I have no doubt that Government Members will take the opportunity to make speeches on this subject, and I am sure those will be rather good. Members may make what could be described as great speeches and what they say will be largely unarguable. I fancy that we may hear the word “mission” from them, perhaps even more than once. They will talk about the importance of skills in our economy, investing in the next generation, valuing every single person for what they can do and the value of joining-up across Government Departments.

That will all be correct, but it will be largely beside the point. To turn a great speech that includes those things into a truly outstanding speech in this Committee, they would have to explain why taking away the independence of the body overseeing the system that upholds the standards would make those entirely laudable and shared goals more likely to come about. I know of no reason to believe that it will, but I am keen to hear from anybody who has such an idea.

In the Labour manifesto, there were some very laudable aims. It said that it wanted to empower

“local communities to develop the skills people need”

and to

“put employers at the heart of our skills system.”

Labour said that it would

“establish Skills England to bring together business, training providers and unions with national and local government”,

in order to deliver its industrial strategy. The manifesto said:

“Skills England will formally work with the Migration Advisory Committee to make sure training in England accounts for the overall needs of the labour market”.

It mentioned a commitment to

“devolving adult skills funding to Combined Authorities…alongside a greater role in supporting people into work”,

and Labour will

“transform Further Education colleges into specialist Technical Excellence Colleges.”

There are different ways that those aims could be achieved, and I would argue that there are better ways. The Government could, for example, keep IfATE as the standard-setting and upholding body, and create a new, small body, possibly inside the Treasury, to assess the needs of the economy and allocate funds accordingly. They could also strengthen the powers of local skills improvement partnerships, working closely with devolved authorities and mayors, to ensure that what is delivered at a local level in individual colleges matches what the local economy needs. I would have probably chosen that architecture, but plenty of other variations are possible.

To be clear, the Bill does not do any of those things. It simply abolishes the independent body that convenes employers to set the standards and then uphold them, and it hands those powers to the Secretary of State. It does nothing else—I say that, but it is not totally clear to me what it does to Ofqual, and we may debate that when we get to clause 8. I suggest that the Bill presents two fundamental questions: first, about independence; and secondly, about who should set the expectations and standards in any given sector of work—should it be the employers in that sector or somebody else? We will come to that debate when we reach clauses 4 and 5.

Ultimately, this is about whether we believe enough in the phrase “parity of esteem” to do the things necessary to achieve it. As I said in the House the other day, parity of esteem is not something one can just “assert”, and it cannot be legislated for. We cannot pass a law to give something greater esteem. Esteem is in the eye of the esteemer and it can only be earned. In part, that comes from knowing that the qualifications of the technical and vocational strand in our country are just as rigorous and have the same integrity as the academic strand.

By the way, independence is not totally a left/right issue. There are plenty of people on the right of politics who share the Minister’s desire not to have independent bodies. There is a general “anti the quangos” strand, and I have some sympathy for that. By the way, a debate is going on at the moment about removing the independence of the national health service and bringing it into the Department of Health and Social Care. That can be argued both ways. On the one hand, it will be harder for the NHS to do some things, particularly what they call reconfigurations, when they become subject to political pressure. On the other hand, it can be argued that there should of course be direct control from a democratically elected Government over the most important institution in our country. However, I think an independent body for upholding standards in education is in a separate bracket.

[Neil O’Brien]

Does my right hon. Friend agree that the context in which this is happening matters? We are talking about getting rid of a prestigious and independent institution, and at the same time, T-levels will not do what Lord Sainsbury hoped they will do. They were supposed to replace the existing standards but, in fact, they will be just another thing in the alphabet soup. We are seeing apprenticeships being made shorter again, and we are going back towards shelf-stacking types of apprenticeships. The mood music is already pretty ominous, and that is against the backdrop of Ministers getting more power by taking this back into the Department and abolishing independence. Does my right hon. Friend agree that that is an issue?

[Damian Hinds]

I do. Funnily enough, my hon. Friend anticipates my next paragraph. Any Government rightly want more young people to pass their GCSEs, get good A-levels, or start and complete apprenticeships. The truth is that the quickest way to have more people getting any qualification is to make it a bit easier, and there is plenty of history of that, I am afraid. The entry requirements or length could be reduced, the pass mark could be made lower, or the credits that count towards the outcome could be changed. One of the reasons we have independent bodies setting standards is so that that temptation cannot be succumbed to, and crucially, everybody can see that it cannot, so they can have total faith in the standards being upheld.

Essentially, the rationale for why there is an independent Institute for Apprenticeships and Technical Education is the same one as why the Chancellor sets fiscal rules, or why Gordon Brown made the Bank of England independent: it is specifically for the Government to keep themselves within certain tram lines. We do this for academic qualifications. I have asked the Minister this question I think three times, and I will ask it again today: it would not be acceptable, would it, to say, “I’m going to put the pass mark, standards and specification for A-levels in the hands of a Government Minister”? If that is not acceptable for A-levels, how can it possibly be acceptable for T-levels? And we still say that we believe in parity of esteem.

In the good, possibly great, speeches that we will hear from Government Members, one other thing they might say—in fact, they have already started to say it; they pre-empted me—is that apprenticeship starts have fallen since the peak, but that under this Government, they will rise. Well, of course they will rise. If we look at the time series over the last decade of apprenticeship starts, we are not comparing apples with apples; we are comparing apples with oranges, because we had major changes in what counts as an apprenticeship, with the move from frameworks to standards as well as the minimum duration and minimum time off the job.

In discussing the overall numbers, we should also mention that the falls were in the intermediate level and that there were rises in the advanced level, and especially in higher-level apprenticeships. If the specification is reduced, of course that will increase the numbers. To be fair, the Government are not waiting for Skills England. They have already been doing this, by bringing the minimum length down from 12 months to eight months. They have also announced what they are calling foundation apprenticeships, and I hope the Minister will be able to tell us exactly what those are—they sound a bit like traineeships, but let us hear it—and crucially, whether they will count towards the number of apprenticeships that are being undertaken in the country.

--- Later in debate ---

[Janet Daby]

Hon. Members have given me much to think about and feed back. I remind Opposition Members that one in eight young people are not in education, employment or training, a third of vacancies in our country are due to a lack of skills, and many people are in jobs for which they are underqualified. Young people need to know that when they undertake skills training, there will be a guaranteed job at the end of the process. We are committed to ensuring growth in this country. We want to get young people into work to ensure that they succeed and progress in life. We absolutely know that what we are trying to achieve with Skills England is the right thing to do.

I will attempt to respond to the various points that hon. Members have made. There have been previous arm’s length bodies with functions partially linked to those intended for Skills England, but none provides a direct comparison, given Skills England’s distinct remit.

Establishing Skills England is a manifesto commitment, and will support the delivery of the Government’s missions. As an Executive agency, Skills England will be subject to clear requirements on governance, transparency and accountability, and Ministers will be accountable to Parliament. The Government have put in the Bill a duty for the Secretary of State to publish information about matters they will take into account in deciding whether to prepare a standard or apprenticeship assessment plan without a group of persons. This new power will therefore be subject to the same level of transparency as existing powers being transferred from IfATE.

An Executive agency is a widely used model of arm’s length body. It has a clearly defined status and must be established and governed in line with official Cabinet Office guidance. Executive agencies are appropriate for the delivery of specialised functions separate from a primarily policy-focused Department, but within a policy and resources framework set by the Department, and for delivery of services to other parts of central Government using specialist skills. The Executive agency model will give Skills England the independence to focus on the delivery of its functions at arm’s length from the Department for Education, while ensuring sufficient proximity to the Department that Skills England can quickly and efficiently inform decisions on skills policy and delivery.

Skills England is operating in shadow form and is working extremely closely with IfATE, which also currently has a base in Sanctuary Buildings—the Department for Education. Following a vigorous recruitment process, in line with civil service guidance, we have appointed Skills England’s chief executive officers. Tessa Griffiths and Sarah Maclean have been appointed co-CEOs. They are senior leaders with long-standing experience in the public sector. Tessa and Sarah have been leading Skills England while it has been in shadow form, since last summer. They have driven the rapid progress that has seen Skills England start to deliver its important work ahead of the passing of this Bill. We do not believe in delay; we want to get on with establishing Skills England as an arm’s length body.

Skills England’s being run by CEOs at civil service director level is consistent with the approach taken by IfATE and other Executive agencies of the Department for Education. It is really important that I make those points so that there is a clear understanding of what is happening.

We considered, but ultimately decided against, expanding or otherwise retaining IfATE. We want to set Skills England up to build on IfATE’s work with employers, and to shape technical education and apprenticeships, but it will be very different from IfATE. It will have a much broader remit and will be more ambitious. It will bring IfATE’s functions together with others that are not currently in statute. We need to go further and do more to identify skills needs and work with regional partners to ensure they are being met. By bringing together those different functions into a single organisation, we will really be able to accelerate change. That will help the skills system to be more responsive to emerging skills needs. We need a flexible system that acts fast on the best available evidence to address the skills gaps that threaten to hold back our country. I am sure none of us wants to do that.

IfATE has worked with employers to design over 700 occupational standards. Skills England will build on that important work and retain a strong role for employers. But the skills system in England has matured since IfATE was created in 2017, and the scale and urgency of the skills challenge that we face means we need a new approach.

