Apprenticeship Levy

Thérèse Coffey Excerpts

Wednesday 22nd November 2023 Westminster Hall

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

It is a pleasure to speak in this debate. I congratulate my hon. Friend the Member for Stoke-on-Trent North (Jonathan Gullis) on securing it and on the valid points that he made. I have not yet found time to read his New Conservatives’ paper, but I have a bit more time on my hands now, so I will make sure it becomes part of my reading material.

It is also a pleasure to follow my constituency neighbour and hon. Friend the Member for Waveney (Peter Aldous). He knows the work that we have put in. Indeed, some of the new courses have been put on in colleges in his constituency, which serve constituents of mine, and in Ipswich. Together, it is all about providing a pathway for people to access high-skilled, good-quality jobs with good salaries. That is why I commend the apprenticeship levy. I am conscious that there is a different apprenticeship system in the constituency of the hon. Member for Strangford (Jim Shannon), but his belief in apprenticeships is really important.

Last but not least of the Members who will be speaking today—I do not know quite so much about the hon. Gentleman just to my right, the hon. Member for Glasgow East (David Linden)—is the Minister for Skills, Apprenticeships and Higher Education, my right hon. Friend the Member for Harlow (Robert Halfon), who used to wear a ladder badge when he was in the Department before. He also tried to change the symbol of our party to the ladder to represent that aspiration. I must admit that, as an Environment Minister at the time, I was happy we kept the tree, but I think both symbols are good. We grow from seeds—as we know, a little acorn makes a grand oak. That is an important part of what we seek to achieve in supporting apprenticeships.

It is fair to say that the apprenticeship levy is an integral component of modern workforce development. In an era marked by technological advancements and shifting economic landscapes, a skilled and adaptable workforce has never been more critical. The apprenticeship levy, introduced just six years ago in the UK, stands as a testament to a proactive approach to addressing this need.

One of the most compelling aspects of the apprenticeship levy is its role in redefining the traditional route to career progression. By offering an alternative pathway to acquiring skills and qualifications, it presents an attractive option both for employers and for individuals seeking to expand their knowledge base. Apprenticeships provide hands-on training and allow people to earn while they learn, thereby bridging the gap between education and employment.

It should also be recognised that the levy is designed to be a tool that allows employers to be inclusive and diverse in the workforce they recruit. Such recruitment fosters an environment of equal opportunity, which not only benefits individuals seeking to enter the workforce, but enriches companies by bringing in a fresh perspective and innovative ideas that we may not get from people who have just gone down the traditional road.

I must admit that there are many good intentions behind the apprenticeship levy, and it has achieved so much. However—dare I say it, having now left Government —as plenty of Ministers and civil servants will know, in my time as Secretary of State for Work and Pensions in particular I was seeking to make reforms and have that debate in Government. Some progress was made, but I believe a lot more could still be done.

I believe without question that improving the system to make it more agile and adaptable to employers’ needs is critical to addressing the productivity challenge that we face. To give a simple example, as I have already had parts of these discussions with the Minister, I have seen consistently that we need to substantially increase the take-up of level 4 and 5 apprenticeships, which I believe is a good bridge going on from T-levels. Not everybody will necessarily be able to make it to degree-level apprenticeships, nor should they have to in order to recognise that they will still be getting a substantial salary. Meanwhile, they will fill key skill gaps between levels 3 and 6, which many industries are crying out for. We all know that part of the challenge is a combination of the provider and how employers can access some of that funding and structure accordingly.

Let me turn to some of the constraints. I appreciate that every policy gets criticised from a variety of angles, but the lack of flexibility has been a consistent complaint from many employers. I think the national health service had to be given an extra £120 million to boost the take-up of nurse apprenticeships. That was because the apprenticeship levy would not be allowed—is still not allowed, as far as I am aware—to cover back staff for that one day a week that people are off. I do appreciate that there have been some good changes recently. It is about not just the 20%, but the six hours, which, if someone is working full time, can still be less than 20% in terms of out-of-job training.

Employers really do need to be listened to. I recall a visit that I made to Severn Trent as part of kickstart; I went with Boris Johnson. The chief executive, the excellent Liv Garfield, was pleading to see changes, because she believed that she would be able to produce at least 50% more apprenticeships that would help, whereas all the other costs associated with helping people to fulfil that apprenticeship route had been deemed prohibitive.

I am also very conscious that there is a substantial surplus that goes back to the Treasury. I recognise that that money is usually used for other sorts of skills, or indeed to help to access the route for smaller employers, but I think that there is still a gap there. This is not about trying to be easy on big businesses; if anything, we should be challenging them to make more use of the levy through their supply chains, which, again, is a flexibility that was introduced a few years ago. Nevertheless, I believe that it tends to be larger organisations that have the HR in place to address that. Alternatively, more of the levy needs to be used for those sorts of auxiliary services to facilitate this, as opposed to the small employer, who might be taking on one or two people and already has, dare I say it, enough to do.

