National Apprenticeship Scheme

Richard Graham Excerpts

Wednesday 21st July 2010 Westminster Hall

[Richard Graham (Gloucester) (Con)]

I am grateful to Mr Speaker for enabling me to re-secure this debate. I am also grateful to him and many others for their kind reminders about its starting time, which, together with the help of three alarm clocks and several telephone calls from my wife in Gloucester, have ensured that this parliamentary apprentice has already rehearsed his speech in this Chamber this morning. I am sorry that the shadow Minister for apprenticeships, the hon. Member for Cardiff West (Kevin Brennan), is unable to be with us, but if he has any difficulties with a faulty printer, I am available to offer assistance.

It is important to hold this debate on apprenticeships, and I am grateful that the Minister, who knows the subject so well, is here to respond. It is telling that the majority of Members here are Conservatives. One irony of the past 13 years is that the previous Government could have done so much more to promote the importance and perception of apprenticeships. I have not found a single secondary school in my constituency that has made presentations on apprenticeships to its pupils, but they all worked assiduously on the previous Government’s drive to get 50% of students into university—a target that was never achieved and which has thankfully now been dropped. That took place when the previous Government allowed manufacturing to decline at its fastest pace ever and youth unemployment to grow to its highest ever. Those sad facts are not unrelated.

Let us be clear about what is at stake. Without apprentices, our national and local capability to do and make things, and our ability to stem the decline in manufacturing and retain, if not improve, our status as the world’s sixth greatest manufacturer will simply not produce results. Only 10 years ago, Gloucestershire manufactured 24% of its GDP; today, the figure is 16%. That is not because our service sectors have grown, but because manufacturing has shrunk faster than anything else. That is not acceptable. The situation must be turned around, and apprentices are the key, just as they are to reducing the 18%—almost one in five—of our 16 to 24-year-olds who are neither learning nor earning. If ever there was a time to support apprenticeships, not only in the manufacturing and construction sectors, it is now.

It is true that the previous Government did some rebranding and restructuring work on apprenticeships, and put some taxpayers’ money behind that.

[Alison McGovern (Wirral South) (Lab)]

The hon. Gentleman makes some interesting points about the previous Government’s work, but is he aware that in the borough of Wirral between 1997 and 2008, the number of apprenticeships rose from 90 to 2,000? His characterisation of the past decade as one of no growth is, certainly in my area, a mischaracterisation.

[Richard Graham]

I thank the hon. Lady for her intervention. I recognise what she says. If she waits a second, I will cover that specific point.

The previous Government put some taxpayers’ money behind their restructuring and promised to create 500,000 apprenticeships. I appreciate that, but it is also true that they missed that target, like so many others, by a very wide margin—about 50%. The restructuring broadly fitted the epitaph for his party given by the right hon. Member for Sheffield, Brightside and Hillsborough (Mr Blunkett), who said that a day without a new initiative was a day wasted for new Labour. The idea of the restructuring was more important than the outcome. I will touch on that later.

I have a suspicion that the shadow Minister here today, the hon. Member for Wrexham (Ian Lucas), might try to distract us by referring to the decision by the Department for Work and Pensions not to extend the future jobs fund and to redeploy the cash as part of the Work programme. However, we are not talking about future jobs; in Gloucester, we are talking about placements in the public sector or quangos, which have kept people out of the unemployment statistics for six months and provided some useful skills, but which have not led to job offers. That is different from an employment contract for a serious three-year apprenticeship, which is what business wants.

It therefore falls to the coalition Government to recognise and restore the vital role of apprenticeships for future business growth in many sectors, increase the number of apprenticeships so that our record youth unemployment can be reduced and implement an expanded Government programme of apprenticeships in a much leaner, more flexible and user-friendly way.

[David Simpson (Upper Bann) (DUP)]

I congratulate the hon. Gentleman on securing this interesting debate. The new coalition has announced 50,000 new apprenticeships over a number of years. Does he agree that those apprenticeships need to be relevant to today’s needs and future needs, and that there need to be linkages with industry so that we can find out exactly what those needs are? The courses offered by universities and further education colleges also need to be relevant.

Furthermore, young people need easy access to apprenticeships. In Northern Ireland, they must be sponsored by industry—whether the building industry or whatever—to go into apprenticeships, but that is difficult today, and the financial reward is not what it should be. I trust that the new coalition will consider those points, and I am sure that the hon. Gentleman will agree with me on them.

[Richard Graham]

The hon. Gentleman makes a number of good points, some of which I am coming to. He is absolutely right that training providers need to tailor their courses to be most relevant to business needs.