The Government are committed to delivering skills for the sector, as I have already pointed out, and we are listening to the needs of employers. This can be seen in our reform, growth and skills offer. Skills England will build on the work of IfATE and employers will continue to play a critical role in the design and delivery of apprenticeships and technical education. Indeed, that is already happening. The changes being brought about through the Bill have been designed in response to employer feedback and will simply mean that employers are not overburdened by repetitive and drawn-out processes, which we know can lead to disengagement.

I welcome the written submissions from the Institute of the Motor Industry, the Association of Colleges, JTL Training and the Royal Society of Chemistry. I thank those organisations for contributing to this important debate. I completely agree with the Institute of the Motor Industry’s view that Skills England must maintain an “employer-led ethos” with “strong industry collaboration”. That is why Skills England is already working, and will continue to work, closely with industry, while also building a clear picture of the challenges facing employers, including regional skills gaps, in order to support growth in our skills sector.

It is pleasing to hear the Association of Colleges, which represents more than 98% of further education colleges, express strong support for plans to establish Skills England and recognise the critical role that Skills England will play in the Government’s broader post-16 education and skills agenda.

Although many Members of the other place support the aims of Skills England, it is disappointing that peers voted for an amendment that would delay its full establishment. The Government are clear that employers need a fully formed Skills England now; they cannot wait. That is why we have tabled amendment 1 to overturn that amendment made in the other place.

Gaps in our economy are holding back growth and opportunity. We need the Bill to give Skills England the key tools that it needs to tackle them now, and not in 12 months’ time. Skills England has been operating in shadow form since July. Due to extensive transition planning over several months, it is ready to move fast to deliver the functions made possible by the Bill. Delay simply is not an option.

With regard to whether employers can spend up to 50% of levy funds on non-apprenticeship training, I do not want to put a target or limit on flexibility. It will be led by what employers need and driven by Skills England analysis. We have already introduced flexibility through new foundation and shorter apprenticeships, and we will continue to work with employers to understand where future flexibility will be most helpful.

[Neil O’Brien]

The Minister says she does not want to set a limit, but there was a commitment from the Secretary of State that employers would be able to spend up to 50% of their funds on non-apprenticeships. That was a Labour commitment. If I understand her, it will no longer be up to 50%; it will be some other number. Or is she saying that it will be up to 100%? Which of those things is she saying?

[Janet Daby]

What I am saying is that we have already introduced flexibility and we will continue to work with employers to understand where future flexibility will be most helpful. That will be worked through with Skills England. I am happy to get the hon. Member some further information.

[Neil O’Brien]

Will the Minister give way on that point?

[Janet Daby]

No, I think I have said enough on that point.

[Neil O’Brien]

But we are completely unclear.

[The Chair]

Order. The Minister is not giving way. As the shadow Minister knows, in Committee people may speak more than once in a debate, so if he wishes to come back after the Minister has sat down, he is free to do so.

--- Later in debate ---

I urge the Committee to support clauses 1 to 3 and schedules 1 to 3.

[Neil O’Brien]

We have mysteries wrapped in mysteries here. As well as the lack of clarity about the future caused by the Bill, even in this debate on one group of clauses, we have had an extraordinary statement by the Minister. Businesses would like to know how, in just a few months’ time—next year—they will be able to spend a couple of billion pounds of their own money. This is employers’ money. Labour have oscillated between, “We will let 50% of this go on other things”, “No, we will not” and, since being in government, “We are reviewing this. This is not our policy any more.” On the Floor of the House, the Secretary of State has been saying, “No, it is absolutely our policy—50%. That is the number.” That is what she has told the House. Now we have another position—a fifth—on the spending of this money: “No, that is not the number any more.”

Employers will be jaw-to-the-floor agog at what is going on in the DFE. What is the policy? This is billions of pounds of employers’ money, in a difficult economic situation, being spent imminently, and yet the DFE cannot say—the Minister literally would not take a further question on it—what the policy is. What an extraordinary situation. What a shameful situation. Unbelievable.

We have been saying that, down the line, there might be some things to worry about in this transfer of power away from an employer-led and independent system towards the tender mercies of the DFE, but employers have got something to worry about right now. The Government do not seem to know what their own policies are. On that basis, I really do want to press clause 1 to a vote, and we will vote against it.

[Janet Daby]

We have been listening to businesses and employers, and they are absolutely telling us that they want greater flexibility in our apprenticeship systems and in how employers can spend their levy funds. We are reforming apprenticeships to deliver greater flexibility for learners and employers, including through shorter and foundation apprenticeships. I have attempted to answer the shadow Minister’s questions, but he is not satisfied. I have also offered to ensure that we get some more information. I want to make one more point: we are not putting a target or limit on flexibility; this will be led by what employers need.

[Neil O’Brien]

I am not asking for a target; that is a complete mischaracterisation. I am asking for clarity on the Government’s own policy. The Government said that that they would allow employers to take up to 50% of the money and spend it on things that were not apprenticeships. Either that is still the policy or it is no longer the policy. Which of those two things is the truth?

[Janet Daby]

I will get back to the hon. Gentleman. I will make sure there is a written response.

--- Later in debate ---

[Neil O’Brien]

Absolutely unreal.

Question put, That the clause stand part of the Bill.

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

Neil O'Brien Excerpts

Committee stage
Thursday 20th March 2025 Public Bill Committees

[The Parliamentary Under-Secretary of State for Education (Janet Daby)]

Government amendment 1 lets the Secretary of State make regulations that determine the date, or dates, when clauses 1 to 8 and schedules 1 to 3 come into force. The other provisions of the Bill in clauses 9 to 14 come into force on the day on which the Bill is passed.

This amendment seeks to overturn the amendment passed in the other place that places a 12-month delay between the creation of Skills England and commencement of key parts of the Bill, including the clauses that transfer functions from the Institute for Apprenticeships and Technical Education to be exercised by Skills England. It was hugely disappointing that, despite broad support for the urgent need for reform, peers in the other place voted for that delay. Reform is exactly what the Bill and Skills England will deliver. After 14 long years of complacency and neglect, this Government are driving high standards, and we have a plan for change. A delay will benefit no one.

Skills England is already operating in shadow form and, once the Bill is passed, it stands ready to become a fully operational arm’s length body. The leadership is already in place, with the chair, the vice-chair, the chief executive officer, the deputy CEO and a full team of senior civil servants already working as one. The work is well under way; Skills England reported on skill gaps in September last year. It is connecting decision making across regional and national Government, as well as working closely with training providers, trade unions and employers. It is collaborating with businesses to develop sector plans for the forthcoming industrial strategy.

Skills England is working with closely with the Migration Advisory Committee to access skills needs to identify shortages in occupations. That will help to identify and grow our domestic skills pipeline over time, which will reduce our reliance on overseas workers. We need to build our own skilled workforce, and Skills England is moving ahead. The Bill gives it some of its key tools, but there is no case for delay, and I commend Government amendment 1 to the Committee.

Government amendment 2 would remove clause 14(2) of the Bill. It is normal procedure for Bills originating in the House of Lords to require the insertion of a standard privilege amendment such as subsection (2). This formally recognises the privilege of this House to control charges on people and public funds. Therefore, in accordance with normal procedure, we now remove the privilege amendment so that any such charge is imposed by this House, rather than the House of Lords. I commend Government amendment 2 to the Committee.

Clause 11 sets out the territorial extent of the provisions contained within the Bill. This is a standard clause for all legislation. Clauses 1 to 7, clause 9 and schedule 2 extend to England and Wales. Clause 8 extends to England, Wales and Northern Ireland. Clauses 10 to 14 and schedules 1 and 3 extend to England and Wales, Scotland and Northern Ireland.

I have already touched upon clause 12 as part of Government amendment 1, which states when the provisions of the Bill will come into effect. Clause 12 should stand part of the Bill, as amended by Government amendment 1. Furthermore, as is standard practice, clause 14 gives the Bill a short title by which it may be known once it becomes an Act. The short title given is the

“Institute for Apprenticeships and Technical Education (Transfer of Functions etc) Act 2025.”

I commend clauses 11, 12 and 14 to the Committee.

[Neil O’Brien (Harborough, Oadby and Wigston) (Con)]

Clause 11 talks about the geographical extent of the Bill, which it says is England and Wales. This is a very small point, but it is worth noting that the Bill and decisions under it will actually affect other parts of the UK as well, not least because they affect degree apprenticeships and higher education. For example, the University of Strathclyde is a leading provider of graduate apprenticeships and degree apprenticeships across Scotland and England; I will return to that overlap later on.

On a more substantive note, Government amendment 1 seeks to overturn the one-year pause inserted in the House of Lords. Why did peers insert that? Why was there so much debate, and such wariness about this Bill? First, because there were good reasons that standard setting was put at arm’s length and closer to employers. We heard from all parts of the House of Lords that this Bill is a centralisation and, alongside other changes the Government are making, it will risk directly damaging the status of these qualifications.

Secondly, the Government are doing several things that will make it less likely that businesses will take on apprenticeships, starting with the Budget. Rather than fixing those problems, the Government are reorganising. Skills England will be the 13th skills body in 50 years. It is abolishing IfATE, which was created only seven years ago—yet more reorganisation, rather than a focus on the real issues.

Thirdly, peers had—and we have—real concerns that the reorganisation of the machinery of Government will lead to harmful delays in addressing some of the most important strategic issues we face. Those concerns are borne out by the Government’s impact assessment, which states that 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…This may disproportionately impact disadvantaged learners, who rely more heavily on these pathways for career advancement.”

