My Lords, in the absence of noble Lords who have business other than the Technical and Further Education Bill to consider this afternoon, I shall move Amendment 1 and speak to other amendments in the group.
The proposed new clause was devised after debate in Committee and would enable families eligible for child benefit to receive it for children aged under 20 who are undertaking apprenticeships. It is slightly disappointing that it is necessary to debate the matter again on Report. The noble Baroness, Lady Buscombe, offered to set up a meeting with Ministers from both the Department for Education and the Department for Work and Pensions, but I regret that no such meeting has materialised, so here we are. We have altered our approach in the amendment to call for the Secretary of State to use regulations to make provision to ensure that apprentices are regarded as being involved in approved education or training.
We are now just five days away from the creation of the Institute for Apprenticeships, the introduction of the apprenticeship levy and a changed landscape of technical education as the Government attempt to address the skills gap inherent in the economy. To achieve success in that, they have set the ambitious target of 3 million apprenticeship starts by 2020. I am certainly not critical of that target—it is better to aim high—but if it is to be reached, it cannot be in anyone’s interest for doors to be closed to young people keen to embark on an apprenticeship, but that is what is happening, at least for those from families reliant on some form of social security. In some circumstances, parents may prevent young people taking up apprenticeships because the economic consequences for the family of loss of benefit payments in various forms could be considerable.
This concerns a relatively small number of young people—primarily those from the most disadvantaged backgrounds—but it touches on a broader issue: that of apprentices being treated like second-class citizens in comparison with their peers who choose to pursue courses at further education colleges or universities. Apprentices are denied thousands of pounds in financial support available to college or university students, and are excluded from other means of support available to their counterparts in further education institutions. This is on the basis that they are employed and thus in receipt of wages.
It might be instructive for noble Lords who are unaware of it to learn that next week, the national minimum wage for apprentices aged under 19 increases to £3.50 an hour—considerably less than for other workers of the same age. Even then, as reported by the Low Pay Commission in January this year, 18% of apprentices said that they were being paid less than their legal entitlement. Even that legal entitlement, based on a 37-hour week, equates to about £6,900 a year—interestingly, precisely the maximum amount of the maintenance loan available to students living at home. The student year lasts only 30 weeks, leaving them able to work full-time, should they choose, for the remaining 22 weeks—apart, that is, from the paid employment that many students are already forced to find during term time. Those earnings do not disqualify a student’s family from benefits, and the amendment is intended to achieve parity of esteem of all post-school young people who are setting out on a route of learning designed to equip them with the skills for a productive working life.
However, in addition to being ineligible for Care to Learn childcare grants, unlike further education students, some apprentices also missed out on travel discounts, council tax exemptions and student bank account packages. The reason is that apprenticeships are not classed as approved education or training by the Department for Work and Pensions, but apprentices must spend at least 20% of their contracted work hours off the job—or at least, they will after 1 April—which means at a college or with a training provider. What is an apprentice supposedly doing in such situations if he or she is not receiving approved education or training?
In the case of apprentices who live with their parents, the families could lose out by more than £1,000 a year in child benefit. Families receiving universal credit lose could more than £3,000. Why should families suffer as we seek to train young people desperately needed to fill the skills gaps that I mentioned earlier? University students receive assistance from a range of sources. Apprentices currently do not receive many of these benefits and are continually excluded from definitions of approved learners. How can an apprenticeship not be regarded as an approved form of learning? The Bill is aimed at unifying apprenticeships with technical education, yet obstacles have been placed in a way that will prevent the aim being fully achieved. The system must be changed so that apprentices and students are treated equally, and there is genuine parity of esteem between all educational and apprenticeship routes.
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We support the noble Lord, Lord Storey, on his Amendment 14, on the need for a contingency fund to be established in the event of an insolvency. It may seem inconsistent that we also support Amendment 16. A contingency fund would be one way to deal with the issue of looking after students but, on further reflection, we reached the conclusion that the net needs to be cast wider, to include any provider of technical education becoming insolvent, and not just a college.
On Amendment 16, noble Lords involved in the Bill received a letter last week from Paul Williams, the deputy director for student funding policy at the Department for Education, on the subject of advanced learner loans. It provided little comfort for a student left high and dry with what Mr Williams called “recent provider failure”, saying merely that she or he will have the repayment deferred. There was not even a mention of how long the deferment might last or what would eventually trigger the repayment. That was widely regarded as a quite unsatisfactory response and, of course, did not deal at all with the issue in our amendment.
Requiring providers to provide a guarantee to students from a financial institution may, on the face of it, seem quite a surprising development. The solution is complex, but its complexity falls on the provider and the private, for-profit financial institution, such as a bank or insurance company. It is not complex for the Government or the student. Specifically, the annual cost is low because any credit-worthy provider could meet the potentially large costs of default by pledging its other assets to the financial institution, as has happened in other cases in other countries. That solution is frequently adopted
by the commercial world for long-term contracts, such as construction contracts, and we believe it appropriate in these circumstances to provide the protection that students deserve.
Finally, on Amendment 20, to some extent it may seem surprising that we seek to ensure all the apprenticeship levy money is spent in the year in which it is gathered. There will be some costs—inevitably, there are some administrative charges—but that is not particularly our concern. There was a suggestion that all the funds available for training apprentices may not be disbursed in a particular year. In light of recent events, that is now less likely; there does not seem a great likelihood that the levy will be underspent, given the furore that has risen over the last few days over the register of apprenticeship training providers, and the announcement that many colleges have been left off that register despite having, in several cases, outstanding Ofsted ratings for the apprenticeship courses that they provide.
I do not want to go into that detail at the moment, but it demonstrates the extent of the concern about how and how well employers will have access to sufficient providers. At the moment, the colleges that have not been given access to the register have been told that they can reapply, with a deadline of the end of next week. For some, that will be all well and good, because they will admitted, albeit late—but too late to access the tranche of funding for the coming year, in many cases. It is also not clear how access will be made available to non-levied funding for those colleges that did not make it on the first occasion.
The amendment is important in itself to ensure that all the money raised is spent on the purpose for which it is intended and that employers do not simply regard themselves as having been levied—and then want to draw the money down as quickly as possible to make sure that, in effect, they get what they regard as their own money back. It is much more important than that. Those colleges that are willing and able and have a track record of having provided that training in most cases should be allowed to do so.
There was a fairly broad sweep within that, but the main thrust of what I wanted to say was in respect of apprentices being denied the rights of their peers—that is, students of further education at universities. On that basis, I beg to move.