That leads conveniently to my next point. The approach that the coalition Government should take is about not simply good management practice, but a political philosophy. I agree with the former Labour Minister, Lord Myners, who told the other House that his colleagues never understood the fact that the Government do not create jobs, but set, or fail to set, the framework in which businesses create jobs. I also agree with Oona King, who recently regretted that new Labour’s belief in social justice counted for nothing if it forgot successful economic stewardship. Our mission is therefore to spread apprenticeships, which are critical to restoring the economy, and to boost social justice. There is no justice in increasing the number of those dependent on handouts. My city of Gloucester is a proud working city, not a centre of benefits, and apprenticeships are a major gateway to work and a better life.

[Esther McVey (Wirral West) (Con)]

I want to pick up on the point about the Wirral apprenticeships raised by the hon. Member for Wirral South (Alison McGovern). Although we are doing well in Wirral, we are seriously over-subscribed. Last year, more than 1,000 young people submitted 3,117 applications to the fewer than 150 businesses involved. To move forward, we are looking to build on something that has done so well.

Do colleagues agree that although we are talking about apprenticeships, there is something that each and every one of us in the room could do? It is good to talk about these things, but we in Wirral West are about to embark on taking on political apprentices, and I know that other colleagues are doing the same. Former apprentices include Sir Alex Ferguson, Alan Titchmarsh, Henry Ford, Vincent van Gogh, Isambard Kingdom Brunel—

[Esther McVey]

Thank you, Mr Caton. I was responding to what had been said.

[Richard Graham]

My hon. Friend makes a number of good points and anticipates brilliantly what was going to be my punchline.

[Mr Oliver Heald (North East Hertfordshire) (Con)]

Will my hon. Friend say a word about the problem of girls? Two per cent. of apprenticeships go to girls and something needs to be done about it. Does he have any ideas on how to encourage girls to go into engineering, science, technology or mathematics?

[Richard Graham]

My hon. Friend began by asking whether I could do something about the problem of girls; on the whole, I would encourage them. He makes a valid point, as always, and I am also grateful to my hon. Friend the Member for Wirral West (Esther McVey) for pointing out the need for more apprenticeships in her constituency. I hope that many will benefit from the expansion of apprenticeships that the Minister has announced, which I shall encourage him to continue with in due course.

If Alan Sugar did much to bring the word “apprentice” to our TV screens, ours must be the Government who bring apprentices into many more large, medium and even small companies. There are different programmes of help for the young, emerging from three different Departments under the coalition Government: the Work programme from the Department for Work and Pensions, the national citizen scheme from the Cabinet Office, and apprenticeships through the Department for Business, Innovation and Skills. Those will require some cross-departmental co-ordination, perhaps through the new Cabinet Committee on social justice. The Minister may want to offer his thoughts on that co-ordination later, but today I shall focus on apprenticeships.

[Alison McGovern]

Business confidence is crucial for expanding apprenticeships and we are in a difficult and uncertain time, especially given the alterations to business support through the regional development agencies. What would the hon. Gentleman suggest to the Government to keep business confidence high in a period of uncertainty, and how could the Government fill the gap in work on skills at a regional level, as we move—perhaps—towards local economic partnerships, maybe in two years’ time?

[Richard Graham]

The hon. Lady asks what I would do to boost business confidence. My feeling, as a former businessman, is that business confidence depends above all on a stable macro-economic situation. That is precisely what the coalition Government are pledged to restore, and I believe that they made significant steps forward with that in the emergency Budget a few weeks ago. Business confidence depends on that, and I believe that it is growing. That is reflected in several indicators, not least falling unemployment, at the moment.

[Mr Heald]

I do not know whether my hon. Friend is aware that Essex county council recently sponsored, I think, 140 apprenticeships to ensure that the engineering base will be maintained in the county, which is of course run by a Conservative authority. Is that perhaps an example to follow?

[Richard Graham]

My hon. Friend makes a good point and gives a striking example. My congratulations go to Essex county council.

Today’s debate could have centred on the situation in my own city and the county of Gloucestershire, but I decided to widen it into a national debate, because the issues are mostly generic. Our experience in Gloucester can help to bring alive the national picture, and other hon. Members will supplement that with their remarks. I want to begin by discussing the value of apprenticeships, and I shall make suggestions about their status, the role of schools, the structure and measurement of administrative organisations, and the current types of apprenticeship, including matters of price and flexibility. I am grateful to the many organisations and individuals who have given me their time and thoughts.