Fourthly, peers inserted the delay because of concerns about what will happen as DFE tries to absorb all the staff of IfATE. Lord Blunkett, who was one of the most interesting speakers in the Lords, said:

“My fear…is that given the number of people currently transferable from IfATE, full- and part-time, which nudges 200…there is a real danger that IfATE will swamp Skills England at birth.

When two years ago I led on the learning and skills document that was a precursor to Skills England…we never envisaged that an agency inside government would have to take on the assurance and accreditation of the relevant sector standards.”

He continued:

“A Skills England that has no legislative backing and no parliamentary references but is down merely to the changing face of ministerial and departmental appointments is in danger of losing its birthright before it has got off the ground.” —[Official Report, House of Lords, 21 November 2024; Vol. 841, c. GC98.]

That argument is somewhat different from the others. His argument, as somebody sympathetic to the creation of a body like Skills England, albeit outside the Department, is that it needs time to establish its own culture and balance, and to grow and develop some roots, before the IfATE elephant steps into the Skills England rowing boat.

Since we last met as a Committee, we have received further written evidence from the Skills Federation, which brings together 18 employer-led sector skills bodies, representing more than 150,000 employers. They add their voices to the concerns. The organisation warns:

“Transfer of IfATE functions risks disruption and a focus on operational rather than strategic priorities…The movement of functions and the people that carry them out will always be challenging. It is important that the transfer is planned effectively, and the time taken to think through the implications for IfATE staff, but also the impact on the system. Compromises will no doubt have to be made to balance the need for pace with the requirement to retain operational continuity.

However, there is a key risk that transfer of functions from IfATE will become the key focus for the set-up of Skills England and less attention (and potentially resources) placed on achieving the overarching aims.”

That is a direct reinforcement of the argument that Lord Blunkett made in the Lords. It is very sensible advice to take our time.

In contrast to employers’ groups, Ministers say there is no time to wait. In truth, there is no great obstacle to the Department doing all the things it might want to do, and establishing Skills England a little bit more before that big transfer of staff, but Ministers want to take this one-year pause out of the Bill with their Government amendment 1. They would be wiser to listen to the grey-haired people in their own party, such as Lord Blunkett, but it seems they are not minded to do that.

This group also includes Government amendment 2 to remove the Lords’ privilege amendment. For the benefit of those following the proceedings, as the Minister said, the Lords automatically insert these amendments when there is legislation starting in the Lords that involves levies and taxpayers’ money, to avoid formal infringement of the Commons’ privileges over those things.

There is nothing unusual about that, but the privilege amendment is put in as a deliberate reminder that the Bill has a significant impact on spending of both levy and taxpayers’ money. The sums involved here are non-trivial—it is billions of pounds of spending, governed by IfATE today and by the Department for Education in future. The ongoing chronic uncertainty about the Government’s plans to allow employers to take money out of apprenticeships is not just damaging for business—it is damaging on a significant scale.

In the last Bill Committee sitting, the Minister promised to write to me to set out the Government’s position on the 50% flexibility. I hope she will tell me today when that letter is likely to appear, because businesses are starting to raise the alarm ever louder.

Since the Committee last met, even more businesses have come out with criticisms. Jane Gratton, the deputy director of public policy at the British Chambers of Commerce has said that the lack of clarity about the future of the growth and skills levy was creating “fresh uncertainty among businesses.” She said that some employers had told the BCC that they had put training plans on hold until they heard what alternatives would be funded in future. She called on the Government to lay out a clear timeline for reform and said that threats to cut the levy before it had even been established are “worrying and destabilising”.

Likewise, Simon Ashworth, the deputy chief executive and director of policy at the Association of Employment and Learning Providers, said:

“there’s little room for manoeuvre—scrapping level 7 apprenticeships won’t yield savings for years…Until the programme budget more closely matches the levy take, it’s imperative funding priorities are aimed at maintaining the sustainability of apprenticeship standards, rather than introducing further non-apprenticeship flexibilities.”

That is a very important warning.

This is all happening against a backdrop where other types of technical education covered by IfATE are shrinking too. I am old enough to remember when Labour MPs spent years saying that adult skills spending was not generous enough—yet yesterday we learned that the DFE is to cut adult skills budgets by 6%. Amazingly, that came out at the same time as the welfare reform Green Paper, which overshadowed it and mentioned training 18 times. In the Chamber the other day, the Secretary of State for Work and Pensions made an argument—a good argument—that it is better to get people into training rather than parking them on benefits; yet elsewhere, at the very same moment, DFE Ministers were cutting the training budget.

Skills England was supposed to bring a joined-up approach to policymaking. There is not much sign of that here. Instead, it will reinforce the concerns of those who want technical education to be more independent and employer-led.

I ask the Minister a specific question on the funding that IfATE regulates. Yesterday, we got an announcement on schools funding. The Association of School and College Leaders and the Confederation of School Trusts are warning that the funding only covers part of the costs of the national insurance increase and is leaving schools with a funding gap ranging from 10% to 35%—but at least schools are getting the funding announcement before the start of the financial year, albeit only days before.

Technical education is not so lucky. Colleges and 16-19 institutions will have to wait. They will be told their allocations this May and will be paid in September, even though they will have to start making the increased tax payments from the start of the new financial year in just a few days’ time. As James Kewin, deputy chief executive of the Sixth Form Colleges’ Association points out:

“16 to 19 funding is uncertain at the best of times, but this year colleges are also waiting for their post-16 budget grant allocations (scheduled for May) and a decision on the 10 per cent T-level uplift…This is all very late in the day”.

He is right. Once again, technical education is being treated as the poor relation.

We already know that independent training providers and specialist colleges will not get any compensation, and it is unclear how much of next month’s national insurance rise will be covered by the grant. Can the Minister stand up and reassure the sector today that all the additional costs, including those for indirectly employed staff, will be covered by the grant? Or will they, like schools, find that they have been short-changed?

I will not labour the point, but many people, including employer groups and very experienced people on the Labour side, have warned about the rush to bring these powers and functions into the Department and the effect that that will have on the Government’s own plans for Skills England. Ministers would be sensible to listen.

--- Later in debate ---

[Damian Hinds]

That is not really the way we do it in Parliament. You respond for the Government.

[Neil O’Brien]

We ask you a bunch of questions. I do not know whether you have noticed, but you are the Minister.

[Janet Daby]

I did not expect the Members opposite to respond anyway.

--- Later in debate ---

[Janet Daby]

Across the UK, almost one in 10 of more than 2.5 million roles in critical demand—

[Neil O’Brien]

Will the Minister give way?

[Janet Daby]

I am going to make some progress first, then I will give way.

[Neil O’Brien]

She was asking us to intervene.

[Janet Daby]

More than 90% of those roles require periods of work-related training or education.

[Neil O’Brien]

Will the Minister take an intervention?

[Janet Daby]

The point I am making is that the last Government did not solve the skills shortages. The last Government held back growth and opportunity. This Government are moving forward. We want to boost skills through Skills England. The last Government prolonged uncertainty.

[Neil O’Brien]

The Minister encouraged us to intervene. One of the things Labour complained about a lot in opposition was what happened to the adult skills budget. Can the Minister confirm that the Government have just announced a 6% cut in the adult skills budget? Can she explain how that fits with the Government’s constant rhetoric—as in the welfare cuts debate just the other day—about getting people out of unemployment and into training? How will a 6% cut help to move people from welfare into training?

[Janet Daby]

Ms Furniss, I fear we are straying far away from the purpose of the Bill and what needs to be achieved.

[Neil O’Brien]

Will you answer the question? You invited the question.

[The Chair]

Order.

--- Later in debate ---

[Janet Daby]

I will continue to respond. Skills will power this mission-driven Government.

[Neil O’Brien]

Will you answer the question?

[The Chair]

Order. Please speak through the Chair.

--- Later in debate ---

[Janet Daby]

I am sorry, Ms Furniss. This is very flustering.

As I said, we have had 14 years of complacency and neglect from the previous Government. Following the reforms they introduced, including the apprenticeship levy, apprenticeship starts have fallen by more than 30%. It is concerning that fewer young people are benefiting from apprenticeships. Apprenticeship starts for those under 25 are down by almost 40%. That is why, since the Prime Minister announced it in July 2024, Skills England has been operating in shadow form in preparation for full establishment.

The teams responsible for Skills England’s broader strategic functions are already operational and are establishing links with their counterparts in IfATE. By combining the analytical and regional functions, it is already delivering in shadow form. Detailed transitional planning has taken place to ensure that the functions moving to Skills England from IfATE will transition smoothly with no break in service. The planned continuity in staffing and team structures will ensure that occupational standards, apprenticeships and wider technical qualifications will continue to be approved, and T-level contracts will continue to be delivered, supported and monitored.

This approach will also ensure that Skills England maintains the vital links with employers and other partners that IfATE teams have previously established. The Minister for Skills in the other place recently met many peers and went through many of the processes and functions under the Bill. He has outlined that in a letter that is available for the Committee.

The Government are focused on establishing a coherent skills system with more flexible training options to support employers to fill skills gaps while driving growth and spreading opportunity. Businesses are backing the Government’s mission to grow the economy by breaking down barriers to opportunity for young people through our planned reforms.

[Neil O’Brien]

Speaking of gaps, I wonder whether the Minister will answer my question. Will she stand up and reassure the sector that all the additional costs, including those for indirectly employed staff, will be covered by the forthcoming national insurance contributions grant?

--- Later in debate ---

[Janet Daby]

As I have already said, the devolved areas will work on LSIPs with ERBs and maintain a close and strong relationship with Skills England.