I encourage the Minister—again, a little bit with my DWP hat on—to consider what has happened to the number of intermediate apprenticeships. I am very conscious that the number of higher apprenticeships has gone up, not just at levels 4 and 5 but at level 6, the degree apprenticeships, and indeed level 7. However, I ask the Minister to really interrogate what is happening, particularly with level 7 qualifications. I have heard stories, although I have not actually got the proof to back it up, that the police superintendents’ course had become a level 7 apprenticeship so that police forces could use their levy. That is not really what it is designed for.

My hon. Friend the Member for Waveney spoke about how apprenticeships should really be for new jobs and so on. I do not agree; I think that there should be an opportunity to change career within a company, or indeed to progress. One thing I hope has happened, given that there are far fewer intermediate apprenticeships, is that those people who have completed level 2 have gone on to advanced and higher apprenticeships. I hope that that has happened, but I am concerned that that might not be the case. I encourage the Minister to get the analysis for that.

Yes, the number of starts has fallen. Some of that will be linked to the costs of the different levels of courses that people are taking up; doing a level 5 or 6 will inevitably require substantially more funding than a level 2. Nevertheless, it is worth looking in detail at the analysis of whether we are really getting the transformation that this apprenticeship levy is meant to have.

My hon. Friends the Members for Waveney and for Stoke-on-Trent North have spoken about drop-out rates. It really is a worry that so many people are dropping out, although there may be very good reasons for that. I think a significant reason is that they go and get a job elsewhere, either because they have finished what they needed to do or because they want more money—let us be candid about that. Employers who do not offer just the bare minimum wage are much more enlightened, because they are more likely to keep their apprentices if they pay them a regular rate or at least something closer to it. On retention, there are too many complaints along the lines of “Oh, well—they finished it and they have gone elsewhere for more pay.” However, I appreciate that it is about more than that, and I am sure that my right hon. Friend will have a good answer.

I agree with the suggested reforms involving a shorter course to accelerate the transition where appropriate. We cannot get away from the issues that have been raised. When I went to visit Andy Street, we went to one of the HGV academies. Basically, Eddie Stobart said that it would guarantee a job to anybody who passes the sorts of course that are available through an apprenticeship; I think this one was a CPC. No more interviews—they just had to pass the course and get the job. There was a big take-up. I know that the Mayor would be keen for more options for providing that sort of apprenticeship or other aspects of professional qualification for skills that are highly in demand and are in short supply.

I encourage the Minister to see about the range of courses that are available. I think I am right in saying that the HGV course is available as an apprenticeship, but that the course to drive the smaller size of vans, which still require an additional driving qualification, is not. That is despite my best efforts to persuade the Department for Transport to take a Brexit bonus. Somebody who got their driving licence before ’97, as I did, can drive a C1 and a D1 without any further qualifications, whereas nowadays it costs about £2,500 or £3,000 to qualify. I appreciate that that is a slightly different debate.

Coming back on topic, I encourage the Minister to think about the really good flexibility that we have seen in the freelance industry and in the media sector. That is really welcome, and we could see what more could be done on aspects of the supply chain.

I turn to agriculture. I represent a rural constituency. The Minister and I have had a separate discussion about the provision available through T-levels for certain sectors. I commend Suffolk New College, which has established Suffolk Rural College to try to keep the pipeline of agricultural workers open. There are definitely challenges around the funding levels given for different elements.

I know that the Department has been generous in giving capital grants. If we want to train people to be welders, there need to be colleges that have that sort of equipment readily available. Let us think about the rural college that needs to keep a herd of 30 cattle going in order to provide the equipment for people to work with.

We need diversity. Let us not just think about IT, admin and, dare I say it, traditional manufacturing. Let us think about wider elements, access to the levy and new routes that can help that to happen. The reasons why those courses is no longer being provided or offered really need to be investigated.

I know that the Minister is passionate about the issue. With the kickstart scheme that I worked on and helped to design, I feel that there was definitely a lot more flexibility. It was able to use Government grants in order to provide for people to have that ladder. Frankly, kickstart was a lifeline. I ask him to think about things we have done that worked surprisingly well, and to bear it in mind that although I fully support the fact that we are trying to get quality apprenticeships, we must make it easier for people to start and finish. This could be a further supply-side reform that would really help to unlock the growth that we need. I know that business would welcome it if he looked at these issues again.

The apprenticeship levy was critical in providing a pathway for individuals to realise their potential and for businesses to thrive in that ever-evolving landscape. The regulation and the design of the scheme needs to evolve to keep at pace. This is a commitment. It is not just a financial levy; it is a recognised commitment to invest in the future and in people of all ages. The Minister will know that the number of older people taking up apprenticeships has increased significantly. A future in which skills, talent and opportunity intersect to create a stronger and more resilient workforce is what UK plc needs.