Apprenticeships, Skills, Children and Learning Bill

My Lords, I understand the desire of the noble Viscount, Lord Eccles, to increase the number of apprenticeship places. That is a desire that I am sure everyone in the Committee shares; the question is how we achieve it. As has already been said, demand exceeds supply quite significantly. We have to examine what has been achieved so far and I make no apologies for repeating what I have said on a number of previous occasions. I was really surprised to hear the noble Lord, Lord De Mauley, say that we had failed to make progress. Perhaps I may remind him of the inheritance. In 1997, apprenticeship schemes were dead on their feet; only 65,000 were left and just over a quarter of them were being completed. If we wind the clock forward 10 years, we will see that we have a quarter of a million people engaged in apprenticeships, with over two-thirds completing them. That does not sound like failure to me; it sounds like success. Just occasionally, it would be appreciated if we acknowledged that success, because an awful lot of people have contributed to it—not least many employers, whose views I feel sure the noble Lord, Lord De Mauley, is keen to represent. Employers have worked hard on this, so we should acknowledge that progress has been made. The noble Lord, Lord Leitch, set us a very ambitious target in relation to young people, and meeting it will of course be a challenge. It is true that we have lost some apprenticeship places during the downturn. The downturn has had an impact on some young people, but it has not been as bad as in previous recessions because more employers are heeding the message that if you want to keep on trading, you need to keep training and that apprentices are a worthwhile investment. The young people—or mature people—concerned pay back time and again in their enthusiasm, in the fact that they are retained more, and in the contribution that they make through their imagination and enthusiasm. Apprenticeships are therefore a good investment. It is a shame that we cannot persuade even more British employers to recognise their importance and value. Can we deliver? That is a profoundly important question. We cannot afford to be complacent, which is why the Prime Minister announced in January this year a further £140 million for creating approximately another 31,000 apprenticeship places. The public sector, which accounts for 20 per cent of the workforce, has only 10 per cent of apprenticeships. So we have launched a real drive to create more than 20,000 further apprenticeships in the public sector and, we hope, another 15,000 in the private sector. We have created the National Apprenticeship Service—400 staff dedicated to ensuring the provision of apprenticeship places and that those employers who are interested in apprenticeships have a one-stop shop for handling them. We have also created a new database. We used to call it the Vacancy Matching Service; we have now made it a bit snappier and called it Apprenticeships Online. Young people and employers can go online and see what is available. Employers can register their vacancies, and young people, parents and mature people can go online and check availability. That is all part of ensuring that people understand the value of apprenticeships. We have had some successful marketing campaigns on apprenticeships, helped by the noble Lord, Lord Sugar. The noble Lord, Lord Cotter, expressed his lifelong concern about SMEs and small firms. It is a concern which I share: they make a valuable contribution. Small businesses are already big apprenticeship providers: firms employing fewer than 25 people are delivering almost three-fifths of 16-to-24 apprenticeships, despite accounting for less than a third of all employment. So they are making a good contribution. What are we doing to help them in those circumstances? I think that I have explained previously the concept of group training associations, where small firms can gather together under that umbrella and some of the training ability and administrative costs are provided. There are lots of good examples. We are putting more money into expanding group training associations and other models. We have also introduced the expansion pilots, giving more money to some employers to take on more apprentices than they might need, possibly for their supply chains, and we have had a good response on that front as well—I think that another 3,000 apprenticeships have been created as a result. On disproportionate expenditure—that phrase will be engraved on my heart after this Bill—I reassure my noble friend Lord Rix that we will bring forward amendments on Report. My noble friend Lord Layard asked about apprenticeship funding. We invest a huge amount of money in apprenticeships: we pay for the whole cost of training for those under 19 and a proportionate amount for those over 19. We are able to channel money directly to employers who can prove that they are running a fully accredited apprenticeship scheme. There is within the proposals the ability to do that. It is a question of priorities. From 2015, everyone up to the age of 18 will be required to participate in either education or training, or employment with training. That is a profound step forward in how we are trying to deal with young people. We are ensuring that never again will we have a situation where young people leave school or college at the age of 16 and do not get any training at all. There will be a real requirement. Noble Lords should not forget that we have also built in the right to request time to train. We are therefore in a new environment. We hope that we are creating a better culture within this country where people acknowledge the value of vocational training and apprenticeships. Apprenticeships are a major pillar of our strategy, which is why we have made apprenticeship for 16 to 18 year-olds our priority, and we make no apologies for doing so, given their impact on youth unemployment. The amendment proposed by the noble Viscount, Lord Eccles, would effectively remove the apprenticeship scheme. While we could not accept that, I assure the noble Viscount that the National Apprenticeship Service will have wider responsibilities to boost employer engagement and apprenticeship opportunities for all. I turn to Amendment 202 and my noble friend’s suggestion of providing further financial incentives to employers. We do not agree that this is the right way to engage more employers in the apprenticeships programme for three reasons. First, as I have already said, the way to boost employer engagement is to disseminate positive messages about the benefits of apprenticeships in terms of increased productivity and improved staff retention. From my experience of visiting chambers of commerce or gatherings of employers, I know that there is nothing like peer-group recommendations—when employers hear other employers say to them that apprenticeships are a good investment. We have to change attitudes. Secondly, employers already benefit from considerable financial incentives. Apprentices aged 16 to 18 receive fully funded training from the Government, which means that employers do not have to pay these costs. Thirdly, an additional financial incentive runs the risk of creating dead weight, as public funds would be used to subsidise the cost of more than 100,000 young people already taken on by employers every year as apprentices. I assure noble Lords that employers can get apprenticeship training funding directly. Indeed, many large employers already take advantage of this. The National Apprenticeship Service will certainly publicise this opportunity through the information that it provides to employers. I reiterate that everyone in this Committee wants to increase apprenticeships. We believe that we have the right strategy. Our track record since 1997 demonstrates a huge achievement. Achieving our goal will be challenging; we cannot afford to be complacent for the reasons that I have outlined; and all the measures that we have taken so far to drive up the number of apprenticeship places will enable us to meet our objectives. I hope that, on this basis, noble Lords will agree not to press their amendments.