LSIPs provide ongoing mechanisms through which local employers, strategic authorities, providers and other stakeholders come together to identify and address skills needs and issues. This supports Skills England’s aim to have the skilled workforce the economy needs at a national, regional and local level.

In response to the question about the impact of national insurance costs on skills and education, the Government have agreed that public sector employers will receive support in recognition of the increase in their national insurance contributions from April 2025. We are also providing £155 million for post-16 schools, academies and further education colleges. That is an increase of over £1 billion in the financial year 2025-26 for the education sector.

[Neil O’Brien]

Will the Minister promise to publish the methodology of how the figure of £155 million was arrived at? Can she reassure the sector that that sum is enough to cover all the costs of the national insurance increase, including the costs for indirectly employed staff?

[Janet Daby]

I hear what the shadow Minister is saying and will endeavour to get more information to him on those points. He asked about the flexibility of apprenticeships and levies. I wrote to the Chairs of the Committee yesterday addressing his question, but I understand that that was only yesterday.

--- Later in debate ---

[Neil O’Brien]

It has not arrived.

[The Chair]

Please, show some respect.

[Janet Daby]

Government amendment 1 is crucial to ensure that Skills England is not unnecessarily held back. Transformation is under way—businesses and employers cannot afford to wait. Government amendment 2 is a normal procedure for Bills originating in the House of Lords. I urge the Committee to support the Government amendments and clauses 11, 12 and 14.

[Neil O’Brien]

I meant no disrespect, Ms Furniss, but the Minister promised in the previous sitting that she would write to me. She may say that the letter has been sent, but it has not arrived. It is telling that the things we are debating will be written into law and I have still not—

[The Chair]

Order. My point was that you were talking from a sedentary position. You had sat down and should have asked to intervene again.

[Neil O’Brien]

I take your point, Ms Furniss. We are keen to move on to a vote on Government amendment 1, which we think is a big mistake. We have already explained why—I will not recapitulate that.

Question put and agreed to.

Clause 11 accordingly ordered to stand part of the Bill.

Clause 12

Commencement

Amendment proposed: 1, in clause 12, page 5, line 6, leave out from “force” to end of line 7 and insert

“on such day as the Secretary of State may by regulations appoint”. —(Janet Daby.)

This amendment provides for the substantive provisions of the Bill to be brought into force by regulations made by the Secretary of State.

--- Later in debate ---

[Janet Daby]

Clause 13 contains provisions to ensure continuity and consistency of functions that are transferred from IfATE to the Secretary of State. This will allow functions already performed by IfATE to be treated as having been done by the Secretary of State. It includes a provision enabling the Secretary of State to continue things that are in the process of being done in relation to IfATE, immediately before the function was transferred. These will also ensure smooth commencement of the new legislation and transition from existing legislation. These functions may only become clear closer to when the functions are transferred.

Therefore, clause 13 includes a power to address this by way of regulations. Without this clause, there will be no statutory way of ensuring the smooth transition of the functions carried out by IfATE under the current legislation, to the Secretary of State under the new legislation.

[Neil O’Brien]

This clause is just a reminder that we are trying to make major changes to the engine of our skills system, while the engine is still running. I have already quoted from the Government impact assessment, pointing out that the impact of transition will be to slow down apprenticeship approval numbers—I will not recapitulate that. I will come back later to the challenges these changes to the engine while the engine is still running will cause.

Question put and agreed to.

Clause 13 accordingly ordered to stand part of the Bill.

Clause 14

Short title

Amendment made: 2, in clause 14, page 6, line 4, leave out subsection (2).—(Janet Daby.)

This amendment removes the Lords’ privilege amendment.

Clause 14 ordered to stand part of the Bill.

New Clause 1

Draft proposals for establishing new executive agency

“(1) Within six months of the passing of this Act, the Secretary of State must produce a report containing draft proposals for the establishment of a new executive agency, to be known as “Skills England”, responsible for the powers transferred under this Act.

(2) A copy of this Report must be laid before both Houses of Parliament.

(3) Within forty days of a Report under subsection (1) being laid, the Secretary of State must ensure resolutions are tabled, and moved, in both Houses of Parliament to approve the Government’s draft proposals.

(4) If the draft proposals are rejected by either House of Parliament, the Secretary of State must, within a period of six months, lay a report containing revised proposals before Parliament, and, within a period of forty days after laying the revised proposals, table a motion before each House of Parliament to approve the revised proposals.

(5) The Secretary of State may not establish an executive agency to carry out the functions transferred under this Act until it has secured, through a motion under subsection (3) or (4), the consent of both Houses of Parliament.

(6) If a motion under subsection (3) or (4) is approved by both Houses of Parliament, the Secretary of State must make an annual statement in each House of Parliament on the work of the agency.

(7) Within twelve months of a motion under subsection (3) or (4) being passed, the Secretary of State must lay before Parliament a report evaluating the effectiveness of the “Skills England” governance structure in delivering on the organisation's aims and objectives.”—(Ian Sollom.)

This new clause requires the Secretary of State to bring forward proposals for the executive agency, to be known as Skills England, subject to the approval of both Houses of Parliament.

Brought up, and read the First time.

[Ian Sollom (St Neots and Mid Cambridgeshire) (LD)]

I beg to move, That the clause be read a Second time.

It is a pleasure to serve under you in the Chair, Ms Furniss. I rise to move new clause 1, which addresses fundamental concerns about the governance and accountability of Skills England. While the Bill as amended in the Lords does now make reference to Skills England, which the original Bill presented to the Lords did not, it still does not establish it properly as an organisation, define its powers, or provide robust mechanisms for parliamentary scrutiny of its work.

The Bill, as we know, simply abolishes the Institute for Apprenticeships and Technical Education and transfers its functions directly to the Secretary of State, with only limited reporting requirements. The most recent evidence provided to the Committee reinforces those concerns, particularly the evidence from the Skills Federation, as was highlighted by the shadow Minister.

New clause 1 remedies that by requiring comprehensive proposals for Skills England to be laid before Parliament for proper scrutiny and approval. It would ensure that both Houses have a meaningful say in how the organisation is structured and operates. It would establish ongoing accountability through annual statements to Parliament and formal evaluation of its governance structure within the first year.

The Government have positioned Skills England as transformative, and the Minister’s letter to peers, which was also shared with the Committee early this week, outlines hugely impressive ambitions for Skills England. I welcome those, as I think we all do. But the governance framework described in that letter is largely discretionary. The framework document that the Minister references in that letter, which has still not formally been published, will be finalised by agreement between the Department and Skills England, with no formal parliamentary input at all.

We are being asked to approve a fundamental restructuring of the skills system without proper guarantees about how the body will operate or be held accountable. The skills system is simply too critical to proceed just on faith. I think Members on the Government Benches would be making the same arguments if they were in our position. I want to stress that the new clause is not about preventing the creation of Skills England; it is about ensuring it is established with the proper scrutiny and accountability that an organisation of such importance deserves. If the Government truly believe in Skills England as the vehicle to address our skills challenges, they should welcome the provisions for proper accountability in new clause 1.

[Neil O’Brien]

I rise only to support the hon. Member for St Neots and Mid Cambridgeshire. I shall speak to new clauses 2 and 3 later, but I do not want the hon. Member to feel that that is because I do not support new clause 1. I absolutely do. I think it is entirely sensible, and if the Government had sense then they would listen to him and include the new clause in the Bill.

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

Neil O'Brien Excerpts

Committee stage
Thursday 20th March 2025 Public Bill Committees

[Neil O’Brien (Harborough, Oadby and Wigston) (Con)]

I beg to move, That the clause be read a Second time.

[The Chair]

With this it will be convenient to discuss

New clause 3—Framework for Skills England—

“The Secretary of State must—

(a) ensure that in performing its functions, Skills England has regard to—

(i) the need to ensure that education and training is of an appropriate quality;

(ii) the need to ensure that education and training within the remit of Skills England represents good value in relation to financial resources provided out of public funds;

(b) ensure that Skills England performs its functions efficiently and effectively;

(c) give notice in writing to Skills England when setting out other matters to which it must have regard when performing its functions;

(d) publish, in such a manner as they think fit, any notice under paragraph (c), and lay a copy of it before both Houses of Parliament;

(e) require Skills England to prepare, as soon as reasonably practicable after the end of each financial year, an annual report which includes—

(i) a description of what Skills England has done during the year, including a description of what Skills England has done as a result of any notice given by the Secretary of State under paragraph (c);

(ii) such other provision as the Secretary of State may direct;

(f) lay a copy of the annual report under paragraph (e) before both Houses of Parliament.”

--- Later in debate ---

[Neil O’Brien]

Clearly, the hon. Member for St Neots and Mid Cambridgeshire has had precisely the same thought that we have, and indeed as many other educators, peers and businesses have had, namely that we should make the Bill actually do what the Government try to pretend that it does: set up Skills England.

As I said in the last sitting, the Bill, as introduced, did not even mention Skills England, the reason for which is that it is part of the Department for Education—in fact, its chief executive officer is a pair of DFE civil servants. Ministers have made their case for this in-sourcing, as they think it will make things faster, and we have made our case for using independents, but so have lots of others. For example, as the Labour peer Baroness Blower pointed out,

“the appropriate move from where we are would be to a statutory body”.—[Official Report, House of Lords, 21 November 2024; Vol. 841, c. GC90.]

