Apprenticeships and Skills (Public Procurement Contracts) Bill

Nick Hurd Excerpts

Friday 1st November 2013 Commons Chamber

[The Minister of State, Cabinet Office (Mr Nick Hurd)]

This has been a very good debate. The speeches have been passionate, honest, often rooted in personal experience and, for the most part, gratifyingly free of tribal politics in relation to an issue that really should cross the party divide.

We have heard about some fantastic models of intelligent procurement, such as REDS10. We have heard about people in Liverpool, Humberside and other parts of the country who are demonstrating how procurement can be used to squeeze out the maximum value for the taxpayer, with the full encouragement of the Government. We also experienced the seismic revelation that the hon. Member for West Ham (Lyn Brown) enjoys a bit of my hon. Friend the Member for Shipley (Philip Davies) on a Friday morning. I think that my friend and colleague earned the admiration of the House for his composure at that moment. He had to take some time out from the debate, but he retained his composure sufficiently to make an excellent speech, as did my hon. Friend the Member for Bury North (Mr Nuttall). I think that the shade of Eric Forth would have been proud to hear both speeches. They conveyed warmth and cross-party support on the need for more apprentices when they posed the fundamental question of why this law is actually needed, which is the job that we, as legislators, must do.

First and foremost, I must genuinely congratulate the hon. Member for Denton and Reddish (Andrew Gwynne) on his speech. It seems a very long time ago, but it was absolutely brilliant—not least because he secured harmony in the Gwynne household this weekend with his rhapsody about Denton community college, of which his wife is a trustee.

The hon. Gentleman spoke with real passion and conviction of his concern about the level of youth unemployment, which, at 7.6%, is clearly unacceptably high. As he knows, and has heard from Government Members, everyone recognises that the Bill is extremely well-intentioned. My hon. Friend the Member for Harlow (Robert Halfon) spoke to me personally about his support for it. We have taken it very seriously, and the context could not be more important. It is shocking that we as a country are wasting the potential of a million young people. The hon. Member for Hartlepool (Mr Wright) was right to speak about that with passion and anger.

The country faces a huge challenge. I am not making a party-political point when I say that the fact that youth unemployment rose by 40% under the last Administration during good times is a source of real concern, and raises serious doubts about the skills and work-readiness of our young people. That has been reflected in survey after survey of employers. The fundamental question is this: how can we ensure that our young people benefit from the gradual recovery in the jobs market? That is a national challenge, and should be seen as such. It is a challenge not just for my party, the Labour party or any other party in the House, but for the private sector, the education system and civil society. So many people care about it that it is a challenge for funders such as the Big Lottery Fund and its Talent Match. So much good will needs to be harnessed to move the needle. That is why the whole debate about academic standards, access to informal learning opportunities for young people—I speak as the Minister for youth—the quality of career guidance and the success of new traineeships, which I greatly welcome, is so important. But the fundamental point of this debate—our level of ambition on the status and priority attached to apprenticeships—is important. It is fundamental, because there has been a missed opportunity; the status of apprenticeships has been too low over time, particularly as they are a win-win—the hon. Member for Worsley and Eccles South (Barbara Keeley) spoke well about that. The evidence is clear that apprenticeships are good for employers, as well as for employees. The evidence shows that those on advanced apprenticeships earn, on average, between £77,000 and £117,000 more over their lifetime, and 72% of employers reported that apprenticeships improved the productivity of their organisation.

[Andrew Gwynne]

I am fully with the Minister in his argument, so far. Does he agree that if we are seeking to drive up the standards of apprentices, as well as to extend the capacity of apprenticeships, it is not wrong to give an empowering facility, as my Bill does, to public bodies to say to contractors, “We expect there to be a proportion of higher and advanced apprenticeships as part of this contract because it is good for our local economy”?

[Mr Hurd]

I have some reservations, which I am going to express, despite the shameless flattery that has been heaped on me, not least by the hon. Member for West Ham. I wish to give the hon. Member for Denton and Reddish some reassurance, not least because of the reservations we have about the need for this particular law, that the ambition he seeks on apprenticeships already exists. As my hon. Friend the Member for Bury North mentioned, this very week the Prime Minister was in Oxford talking about our ambition to be the best in the world. The hon. Gentleman will know that given the fiscal constraints we are under, what we choose to spend our money on does reflect our priorities. The fact of the matter is that we have spent £5.7 billion on apprenticeships since 2010; we have grown them by 1.5 million; and in 2012-13 the current provisional estimate is for about 500,000 apprenticeships. That is building on work that has gone before, but let us be clear: that is double what was available in 2008-09. As my hon. Friend the Member for Shipley said, it is not just about numbers and growth; robust quality is also important.

[Andrew Gwynne]

The Minister is right to say that this is about how we spend the money. That is true of not only central Government, but other public bodies, so does it not empower local government, which does not provide many services directly itself but buys in services from contractors, if it is able to say, “This is what we expect because these are our budgets that we are handing over to you as contractors, and this is what we want in return”?

