Apprenticeships (Small Businesses)

Richard Graham Excerpts

Thursday 9th June 2011 Westminster Hall

[Richard Graham (Gloucester) (Con)]

It is a pleasure to be here under your chairmanship for the first time, Mr Davies.

I am delighted that my hon. Friend the Minister has been able to find time at short notice to join us for this debate on a subject that lies at the heart of two of the greatest challenges for the coalition Government: first, how to increase growth in our economy and, secondly, how to reduce unemployment and, in particular, youth unemployment. Today’s debate on the take-up of apprenticeships by small businesses is therefore critical. During the next few minutes, I will lay out the structure of the debate in which I hope that as many hon. Members as are here today—there are many—will participate.

First, I intend to touch on the present Government’s approach to apprenticeships in general. Secondly, I will consider how successful that has been overall in the first year of the new coalition Government. Thirdly, I will examine the relative take-up of apprenticeships by large, medium-sized and small businesses. I hope that in today’s debate we will all focus to a large extent on businesses that are often described as micro-businesses—those employing 12 people or fewer. Of course, it is relevant that all of us in Parliament are in effect small businesses ourselves, employing typically between three and five people. I will come on to that aspect of the issue towards the end of my speech. Thereafter, I want to consider the obstacles to small businesses in taking up apprenticeships, how we might overcome them, what the challenges to overcoming them will be and what aspects of Government policy would help the process. Finally, I will bring all that together in specific recommendations.

The first question is the present Government’s approach to apprenticeships. The Government’s announcement immediately after the election last year that they would provide 50,000 additional apprenticeships, followed up later by a further 75,000, making a total of 150,000 new apprenticeships, was warmly welcomed by all of us who want to see business growth. That announcement sent a powerful message, especially to our manufacturing sectors, that this Government are determined not only to talk about rebalancing the economy, but to deliver by doing something practical to help that to come about.

Of course, apprenticeships today are not only about manufacturing. They are not the cliché of, on the one hand, hairdressing for women and, on the other hand, blokes in dirty overalls. They are about a much wider selection of opportunities. One of the things that I hope will come out of today’s debate is the breadth of opportunity—the breadth of training providers and sectors that offer apprenticeships. All my hon. Friends are seeing that in their own constituencies and of course have the possibility of taking on apprentices themselves.

There was a firm commitment right at the beginning of this Government to providing significant funding —hundreds of millions of pounds—for additional apprenticeships. That has been widened further. There have been significant efforts, led by the Minister, who has been a champion of vocational employment—[Hon. Members: “Hear, hear!”] That has been warmly welcomed, as you can tell by the response from everyone here, Mr Davies.

Let me run through some of the detailed figures. Nationally, there are many more apprenticeships now than there were in previous years. Locally, as far as Gloucestershire and my own constituency of Gloucester are concerned, we have seen a significant take-up of apprenticeships; there were about 30% more apprenticeships in 2010 than there were in 2008. The general picture is therefore very encouraging. Of course, that is complemented by Government programmes to create, for example, 100,000 work experience placements and additional commitments to help 10,000 vulnerable young people, which I am sure all of us welcome.

[Julian Smith (Skipton and Ripon) (Con)]

I pay tribute to my hon. Friend for securing the debate. Does he agree that in addition to the number of apprenticeships increasing, the type of apprenticeships available has shifted under the present Government? The previous Government left thousands and thousands of people in the classroom; the present Government are committed to the provision of work-based apprenticeships. Does my hon. Friend agree that that is much better for young and older people who are undertaking an apprenticeship?

[Richard Graham]

My hon. Friend is absolutely right in what he says, although at some point in the debate we should touch on the removal from employers offering apprenticeships of the freedom to have the training element provided in the workplace. The new rules require 30% of the time to be spent away from the workplace, which for some employers is not necessarily practical. My hon. Friend and others may wish to comment on that as the debate continues.

The National Apprenticeship Service has provided the key facts. There are now more than 85,000 employers nationally offering apprenticeships in more than 130,000 locations, with almost 200 frameworks. That is highly encouraging. The statistics about employers who take on apprentices finding that it is a worthwhile thing to do are even more encouraging, with 80% agreeing that apprentices make their workplace more productive, which of course is ultimately the test in terms of the business growth element of the equation. Some 83% of employers who employ apprentices rely on those apprenticeship programmes to provide the skilled workers whom they need for the future.