That is the effect of new clause 2; the powers that would be transferred to the Secretary of State would instead be vested in Skills England. The Labour peer Lord Knight has pointed out:

“The problem that some of us have with the Bill is that it feels like the second half is missing. The second half is the establishment of Skills England as a statutory body.”—[Official Report, House of Lords, 21 November 2024; Vol. 841, c. GC87.]

That is effectively what new clause 3 would do.

In the previous sitting, I quoted from various industry bodies that are making the case for independence, including the Institute of the Motor Industry and the Construction Industry Training Board. Since then, further evidence has been submitted to the Committee by those on the education side. The University of Winchester, in its submission to the Committee, highlights “four core concerns”, one of which is about independence. It says:

“The transfer of power from IfATE to the Secretary of State for Education raises questions about the independence of the proposed Skills England regulatory body. We believe that the integration within the Department for Education (DfE) is a significant risk, with the current regulatory body being completely independent of external leverage. The current IfATE structure includes a regulatory board which is independent from the DfE, ensuring that outside influence is minimised within the decision-making process. We are, therefore, recommending that Skills England is structured to ensure and protect their regulatory independence from Government and other agencies”.

That is the spirit of our new clauses.

The University of Winchester also worries that in IfATE, at present,

“employers and academics come together to ensure that the standard is industry relevant, current, and academically rigorous. Within the current proposed bill, we believe this breadth will be at risk given the transfer of power from IfATE to an individual in the Secretary of State for Education. This transfer has the potential to lead to situations where ministers can create and/or change standards and assessment plans without consultation with the relevant stakeholders, resulting in apprenticeships which are not fit for purpose or academically appropriate.”

It also notes:

“Currently, IfATE as a regulatory body highlights the importance of technical education, through both its name and its work. The proposed legislation will effectively remove the prominence of this important aspect of industry, undermining its activities and relegating it to the background.”

The university is completely right. Setting up an institute was a core part of the drive to create greater prestige and esteem for technical education, and our new clauses aim to restore that degree of independence from the Secretary of State.

New clause 3(c) and (e)(i) also try to highlight, via an annual report, how the Secretary of State is steering Skills England, and how the body is responding to that. I mentioned earlier the Skills Federation’s submission to the Committee, which brings together 18 employer-led skills bodies and 150,000 employers. Its submission notes:

“The clauses in the bill which transfer powers from IFATE to the Secretary of State risk shifting the development of standards further away from employer demand…Too much centralisation leads to a lack of focus on sector needs.”

Surely that is right, which is why we propose a degree of decentralisation with these new clauses.

In a previous sitting, the Minister made the argument that the Secretary of State might need to write standards directly without external input from a group of people in fast-moving and technology sectors. We argued, in contrast, that those are precisely the kind of exciting sectors where industry input, rather than just ministerial enthusiasm, is most needed. That same argument was made to the Committee by the International Information System Security Certification Consortium—the international professional body for cybersecurity—which wrote:

“While ISC2 understands that Government is seeking to introduce flexibility and agility in the way apprenticeship standards are developed, we contend that without industry involvement in the development of standards, there is a risk that apprenticeships may not adequately reflect the evolving needs of certain sectors. This is especially true for cybersecurity where a changing threat landscape and dramatic shifts brought about by emerging technologies means that apprenticeship standards must stay relevant. It is essential that the voice of professionals and industry, as well as those directly involved in delivering educational provision, be heard whenever the Secretary of State exercises these new powers. Any decision to intervene and directly develop or approve apprenticeship standards or assessment plans should take into account the perspectives of those with hands-on expertise in the sector.”

That is surely right.

We have already voted on a very similar new clause to this—new clause 1, tabled by the hon. Member for St Neots and Mid Cambridgeshire—so we will not press this to a vote. But I want to log the concerns that are being raised by professionals and those in industry about the lack of independence, and I do hope—even though I suspect that the Government will not change their mind about bringing this into the Department—that they can at least find ways in its operating procedures and the way it evolves to try to create that sense of independence, and reassure all those who are worried about the idea of the Secretary of State taking the powers in this Bill to go it alone and write things without the input of those who are actually working in the sector.

[Damian Hinds (East Hampshire) (Con)]

I rise to speak in favour of the new clause in the name of my hon. Friend the shadow Minister. He is right; of course, we have just voted on something quite similar, and that vote was lost by the classic 11 to four margin, with which we have become familiar. But that does not mean the Government cannot do this, and indeed there have been some signs and indications that they might make Skills England a fully independent body on a statutory footing. Most people talk about Skills England in their speeches, but that is not what the Bill, as introduced, does; it abolishes something without actually creating something else, and hands the powers to the Secretary of State, in whose gift it is to hand on.

There was also the question that came up last Thursday about Ofqual, and what the Bill does to that, which I do not think we were 100% clear about. I think the Minister was going to write, but I do not think I have seen that letter—that is not to say it has not come, or been sent, but I am wondering if when the Minister comes to speak, if she could confirm whether that letter has come.

There have always been two fundamental questions about the Bill and the creation of Skills England: the first is about independence, and the second is about who should set the expectations and standards for various occupations—should it be the employers in those organisations or somebody else? There is also a third point, which is relevant to independence, about the heft of this body, putting skills right at the heart of cross-departmental work, and what statutory independence would do to the status of this body.

Particularly in education and training, one of the reasons that we have independent bodies is so that everybody knows that the standards are robust, they cannot be subject to political pressure, and there cannot be a temptation to make it a bit easier to get over a hurdle to make the numbers look better. We have had that system of independence for a very long time, and do to this day, and still will in the future for academic qualifications. As I said the other day, I think independence of this body is important to underpinning parity of esteem. IfATE is legally established as a non-departmental public body, whereas Skills England will be, as things stand, an executive agency. As a non-departmental public body, IfATE does therefore have some independence from the Department for Education because its functions and responsibilities are set out in legislation approved by this Parliament, whereas Skills England, as things stand, will simply be an integral part or unit within DFE.

When Skills England was first talked about in the King’s Speech, it seemed that it would be established as an independent body. As well as my question on Ofqual, the first of my other questions to the Minister is, what has changed? If that was the intent—perhaps we have all just misread the text—what is different now, that it should not be? Finally, if it is right for the Industrial Strategy Advisory Council to be put on a statutory footing, why is it not for Skills England?

[The Parliamentary Under-Secretary of State for Education (Janet Daby)]

New clause 2 would impose a requirement on the Secretary of State to establish Skills England as a statutory body with a separate legal identity. It would transfer the functions the Secretary of State takes on under the Bill to a new body within 12 months.

The new clause would undo significant progress already made by the Government to establish Skills England. It has been operating in shadow form since July of last year. It is ready to take on the functions conferred by the Bill. I reassure Members that we considered different options for the model of arm’s length body for Skills England. It being an executive agency allows us to move fast, much faster than the previous Government did for 14 years. Skills England can take immediate action to plug the skills gaps that this Government have inherited, and we are focused on economic growth. An executive agency balances the independent Skills England’s need to deliver its functions at arm’s length from the Department with being close enough to inform decisions on skills, policy and delivery. That is good practice for all new arm’s length bodies.

The Department for Education will undertake a review of Skills England. The review will take place about 18 to 24 months after it is fully established, and that will align with the requirements of any future Cabinet Office review programme. It will consider how far Skills England is delivering its functions in the way intended; whether its mix of functions is still aligned to Government priorities; and whether there are alternative ways to deliver the Government’s objectives, including a different model of arm’s length body.

Delay, however, is not an option. We need to respond urgently to critical issues in the skills system to drive growth and spread opportunity. To encourage this Committee, in the first set of apprenticeship statistics under the new Labour Government, we saw an increase in starts, participation and achievements compared with the same period under the Tories in 2023. We remain an ambitious Labour Government. We do not dither or delay, and we urgently need reform to deliver the skills and technical education that is needed. That is what the Bill and Skills England will enable us to do.

New clause 3 would create a duty on the Secretary of State to publish an annual report setting out Skills England’s activities in the preceding year. It would also require Skills England to have regard to matters such as the quality of training and education, and value for money when performing its duties.

Well-established requirements are already placed on executive agencies for a high level of transparency and accountability in how they operate. That includes the publication of a framework document which, as I have mentioned, is a core constitutional document. It will be agreed between the Department for Education and Skills England in accordance with HM Treasury’s handbook “Managing public money”. Once finalised, it will be published online and a copy deposited in both Houses.

The Secretary of State, and Skills England acting on their behalf, is already obliged under general public law to take into account all relevant matters when exercising their functions. Those relevant matters are likely to include the ones in new clause 3. While the Bill was scrutinised in the other place, as I have said, my right hon. Friend the Baroness Smith of Malvern, shared a draft copy of the Skills England framework document with peers. She committed to include references to the need for Skills England to deliver its functions efficiently and effectively, and to ensure that training is high quality and provides good value for money.

In response to the right hon. Member for East Hampshire on Ofqual, the letter concerning Ofqual has been sent to the Chair of the Committee, and also addresses other issues raised by the hon. Member for Harborough, Oadby and Wigston last Thursday.

I am happy to repeat the commitments that I have already mentioned, but finally, I would like to say there is precedent for non-departmental public bodies being closed and their functions being reassigned to newly formed executive bodies. For example, under the previous Government in 2011, the Standards and Testing Agency was established as an executive agency taking on functions from the Qualifications and Curriculum Development Agency, a non-departmental public body, which was later closed.

