New clause 1 provides for an information-sharing gateway between Her Majesty’s Revenue and Customs and the Secretary of State to support the new apprenticeship funding arrangements. The gateway was previously contained within clause 4 of the Bill, and new clause 1 allows it to operate independently from the arrangements in clause 4. As I set out in Committee, routing funding through employers will mean that the Secretary of State will make arrangements with HMRC, and regulations will set out how the administration of the scheme would operate. The Government published a technical consultation on apprenticeship funding reform in March, which sought views on two payment mechanisms: PAYE—pay-as-you-earn; and an apprenticeship credit. The consultation closed on 1 May. We are analysing the responses and expect to announce our next steps later this year.
Clause 4 provides for the use of HMRC systems to administer the apprenticeship payments, but we must also provide for appropriate information flows. The use of HMRC systems means that information will need to be shared between HMRC and the Secretary of State for the purposes of administering the payments. New clause 1 provides for the disclosure of information between HMRC and the Secretary of State or persons providing services on behalf of the Secretary of State in connection with approved English apprenticeships.
The new clause also allows the information-sharing gateway to operate independently of arrangements in clause 4. That will allow flexibility, should it be needed, in any future arrangements. As new clause 1 sets out, information can be shared only provided it is in connection with approved English apprenticeships. The routing of apprenticeship funding to employers will mean that the Government will need to have the facility to check an employer’s credentials. For example, the Government will want to know that the person they are paying is who they say they are, and the new clause will allow the Government to cross-check information with HMRC data.
New clause 1 is a sensible way to validate employer and apprentice data, potentially minimising the burdens on employers and helping to reduce the potential for fraud. As is normal in relation to HMRC information, the information-sharing gateway is provided for in primary legislation and ensures that taxpayers’ information is safeguarded, with a criminal sanction protecting against unlawful disclosure of identifying information. Amendments 10 and 11 are consequential on the new clause, and would leave out the information-sharing gateway provisions in clause 4.
The Opposition’s amendment (a) to new clause 1 seeks a reporting requirement in connection with the new information-sharing gateway that the Government are introducing in the new clause. To direct apprenticeship funding via employers securely and in a way that safeguards public funds, government must be able to verify an employer’s identity and credentials. New clause 1 will allow the Government to do that by providing for an information-sharing gateway between HMRC and the Secretary of State, so that information already held by government can be used to validate payments without placing additional reporting burdens on employers—the Government want to avoid that. Subject to the detailed design and operation of the payment system, which is still to be confirmed following the recent consultation, examples of the types of data that may need to be shared in order to validate payments and manage the risk of fraud include: employers’ PAYE references; apprentices’ national insurance numbers; and details of the amounts that have been paid.
The Opposition amendment is not necessary. Many hon. Members will be aware that information sharing within government is quite normal, provided there are sufficient safeguards. The House will note that the new clause only allows HMRC to share information for the purposes of the Secretary of State’s functions in relation to approved English apprenticeships. HMRC can disclose information only to the Secretary of State or a person providing services on behalf of the Secretary of State—not to anyone else. The Secretary of State, or his service provider, can only disclose information to HMRC to request information from it or for the purposes of
arrangements for the administration of apprenticeship payments made under clause 4.
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The new clause also provides for the protection that is afforded to HMRC information under section 19 of the Commissioners for Revenue and Customs Act 2005. This imposes a criminal sanction in the event of the wrongful disclosure of HMRC information. This is a safeguard against onward disclosure without the consent of HMRC. Quite simply, new clause 1 allows the scheme to operate effectively and minimises the burdens on employers—something that I am sure all Members will welcome.
I now turn to amendments 6 to 9 and 74. This group provides for a number of technical amendments to clause 4 to ensure the Bill provides the necessary powers for the policy options on which the Government have consulted. The origins of clause 4 lie in Doug Richard’s independent review of apprenticeships, which recommended that funding should be routed direct to employers instead of to training providers. The Government accepted that recommendation, which will improve the quality of apprenticeships and make the training more responsive to employers’ needs.
Clause 4 allows the Secretary of State to make arrangements with HMRC to route English apprenticeship funding direct to employers. In particular, it provides for a new function for HMRC. HMRC will set out in regulations how the administration of the scheme would operate. I am sure that all Members will agree with the value of apprenticeships for businesses and young people. Indeed, many in this House may have had first-hand experience of apprenticeships and met apprentices in their constituencies.
The recent consultation sought views on two payment mechanisms, pay-as-you-earn and an apprenticeship credit. As was indicated at Committee stage, the amendments are technical and are being made to ensure that clause 4 provides the necessary powers for the policy options in the consultation. In particular, amendment 6 broadens the arrangements covered by subsection (1) to include the administration of payments by the Secretary of State to any person in connection with approved apprenticeships. This provides that all payments made in connection with approved English apprenticeships are covered by the clause. For example, the amendment would allow flexibility over who is to receive the payments. Employers manage their apprenticeships in a variety of different ways and some employers may wish to make use of an agent to manage their apprentices and their training. Such organisations already exist and some apprentices are employed by an apprenticeship training agency but carry out their apprenticeship with a different employer.