The question for this debate is whether the take-up of apprenticeships by small businesses is quite so encouraging. I do not have the range of national statistics to argue the case as strongly as I would like to today, but I am sure that the Minister will share with us some of the Department’s research. I know that the Federation of Small Businesses has estimated that take-up by small businesses is only 8%. Anecdotally, in my own constituency and my own county, it is true that it is much harder to persuade a small business with fewer than 12 employees to take on an apprentice than it is to persuade, say, a company with 100 employees.

[James Morris (Halesowen and Rowley Regis) (Con)]

My hon. Friend is making a very important point. One of the things that I have been trying to do in Halesowen in my constituency is to work with the further education college to develop specific engagement programmes for small business to overcome the barrier that my hon. Friend has correctly identified. I still see a very important role for FE colleges in reaching out to the small business community in local areas.

[Richard Graham]

Yes. My hon. Friend is absolutely right to say that FE colleges have a critical role to play, as do some of the smaller, specialist training providers. A question for us all to consider—I am sure that my hon. Friend has done this in his own constituency—is the extent to which courses offered by further education colleges can be effectively tailored to the requirements of small businesses. Quite often, some of the courses—this is where the questions of the framework structure and the sector skills bodies come in—are fairly specific and technical, and small businesses often require an apprentice to take elements of a business administration course, elements of a marketing course and elements of other courses. So there is a question about whether there is an adequate structure of training to cater for small businesses, but I absolutely agree with my hon. Friend that further education colleges have a crucial role to play.

Moving away from apprenticeships in general and their take-up nationally, and coming on to the small businesses sector specifically, I believe that there are just less than 5 million small businesses in the UK, of which more than 3.5 million have sole proprietors. An astonishing statistic is that 97% of UK companies employ fewer than 20 people, and 95% of them employ fewer than five people. That shows us that one of the key drivers in all our constituency economies is the extent to which small companies that employ fewer than five people feel able to take on an additional person.

[Justin Tomlinson (North Swindon) (Con)]

As a former small business owner myself, I recognise the challenges. For nine years, I wanted to get an apprentice, but I did not understand how to do so. The Government can play a proactive role in providing information to explain just how easy it is to recruit an apprentice. My suggestion, which I have raised on a number of occasions, is doing it through the annual business rates bill. All the information can be provided at a relatively low cost.

[Richard Graham]

That is an interesting suggestion, and one that I am sure the Minister will want to respond to in due course. The idea of using the annual business rates bill as an opportunity to explain how simple it is to take on apprenticeships would, I think, be widely appreciated. My hon. Friend the Member for North Swindon (Justin Tomlinson) is right, and I was just about to come on to the question of education and information. There is undoubtedly a gap that needs to be filled.

[Esther McVey (Wirral West) (Con)]

I want to add some personal knowledge as someone who has had an apprentice since last October and as the owner of a small business. It is the cost that concerns small businesses. What can the Government do to incentivise them to take on apprentices? We need to look at the cost to employ one and the payroll costs.

[Richard Graham]

My hon. Friend is absolutely right to raise those points. The incentives—the carrots—to encourage more small businesses are a crucial part of the argument, which I will come on to. May I take the opportunity to congratulate her? She has helped a number of us to take on our own apprentices, demonstrating the local and national leadership that she is renowned for in her constituency.

[Chris White (Warwick and Leamington) (Con)]

rose—

[The Minister for Further Education, Skills and Lifelong Learning (Mr John Hayes)]

rose—

[Richard Graham]

I will give way in a moment, if I may. It is interesting that so many hon. Members from the coalition side of the House are here today. They are firmly focused on the importance of apprenticeships, are leading by example and have their own experience as small business men and women. It is disappointing to see the complete absence of any representation from the Opposition, apart from the shadow Minister, the hon. Member for Blackpool South (Mr Marsden).

