Institute for Apprenticeships and Technical Education (Transfer of Functions etc) Bill [Lords]

Toby Perkins Excerpts

2nd reading
Tuesday 25th February 2025 Commons Chamber

[Bridget Phillipson]

I agree with my hon. Friend, and I know how much he champions, in his constituency and in the House, opportunities for young people to have the chance to take on new skills, including through apprenticeship routes. Where it comes to construction, he is right to say that there are fantastic opportunities out there. It was heartening, during some of my visits during National Apprenticeship Week, to see the fantastic contribution that women play in construction, breaking down some of the stereotypes that exist about the right opportunities, and to meet some amazing engineering apprentices and bricklaying apprentices. Those women are really trailblazing in an industry that is often very male-dominated.

[Mr Toby Perkins (Chesterfield) (Lab)]

On the subject of construction, does my right hon. Friend agree that a huge amount of the construction industry is made up of small employers and that one of the biggest failings of the apprenticeship levy approach has been that small and medium-sized enterprises have been shut out? We have had a 50% reduction in the number of SMEs offering apprenticeships since the introduction of the levy. How will she increase the number of SMEs that are able to offer apprenticeships? If the major employers are the ones that have all the budget, how do we ensure that we increase the number of SME apprenticeships?

[Bridget Phillipson]

My hon. Friend has a long-standing interest in this area and has consistently raised not only the challenges faced by small businesses but the opportunities to create more apprenticeship starts and more training routes for people across our country. One of the changes that we set out during National Apprenticeship Week was to the maths and English requirements for adult apprentices, which will make a big difference to employers large and small and was welcomed by business, but he is right to say that much more is needed to help smaller employers and small contractors to take on apprentices. That is the work that Skills England will drive forward and that is why this Bill is such a crucial development.

The skills gaps that we face in our country deny people the opportunity, the power and the freedom to choose the life that they want to live. But it is not just today that we count the cost; those gaps limit our power to shape the careers, the economy and the society of tomorrow as well. Only with the right skills can people take control of their future, and only with the right skills system can we drive the growth that this country needs. It is time this country took skills seriously again: no longer an afterthought, but now at the centre of change; no longer a nice to have, but now a driving force for opportunity; no longer neglected, but now a national strength.

There is much to celebrate. Plenty of colleges go above and beyond, plenty of employers are ready to contribute and plenty of people are eager to upskill, but our system needs reform. Too many people have been sidelined and left without the skills to seize opportunity. One in eight young people are not in employment, education or training. We can, and we must, do more to break down the barriers to learning that too many people still face. We need a system that is firing on all cylinders.

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[Bridget Phillipson]

The hon. Gentleman is right about the challenges across the further education sector. Sadly, we know those challenges all too well after 14 years of failure under the Conservatives. We recognise the enormous opportunity that comes from investing in our fantastic colleges. That is why at the Budget we announced an extra £300 million of additional revenue for further education and £300 million of new capital investment. That also builds on our investment to extend targeted retention incentive payments of up to £6,000 after tax to eligible early career FE teachers in key subject areas. Our FE sector will have a crucial role to play in our mission for growth and opportunity, and he is right to draw attention to that.

Skills England will be ready to give employers the fast and flexible support they need. While updates to courses in the past have been sluggish and left behind by new technology, the Bill will help us keep up with the pace of change. Skills England will draw on high-quality data. It will design courses that are demand-led and shaped from the ground up by employers. Employers should be in no doubt that they will have a critical role in course design and delivery. That is why I have appointed Phil Smith to chair Skills England. Phil brings a wealth of business expertise from his two decades leading Cisco and will ensure that employers are at the heart of Skills England. I have appointed Sir David Bell as vice-chair, drawing on his wealth of experience across education and Whitehall. I have also appointed Tessa Griffiths and Sarah Maclean as chief executive on a job-share basis, with Gemma Marsh as deputy chief executive. They will provide strong, independent leadership to move the skills system forward. Skills England will be held accountable by an independent board, and the Bill requires a report to be published and laid before Parliament, setting out the impact on technical education and apprenticeships of the exercise of the functions in the measure.