[Mr Hurd]

The point is that local authorities already have that power. This proposed law does not change anything in terms of regulation or the permission that the system gives to contractors at the moment.

I wish to finish making my point about quality. It is important, and we have put statutory standards in place to ensure that apprenticeships are real jobs and lead to recognised qualifications. I hope that that enjoys the support of the House. We want this to be employer-led. We want to encourage employers because it is absolutely in their interests, and that is how we sustain the momentum behind this as Governments come and go. That is why we have introduced incentive payments of £1,500 for smaller employers, because the attitude of small and medium-sized enterprises is important, to take on up to 10 new apprentices aged 16 to 24. As we have announced this week in the implementation plan, there will be trailblazer projects in the aerospace, automotive, digital industries, energy and utilities, electrotechnical, financial services, food and drink, manufacturing and life sciences and industrial sciences sectors. I hope I have convinced the hon. Gentleman that the ambition that he wants to see is there, not only to build on what was done before, but to take it to a different level.

[Andrew Gwynne]

I have no doubt that the ambition is there, but the Minister will have heard earlier about SETA in the Stockport part of my constituency, an organisation that was established by industry to get apprenticeships and training in a range of high-skill areas. It has raised concerns with me that the apprenticeships are not coming through in the rail industry, the nuclear power industry and so on. There is a role for public procurement in this.

[Mr Hurd]

I certainly agree that there is a lot more to do in supplying apprenticeships and pushing, nudging, encouraging and incentivising various sectors of the economy to be more ambitious and think more intelligently about how they can structure such opportunities.

I want to show the Bill the respect it deserves, and I do so as someone who has been in the same position as the hon. Gentleman and promoted a private Member’s Bill. I want to make it quite clear to him that the ambition he seeks is there. The question we need to ask ourselves is whether we need this law. As I was sitting here during the debate, I could almost see Eric sitting over there, getting ready to speak and to ask that question in a forensic way. We need to get beyond the good intentions; we are legislators. We need to ask ourselves with each snowflake that we add to the mountain of regulation whether we can justify it, whether it will make a difference and whether it will serve its purpose, however well-intentioned the promoter.

[Andrew Gwynne]

Of course, there has to be a problem if we are to address it through good intentions. I contend that there is a problem. Too few apprenticeships are coming through the public procurement route, which is why this Bill is absolutely necessary.

[Mr Hurd]

There is a problem, and we are wasting the potential of 1 million young people in this country. Apprenticeships are part of the response to that, as I have said, and the Government are very proud that we have effectively doubled the number of apprenticeships each year compared with 2008-09. We are in no way complacent, because as Labour Members have said, there is still a great deal more that can be done.

As for whether the law is needed, the point was powerfully made by Government Back Benchers that the existing law and procurement policy give the permission that the hon. Gentleman seeks. I would go further than that. A private Member’s Bill that I, as a Minister, picked up and championed, the Public Services (Social Value) Act 2012, extended that permission. The Act, which came into force in January with cross-party support, places a requirement on commissioners to consider the economic, environmental and social benefits of their approaches to procurement before the process starts. They must also consider whether they should consult on these issues. I put it to the hon. Gentleman that that process, with which contracting authorities around the country, particularly Liverpool and Birmingham, are very engaged, could include consideration of the benefits of any potential apprenticeships to be created under the contract. That is another tool in the box for those who are seeking to develop intelligent models of procurement and trying to squeeze as much value as possible out of every public pound that they are spending. That is exactly what we are trying to encourage.

[Lyn Brown]

I am so disappointed. I genuinely thought that the Minister would be able to listen and work his way through this. How much public money does he think is being wasted by not being used to procure apprenticeships in this country?

--- Later in debate ---

[Mr Hurd]

I am obviously disappointed to disappoint the hon. Lady. That has rather spoilt my day. There is a fundamental point about value for money, which is that the processes and regulations we have set up absolutely allow what the hon. Member for Denton and Reddish wants and, as I said, the social value Act goes further in seeking that permission. We have set up a commissioning academy to support and create the space for people who are spending taxpayers’ money so that they can think more intelligently about how that can be spent. I give him my pledge that I will use what evidence I have to ensure that in my conversations about the use of that Act, and in the commissioning academy, we ask how apprenticeships can be boosted by those processes so that we can share and spread the best practice that exists and has been articulated extremely well by Opposition Members. As the hon. Gentleman generously said, the DWP has shown intelligent, forward-thinking practice by managing to get approximately 2,000 apprenticeships into its supply chain through its procurement practice.

[Andrew Gwynne]

I am grateful to the Minister for giving way in the last remaining seconds. But does he not understand that, laudable though his legislation may be, it does not explicitly give local authorities the power to ask for higher level and advanced level apprenticeships, or to have them advertised in the local economy? That is crucial if we are going to change the life chances of the young—