[Chris White]

I recently met the Warwick and Leamington branch of the Federation of Small Businesses. Skills were an important issue that was touched on, but the issue that caused most concern was the lack of information. Although I am sure that my hon. Friend agrees that it would be good to have extra funding, the Government can do more to promote the apprenticeship training agencies, as proposed by the FSB, so that businesses can be more aware of the help that they could receive and the benefits for both themselves and the community at large.

[Richard Graham]

My hon. Friend is absolutely right. The situation in his part of Warwickshire is not dissimilar to that in my own neighbouring county of Gloucestershire. The small businesses in the world of the bear and ragged staff have similar issues, which we will certainly come on to.

[Mr Hayes]

I would not normally interrupt my hon. Friend’s peroration, but he made a comment about the number of colleagues across the House who are taking on apprentices. Does he agree that it may be appropriate to hold some kind of reception when we feel that we have reached a critical number, so that we can celebrate that, use it as a way of advertising the apprenticeship brand and send out a message that we are leading, as he has described, by example?

[Richard Graham]

I am grateful for the Minister’s remarks. He has brilliantly anticipated the climax of my speech, which was to come a few minutes down the line. The part of my speech that he may not necessarily have anticipated, or will necessarily appreciate, is about the funding of the great celebration that I have in mind, which he has so kindly already agreed to host. He is quite right to mention our own involvement in apprenticeships. I will come round to that, because a number of hon. Members present will want to make their own points and contribute with their own work in the field.

Returning to the question of small businesses and their contribution to both our local economies and collectively the national economy, I mentioned earlier small businesses that employ fewer than five people and their contribution to the UK economy. Small and medium-sized enterprises account for, astonishingly, almost 99% of all enterprises and almost half the country’s private sector turnover. Therefore, the essential argument that I want to start with today is that we cannot underestimate the extent to which small businesses will be the drivers of growth—or of stagnation, should the economy falter, which we all fervently hope it will not, and believe it will not. The question that we have to debate is how we can stimulate, encourage and exhort small businesses to think that taking on an apprentice is the right way forward.

[Dr Julian Huppert (Cambridge) (LD)]

Will my hon. Friend give way?

[Richard Graham]

I will give way with pleasure to my hon. Friend the Member for Cambridge (Dr Huppert), now with his royal duke.

[Dr Huppert]

I am afraid that the duke is not able to be here for various reasons. Does my hon. Friend agree that small companies now, particularly within the rapid growth sectors, such as many of the high-tech industries in my constituency, are the bigger companies of the future? Is he aware that many small companies in my constituency, which receive support from the excellent Cambridge Regional college, say that their biggest problem is not about finding excellent scientists and people to work at that level, but about finding technicians who can do things? Is he also aware that a good apprenticeship scheme at a high level is exactly what small businesses need to grow and become the large companies of the future?

[Richard Graham]

My hon. Friend is, as so often, exactly on the money with his observations about small businesses. It is quite true—the cliché of acorns growing into oak trees is exactly what businesses are all about. He and I, and others here today, can give strong examples of businesses that started with virtually nothing and no one and have grown into great economic successes for our country. To use one illustration from my constituency, we have a successful hairdressing business that has now expanded into other constituencies in Gloucestershire, and which I believe is advancing on Worcestershire as well. Blushes is now a company with a multi-million pound turnover and multiple sites, and it is driven by the recruitment and mentoring of successful apprentices. Small businesses are undoubtedly, as I am sure all hon. Members present will agree, the foundations of tomorrow’s businesses. The purpose of taking on apprentices for small businesses is precisely to help businesses achieve growth.

[Dr Huppert]

My hon. Friend’s acorn-to-oak-tree analogy was so good that I should highlight that one of the companies that I was thinking of was Acorn, which was a company set up in Cambridge. It grew not into an oak tree, but into ARM, which is a massive designer of computer chips. There are now more ARM chips in the world than human arms, and it is a huge success, growing from a small, garage-type company into a FTSE 100 company that is transforming the world.

[Richard Graham]

There can be no better illustration of the acorn-to-oak analogy than the one given by my hon. Friend. We all agree that small businesses are the future, that large businesses dominate the opportunity for growth in the private sector and that that is an area on which we should therefore all focus.

The Federation of Small Businesses data show that only 8% of small businesses have taken on an apprentice in the past year, and that is an area on which we need to focus.

