Apprenticeship Levy

Robert Halfon Excerpts

Wednesday 22nd November 2023 Westminster Hall

[The Minister for Skills, Apprenticeships and Higher Education (Robert Halfon)]

It is an honour to serve under you in the Chair today, Dr Huq. I congratulate my hon. Friend from Woke-on-Trent North; I beg your pardon, my hon. Friend the Member for Stoke-on-Trent North (Jonathan Gullis)—slip of the tongue. He is a passionate advocate of apprenticeships and skills, and he made a very thoughtful speech, as did all my colleagues and everyone here today. I will try to respond to some of the points that hon. Members have raised, but where I do not I will write to them.

I have made it my political life’s mission to champion apprenticeships and skills. My hon. Friend said he employed apprentices, which is a wonderful thing. I was the first MP to employ apprentices in Parliament. I have had many, and one of them has gone on to be the leader of my local council—I think the youngest ever leader in history. That shows the power of apprenticeships.

Let me focus on a few of the things that my hon. Friend said. It is worth noting the increase in starts between 2021 and 2022. In 2022, there were 349,000 starts, which is 8.6% higher than in 2021. I am not saying that we do not have challenges when it comes to the number of starts—Members have spoken about starts—but we have to focus on quality, not just quantity. That has been a problem in the past, especially if I may say so with the party of the shadow spokesman, hon. Member for Feltham and Heston (Seema Malhotra), although I greatly respect her. Her party had an obsession with 50% of people going to university. That was about quantity rather than quality, and we are trying to give people a choice between university and apprenticeships.

It is also worth knowing that 70% of apprenticeships are at levels 2 and 3, and more than 50% are done by young people. Both my right hon. Friend the Member for Suffolk Coastal (Dr Coffey)—who was a brilliant Secretary of State, who did a lot to protect the environment and who I massively respect—and my hon. Friend the Member for Stoke-on-Trent North talked about modular apprenticeships. I am firm in the belief that we want quality apprenticeships. We want to move away from the pre-2010 past, when many apprenticeships were not seen as high quality. That is why we moved from frameworks to standards. I believe that apprenticeships should be for a minimum of a year, but of course many are over a year—two to three years. They have to be about quality. They are designed by employers. We now have over 680 apprenticeship standards, which are designed by employers with the Institute for Apprenticeships and Technical Education. However, there are career starter apprenticeships and short skills courses—bootcamps. My right hon. Friend the Member for Suffolk Coastal spoke about HGVs, and there are HGV bootcamps. Our multimillion-pound package on bootcamps has been a great success. They are 16 weeks, so people can do them and go on to an apprenticeship or get a job. Many people on bootcamps get good outcomes. They have been a huge success and are an example of the Government investing in skills.

I want to make a point about the levy budget. We have spent 98% of the apprenticeship budget given to us by the Treasury and we give hundreds of millions under the Barnett consequential formula. The hon. Member for Strangford (Jim Shannon)—I am going to call him my hon. Friend because he is a very kind friend—rightly mentioned Barnett consequentials, as did the SNP spokesperson, the hon. Member for Glasgow East (David Linden). We give hundreds of millions from the levy, but I recognise the points made about the devolved authorities. They decide their apprenticeship policies, but I am happy to work with officials to ensure that we work with Scotland, Northern Ireland and Wales to support them in every possible way to make those policies a success.

My hon. Friend the Member for Waveney (Peter Aldous) —the great FE champion in the House of Commons—asked about the minimum wage. This is really good news, and he is absolutely right. Last year, we increased it by 9%. I am pleased about today’s announcement that we will increase the apprenticeship minimum wage not by 9%, 10%, 11% or 15%, but by 21%, which will benefit an estimated 40,000 apprentices.

My hon. Friend the Member for Waveney talked about levels 4 and 5, as did my right hon. Friend the Member for Suffolk Coastal. It is worth remembering that we have introduced 106 higher technical qualifications at levels 4 and 5 with 140 providers. We are spending £300 million on 21 institutes of technology all over the country. We have a national strategy on apprenticeships and skills. We have the Unit for Future Skills for data. We have the local skills improvement plan, which identifies skills needs in local areas. Only a week or so ago, we announced £165 million to benefit 38 areas in the country. There were over 66,000 starts at levels 4 and 5, which is about 20% of total starts, and 151 standards approved for delivery at levels 4 and 5.