[Neil O’Brien]

I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 4

Report on the impact on T levels

“(1) Within one year of the passing of this Act, the Secretary of State must publish a report on the impact of this Act on T-Levels.

(2) The report under subsection (1) must include—

(a) the involvement of Skills England in the administration of T Levels, including the curriculum and assessment methods;

(b) an assessment of the independence of the accreditation of T-Levels, specifically whether there has been any involvement of the Secretary of State in this process; and

(c) an assessment of the extent to which T-Levels are meeting local demand for skills.

(3) The report under subsection (1) must be laid before both Houses of Parliament.”—(Neil O’Brien.)

Brought up, and read the First time.

[Neil O’Brien]

I beg to move, That the clause be read a Second time.

[The Chair]

With this it will be convenient to discuss new clause 5—Report on the impact on Higher Education—

“(1) Within one year of the passing of this Act, the Secretary of State must publish a report on the impact of this Act on the higher education sector in England.

(2) The report under subsection (1) must be laid before both Houses of Parliament.”

[Neil O’Brien]

New clause 4 would require a report on the impact of the Bill on T-levels. We talked before about the measure in clause 8 to bring Ofqual into the regulation of technical qualifications, and the implication that that is focused on T-levels. I was going to say this anyway, but let me pause for a moment on that point about clause 8 and Ofqual—I have not seen from the Clerks to this Committee the letter that the Minister just referred to. I do not know whether you are about to guide us, Ms Furniss, about whether that letter has been made available to Committee members, but I may simply have missed it.

[The Chair]

We do not think we have seen a letter yet.

[Neil O’Brien]

The Minister said that the letter has been sent to the Chair, but the Chair says that she has not seen it.

[Janet Daby]

The letter addressing the issues that the hon. Member for Harborough, Oadby and Wigston and the right hon. Member for East Hampshire have raised has been sent to Sir Christopher, your co-Chair, Ms Furniss, and I am sure it will be shared in due course.

[Neil O’Brien]

It is a shame, as this is the last day of this Bill Committee. I do not know whether the letter could be produced before we finish today, but otherwise, those questions will effectively go unanswered because they have not made their way to Committee members. But this was a minor point about the interaction with clause 8 and the decision to bring Ofqual in potentially for T-levels, so I will turn squarely to T-levels now.

I was encouraged by the positive words about T-levels in the curriculum review, but it is very difficult to get a new qualification going, never mind a whole new system, which is what T-levels were intended to be in their initiation by Lord Sainsbury. After the big long debate on BTecs, Ministers in the end decided to add T-levels into the existing alphabet soup of qualifications rather than use them to replace and rationalise that system, which was the original goal of Lord Sainsbury’s project. I should declare an interest in so far as I worked on T-levels back when they were still known as Sainsbury routes. None the less it would still, despite the Ministers’ decision, be possible for them to grow and become a leading part of the system, but that would require a huge push from Ministers. It is difficult to get a new qualification going, never mind a whole new system, and it is much more likely that in the absence of a big push from Ministers that they will stagnate as an interesting, well-regarded and quality niche, but ultimately a small part of the system, which was really not what was intended.

For several years, the DFE has provided a 10% uplift to the funding rates for T-levels as a new qualification, but a couple of weeks ago the Government implied that they would stop doing that this year. They have not made a decision, and providers are now desperate for certainty on that issue. I ask the Minister directly to respond to this: will the 10% uplift be continued or not after this academic year? The sector is now making decisions about this, and urgently needs certainty. The Minister keeps saying that she wants to move fast: the providers, and I am asking her to move fast to give them the certainty on what the funding rate will be, and whether the 10% will continue, because if not, my strong sense is that many providers will conclude that it is not really a priority any more, and not worth the investment of time and resources, which are significant to get these things going. I hope the Minister can address that point, and I give her a bit of notice: will the 10% continue or not—yes or no?

The Government are notionally in a one-year “pause” on the move to replace BTecs, which should give the Government time at least to make up their mind on how they see the future of T-levels. If they want to preserve the option to be ambitious for T-levels, however, they need to keep supporting them now. Those of us who worked on their development and who still support them are not blind to the challenges. Although drop-out rates fell sharply in the last year, they are still high. Even though T-levels are meant to be a demanding qualification, we want young people to get to the end of them.

Although the huge element of work experience is a key advantage and attraction of T-levels to learners, it is expensive and hard to deliver, particularly in a way that is slick and gives clarity to students up front, rather than gives stress. I do not say this every day, but Gordon Brown was right to press the Government to be more ambitious here—

[Damian Hinds]

Hear, hear.

[Neil O’Brien]

We do not always cheer Gordon Brown on the Conservative Benches, but on that occasion he was absolutely right. Lord Sainsbury, too, is right to want to be ambitious. A huge amount of thought went into T-levels over a long period and on a cross-party basis. They have great potential to rationalise the system and to do what politicians have said for decades they want to do, which is to create a prestigious and clear alternative to the academic A-level route. At the moment, however, T-levels are still a fledgling qualification. They have great potential, but they are in need of a lot of care and attention.

My worry is that, amid all the commotion and disruption caused by the transfer of IfATE staff into the Department, that attention will be lost at the critical moment in the development of T-levels. The looming withdrawal of the 10% compounds my worries that attention will be lost at this critical moment. Our new clause therefore aims to ensure that the spotlight stays on T-levels, so that they do not get lost in all the reorganisation, that we preserve at least the option for them to become a widespread and leading qualification on the technical side, and that we achieve Lord Sainsbury’s vision of a more prestigious and higher-funded set of qualifications, more intelligible to employers, and with simpler routes and much more work experience. There is so much potential in T-levels that it would be a tragedy if they got lost in this reorganisation. That is why we are moving the new clause: to ensure that we continue to closely monitor everything going on with them.

New clause 5 concerns higher education. The Government talk about Skills England bringing everything together, but as my right hon. Friend the Member for East Hampshire has pointed out, we can never quite do that—there are always other bodies and overlaps. In this case, for starters, we will have two continuing levy training bodies, the Construction Industry Training Board, or CITB, and the Engineering Industry Training Board, or EITB, as well as the many other bodies that my right hon. Friend mentioned—I am thinking about those involved in skills and supply, which includes the Migration Advisory Committee, as well as the workforce strategies of other Departments, such as the NHS long-term workforce plan, which spans technical education, higher education and apprenticeships.

The other big case in point, of course, is the overlap between the work of IfATE and the future Skills England, and the regulators of higher education. In our previous sitting, we talked about the welcome growth of higher apprenticeships and the Government’s imminent plans to axe them, which we are concerned about, particularly after so much work has gone into them. That is why new clause 5 would require a report on the impact of the Bill on higher education.

The Bill is about apprenticeships and technical education rather than higher education, but the two have become increasingly overlapping. The number of people on higher apprenticeships went up from a little over 3,000 in 2010 to 273,000 last year—a huge increase. For some universities, providing degree apprenticeships has become a very important part of their work.

I will not recapitulate the things I talked about in the previous sitting, but level 7 apprenticeships are a powerful tool to enable people to earn while they learn, and to allow employers the freedom to shape higher education to their needs. Employers are choosing—with their own money—to invest in level 7 skills. It would be false to assume that a reduction in funding here would lead to an increase in the lower levels. Contrary to the claims that are sometimes made, level 7 apprenticeships do not cater primarily to major corporations. Less than 10% of level 7 apprentices are in FTSE 350 companies. Level 7 apprenticeships in health and care are a hugely important part of the NHS workforce pipeline. In a previous sitting, I talked about how axing those apprenticeships would blow a hole in the NHS plan over the long term, equivalent to 11,000 senior nursing posts, but that would start right now, as there were 2,040 level 7 apprenticeships starts in health, public services and care in 2023-24.

The creation of the apprenticeship levy had two purposes: to stop employers that do the right thing and invest in their people from being exploited by employers that do not, and instead just wait to poach their staff once they are trained; and to make sure that employers drove and owned the system. Now that they do drive and own the system, we see that their revealed preference is to spend their money on higher and degree apprenticeships.

The growth has been spectacular. Between 2018-19 and 2023-24, higher and degree apprenticeship starts grew by 63%, while the growth in level 7 apprenticeship starts was even higher, at 105%. That growth was even faster in some critical sectors. Level 7 apprenticeships in health, public services and care grew 716%. Significant extensions occurred in construction, planning and environment, where they went up by more than 700%, and in digital technology, where they went up nearly 600%. Both are key skills areas for our economy and both are supposed to be key parts of the Government’s industrial strategy.

The Bill changes the balance between the voices of employers and the voices of Ministers. Degree and level 7 apprenticeships are a good example of how ministerial priorities can be very different from employer priorities. I will not repeat the criticisms from lots of employers that I read out in a previous sitting—I quoted the Institute of Chartered Accountants, the Chartered Management Institute, several solicitors’ firms and those providing higher apprenticeships into local government and the NHS. In this sitting, I want to look at the other side of the ledger and consider the impact on universities, which is the purpose of new clause 5.

I have said before that we would never accept the lack of independence for the academic side that the Bill proposes for technical education. We would not have Ministers setting the curriculums, specifications and exams for GCSEs and then taking on the role of Ofqual and marking their own homework. We would not allow the same for higher education either, in general, but there is a growing overlap between IfATE, which is to be centralised into the DFE, and higher education, which has all kinds of implications.