[Mark Pawsey (Rugby) (Con)]

Like my hon. Friend the Member for North Swindon (Justin Tomlinson), I ran a small business for 25 years. At no stage during that time did it even cross my mind to take on an apprentice; we just had this notion of bureaucracy and cost. The critical thing is to get the message out to the 92% of businesses that have not taken on an apprentice and to pass on the information from the 8% that have done so successfully. That is the Government’s biggest challenge. Those businesses that have taken on an apprentice recognise the great value of doing so.

[Richard Graham]

My hon. Friend is absolutely right. He, too, has brilliantly anticipated some of the themes that I want to bring up. He is right to focus on two key elements, one of which is administration and the second of which is cost, which also brings in the crucial factor of value. Let us delve deeper into the question of bureaucracy or administration. There are perceptions out there that taking on an apprentice is a time-consuming business; those of us who have done so know that it is not.

[Stephen Lloyd (Eastbourne) (LD)]

I commend my hon. Friend for his tremendous generosity in giving way so often. It shows the passion and support that there is in the Chamber for this debate. I also congratulate him on calling the debate.

Before I ask my question, I thought that I would give my hon. Friend some good news. Many of us are making a real difference in the area of apprenticeships within our own constituencies. Two weeks ago, with the support of the NAS, I launched an Eastbourne initiative to recruit 100 apprenticeships in 100 days. That was 17 days ago. I got a call yesterday from the training providers to say that we have hit 103. I am now going back to Eastbourne to say that I want 200 apprentices in 100 days. That demonstrates the real hunger that is out there for apprentices from both small and large businesses.

My hon. Friend used to be a colleague of mine on the Work and Pensions Committee until he was promoted to grander things. He will know that the Work programme, which was launched by the Department for Work and Pensions, is an enormous, costly and laudable effort to help people into work, but it appears somewhat disconnected from the Department for Business, Innovation and Skills, which runs the excellent apprenticeship programme. Does my hon. Friend agree that it would make sense for both programmes to link up, so that we can improve job opportunities for everyone?

[Philip Davies (in the Chair)]

Order. May I advise Members that interventions should be brief?

[Richard Graham]

I am grateful for your remarks, Mr Davies, not least because my capacity to absorb all the points at such rapid fire is limited. My hon. Friend has rightly congratulated his local paper in Eastbourne for promoting the “100 apprentices in 100 days” campaign, which was first started in my own constituency by Gloucestershire Media. The citizen who originally launched the scheme in 2010 is now involved in a second one, which is similar to the one that my hon. Friend mentioned. The third scheme, which is not time-capped, involves 100 apprentices being taken on by companies that have never taken on apprentices before. Other Members, including my hon. Friend the Member for Worcester (Mr Walker), who have had similar successes may wish to comment on other such schemes.

[Mr Robin Walker (Worcester) (Con)]

I congratulate Worcester News on its “100 apprentices in 100 days” campaign and volunteer to sign up one of the apprentices, because all hon. Members should play a role in supporting such positive campaigns. Does my hon. Friend believe that the media has an important role in promoting the breadth of apprentices, and does he think that we should urge other hon. Members to use the media in promoting the jobs that are available for apprenticeships?

[Richard Graham]

My hon. Friend and near neighbour is absolutely right to congratulate the media in Worcester for taking forward the scheme. I congratulate him on making his commitment to take on an apprentice himself. When I outline the target that I have set for Members of Parliament, the Minister should note that we may be able to achieve it in fewer than 100 days, but I will deal with that towards the end of my speech.

My hon. Friend is right to say that the media has an important role to play. I should also stress that local radio can be extremely helpful, too. About six months ago, I held the Gloucestershire apprenticeships fair, jointly with the NAS, which is admirably represented in Gloucestershire by my friend Gina Johnson whom I was hoping to see here today. We had terrific support from Gloucestershire Media, which is something that could be replicated in Worcester, Eastbourne and elsewhere, and from Radio Gloucestershire. I strongly recommend my colleagues in the House to organise an annual apprenticeship fair; the national apprenticeship week is in February, which would be quite a good time to do so if they want to tie it in with national themes.

My hon. Friend the Member for Eastbourne also mentioned the co-operation between DWP and BIS. That is an inter-departmental question on which I will leave the Minister to comment in due course.