I am excited that we have introduced not only nursing apprenticeships but doctor apprenticeships. The workforce plan puts apprenticeships and skills at the heart of the NHS workforce strategy, with 22% of all training for clinical staff to be delivered through apprenticeship routes by 2031, up from 7% today. We expect that 20% of registered nurses will qualify through the apprenticeship routes by 2028-29 compared with 9% now.

I have been to see policing degree apprenticeships in Manchester and they are second to none, but I will look into what my right hon. Friend the Member for Suffolk Coastal said. I visited Staffordshire University, where many constituents of my hon. Friend the Member for Stoke-on-Trent North go. It does a brilliant degree apprenticeship policing programme. I know that the quality is second to none, but I will look into the question raised by my right hon. Friend and write to her.

The shadow spokesperson, the hon. Member for Feltham and Heston, was incredibly kind to mention the extra £50 million that we announced today for a two-year pilot to boost high-value apprenticeships in priority growth sectors. The Chancellor mentioned engineering today, but we will set out further details. It is worth noting that we will spend more than £2.7 billion on apprenticeships by 2025. That is a huge whack of money, especially in the current difficult economic climate.

The other point I will make is very important. My right hon. and hon. Friends and Opposition Members talked about businesses not using their levy. When that happens, the levy is used to fund 95% of the training costs for small businesses, which is what my hon. Friend the Member for Stoke-on-Trent North wants. We fund 95% of the training costs, and if a business has less than 50 employees and employs somebody aged 16 to 18, we fund all the training costs. That is where the money goes. When big business does not use its levy, we use it to fund training costs.

Given some of the things that have been raised today, it is also worth noting that we give £1,000 to every provider. We give £1,000 to every business that employs an apprentice to help them along the way, and we are trying to slash regulation. I have a phrase that I use in the Department: I call it Operation Machete. I do not like regulation, and there is too much of it. We are doing a huge amount of work in this area. We have significantly reduced regulation for small businesses when they start to employ apprentices. We have also removed the cap on the number of apprentices they can employ. There used to be a cap, which we have changed. I am absolutely determined to do everything we can, but it is important to remember that when big business does not use the levy, the money is used to fund smaller businesses’ training costs.

[David Linden]

I do not necessarily expect the Minister to answer this, but perhaps he could undertake to write to me. Those of us on the Work and Pension Committee are interested in things such as auto-enrolment. I ask the Minister to go away and have a look at why auto-enrolment does not kick in at age 16, when a lot of people are doing apprenticeships. That might be one of the areas where we could look at retention and how we help young people. It is not the Minister’s brief, but I would appreciate it if he could write to me about that.

[Robert Halfon]

I would be very happy to write to the hon. Gentleman, and I respect the thoughtful way he set out his remarks today.

The hon. Member for Feltham and Heston quoted organisations that do not like the levy. I have a whole list of businesses that do like the levy and use it brilliantly. Virgin Atlantic has used the levy extensively.

[Seema Malhotra]

It was a call for flexibility. It is not the case that they do not like the levy.

[Robert Halfon]

That is a fair point. I just want to point out that many businesses not only support the levy and have used it effectively, but recognise the flexibilities that we have introduced. For example, Virgin has created an apprenticeship programme that attracted 500 engineering apprenticeships alone. I think the apprenticeship levy is like the Ronseal advert, which is one of my favourites: it does what it says on the tin. As I said, 98% of the apprenticeship budget was spent in the last two years. It is clear that employers understand this message well.

I know the value of apprenticeships to young people and under-25s. As I say, they continue to make up over 50% of starts, and just under 70% of starts are at levels 2 and 3. It is important to mention that we are spending billions of pounds not just on the apprenticeship offering and the 680 apprenticeship standards, but on skills bootcamps, T-levels and higher technical qualifications—all Government investment in skills.

The hon. Member for Feltham and Heston spoke about careers. We have introduced the Baker clause to ensure that schools encourage students to do apprenticeships. The awareness of apprenticeships in schools has now rocketed up, although there is lots more work to do. We have the apprenticeship support and knowledge, or ASK, network, reaching 2,300 schools and something like 625,000 pupils, ensuring that they know about apprenticeships. I visited the Oasis Academy to see that. We have also worked with UCAS to introduce the UCAS apprenticeship scheme, which will bring a dramatic transformation in the take-up of apprenticeships, because people will be able to access them when they decide to go to university.