Amendment 6 also provides that HMRC may administer payments to employers or other persons after an apprentice has achieved the standard if that person remains in employment afterwards. Amendments 8 and 9 are consequential on amendment 6.
Amendment 7 clarifies that arrangements may be made for HMRC to recover apprenticeship payments, which would be recoverable to the Secretary of State.
That could happen where the apprenticeship ends early, or in cases of fraud or error.
Amendment 74 is related to amendment 7 and provides that the regulations may allow for HMRC to recover apprenticeship payments by making deductions from payments that HMRC would otherwise have to make. In conclusion, the purpose of this group of amendments is to ensure that the Bill provides the necessary powers for the policy options on which the Government have consulted.
I now turn to the amendments to schedule 1. Government amendments 27 to 31 are to schedule 1, paragraph 1, which inserts a new chapter about English apprenticeships into the Apprenticeships, Skills, Children and Learning Act 2009. In particular, the amendments all concern new section A2, which introduces the new approved apprenticeship standards. Approved standards will replace the apprenticeship frameworks that currently set out the content and other features of apprenticeships within a particular sector. Frameworks include qualifications and other requirements that apprentices must meet. Standards may include qualifications and other requirements, but they will define occupational competence and will focus on what an apprentice is able to do at the end of the apprenticeship rather than collecting the various component parts.
Currently, issuing authorities, generally sector skills councils appointed by the Secretary of State, issue apprenticeship frameworks. In the future, the Government will encourage employers, or consortiums including employers, to be actively involved in developing outcome-focused standards before submitting them to the Secretary of State for approval and publication. The main purpose of amendments 27 to 31 is to clarify the role of the Secretary of State and others in preparing, amending and withdrawing apprenticeship standards better to reflect Government ambitions to put employers at the heart of standards development. The amendments reflect what we have learned from those employers developing trailblazer standards and it is right that that is properly reflected in the legislation.
Amendment 27 removes the requirement that only the Secretary of State must prepare the standard. Amendment 28 provides that the standards may be prepared by the Secretary of State or another person, including any employer. The Secretary of State must approve standards prepared by other persons and there will still be a requirement for the Secretary of State to publish apprenticeship standards. The amendments will allow employers to prepare standards and would ensure that they are all of a high quality and consistent standard.
Amendment 29 clarifies that the Secretary of State may publish a revised version of a standard or withdraw a standard with or without publishing another in its place. Amendment 30 provides that revisions of a standard may be prepared by the Secretary of State or other persons, and revisions prepared by other persons must be approved by the Secretary of State. This will allow flexibility for employers and others to prepare amendments to standards.
Amendment 31 removes the express provision for employers or their representatives to make proposals about standards to the Secretary of State. It is implicit that employers, their representatives, or indeed other persons may make such proposals. It is no longer necessary
to spell that out as the effect of amendments 28 and 30 is to allow for an enhanced role for employers and other persons.
These amendments support the Government’s ambition that employers should be actively driving the preparation of new apprenticeship standards. Employers know what competence means in their professions and the phase 1 trailblazers have already shown that they are able to collaborate effectively to produce clear, high-quality standards. Giving employers a greater say in the development of apprenticeship standards will help engage a wider range of businesses and will allow employers to see a clearer link between their investment in apprenticeship training and an increased relevance of apprenticeships.
Amendment 32 will insert a new subsection (1A) into section 100 of the Apprenticeships, Skills, Children and Learning Act 2009. The new section will ensure that payments may be made by the Secretary of State to fund approved English apprenticeships. Section 100(1A) will give the Secretary of State power to pay or secure the financial resources to any person in connection with approved English apprenticeships. That supports Doug Richard’s recommendation that employers should be more directly involved in funding apprenticeships. Without the amendment we would have to rely on various other funding powers that the Secretary of State has, in particular those under section 2 of the Employment and Training Act 1973 and section 14 of the Education Act 2002.
Section 100(1A) makes it clear on the face of the amended 2009 Act that the Secretary of State may fund all aspects of the apprenticeship reforms. It achieves that by making specific provision for the Secretary of State first to fund any person for the purpose of encouraging opportunities for the completion of approved English apprenticeships, or to undertake work after such apprenticeships are completed, or, secondly, otherwise in connection with approved English apprenticeships.
Amendments 33 and 34 clarify that the definition of apprenticeship training in section 83 of the 2009 Act includes training provided in connection with either a contract of service or a contract of apprenticeship. The Act specifies that apprenticeship agreements should be treated as contracts of service, but contracts of apprenticeship may apply in some circumstances. The amendments are drafted to be consistent with the new powers that the Secretary of State is to have to make arrangements with the commissioners in respect of the administration of apprenticeships in clause 4.