[Julian Smith]

Inter-departmental issues are coming up in the Government’s review of employment law at the moment. May I ask my hon. Friend to urge the Minister to ensure that all Departments focus on how we can create jobs and take on people, whether through apprenticeships or full-time employment?

[Richard Graham]

I am grateful for that intervention, and I am sure that the Minister will have noted that point and will come back on it in due course.

Developing the themes of our debate today, we now have to consider the obstacles that small businesses face in taking on apprentices. I have touched on the two key areas of bureaucracy and cost. On bureaucracy, the challenge for those of us who want to promote apprenticeships is that there are so many different ways of taking on apprentices. For example, it is generally the case that the training costs for 16 to 18-year-olds are entirely funded by the Government and those for 19 to 24-year-olds are half-funded by the Government. Members will find in their own constituencies that we have training providers who will provide certain training courses for 19 to 24-year-olds entirely free of charge. On the one hand, that gives the 19 to 24-year-olds a competitive advantage, and on the other, it offers to small businesses the opportunity to take on a slightly more experienced individual at a lower cost than might be the case normally.

[Jim Shannon (Strangford) (DUP)]

The hon. Gentleman mentioned two schemes—I think that one of them was for 16 to 24-year-olds and that the other was for 24 to 27-year-olds—but some people lose their jobs and have to retrain. Does he not think that opportunities should be given to those who want to diversify into other jobs? Should they not be given apprenticeships as well, even if they are past those ages?

[Richard Graham]

The hon. Gentleman raises an interesting point about the ways in which we can get people back into work. The Work programme is starting this week. I am sure that he is already in touch with both the contractors and sub-contractors in his own constituency. Working closely with those who are rolling out the Work programme offers the best chances of getting older people back into the workplace. What we are really talking about today is apprenticeships that are focused specifically on the 16-to-24 age group. I acknowledge the hon. Gentleman’s general point, but I think that it ranges wider than today’s debate, although the Minister might want to comment on that.

I will return to the obstacles for small businesses and quote from the NAS in Gloucestershire, which works with hundreds of SMEs on a daily basis. We know that the definition of an SME can include businesses that, on a constituency basis, are really quite large. Companies employing 250 employees are big employers as far as I am concerned, but they are categorised as SMEs. One of the challenges for the NAS, which is resourced by one representative per county, is to engage with the small businesses that we are discussing today, which would technically be called micro-businesses. I do not use the term “micro” because I do not think that companies enjoy being called “micro”—they do not relate to that word. We are talking today predominantly about companies with fewer than 12 employees.

The NAS in Gloucestershire has spoken to more than 15,000 small businesses in the past five months. That is an astonishing achievement, and I pay tribute to its hard work in spreading its tentacles so widely among small businesses in our county. Its experience has shown that it has been able to spread the word about apprenticeships and their role.

As hon. Members have said, the role of the media and further education colleges has also been critical in spreading the word, but it can be very difficult to reach businesses of the size that we are discussing today. Many people

“simply don’t have the time to come out of their businesses”

to attend events. Such companies—often one man, one woman or a family working together—do not have the sort of people who typically sit on the committees of their local Federation of Small Businesses. We are fortunate if we can persuade them to come to an event, a lunch or a supper to discuss topical issues.

There are some breakfast clubs for very small businesses—I have certainly been to them, as have other hon. Members. They are quite good at doing business-to-business with each other, but the process of filling in forms, searching on websites, discussing with training providers and working out whether to go to the further education college or a more specialist training provider is quite time-consuming for people who are dealing with customers minute by minute in their shops.

To try to ensure that very small businesses get the opportunities to incorporate apprenticeships into their companies, the Department and the NAS are therefore supporting projects among group training associations and apprenticeship training agencies. In response to a letter that I wrote him, the Minister highlighted that

“recently, Group Training Association and Apprenticeship Training Agency models have been proving successful in making it easier for small business to take on apprentices.”

I hope that the Minister will share some examples of those successes with us, whether they are geographical or sectoral, and share with us how we can help him to promote GTA and ATA models in our own constituencies, as a way of helping small businesses to overcome the apparent obstacle of administration.