When I was a boy, one of my favourite stories was that of the 12th century meeting, before their armies, of the giant Richard the Lionheart and the more slender Saladin. Richard showed his great strength by bringing down his enormously heavy double-handed sword to break in half a steel anvil. Saladin then tossed a silk scarf into the air and slashed it in two with his curved scimitar, with great strength of wrist. The important thing was that neither could have done what the other did. Both were remarkable. So it is with degrees and apprenticeships. I am quite incapable of fixing many things—including faulty printers, but also things under the bonnet of my car—and some of my friends who are engineering geniuses might struggle with essays and speeches. We need both skills, but it is absurd to rate the degree more highly than the apprenticeship, and the marketplace will often reward the practical skill more highly.

My key message to students, parents and schools in my constituency and more widely is that an apprenticeship, especially a higher apprenticeship, is every bit as much of an achievement as a good degree from a good university. I urge the Minister to direct the Department for Education to encourage all secondary schools to provide their students with presentations on apprenticeships from training providers, employers and apprentices themselves. Those presentations could start by making the important distinction that from day one apprentices earn to learn, rather than building up debt. They could spell out the differences between the second, third and fourth, or higher, levels of apprenticeship, which many people are unaware of.

I hope that the Minister will confirm that under this Government more status and recognition will be given to apprentices. I propose that we should create a national apprenticeship day to celebrate what apprentices have achieved and what they contribute throughout the country. A special stamp issue, for example, could commemorate some of the world’s most famous apprentices, some of whom my hon. Friend the Member for Wirral West alluded to, such as Vincent van Gogh, Isambard Kingdom Brunel and Alexander McQueen.

As to the structure of Government bodies involved with apprenticeships, I am not absolutely sure that the previous Government’s disbanding of one quango, the Learning and Skills Council, to create three, led by the Skills Funding Agency, just as the budget deficit began to reach record proportions, was the right move. I would welcome the Minister’s comments on that. I believe that employers and training providers broadly welcome the National Apprenticeship Service, but I am sure that the administrative cost associated with the programme could be reduced. Perhaps he will say something about that too.

The structure is also very top-down. There is a quota system, parcelled out to regional offices of the NAS and from there to the shires—rather like the unloved regional spatial strategies in the planning sector—and constructed on the basis of historical demand, which is a bit like looking out of the rear window while driving. The system—in Gloucestershire, anyway—is inflexible. If training providers find that demand for one sector or age group has increased, and demand for another has diminished, they cannot swap or trade quotas. In an era when businesses can trade carbon emissions, it surely should be possible to trade apprenticeships, or to do away with the regional approach and give my county and others a sum of money for apprenticeships. The local economic organisation, which in our case is Gloucestershire First, and the NAS could decide how to manage it.

That leads me to the question of marketing, which in Gloucestershire is done by one employee of the NAS. That is ambitious and she depends on distributors, whose co-operation will vary without any direct, commission-style incentive. I sense that the quality of the NAS database and access to employers varies, and I believe that the service should work more closely with the local economic organisation to target and penetrate leading employers. That would be easier if the funds were controlled locally.

A related matter is penetration of the small and medium-sized enterprise market. The Department has figures that show that the majority of employers with apprenticeships are SMEs, but I believe that those figures are distorted by, for example, the number of hairdressers, and that take-up by members of the Federation of Small Businesses—5,000 of them in Gloucestershire—remains very small.

Many small firms, such as IT consultants, public relations companies or recruitment firms, could benefit from taking on apprentices as their order books expand again, but they are reluctant to get involved, for fear of bringing excessive paperwork into the office. The NAS should focus on the FSB and SME market, using examples of clients who have found that the business of taking on apprentices is not nearly as cumbersome as it might at first appear.

Will the Minister also consider breaking training provider courses into bite-sized chunks or units? That would be popular, especially with SMEs, which do not always need a complete training course alongside work-based learning. There is, effectively, a market for an apprenticeship-lite. My final suggestion on this theme would be for the NAS to consider the provision of courses in Gloucester relative to actual or likely high-growth sectors, as one or two hon. Members have mentioned. Examples might be green energy and even more conventional sectors such as real estate agency, which are not covered at the moment.

The NAS needs to talk to some of our newest and most entrepreneurial companies, such as Gloucester’s Book Depository, which yesterday was awarded the Queen’s Award for Enterprise as the UK’s third-fastest-growing company. There is plenty more marketing to be done, and Gloucestershire First and similar agencies in other counties can and should help the NAS to gain access to it.

