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

Debate between Neil O'Brien and Melanie Onn

Committee stage
Thursday 13th March 2025 Public Bill Committees

[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?

--- Later in debate ---

[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.