It is true, for example, that the South West Apprenticeship Company in my own constituency is able to provide the legal ownership of apprentices taken on by small businesses should there be future employment law concerns with an apprentice who has not worked out. Many of us will know that the business of finding the right apprentice is the single most important thing and often a very hard thing for a small company to do. As far as employment law is concerned, ownership of the apprenticeship is with the training provider, which can be enormously helpful to small businesses.

The next stage covers what sort of carrots might be offered to very small businesses as part of the incentive to take on an apprentice. I start from the presumption that if we were all able to persuade half the small companies in our constituencies to take on one apprentice each, we would have solved the youth unemployment problem in this country by that step alone. The opportunity, if we were able to seize it, would be enormous. The goal would be considerable, so how can we get closer to achieving it? We could consider two or three things, the first of which is to provide a financial incentive. In March 2010, there was an apprenticeship grant for employer scheme—AGE—which gave a straightforward cash amount of £2,500 to employers taking on their first apprentice. As a result of that incentive, which was offered for a limited period of three months, 5,000 unemployed 16 to 17-year-olds were taken on during that time.

It is right to ask ourselves whether that incentive was entirely motivated by a long-term solution for youth unemployment or by a short-term concern to keep teenagers off the unemployment statistics in the run-up to a general election. It is also right to ask whether cash incentives for taking on a first apprentice, without necessarily a time commitment on how long that apprentice will work, will always generate good long-term results, or whether that is a very short-term way to enhance small business profitability without necessarily leading on to career opportunities for 16 to 17-year-olds, but it is something on which perhaps the Minister might comment today.

A slightly different thought offered to me by the chairman of the FSB in Gloucester was to look at ways to subsidise apprentices over a three-year period. For example, when a company takes on an apprentice for the first time, a percentage of the amount paid by the employer could be reimbursed by the Government at the end of the first year. A smaller amount would be reimbursed in the second year, and in the third year all the cost would be absorbed by the company. That is a slightly different and more interesting model to look at, were the Government able to offer financial compensation for some of the employment costs of taking on new apprentices for small businesses.

Other ways to help small businesses to take on apprentices could be considered. One of them could be to rationalise the training costs for 18 to 24-year-olds as well as 16 to 18-year-olds. The Government have previously differentiated between the two age groups on the basis that getting people started is the most important thing and that, by the time people are 19 to 24, they should have more experience and more maturity to offer employers. But we know that that is not always the case. Some 19-year-olds and older people might still need considerable investment of time and effort by very small businesses to bring them to a stage where they can contribute to the growth of that company. The cost of that investment in time is as important to the smallest companies as the financial cost of paying apprentices for however many hours a week they are employed.

[Esther McVey]

I totally agree. If there is one thing that small companies have told me about the hurdles to taking on apprentices and about why they want incentivising to do so, it is that the hidden cost of spending time with a person, bringing them on, encouraging them and making them work-ready cannot be underestimated.

[Richard Graham]

I am grateful to my hon. Friend for making that point. She has direct experience of these things, as do so many Members here today. It is absolutely true that the smallest companies’ greatest fear on the administrative or bureaucratic side relates not necessarily to the paperwork involved in filling in an application form or designing an advert, but to the fact that a huge amount of time and effort may be required, hour by hour and day by day, to manage the apprentice. The worry is that the investment that will need to be made over a year or two before the apprentice can make a significant contribution to the business may not be rewarded at the end of that time because the apprentice might leave, might be recruited by somebody else or might not be able to deliver the return that the small business is looking for on its investment.

I want now to raise a few of the points that the FSB has raised with me, which it believes are relevant to the promotion of apprenticeships in the smallest businesses. On the promotion of ATAs to help small business, one advantage of such agencies is that they would employ the apprentice in the same way that the training company I mentioned in my constituency does. The ATA would deal with issues such as employer compulsory liability insurance, and help of that kind with modern administrative requirements would be useful.

On skill recognition, GTAs could provide an effective route for solving the problem I raised in answer to the point about tailoring the training of apprentices to companies’ requirements. GTAs might well be able to help design new training programmes for specific companies to meet their requirements. Component manufacturers in the engineering sector, for example, which are an important employer in my constituency, may have more concerns and requirements regarding training than we realise. There might be small businesses out there that need something like a GTA to help them design the appropriate training course.