The clear relationship between the Department and Skills England is governed by a public framework document, which will be published for all to see. It will be a core constitutional document produced in line with guidance from the Treasury, making clear the different roles of my Department and Skills England. Skills England will reach across the country. It will not be trapped in Whitehall but spread to every town and city, because growth and employment must benefit every part of the country, not just where it is easy to drive growth. That means being ambitious, especially in areas that have been overlooked for decades, because talent and aspiration are no less present in those places.

Skills England will drive co-ordinated action to meet regional and national skills needs at all levels and in all places. It will work closely with mayoral strategic authorities and local and regional organisations, and it will connect with counterparts in Scotland, Wales and Northern Ireland. Skills England will simplify the system by combining functions within one powerful body and pulling together the disparate strands of Departments, local leaders, colleges, universities and training providers and weaving them into a coherent offer for businesses and learners alike.

To see why the skills revolution is so important for growth and why we must take skills seriously again, we should look no further than the UK’s stalling productivity over the last decade and a half, dragging down our economy and cutting off hopes of higher incomes for workers. The skills system is central because, despite all its problems, the expansion of workforce skills drove a third of average annual productivity growth between 2001 and 2019. Here we have a chance. Here we see what is at stake. If we get this right by investing in our people and backing Skills England, we can drive productivity and get economic growth back on track. At the same time, we can give working people power and choice because that is what good skills can offer: the chance for them to take control of their careers and take advantage of the opportunities that our economy will create. That is why Skills England will work to support the forthcoming industrial strategy unveiled by the Chancellor last November. The next phase of its work will provide further evidence on the strategy’s eight growth-driving sectors: advanced manufacturing, clean energy, the creative industries, defence, digital, financial services, life sciences, and professional and business services. Added to those are two more: construction and healthcare.

Skills England will work closely with the Industrial Strategy Council, which will monitor the strategy’s progress against clear objectives.

[Mr Perkins]

I am grateful to the Secretary of State for giving way again. She is speaking incredibly powerfully and passionately about the role of Skills England, and I share her commitment and excitement about it, but as she knows, this IfATE Bill abolishes IfATE rather than creating Skills England. There were those who believed that putting Skills England on a statutory footing as an independent body, rather than keeping it in the Department, might have been the way to go. Will she explain to the House why she has taken this approach, and why she believes that Skills England will, as a body in her Department rather than as a truly independent body, have the strength and respect in the sector that it so badly needs?

[Bridget Phillipson]

I will set out the reason primarily and then say a little about the way in which Skills England will operate. First, the need to do it in this way is one of time and speed. As I hope I have set out to the House, the need to act is urgent; we must get on with this and ensure that we tackle the chronic skills shortages right across our country—there is no time to waste. The Government are determined to drive opportunity and growth in every corner of our country. Further delays to that will hold back not just growth but opportunities.

When it comes to the function of Skills England and how it will operate, it will be an Executive agency of the Department for Education. It will have the independence that it needs to perform its role effectively, with a robust governance and accountability framework and a chair who brings an enormous wealth of experience from business. A strong, independent board, chaired by Phil Smith, will balance operational independence with proximity to Government. It will operate in the same way that many Executive agencies, such as the Driver and Vehicle Licensing Agency, already operate.

As with any new arm’s length body, in the next 18 to 24 months we will review how Skills England is functioning, to consider whether it still exists within the best model. [Interruption.] That is entirely in keeping with the way in which arm’s length bodies are routinely considered by the Government. I am surprised that Conservative Members are surprised, because that is simply how these things are done, as they know all too well. If they are content to allow drift and delay, they will hold back opportunity for people across our country; they will hold back the demand that businesses rightly lay at our door to get on with the job of creating the conditions in which they can deliver more apprenticeship starts, more opportunities, and more chances to learn and upskill.

