Apprenticeship Levy

Robert Halfon Excerpts

Tuesday 11th February 2020 Westminster Hall

[Robert Halfon (Harlow) (Con)]

It is an honour to serve under you, Ms Nokes, and to be sat next to my hon. Friend the Member for Gloucester (Richard Graham), who has done so much to support apprentices. Like me, he understands the importance of promoting the prestige of apprentices, which is why he employs one. My own apprentice, Dan Swords, is present in the Public Gallery. That prestige is incredibly important.

I will make a general point before talking about the levy specifically. The solutions proposed by my hon. Friend are very important, but a number of other things need to be considered. We can tune the apprenticeship levy as much as we want, but we have to address prestige and careers as well; otherwise the levy, however good or bad, will not succeed in the way we would like. Prestige is important. The fact that Mr Speaker is going to employ an apprentice in his office sends an important signal to millions of people across the country about how prestigious apprenticeships are. More parliamentarians should employ apprentices.

One of our biggest problems in terms of the prestige of apprenticeships and the number of people who want to do them comes from the fact that apprenticeship careers are so poor. One of the last things I did as Skills Minister in 2017 was to introduce the Baker clause, which compels schools to invite apprentices, apprenticeship organisations and further education colleges into schools, but that is not happening as it should be. I strongly welcome the letter that Lord Agnew is sending to schools, but a letter is not enough. The Ofsted guidelines must be much tougher and look at the outcomes. How many children in those schools are going on to apprenticeships, further education qualifications, or technical education as that comes through the system? We will not change the attitudes of parents and families unless we transform careers.

There is an incredible duplication of careers organisations from the Departments for Education and for Work and Pensions. I would like there to be one organisation—a national skills network—and a UCAS-type system for further education, skills and apprenticeships, which would also include universities. Rather than having separate education systems, there should be a one-stop shop for students or apprentices to get advice on the best FE college or kind of apprenticeship. That is the way to promote parity of esteem, not by having separate systems. We have talked for a long time about a UCAS-type system for FE, skills and apprenticeships, but it has still not happened.

Unfortunately, there has been gaming of the levy system. The Times Educational Supplement has published a report today saying that more than £100 million of apprenticeship levy funds have been spent on masters degrees for managers. New polling by YouGov for the Centre for Social Justice shows that in the last 12 months almost one in five businesses has used the levy to accredit skills that their workers already have. We need to reform the apprenticeship levy so that funds are used more productively. The Government could do that by restricting funds for employees who are already qualified to degree level, or by allowing employers more generous terms when they create apprenticeships for low-skilled workers. In other words, if employers used their levy for gaming the system, they would use a tiny part of it, but if they used it to get more young people, more 16-year-olds, doing apprenticeships that meet our skills needs, they would use much more of it. We need to look at the levy in that way.

We also need to do more to ensure that the disadvantaged have access to degree apprenticeships, which are my two favourite words in the English language, as those who know me know. I am not talking about the gaming of the system for masters degrees, but degree apprenticeships in law and engineering. Last week, during National Apprenticeship Week, I went to the TUI holiday store in my constituency of Harlow and met a degree apprentice who is doing law for TUI. She is an outstanding individual who wanted to earn while she learned, so she has no debt at all. She is virtually guaranteed to get a job with TUI at the end, so her career is made.

We should be doing more. We should have an ambition that at least 50% of our students do degree apprenticeships. We need to increase and ring-fence funds from the apprenticeship levy. We could do that by broadening its remit so that employers with a salary roll of £2 million qualify.

We have to be more imaginative in removing the bureaucracy, as my hon. Friend the Member for Gloucester has said. He touched on nursing degree apprenticeships, on which the Education Committee did an inquiry. There could be many more if the bureaucracy, the rules and regulations, and the apprenticeship levy were more flexible in all sorts of ways. We are missing an opportunity. We had an argument about the bursary—I am glad it has come back in one form or another—but it would be better if the vast majority were doing nursing degree apprenticeships, and if the Institute for Apprenticeships and Technical Education and the Department had the vision and provided strategic guidance and a more flexible levy and rules. There has to be flexibility.

Better-off families are two and a half times more likely than their disadvantaged peers to know about degree apprenticeships, and that is linked to careers advice. The Government should hardwire apprenticeships into all careers advice and we should enforce the Baker clause more stringently. In my previous job as a Minister, and in my current job as Chair of the Select Committee, I have gone around the country visiting incredible providers—private providers and FE providers—but in 2018-19 only 56% of providers inspected were rated good or outstanding. The Government should strengthen Ofsted’s capacity to carry out monitoring visits much earlier for new market entrants and across a large part of the market.

Let us think imaginatively. We have a research and development tax credit. Why on earth do we not have a skills credit to help companies that are doing the right thing, such as smaller companies employing apprentices? We need to look at wider issues, such as whether we should extend the levy across the board, as proposed by the Association of Employment and Learning Providers, whose representatives are also in the Gallery, and get rid of the training costs for employers.

[Jack Lopresti (Filton and Bradley Stoke) (Con)]

Could university technical colleges play a bigger role?

[Robert Halfon]

I support university technical colleges, and I think that the entry age should start at 16. My dream would be to have a technical school in every town in the country, because they have good outcomes, but they need to be reformed.