Perhaps I can bring that point alive with an anecdote. In my constituency, we have two makers of high-quality shirts; in fact, when I made my maiden speech in the House last year, I was delighted to be wearing a shirt made in Gloucester. Their shirts are made from high-quality English cotton and sometimes cotton from abroad. They are made in England, but one of the firms is increasingly taking on workers from Poland, where there is a high-quality sewing qualification. People arriving here with that qualification can immediately be put on the factory floor to contribute to the making of high-quality English shirts. It appears that this country does not yet have a similar qualification, which could easily provide the basis for a new form of apprenticeship with shirt manufacturers in my constituency and elsewhere.

I have also touched base with the British Chambers of Commerce, and it is important to recognise its remarks on the take-up of apprentices among small businesses. It believes that there is a case for better marketing to businesses of the resources that are available to them and of the benefits of apprenticeships. If we follow the suggestion of my hon. Friend the Member for North Swindon (Justin Tomlinson), such issues could be covered in what would, effectively, be a marketing flyer. Indeed, it could be designed by the company that he used to run in Swindon. That could be done at very low cost—possibly even pro bono—and the Department could distribute the details with information on business rates.

The British Chambers of Commerce also wants to place greater emphasis on the relevant agency sifting through candidates to find the right ones, rather than simply box-ticking. It says that small businesses have

“a greater fear than larger companies of the wrong candidate”.

From my own experience, I know that finding the right candidate and spending time taking them through an induction programme before offering them a job, which is difficult for a small business, will be increasingly relevant.

Two weeks ago, I presented certificates to people on an apprenticeship course in a large distribution company in my constituency. I asked the gentleman in charge of recruiting apprentices how he did it. He explained that he took all the people who applied, and who had not been ruled out because of a criminal background, on a one-day induction course in his warehousing company. He made a point of having an escorted walk through the company, which was led by a manager who explained the business as the group went through the various parts of the company. A lot of candidates were ruled out early on because they simply were not paying attention or contributing. When the group sat down later for a PowerPoint presentation on the business and what it was trying to achieve, some of those at the back of the room were texting on their mobiles or BlackBerries—something, Mr Davies, I am sure would never happen in this Chamber. In effect, there was a series of soft hurdles, which, by the end of the day, had reduced the number of candidates from about 40 to 15.

The vast majority of our teenagers do not realise how important such things are and what an impact they will have on their job opportunities. There is therefore a duty on us all as constituency MPs, and possibly on the National Apprenticeship Service, to ask employers to lay out in schools, before teenagers leave after their GCSEs or A-levels, exactly what is involved in getting a job, because it is not just about writing a CV. The NAS and the Department for Education could do something on that. The Minister wears the hats of two Departments, and he might want to comment on the way in which the Department for Education could co-operate more with employers to promote apprenticeships for businesses and, indeed, for small businesses that decide to take them up, so that school leavers really understand the challenges ahead.

[Mr Hayes]

Given the interest in the subject, it might be helpful if I dealt with that point now. Yesterday, in the Select Committee on Education, I was able to advertise the fact that, given my responsibilities in the Department for Education, I want to work with Lord Hill and others to encourage much greater engagement between the world of work and the world of learning by bringing employers into schools and letting people know about the employment opportunities available to them. My hon. Friend can rest assured that we are on the case.

[Richard Graham]

I am grateful to the Minister; it is extremely helpful to be aware of that. He will have heard me say before—others may wish to comment on this in due course—that I ask every apprentice I meet in my constituency how much help they got from their schools in winning their apprenticeship, and nine and a half times out of 10, the answer is nil, so we have a long way to go on that front.

Let me bring together some of the threads in the debate. We have covered the Government’s welcome commitment to see a vastly increased number of apprenticeships, and the Minister will confirm the figure of 150,000 additional apprenticeships, with 450,000 overall during the lifetime of this Government. We also touched briefly on the greater take-up of apprentices, particularly by large and medium-sized companies across the land in a variety of sectors, and the welcome pick-up in manufacturing, which has certainly driven forward the number of apprenticeships, for example in the crucial engineering sector. I am delighted that the Gloucestershire Training Group, a specialist engineering organisation in my constituency, is now overbooked with new apprentices for next year. I am working with the group to try to achieve new and larger premises to cater for that demand.