Amendment 35 supports the transition to approved English apprenticeships and approved standards. The amendment will allow the Secretary of State to make an order to treat work done under a trailblazer apprenticeship as though it was done under an approved English apprenticeship. The trailblazer apprenticeships are pilot programmes led by employers to test the reforms before they are rolled out more widely. The Secretary of State can make such provision only if it relates to arrangements that started before the new legislation comes into force. The Secretary of State will also be able to make provision to treat trailblazer standards as though they are apprenticeship standards under section A2 of the 2009 Act.
Amendment 5 is consequential on amendment 35 and amends clause 3 to provide a signpost to the transitional power in schedule 1. At present, apprentices study towards the achievement of an apprenticeship
framework as described in the 2009 Act. Schedule 1 will introduce approved standards that will, over time, replace apprenticeship frameworks. Apprenticeship reforms will give employers greater say in the content and assessment of apprenticeships in England. Groups of employers have come together with partners to develop trailblazer standards. As noted, the trailblazers will test out the apprenticeship reforms.
From September, some apprentices will enter into arrangements with employers to undertake apprenticeships based on trailblazer standards. Because these apprentices are not working towards an apprenticeship framework, the 2009 Act does not apply. Transitional provision as set out under paragraph (a) of the proposed new part 4 to schedule 1 is needed so that these apprentices can be treated as if the whole of their apprenticeship is covered by the changes introduced when paragraph 1 of the schedule comes into effect. Provision set out under paragraph (b) will similarly allow the Secretary of State to recognise a standard published by him before the legislative change as if it were an approved apprenticeship standard.
In conclusion, the amendments support the Government’s ambition that employers should be actively driving the preparation of new apprenticeship standards. Phase 1 trailblazers have already shown that they are able to collaborate effectively in order to produce clear, high-quality standards.
Amendments 55 and 56 make changes to schedule 13. Amendment 55 omits section 85 of the 2009 Act, which currently requires the chief executive of skills funding to make reasonable efforts to secure employer participation in apprenticeship training for certain categories of apprentices, including those over compulsory school age but under 19, care leavers, and those aged 19 or over but under 25 and who are subject to a learning difficulty assessment.
Clause 42 abolishes the office of chief executive of skills funding and we are transferring the duties and functions of the chief executive to the Secretary of State, with suitable modification where necessary. With the abolition of the office of chief executive of skills funding, the Secretary of State will be responsible under section 83A of the 2009 Act for ensuring the provision of proper facilities for apprenticeship training for these persons. The Secretary of State will have a broad remit to encourage employer engagement with apprentices of all ages.
The new statutory scheme in schedule 1 dealing with English approved apprenticeships will be more effective at facilitating the Government’s policy of encouraging employer participation for all apprentices, such that section 85 will no longer be necessary. We therefore do not consider it necessary additionally to transfer the duty in section 85 of the 2009 Act to the Secretary of State. Administrative arrangements can be put in place to ensure the continued prioritisation of apprenticeships for these groups. For these reasons it is considered appropriate to repeal section 85, rather than amend it.
Amendment 56 transfers the funding powers and related provisions of the chief executive of skills funding in sections 100 to 103 of the 2009 Act to the Secretary of State. These existing powers permit the chief executive to pay persons in respect of the provision of education and training within the chief executive’s remit. As a consequence of the abolition of the statutory office of
chief executive under clause 42(1), we wish to transfer the relevant powers and functions to the Secretary of State.
Although the Secretary of State has broad funding powers under other legislation, such as section 14 of the Education Act 2002, in the interests of clarity it is desirable to provide an express power in the 2009 Act. In our view, this will make it clear which funding powers are being used for education and training provided under the 2009 Act and will therefore simplify the legislative position.
Section 100 enables payment to be made to persons who deliver or propose to deliver education and training under part 4 of the 2009 Act. This includes further education colleges, private and voluntary sector training providers, and individuals. It also allows for payments to those receiving education. Sections 101 to 103 are consequential on the funding powers provided in section 100 and accordingly we are also seeking to transfer these to the Secretary of State.
Section 101 enables conditions to be attached to the provision of financial resources. For example, funding may be granted on condition that specified information is provided to the chief executive or, in future, the Secretary of State. Section 102 enables schemes for performance assessment to be devised and applied to those providing education and training within the remit of the chief executive and, in future, of the Secretary of State. Such assessments may be taken into account in funding decisions made under section 100.
Section 103 enables the chief executive—in future the Secretary of State—to carry out means tests in respect of support provided to individuals undertaking education or training under section 100(1)(c) to (e). This could include support towards child care or travel costs associated with education or training.
I apologise for the length of my explanation. I note that there have been no interventions, which I can confidently say means that everyone has understood every word of what I have said. I urge the Opposition to withdraw amendment (a) and to support Government new clause 1 and the Government amendments to clauses 3 and 4 and schedules 1 and 13.
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