The context for higher education is a challenging one. The Government have increased fees, but wiped out the gains from that by increasing national insurance, meaning a real-terms cut in resources for universities this year. With widespread industrial action in the sector looming, the Government have also chosen this moment to dramatically lower the threshold for strike action with the Employment Rights Bill. To now axe level 7 apprenticeships, and potentially also level 6, would be very destabilising for universities and could whack institutions that have tried to do the right thing for their community and for those who do not traditionally go to university.

Sixty-six universities now deliver level 7 apprenticeship standards, and some have got really into it. Prestigious institutions such as Cranfield, a postgrad-only institution with deep industry links, will be hugely exposed if the Government wield the axe in the way they are planning—I suspect that level 7 accounts for a very large part of Cranfield’s UK students. Likewise, York St John University has something in the order of 100 level 7 apprenticeships. Other institutions that are heavily involved include the Open University, Manchester Metropolitan and the University of West London. Given the challenging context for higher education, which is partly a result of Ministers’ own decisions, axing these apprenticeships, which have become quite a big part of their work, could be very damaging.

Given that their action on fees, national insurance and strike action has been a connoisseur-level example of un-joined-up Government, I am not reassured that Ministers have thought through the implications of axing level 7 for higher education.

[Pam Cox (Colchester) (Lab)]

It is my understanding that the Bill, as unamended, does not preclude the continuation of level 6 and 7 degree apprenticeships. I speak as somebody who worked in the higher education sector before coming here and sees the value of them. It is my understanding that nothing in the Bill rules them out at this point.

[Neil O’Brien]

The hon. Lady is completely correct; this is not the Bill that abolishes level 7 apprenticeships. However, according to Ministers, the Government are planning to abolish those apprenticeships, which I think is a shame. I think I detected a note of regret in the hon. Lady’s intervention, which I certainly share.

New clause 5 would require a report on the impact of the Bill and the actions of Ministers, through their centralisation of power, on higher education, given that there is now this overlap. Someone might think, “They’re looking at a Bill on technical education and apprenticeships. What’s that got to do with universities?” The truth is that it has quite a lot to do with universities, for the reasons that I have just set out. I worry that the Bill’s implications have not been well thought through.

Can the Minister assure us that she has thought this through? For example, can she tell us how much income universities would lose if the level 7 levy funding really is axed, as Ministers plan to do? How much would universities lose if level 6 levy funding is also axed, an option that Ministers are keeping open? I would love answers from the Minister on those questions today. If she does not feel able to give them, I would be very happy for her to write to me. We have tabled new clause 5 to ensure transparency, so that it is at the back of Minister’s minds that, as they take greater control of everything to do with technical education and apprenticeships, they are not just thinking about those things in their own right, although they are very important.

[Damian Hinds]

In encouraging the Minister to write to him about the effect of the level 6 and level 7 restrictions, will my hon. Friend also ask her to comment on the potential effect of those restrictions on schools—the sector for which the DFE is responsible—and in particular on the postgraduate teaching apprenticeship?

[Neil O’Brien]

My right hon. Friend is completely correct. He will remember from the last sitting that I tried to lay out the incredibly damaging direct effect on our public services that the decision to axe level 7 apprenticeships would have. The most notable effect is on the NHS, where the doctor apprenticeship has already been axed—that is tragic and has left various people who were on it stranded. It will have a particular effect on advanced nursing, which is a critical part of the NHS long-term workforce plan, as well as management throughout the public services, including local government and the town planning skills that the Government claim are desperately needed.

Exactly as my right hon. Friend said, the implications are severe right across the public services, including teaching, where the DFE is the biggest user of this apprenticeship and the biggest beneficiary in the end, which is a terrible irony. That is why we bring have tabled new clause 5, so that we at least have transparency about the effects of Ministers’ actions, and we have it in the back of Ministers’ minds that they will have to explain their decisions, including not just their direct effect on technical education and apprenticeship funding, but their effects on the wider education system.

[The Chair]

We have located the missing letter, which Members should all now have on their desks. I will suspend the sitting for five minutes while we try to digest it. If the shadow Minister, or anyone else, wants to come back in with something, they are free to do so.

--- Later in debate ---

[Janet Daby]

My understanding is that there needs to be the option for Ofqual to decide whether to inspect certain technical qualifications and whether they should be accredited. That option needs to be available. At present, it has not been happening since 2002. We continue to support the growth and uptake of T-levels, in line with identifying skill needs in the economy. Skills England will gather and publish information about local skill needs. Skills England will also assess how far available provision, including T-levels, is meeting those needs.

I turn to new clause 5, which would impose a duty on the Secretary of State to publish, within one year of Royal Assent, a report on the impact of the Act on the higher education sector in England. Higher education providers play an essential role in meeting the nation’s skill needs and supporting the growth mission. Many of the jobs and sectors that drive economic growth rely on the skills delivered by higher education providers. It is therefore vital that Skills England works closely with and supports the higher education sector as it delivers each of its three key functions. Higher education providers have a deep understanding of local skill needs and growth opportunities. That provides a rich resource for Skills England to draw on, and it builds its authoritative assessment of skills needs in the economy.

[Neil O’Brien]

I am hugely encouraged by the Minister’s recognition of the importance of these higher degree-level apprenticeships to the higher education sector. Will she undertake to write to me setting out what the impact on universities of ending level 7 apprenticeships would be? I mean primarily the financial impact, but also the impact on numbers of students. The information available in the public domain is somewhat patchy, so it would be incredibly helpful to have that at either the point the Government make a decision on level 7 apprenticeships or—even better—before. Will she write to me, so that we are at least on the same page about what the impact on universities of changes to level 7 would be?

[Janet Daby]

I think the shadow Minister is well aware, having asked similar questions many times, that more information will be coming out from the Government.

Staying on level 7 apprenticeships, we are reforming apprenticeships, tilting the system towards young people in most need of developing skills and getting a foot on the career ladder. We are cutting through the red tape by removing the 12-month requirement, to support shorter-duration apprenticeships in key sectors. That flexibility will support apprentices in areas such as the creative industries, where training does not need to take 12 months and is currently putting barriers in the way of getting apprentices into key jobs. The Prime Minister also announced the development of new foundation apprenticeships, which will align to entry-level roles in key sectors and help to bridge the gap between employees, skills, staffing shortages and young people ready to begin their careers.

--- Later in debate ---

Skills England’s published analysis and insights on skills needs in our economy will also include a focus on the extent to which provision is meeting higher-level skill needs. That will help to inform decisions on higher education policy and delivery. A separate one-off report on Skill England’s impact on higher education would therefore be a duplication; it would only repeat existing reporting arrangements and is therefore not required.

[Neil O’Brien]

I was a bit disappointed that the Minister would not undertake to write or set out the financial impact on universities of ending level 7 apprenticeships. When I speak to people in higher education, they are extremely worried about that. For some institutions, it will be a damaging blow.

Numerous people, including those I have already quoted, have pointed out that although the Government hope that all this money will flow straight from level 7 to level 2 and 3 apprenticeships, that is very unlikely to happen; it is more likely that it will flow to level 6. It is clear from the Minister’s comments that they are keeping that in crosshairs too, and that they might axe it at some point. That would compound the damage in higher education and our skills system more broadly. I was disappointed that the Government do not want to set out that detail, but I am not surprised.

I was also disappointed that the Minister could not give us any clarity on the 10% uplift for T-levels. People in the sector who are delivering these great qualifications—the Government agree that they are great qualifications—are crying out for clarity. They are making decisions right now. The Government keep talking about how they want to move fast—“We are very dynamic and ambitious”—yet on the things on which the sector wants them to move fast, they are not moving at the pace that people on the frontline would like. That is a great shame.

Likewise, we see with the funding decisions on national insurance that technical education is once again being treated as a bit second class. Schools get a funding decision at least slightly before the start of the financial year—during which the national insurance increase will hit them—whereas those in technical education will have to wait a long way into the academic year, when they will already be paying out significant sums in increased national insurance, to find out whether there will be compensation and how much will be covered. As schools are discovering, that is often a bitter experience, because they find that they have been short-changed by the Treasury.

We will not press the new clause to a vote. We have had a good debate in Committee, and we have set out our concerns, which are pretty serious. I hope that, even if the Government do not change their mind today, we will at least have given Ministers cause to think about how Skills England will operate. If they do not listen to us, I hope that they will at least listen to some of the criticisms, which we have been reading out, from stakeholders in industry and education about the decisions that they are about to make. I hope that they will act on those concerns. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

Bill, as amended, to be reported.

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

Neil O'Brien Excerpts

Report stage
Monday 31st March 2025 Commons Chamber

[Madam Deputy Speaker (Caroline Nokes)]

I call the shadow Minister.

[Neil O’Brien (Harborough, Oadby and Wigston) (Con)]

I find myself in complete agreement with the hon. Member for St Neots and Mid Cambridgeshire (Ian Sollom), and our amendments—new clause 4 and amendment 6—are suggested in the same spirit. There were good reasons why standard setting was put at arm’s length and closer to employers, but now the Government are bringing it into the Department. Alongside other changes, such as shortening apprenticeships and axing higher apprenticeships, that risks damaging the status of these qualifications, which we have been working to build up.

The Budget was bad for employment, and it will make it less likely that businesses will take on apprentices. Rather than addressing the problems that they are creating, the Government are reorganising. It is the umpteenth reorganisation in recent decades. The Government’s own recent impact assessment says that the reorganisation will lead to a delay and drop in apprenticeships, hence our amendments.