On pricing, the package of Government support is worth about three times as much for 16 to 18-year-olds as it is for those aged 19 to 24. What is the formula for arriving at that ratio? Does the Minister believe that it is right? Several employers have told me that they would like a level playing field for the various age groups. In some cases, as with the electrical engineering training specialist Clarkson Evans, it appears that health and safety requirements disadvantage employers who cannot take 16 to 18-year-olds. Under a flexible scheme, they could swap x 16 to 18-year-old places for y 19 to 24-year-olds. However, as I pointed out earlier, that cannot easily be done.

Although the cash value of Government support for apprenticeships is fixed, the price from the training provider and the salary from the employer vary considerably. That can be seen either as choice and market freedom, with the price being weighed against the service quality of the training, or as a distortion of the market that encourages market consolidation and might drive out niche private sector providers. My instinct is that we have a bit of both, which may not necessarily help the smaller players. One way around that would be to provide employers with more advice on apprenticeship quality.

Quality of delivery is hard to analyse. The NAS can offer some pointers, but it cannot offer much qualitative judgment; after all, the trainers are their customers. I would love to see a simplified Ofsted-like report on each training provider’s apprenticeship training schemes, and their good and not so good points, just as I hope that the Gloucester-based Quality Assurance Agency will one day do something similar for universities. Parents could then see immediately on websites what was best and worst about universities and apprenticeship schemes. Choice is good, but informed choice on universities and apprenticeships would be even better.

Equally important is the way different bodies are measured. The NAS is proud of the fact that, at 79%, its success rate in Gloucester—I would put inverted commas around that term—is high for the south-west, and that the south-west has the highest in the country, up significantly from a few years ago. I consider such success rate measures misleading. First, this measures only how many of those who started apprenticeships actually finished them. The NAS has no involvement with the individual apprentice. Should a judgment be made on that measure—in reality, it is customer service—or would a better benchmark be success in persuading a higher percentage of employers to take on apprentices, and in cross-selling new apprenticeships in different sectors to existing clients?

We need effective sales benchmarks for the marketing arm, not customer experience ones, which are more relevant to the training provider. My recommendation is that the Government should reconsider the measurement of various organisations. If the Minister was looking for a third way, he could measure success on both sales and customer service criteria. The important thing, however, is that the current success criteria do not prove success. That, I am sorry to say, is very new Labour; it is like the future jobs fund, which should have been called the “keep me off the unemployment stats” fund.

I draw the attention of the House to one innovative way in which Gloucestershire has succeeded in stimulating employer demand for apprenticeships. Our newspaper, The Citizen, together with Gloucestershire college and other colleges, challenged businesses to create 100 new apprentices in 100 days. They succeeded, and will shortly launch the next “100 in 100” challenge. That marketing initiative has been copied in the south-west by related Associated Newspapers titles, and it could resonate elsewhere.

I invite the Minister to join the launch of the next “100 in 100” challenge to see the wide range of companies, from many sectors, that are interested in apprenticeships—they range from hairdressing to engineering—and which are encouraged by our local newspaper and our leading further education college. The launch will also give him the chance to show that the coalition Government are doing more with less. Last year, the Minister with responsibility for apprenticeships and the Minister for the South-West were both present, but the coalition Government have dispensed with regional Ministers—something, I believe, that not even the shadow apprenticeships Minister would greatly mourn.

I realise that other Members wish to speak, so I shall summarise the main points of my argument. I hope that I have made clear our need for apprenticeships and my enormous support for them—and as many of them as possible. I would be delighted if the Minister said when we are to have the additional 50,000 apprenticeships that I and many others here today have welcomed. Does he agree that doubling our already strong commitment to 100,000 new apprenticeships—a figure that we had in mind during the election campaign, before the full truth of the previous Government’s accounts was exposed—is a desirable goal, and might achieving it be possible over the next year or so?

I have raised questions about the number of quangos involved, who gets what budgeting quota, and how that is measured and against what targets. I hope that the Minister agrees that it is time to scrap the regional approach, and that we should devolve responsibility as soon as possible, giving training providers more flexibility and making apprenticeships more responsive to the marketplace and business demands. I hope that he agrees also that the NAS and local economic entities should work together, and that the NAS and the FSB should engage to ensure more apprenticeships in the SME market.

I hope that the Minister and everyone here today agrees that the impact of apprenticeships on youth unemployment can and should be striking. Gloucestershire took up 4,500 apprenticeships in 2009, of which the city of Gloucester had 1,200—almost the same number as the current record number of young unemployed. Doubling the number of apprenticeships would have a significant impact on those young people not earning or learning, with knock-on benefits for their families and communities, and probably a good effect on antisocial behaviour and the cost of policing and probation work. It would also contribute to growing business and tax revenues.