Hon. Members have also spoken about apprenticeship achievement volumes, which are substantially higher than they were the previous year—in 2022-23, they are up by 20%—so we are doing a lot to drive up the achievement rate, which I know my right hon. Friend the Member for Suffolk Coastal cares about. We also have £7.5 million of investment in professional development to support the workforce.

My hon. Friend the Member for Stoke-on-Trent North talked about English and maths skills. He rightly challenged me, and if he does not mind I would like to challenge him back. I absolutely believe that people need basic English and maths if they are to do an apprenticeship. He wants that to happen in schools, and with the advanced British standard people will be learning English and maths till the age of 18, so we should have the same for apprenticeships. We should not say that one group of people does not have to do English and maths because it is too much of a burden, but that it should happen in schools, which my hon. Friend cares about. He will be pleased to know that we are increasing the English and maths funding rate for apprentices by 54% to match the adult education budget. That will kick in from January 2024.

I have talked about removing the regulation on small businesses. We have an expert provider pilot to allow the best providers to offer more support to SMEs. We have a transformation in degree apprenticeships. We created degree apprenticeships—those are my two favourite words in the English language. There have been 200,000 starts at levels 6 and 7 since 2014, and starts are almost 9% higher than last year. We are investing an additional £40 million to support more people to access degree apprenticeships.

The hon. Member for Feltham and Heston spoke about social justice, which is why I am such a passionate supporter of apprenticeships—it is what motivates me. We increased the apprenticeship care leavers bursary to £3,000 this August and, as I said, we give £1,000 to employers and providers who take up apprenticeships; that is very welcome.

I really hope the hon. Lady moves away from the policy that the Labour party announced on skills. As I said, you had a target of 50% of people going to university because Labour believed it to be the only route to success. That led to the growth of poor-quality university courses, although of course most of our universities provide excellent courses. That was all about quantity over quality. The DFE analysis has found that your apprenticeship policy would slash the number of apprenticeship starts.

[Dr Rupa Huq (in the Chair)]

Order. I am sure the Minister did this inadvertently, but we are always told to be very tough on people who keep saying “you”, as that is technically me. So just de-you it.

[Robert Halfon]

I beg your pardon, Dr Huq. I was talking about the Labour party, but I understand. I will follow your ruling.

[Dr Rupa Huq (in the Chair)]

Just call them the Labour party and depersonalise it.

[Robert Halfon]

DFE analysis has shown that the policy the hon. Member for Feltham and Heston is suggesting would reduce the number of apprenticeship starts by 140,000 per year, cutting them in half. The reality is that the moment the apprenticeship levy is diluted, there will be gaming of the system and much less spending on apprenticeships. The policy would undermine the apprenticeship starts that the hon. Lady says she is so keen to increase.

[Seema Malhotra]

I return to the quote I shared from the CEO of the Learning and Work Institute, who said that the Government’s analysis of our policy was pretty simplistic and that we need a bit more of a nuanced analysis. There is a long way to go before that analysis challenges our policy and the outcome it would achieve. We should remember that it is up to 50%. For those who spend their full apprenticeship levy, it does not say that they have to spend it any other way.

[Robert Halfon]

The reality is that if the levy is diluted and people are allowed to spend it on skills, there will be thousands and thousands fewer apprentices. As I say, I want the apprenticeship levy to do what it says on the tin: it should be a levy that supports the take-up of apprenticeships. I want to build an apprenticeship nation.

[Dr Rupa Huq (in the Chair)]

Order. Before we get into too much of a ding-dong, the Clerk is reminding me that the normal time has been exceeded. I know we are not up to the hour, but the Minister would usually be doing his conclusion by now.

[Robert Halfon]

The good news is that I will conclude.

I mentioned the advanced British standard, which will provide young people with knowledge and skills. That includes £600 million in investment over the next two years, much of which will go to support colleges.

In conclusion, these are exciting times for apprenticeships. Yes, we always have to look at our reforms and make sure things work, and I have listened to everything hon. Members have said in the Chamber today. However, it is vital that we give employers and providers the time and stability to deliver gold-standard apprenticeships across even more apprenticeships and that we offer a ladder of opportunity to every young person and to those who want to train and retrain throughout their lives.

[Dr Rupa Huq (in the Chair)]

I wanted to leave time for Jonathan Gullis—I will not repeat that joke for the third time—to conclude.