For decades, politicians have said that they want to make apprenticeships more prestigious. On average, twice as many people started apprenticeships each year under the last Government as under the previous Labour Government, but higher apprenticeships grew fastest of all. The number of people on higher apprenticeships went from just 3,000 in 2010 to 273,000 last year—a huge increase. We increased the quality of apprenticeships, too, which was much needed, as has already been alluded to by my right hon. Friend the Member for East Hampshire (Damian Hinds).

In 2015, a devastating Ofsted report found that some apprentices who had been on an apprenticeship for more than a year were not even aware that they were on an apprenticeship, and the skills they were learning were things like making a cup of coffee, which are not life-changing skills. Things were being funded that did not benefit young people, but did allow employers to pay a lower wage. Whereas we lengthened apprenticeships, this Government have cut the length of apprenticeships to eight months. By abolishing IfATE and bringing it in house at the DFE, they are eroding that employer ownership that we worked to build up. Whereas we grew higher apprenticeships, they are about to abolish most level 7 apprenticeships. That is a taste of what is to come if our amendments are not accepted. The Government are doing this because in opposition they promised that employers could take 50% of their levy funds and spend them on other things.

On 20 November, the Parliamentary Under-Secretary of State who will respond to this debate said that this commitment was “currently being reviewed”. But just weeks later, on 9 December, the Secretary of State said the Government were still fully committed to “50% flexibility for employers”. When I asked the Minister in Committee whether that was still the policy, she said that she would have to get back to me. As the Skills Minister said in the Financial Times, far from the 50% being a promise—as employers were led to believe—it will, in fact, all depend on the outcome of the spending review.

Businesses are starting to raise the alarm. The British Chambers of Commerce has said that a “lack of clarity” about the levy is creating “fresh uncertainty among businesses” and is “worrying and destabilising”. Employers say that this is leading to firms pausing hiring of apprentices.

Since the levy was introduced in 2017, real-terms spending on apprenticeships and work-based training have increased by about a quarter from £2 billion to £2.5 billion. Moving 50% of all that money out of apprenticeships would obviously lead to a substantial drop in the number of apprenticeships. In a written answer to me, Ministers have confirmed that the Department has an internal forecast for the number of apprenticeship starts, but they have also said that they will not publish it—I think we all know why that is.

The previous Government moved to make it more attractive for small and medium-sized enterprises to take on younger people. Since April, 16 to 21-year-olds have had 100% funding, rather than requiring the 5% employer contribution. We need to build on that and cut bureaucracy for smaller businesses, but the Government’s answer is different: they plan to abolish the highest-level apprenticeships and redistribute the money. I thought the brilliant speech by the hon. Member for Stoke-on-Trent Central (Gareth Snell) on his amendment 2 was so right. I will not be as articulate as him, but I will try to add to the points he made, and I hope the Minister will listen to her wise colleague. Employers and educators can see that this is a trial run of what it will be like as Ministers take more control with this Bill, and they are warning that it is a big mistake.

Dan Lally at Sheffield Hallam University says that level 7 cuts will

“disproportionately impact on public services…We are meeting vital skill gaps in disciplines such as advanced clinical practitioner…These are NHS workers, civil servants and local authority employees. A high number of our level 7 apprentices…come from the areas of highest deprivation.”

For example, level 7 apprenticeships are absolutely central to the NHS’s long-term workforce plan. Last year, we saw the Government’s disappointing decision to cancel the level 7 doctor apprenticeships. That means there will be a shortfall of about 2,000 medical places a year. Students who had already started on the medical doctor apprenticeship have sadly been left in limbo, and I am concerned the Government will do something similar to nurses as part of the level 7 cuts. The NHS’s workforce plan proposed an extra 50,000 nurses coming through the apprentice route. Around a quarter of them tend to be on an “Agenda for Change” band 7, which typically requires a master’s equivalent, so we would expect about 11,000 of those nurses to be coming via level 7 apprenticeships. If the Government get rid of them, that is a huge hole in the NHS plan.

As well as the NHS, local government makes huge use of level 7 apprenticeships, including the extra town planners that the Government say are needed to deliver on housing targets. Deborah Johnston at London South Bank University says:

“Over half of the employers we work with…on level 7 apprenticeships are local authorities. Our apprentices enable councils to deliver projects in the wake of…reintroduced mandatory housing targets. The suggestion that, as employers, local authorities should step in and pay for the level 7 apprenticeships themselves is fanciful.”

The professions are also worried. The Institute of Chartered Accountants has said that axing level 7 apprenticeships will lead to work leaving the UK. It says:

“removing Level 7 apprenticeship funding will mean that fewer UK training roles are created. Instead, organisations are likely to turn to offshoring to replace UK training roles”.

The hon. Member for Stoke-on-Trent Central rightly said that it would lead to people being outside Stoke-on-Trent, but in some cases it would lead to them being outside this country altogether. That is why the Campaign for Learning has called for a skills immigration worker test before defunding level 7 apprenticeships, so that we do not simply go from investing in British workers to importing workers from other countries.

Likewise, the Chartered Management Institute has said:

“cutting funding for level 7 apprenticeships would risk creating gaps in leadership…at a time when business and the public sector need them most.”

I have been contacted by several firms worried about the abolition of the solicitor apprenticeship—a way into the law for people from less privileged backgrounds. Attwells Solicitors, for example, says:

“Reducing funding to level 7 apprentices runs the risk of removing opportunities into professions”

and that

“Apprenticeships help break down barriers into not only Law but all career paths which could be inaccessible to young people without them.”

As well as hitting employers, on the other side of the ledger—this is why our amendment is important—axing level 7 will be destabilising for university providers. It will particularly hurt those institutions that have tried to do the right thing for those who traditionally do not go to university. Sixty-six universities deliver level 7 apprenticeships, and a prestigious institution such as Cranfield University, which is a postgraduate-only institution with deep industry links, will be hugely exposed if the Government wield the axe in the way they plan. York St John University has something like 100 level 7 apprentices. Other institutions such as the Open University, Manchester Met and the University of West London are all exposed, too.

Culling level 7 is a big mistake. These apprenticeships are vital across the public sector and are a way into the professions for people who might otherwise struggle to enter them. Above all, they are the capstone of a drive to make the apprenticeship system more prestigious. British Airways carried on running the Concorde even though it was a small part of its business because of what it called the halo effect. It knew that it changed the way the organisation was seen. By creating the top of that pyramid—the very top of the ladder; people can go all the way—level 7 apprenticeships create a halo effect around apprenticeships, and that is a vital part of why we should not get rid of them. Worse still, it was crystal clear from the Minister’s replies in the Bill Committee that the Government are keeping open the option to move on and take an axe to level 6 apprenticeships too, which would make that mistake even bigger and will not, in fact, drive money towards L2 and L3.

The other day we learned that the DFE is to cut the adult skills budget by 6%—something for which Ministers criticised the previous Government but are now doing themselves. Ironically, that came out at the same time as, and was overshadowed by, the welfare reform Green Paper, which mentioned training 18 times. In Committee, the Minister refused to confirm whether the Government would continue to provide the extra 10% funding to get T-levels going, even though providers are crying out for clarity on that. It is no wonder that many employers would like the certainty that comes with a degree of independence from politics.

Wise people on the Labour Benches want that, too. Lord Blunkett said in the other place:

“When two years ago I led on the learning and skills document that was a precursor to Skills England…we never envisaged that an agency inside government would have to take on the assurance and accreditation of the relevant sector standards.”

He noted:

“A Skills England that has no legislative backing and no parliamentary references but is down merely to the changing face of ministerial and departmental appointments is in danger of losing its birthright before it has got off the ground.”—[Official Report, House of Lords, 21 November 2024; Vol. 841, c. GC98.]

Even those on the Labour side who were involved in dreaming up Skills England have argued for its independence. Likewise, various employer bodies, including the Institute of the Motor Industry, the Skills Federation and the Construction Industry Training Board, have argued that it should be more independent.

As Labour peer Lord Knight has pointed out, the problem that some of us have with the Bill is that it feels as if the second half is missing, and that second half is the establishment of Skills England as a statutory body. The original draft of the Bill did not even mention Skills England. As Baroness Blower, another Labour peer, has pointed out, the appropriate move from where we are now would be to make it a statutory body. That is why our amendment would make the Bill do what the Government are pretending it does by actually setting up Skills England, which was clearly the intent of many on the Labour Benches.

Given all the problems that the Government are creating, the very act of a further reorganisation is likely to compound the effects of the Budget. The impact assessment states:

“The transfer of functions 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… This may disproportionately impact disadvantaged learners, who rely more heavily on these pathways”.

So there you have it, Madam Deputy Speaker. Employers and educators are criticising the uncertainty that the Government are creating; Labour peers are arguing that Skills England should be made independent, but the Government are ignoring those on their own side with experience; and employers are warning against axing valuable qualifications, but the Skills Minister is determined to end them. Yet another reorganisation, yet more centralisation, no clear vision—it is another big mess.

--- Later in debate ---

[Neil O'Brien]

I have already read out quotes from employers and those in education and the public service warning about the problems building up in the skills system because of the decisions the Government are making. This evening the Government have decided not to listen to some of the wise people on their own side, including a former education Minister, but I hope that they will listen to the hon. Member for Stoke-on-Trent Central (Gareth Snell), because they are on the edge of making a huge mistake by butchering higher apprenticeships —a huge mistake that they will live to regret. They are not listening to their own Members this evening, but I hope that they will in the future.

Question put, That the Bill be now read the Third time.