My hon. Friend the Member for Gloucester mentioned that from 2020 we have a £2.5 billion budget. We need to know what the apprenticeships budget will be over the next five years. If the Minister cannot provide that information today, I hope we will find out in the Budget.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Education (Michelle Donelan)]

I congratulate my hon. Friend the Member for Gloucester (Richard Graham) on securing the debate, and I warmly welcome his ongoing interest and engagement with the Government’s work on high-quality apprenticeships. It is vital that we advocate for businesses and apprentices alike up and down the country. I am delighted to see so many Members present, and I recognise the work they have already done on this issue. I hope my hon. Friend will agree that we have made huge progress on building a world-class apprenticeship system that creates opportunities for people of all ages and backgrounds, wherever they are in the country. It is great news that there have been 11,000 more apprenticeships in his constituency alone since 2010.

As Members will know, last week was National Apprenticeship Week, our annual celebration of everything that apprenticeships have to offer employers, individuals and society. Many Members present will have heard some inspiring stories. The highlight for me was presenting the awards at Wiltshire College apprenticeship evening, where I met many extremely enthusiastic apprentices of different ages and at different stages of their career. Many Members will agree that the message of optimism in our outreach work, and the determination to challenge the outdated perception that university is the only desirable option for the ambitious and motivated, are quite rightly at the top of our agenda.

Many may have also heard the frustrations. Although we have made a great deal of progress, we cannot be complacent. We know that the levy remains a source of concern for some employers, and many Members spoke about the complexities and inflexibilities of the present system. I want to assure them—in particular, the hon. Member for Kingston upon Hull West and Hessle (Emma Hardy)—that we are keeping the apprentice system and levy under constant review to understand how it works for employers of all sizes, and most importantly how it can deliver for our economy and for social mobility.

On the timing for creating standards, which my hon. Friend the Member for Gloucester raised, we introduced a faster, better programme, which has made significant improvements. In fact, the institute has exceeded its own targets. I appreciate that there is further work to do, but we are making progress.

It is vital to recognise that the levy is at the centre of our ambitious apprenticeship reform. Less than 2% of employers pay the levy, but 56% of starts—almost 225,000—were supported by the funds in the employers’ levy accounts between 2018 and 2010. The apprenticeship levy is helping businesses large and small to access the high-quality training that they need. More funding is available for apprenticeships than ever before. We will make more than £2.5 billion available for investment this year—double what we spent in 2010. That point was noted by my right hon. Friend the Member for East Hampshire (Damian Hinds), whose insight from leading the Department was of great use today. His excellent speech highlighted the benefits of the apprenticeship system and how it works in practice.

[Robert Halfon]

Like the shadow Minister, the Minister is a graduate of the Education Committee—it is a true ladder of opportunity. She spoke about reform of the levy, but are the Government open to the idea of extending it, or are they just looking at reforms to the current system? Could she also say something about whether she has any figures for the budget for apprenticeships over the next few years?

[Michelle Donelan]

My right hon. Friend gives me more credit than my position is due. I am afraid that I do not set the budget, but I assure him that we are keeping everything under review. As he knows only too well, the apprenticeship levy is worked on in conjunction with the Treasury. We will be considering the impact that it has on businesses, on social mobility and on opening up apprenticeships in the long run, so that the system is not only sustainable but opens door after door for young and older people in our communities.

Hon. Members mentioned SMEs, and I assure them that we are putting those on the same footing as big business. The apprenticeship service includes an award-winning digital service to support employers to manage their funds and choose the training they need from a register of approved providers. We are rolling out the benefits of that service to smaller employers too, moving away from the previous procured contract system to give SMEs more choice than ever over the opportunities that they create. Putting employers that do not pay the levy on the same footing as big businesses will allow them to choose the training providers that suit their individual needs. As that transition takes place, we are supporting SMEs by making funding available for more than 15,000 additional apprenticeship starts this financial year. I hope that addresses some of the points raised by my hon. Friend the Member for Stoke-on-Trent Central (Jo Gideon).

I note the comments of my right hon. Friend the Member for Harlow (Robert Halfon), the Chair of the Education Committee, which I formerly served on. He talked about the issue of gaming, and mentioned second degrees. We have to be really careful, because there are a number of sectors in which we have to recruit more people because we have skills gaps, including the NHS and the police, so we actually want people to do a second degree to get into those sectors. I hear the concerns about that and the MBA debate. I want him and other Members to know that I am personally looking at that to ensure that we get it right.

We are confident that our work to improve the working of the levy will respond to the rigidity of the system, which hon. Members mentioned, and open up more opportunities for individuals and businesses. I assure hon. Members that we will continue the progress with this so we support employers in the sector. However, as my hon. Friend the Member for Gloucester said, starts have fallen since our ambitious reform programme began. We will continue to carefully monitor falls in apprenticeship starts at level 2 and by younger people, as our reforms bed in and the balance of the programme continues to shift. Apprenticeships at level 2 can provide significant returns to individuals and may be the starting point for further progression—or, as my hon. Friend the Member for Henley (John Howell) neatly said, act as the ladder of opportunity. However, it is also vital that young people and those from disadvantaged backgrounds can realise the benefits of apprenticeships at higher levels, so we will continue to look at this.

[Sir Gary Streeter in the Chair]

I want to stress the importance of quality, because apprenticeship standards are central to driving forward our reforms. Employers often told us that the quality of the training was inconsistent and inappropriate. Standards today ensure that apprentices train for a minimum of a year, with at least 20% off-the-job training, and receive a rigorous assessment at the end. All apprentices will be starting on these high-quality standards by the start of the 2020-21 academic year. We listened to employers’ concerns around their engagement in developing the apprenticeships. We have established the independent Institute for Apprenticeships and Technical Education, which was mentioned several times. It is working with employers of all sizes to ensure the standards deliver for them.

When we reach National Apprenticeship Week 2021 and look back on the achievements of the coming year, I am confident that we will still be proud of the progress we are making. By this time next year, all apprentices will be starting on high-quality standards, developed by employers to deliver the skills they need.