Skills England will work closely with the Industrial Strategy Council, which will monitor the strategy’s progress against clear objectives. The Skills England chair will have a permanent seat on the council—that really matters. By 2035 there will be at least 1.4 million new jobs. Our clean energy mission will rely on talented people with the expertise to power our greener future. The pace of technological change, including artificial intelligence, is accelerating, and it brings huge opportunities for our economy. However, to seize those opportunities, firms need a ready supply of people with the right skills. We will nurture home-grown talent in all regions so that people have the skills they need for those exciting jobs of the future.

Skills England will work with the Migration Advisory Committee to ensure that training in England accounts for the overall need of the labour market and to reduce the reliance of some sectors on labour from abroad.

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[Laura Trott (Sevenoaks) (Con)]

I rise to speak on a piece of legislation that poses more risks than benefits and proves that there is not parity of esteem for technical and academic qualifications within the Government. The Secretary of State is putting forward a Bill that allows her personally to write each apprenticeship assessment. Just in case you think I am exaggerating, Madam Deputy Speaker, we can see it in the explanatory notes. The Bill provides

“the option for each standard and apprenticeship assessment plan to be prepared by the Secretary of State”.

Madam Deputy Speaker, can you imagine the outcry if this was done with history GCSEs? If it were a Conservative Government taking these powers, there would be howls of outrage from the Labour party. It is extraordinary that the Government are, contrary to the words of the Secretary of State today, cutting out employers and giving sole discretion to the Secretary of State. They would not allow it with academic qualifications; we must not allow it with vocational ones.

I acknowledge the statement made in the other place about clarifying the situations when the Government envisage the Secretary of State intervening, but the specific criteria for using this power should be on the face of the Bill. At the moment, the Secretary of State has carte blanche to do whatever she likes, and we know from the Children’s Wellbeing and Schools Bill that that is a very bad idea. Can the Minister confirm that there will be some restrictions, and will the Government put those on the face of the Bill?

The Bill is another manifestation of the Department for Education’s centralisation spree. As with the Children’s Wellbeing and Schools Bill, everything must be controlled by the Secretary of State, and no innovation is allowed. The Bill abolishes the Institute for Apprenticeships and Technical Education—shortened to IfATE—and transfers its functions to the Secretary of State, in effect absorbing them into the Department for Education. The Government say that they will set up Skills England, but there are no details on the plans for Skills England in the Bill, or on how the Government’s proposed changes to the funding of skills-based qualifications will work in practice.

Simply creating a new agency will not address any of the issues that we need to address within the skills system. Even putting aside my severe doubts about the wisdom of progressing down this road in the first place, the very least the Government could provide the House with is some information on Skills England itself in the Bill. The only thing we know from debates in the other place—the Secretary of State has confirmed it today—is that Skills England will not be on a statutory footing and therefore will unquestionably be less independent than IfATE. Can the Secretary of State explain why this is an improvement?

This matters because the framework document published in the autumn is, at best, vague and, at worst, silent on the role of employers. There are some statements in the section on aims saying that employers will be engaged in the preparation of occupational standards, but it does not say how. Does the Secretary of State think that she knows better than employers? I urge her to explain why employers are so much less visible in the framework document, or to agree to amend the Bill. Reducing the role of employers will harm the apprenticeship system.

The change will also create unnecessary turmoil in the skills system. A cross-party amendment was passed in the other place to try to minimise the impact that this uncertain upheaval will have. The amendment will delay the provisions of the Bill to ensure that Skills England has time to set up before taking on its role and to ensure that the administrative duties do not get in the way of providing quality apprenticeships. That seems the bare minimum of what we would expect, and I hope the Government will not oppose that amendment, because to do so would be absurd.

The skills system needs a stable landscape, but the Bill presents real risks with no obvious benefits: risks that the Government will erode standards in our skills system by removing the relationship with the employer and replacing it with diktat from the Secretary of State; risks of poor leadership by replacing a good organisation, which is liked by employers and apprentices, with an unknown and undefined body.