Lastly, does the Minister agree that apprenticeships are a genuine example of investment by Government and employers that can have a positive impact on the community in several ways? I believe that the combination of more opportunities provided by the Government and better co-operation from schools, with more courses and more flexibility, the transferability of unused quotas and a national apprenticeship day, would increase employer interest and make the future for our youngsters much brighter.

Reviving apprenticeships was a Labour idea, but it is for the coalition Government to sort it out, take it forward and make it work effectively, and to make the renaissance of apprenticeships a reality. That is my goal for my city of Gloucester and for Gloucestershire, and I intend to put my money where my speech is. I shall follow the example set by my hon. Friend the Member for Harlow (Robert Halfon) and hire an apprentice for my office in Gloucester, who will do a business admin course at Gloucestershire college. It is not often that we MPs have the chance to practise what we preach, but today provides such an opportunity.

--- Later in debate ---

[Ian Lucas]

What I can say is that the Labour Government’s approach to apprenticeships from 1997 was a marked contrast to that of the preceding Government, and that it placed far more emphasis on the apprenticeships scheme. I will come on to talk about some specific examples from my area of which I am personally aware and mention the individuals I have met who have benefited hugely from the apprenticeships scheme.

[Richard Graham]

Will the hon. Gentleman give way?

[Ian Lucas]

I will just make a little progress and then I will certainly give way to the hon. Gentleman, whom I should have congratulated on securing the debate; I do so now.

The White Paper’s proposals included a joint investment scheme with sector skills councils, more national skills academies, skills accounts, user-friendly public ratings for colleges and providers, and better skills provision for those on out-of-work benefits. The promotion of apprenticeships as a priority in public procurement is important and we also wish to reduce the number of publicly funded skills agencies by more than 30. It is important that we make apprenticeship schemes as easy as possible for employers to access, and we need to focus resources on key economic strategic areas, so that we can make real progress.

The Labour Government have a strong record of achievement and the Labour party has a clear strategy for the future. I have heard the Minister speak many times of his passion for apprenticeships and I profoundly admire his rhetoric, so I hope that the Government will carry that through with real action. I hope that he will be clear this morning on whether he intends to follow the strategy set out in the White Paper or whether he intends to jettison it.

[Richard Graham]

The hon. Gentleman suggested earlier that the Conservatives had had a damascene conversion on apprenticeships. I suggest gently that if he looks at the Members on this side of the Chamber, he will see that none of us was on any road in 1997, let alone the road to Damascus, as we are all new Members. It is rather telling that few Members from his party, old or new, have attended. Although we could argue about the role of the previous Government and their achievements on apprenticeships, does he not recognise that several positive suggestions for taking forward apprenticeships have been made today and that he might agree with them?

[Ian Lucas]

I do not wish to be churlish in any way and at the outset I welcomed the fact that the debate was taking place. I also welcome the genuine and sincere contributions that have been made. However, my political views were forged in the 1980s and 1990s and my perceptions were based on the Conservatives’ attitude to manufacturing as I saw it in the north-east of England. I know that progress has been made in the apprenticeships scheme and I want to put that on the record, because we have heard a contrary view during the debate.

We have also heard from the Minister, who has been trying to soften the savage in-year cuts that the Chancellor has imposed on his budget by recycling £200 million from the skills budget into 50,000 apprenticeship places, costing £150 million—£3,000 per place. What kind of apprenticeship places will the Minister be able to get for a unit cost of £3,000? How has he costed those places, and what will be the breakdown by sector? He sometimes tries to give the impression that he is the first Minister ever to announce investment for extending apprenticeships, but the fact is that the previous Government rescued apprenticeships from the oblivion they faced under the Conservatives, who allowed the number of apprenticeships to fall to 65,000, with a completion rate of only one third.

Yesterday, I had the privilege of attending a reception for the Society of Motor Manufacturers and Traders in the House of Commons and of meeting young apprentices. Some were from General Motors at Ellesmere Port, some were from Toyota at Burnaston and some were from Ford at Dagenham. They were of varied ages and backgrounds, but they all shared a passionate belief in what they were doing and the part that they would play in the future of automotive manufacturing in the UK. It was an inspiring reception. I was disappointed not to see a Minister there, who could not only have met the apprentices, but listened to an interesting speech by Ron Dennis, from McLaren, on the future of UK manufacturing. Earlier this year, I attended the Airbus annual awards scheme, where the largest apprenticeships scheme in the UK was celebrated.