We also covered the take-up of apprentices by small businesses. Both the statistical and anecdotal evidence is that it is a great challenge for this, or indeed any, Government. We have looked at some of the factors that could encourage and incentivise the smallest businesses to take on apprentices: administrative and bureaucratic questions, cash incentives, and cost reductions, possibly through wider training funding for older apprentices. We touched briefly on the role of GTAs and ATAs, and I am sure that the Minister will want to say more about that. We have looked at the role of local media and at the feelings of the FSB, the BCC and some Members’ constituents.

The last part of my speech is about what we as MPs can do. I talked about how we can be champions of apprenticeships, both in general and more specifically for smaller businesses. I mentioned the role of apprenticeship fairs and having a specific sectoral focus. I have organised a job fair, which will have a large apprenticeships element, for the black and minority ethnic community in Gloucester in 10 days’ time, and there will be something similar for those with disabilities in due course. There is a large amount we can do, but there is also one specific thing. There are 650 of us in Parliament, and if we each took on an apprentice, that would be 650 additional apprenticeships. Some of my hon. Friends here today have already done so or, like my hon. Friend the Member for Worcester (Mr Walker), are committed to doing so.

If 100 MPs took on apprentices, it should be celebrated in Parliament with a reception, perhaps generously funded by BIS, with a welcoming speech to all the apprentices by the Minister who champions their cause so doughtily in Parliament and elsewhere. That would send a message across the land that we are not only talking the talk, but walking the walk in finding our own apprentices and, as small business people with fewer than 12 employees, promoting apprenticeships. That is an exhortation to my colleagues, but it is also an advance call on the Minister’s funding, to which I hope he will respond warmly.

I hope that today we send a message around the country that the Government are committed not only to increasing the number of apprenticeships, important though that is, and to highlighting their value in driving forward the future growth prospects for our businesses, vital though that is, but also to stimulating the smallest businesses in the land each to take on an apprentice, because that will both help their growth and serve their community by helping to reduce youth unemployment.

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[Mr Jones]

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

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

[Richard Graham]

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

[Mr Jones]

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

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

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[Mr Ward]

I should like to conclude by coming back to the focus of my comments. I think that the figure of 8% was mentioned as the number of businesses who take on apprentices. If we look at that figure, however, the vast majority are small businesses. Those are the statistics. We know that the vast majority of businesses are small businesses—the butcher, the baker, the candlestick maker and so on. We want to fill the supply side gap. Yes, we want to get the big companies involved and that in some ways that is relatively easy. If we are to provide at a practical local level experience and apprenticeships in small businesses, we need to consider some element of wage subsidy.

[Richard Graham]

The figures back the hon. Gentleman up. Some 3.3 million businesses have sole proprietors; that is, 3.5 million people. That is 16% of all people in business. One apprentice for a third of those would take a million people into employment.

[Mr Ward]

I thank the hon. Gentleman for those comments, and for giving me time to look at my own notes.

The FSB has pointed out that two thirds of apprenticeships are offered by small businesses. Of that 8%, the vast majority are in small businesses, so we have a problem. Small businesses, certainly in areas of high youth unemployment, have been the main provider. However, small businesses in those economies are struggling the most and can ill-afford the cost associated with apprenticeships. I would argue that there may be a case for businesses—small businesses in particular, in areas of high unemployment, particularly high youth unemployment—to consider some element of wage subsidy to enable those who will simply not otherwise get into apprenticeships to be taken on by those businesses and partly fill the gap that has been left by the withdrawal of the future jobs scheme.

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[Richard Graham]

I am grateful to you, Mr Davies, for chairing this debate and to all the hon. Members who have participated. I am grateful to the shadow Minister, the hon. Member for Blackpool South, for his contribution and to the Minister, who believes so strongly in the cause to which all of us are so committed, for delivering his response to my debate. He has reassured us about the future of apprenticeships overall. There is a renewed focus on tackling the smallest businesses and making apprenticeships accessible to them, which can only provide reassurance to the young unemployed who are seeking opportunities from the Government.

Question put and agreed to.