[Mr Perkins]

I am listening carefully to the right hon. Lady. She seems to be evangelising the role of IfATE, but I have heard far stronger criticisms of it than she appears to make. Is her position that IfATE does not have many faults and should carry on the way it is, or does she think that the organisation’s remit has grown and is vague, and most employers feel that it is a block to getting the standards they need, rather than the vehicle for that, as she seems to suggest?

[Laura Trott]

I have huge respect for the hon. Gentleman and thought his earlier question was spot on. There is much that needs to be improved, but that is much less vague than Skills England, which is what we have in front of us at the moment. There are risks of distraction, with the time and cost involved in creating a new agency in the Department for Education. If the Government were serious about progressing quickly with the urgent strategic issues that I accept are needed in skills reform, the most effective step would be to build on the success of IfATE, rather than dismantling it. Instead, the Bill threatens to undo much of the progress made under successive Conservative Governments in building a world-class apprenticeships and technical education system. It is fiddling for no reason, change for no purpose and, as is so often the case with this Government, the opposite of what is required.

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[Ian Sollom]

I agree. That cross-departmental and cross-industry working is a critical reason for the need for a truly independent body.

The implication for standards development is also concerning. Where we have had employer-led trailblazer groups setting standards, the Secretary of State can now bypass employers entirely. In limited circumstances and for minor changes, that will have the benefit of speeding up the review process, which has been frustrating for employers. There are, however, no safeguards to prevent ministerial control becoming the default approach. Instead of giving businesses a structural role, maximising responsiveness, the Bill makes engagement merely consultative. That speaks to a broader point: Skills England’s credibility with employers will be key if those employers are to buy into the Government’s skills vision for the country. Has the Secretary of State not at least considered the possibility that the proposed structure, whereby programmes can be driven at her whim or those of her successors, undermines that much-needed credibility from the start?

The Government’s own impact assessment worries that there will be a

“slowdown in the growth rate of new apprenticeships and technical education courses due to potential delays in the approvals process”

caused by this new approach, and it reveals who will pay the price. It is adult learners, who make up 48% of apprentices and often face the greatest barriers to retraining; learners from our most deprived communities, whose achievement rates are already eight percentage points lower than those from affluent areas; and learners in regions such as the north-east, where apprenticeship starts are already lower and where every reduction in opportunity has a disproportionate effect.

[Mr Perkins]

I see that the hon. Gentleman has received the briefing from the Association of Employment and Learning Providers. He appears to be reading it virtually word for word; I do not know whether he contributed anything to the speech, but it has been very interesting to hear what he has said.

With the Bill having been through the House of Lords, the hon. Gentleman is proposing a wrecking amendment that would kill it. Although I sympathise with some of the points in his amendment, does he not think that with the reassurances that we have heard from the Secretary of State—which can be scrutinised over the course of this Bill’s progress—we can at least get Skills England set up at speed, so that it can take on the shape he is suggesting in future? The hon. Gentleman’s proposed approach would cancel all this reform. It would go right back to square one and stop reform dead in its tracks.

[Ian Sollom]

I have looked beyond the AELP briefing, thank you very much. This is a critical area of Government policy, and it is important to get it right from the start. That is just a difference of approach.

As my noble Friend Baroness Garden said in the other place, this looks like an innocuous little Bill, but there is so much more to it than meets the eye. It represents a fundamental shift away from employer leadership in our skills system towards ministerial whim, a shift away from statutory independence towards departmental convenience, and a shift away from proper parliamentary accountability towards rule by regulation. The Government may argue that this is just an enabling Bill to pave the way for Skills England, but that is precisely the problem. It enables the wrong thing—it enables centralisation when we need independence, it enables ministerial control when we need employer leadership, and it enables opacity when we need accountability.

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[Mr Toby Perkins (Chesterfield) (Lab)]

As co-chair of the all-party parliamentary group on apprenticeships, alongside my hon. Friend the Member for Peterborough (Andrew Pakes), I welcome the Government’s focus on this crucial aspect of skills policy. They have inherited a wildly diverse and dysfunctional skills landscape. I would not go so far as to describe what we have as a skills system, which would seem to suggest something far more considered and structured than what currently exists. This Bill is the Government’s first very small legislative step towards addressing the skills crisis that is one of our nation’s biggest barriers to growth and productivity.

It is almost impossible to have a meeting with an employer—private or public sector—without the issue of the UK’s skills deficit arising. Apprenticeships are a crucial but criminally underutilised dimension of providing Britain’s learners with an opportunity to earn while they learn, and provide our employers with skilled and qualified workers who contribute in the workplace as they develop the skills they will need. Indeed, the Government’s ambitious aspirations for growth will remain purely aspirations if the current failure in our skills approach is not rectified.

The right hon. Member for Sevenoaks (Laura Trott) suggested that the previous Conservative Government’s record on apprenticeships was world class, but I beg to differ. In discussing apprenticeships, it is worth first identifying what is wrong with the current system before considering the extent to which the Bill moves us towards resolution of those issues.

First, it is estimated that around £480 million will be left unspent in the major employers’ apprenticeship levy pot this year. FE News reported in February 2024 that SME apprenticeship starts had fallen by 49% since the introduction of the apprenticeship levy, with the cost, rigidity and bureaucracy of the current system all cited as reasons why SMEs do not take on apprentices. Level 2 and 3 apprenticeships, in particular, have suffered, with a 53% reduction since the introduction of the levy, while a growing portion of the levy pot is being spent on degree-level courses.

Degree-level apprenticeships should be a huge social mobility tool, with learners from poorer backgrounds who might be dissuaded from attending university relishing the opportunity to secure a degree while working and without accruing debt. However, recent research has shown, shockingly, that degree apprenticeships are being swept up by the wealthier students, with free school meals pupils less likely to get a degree apprenticeship than to get a place at Oxbridge.

Finally, the completion rate of apprenticeships is worryingly low, at just 54.3% of all students, compared with 97% of A-level students passing across all subjects. This is due to many causes; the Government have set about addressing one by removing the need to pass functional maths and English in order to complete an apprenticeship for under-19s. However, there also needs to be a much greater link between the completion of the apprenticeship and the fitness-to-practise requirements. Many learners do not complete the apprenticeship, but not because they have failed—they may well have secured the skills they needed to start work, and do not see the apprenticeship as being relevant once the job has been secured. There is, therefore, a great deal for the noble Baroness Smith, in the other place, to sink her teeth into.

This Bill is the Skills England Bill that dare not speak its name. By abolishing IfATE, it lays the groundwork for the creation of Skills England. There are important questions for the Government to answer, and I hope that when my hon. Friend the Minister responds to the debate, she will be able to enlighten us on a number of them. First, is she concerned that Skills England will have the necessary weight and independence to bring about the scale of change that its own report acknowledged was necessary? What will the extended scope of Skills England be, beyond the identification of standards and the potential alternative use of the Government’s new growth and skills levy?

If the Minister is not clear about what shape Skills England will take post IfATE, is she concerned about abolishing IfATE without being clear on what will replace it and where the responsibility for those functions will fall? Can she say any more about how the voice of employers will be heard when the powers are centralised with the Secretary of State? There may be huge enthusiasm for the Secretary of State taking a more streamlined approach, on occasions, to the process of creating new standards, as IfATE is seen as too cumbersome. However, does she agree that that must be the exception rather than the rule? How will she ensure that employers’ voices are still heard? Can she also confirm that the powers to approve standards will indeed pass to Skills England once that has been created, and can she say any more about the role of Skills England with regard to the growth and skills levy?

I very much welcome Baroness Smith’s announcement about removing the need for passing maths and English for students who are over 19, but has the Minister done any assessment of the merits of that for students under the age of 19? I am interested in understanding the arguments in favour of that change for over 19s that do not apply to students who are under 19.

I hugely welcome the Government’s commitment to this area of policy and the positive initial steps. I suspect that it will not be news to my hon. Friend that I think that far greater systemic change is needed if we are to deliver the more transformational change that our employers, our learners and, indeed, our nation desperately need.