My Lords, this seems to be our only opportunity, in considering the Bill, to mention the words “apprenticeship” and “levy” in the same sentence. We should utter these words sotto voce because, at Second Reading, the Minister, the noble Baroness, Lady Berridge, made it very clear that the levy was beyond the scope of the Bill. That is not the fault of the noble Baroness, of course, but speeches by several noble Lords at Second Reading, which have been reinforced today, demonstrated that I am not alone in finding it rather perplexing that the levy does not merit a mention in the Bill. This is despite the fact that the Institute for Apprenticeships and Technical Education—which develops and approves apprenticeships and technical qualifications with employers—is quite prominent in clauses that we shall consider in later debates on the Bill.
Apprenticeships are key to ensuring that Britain is equipped with a well-skilled workforce in the years ahead. The levy scheme—which we have supported in principle—has yet to produce anything like the effects hoped for and required. So, while I am happy to support the intent of this amendment—and understand the reasoning behind it on the basis of what the noble Lord, Lord Aberdare, said in introducing it—I urge caution at this stage with regard to the levy and using its funds for any purpose other than apprenticeships. In that, I think I am reflecting the comments which my noble friend Lord Young has just made.
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In a briefing for noble Lords, the Association of Employment and Learning Providers pointed out that, prior to the pandemic, the levy was heading towards an overspend on apprenticeships. It quoted the National Audit Office report and the subsequent Public Accounts Committee hearing and suggested that should the expected economic recovery, much trumpeted by the Chancellor of the Exchequer, come to pass, that danger might return.
I am a bit confused. We believe that the levy should be rebalanced to ensure that more apprenticeship opportunities are available for young people, and at entry levels. A stand-alone budget for non-levy-paying SMEs is also needed. My confusion comes from what we know about the levy in its second two-year term—and we know it because of a reply on 24 May by the Minister, Gillian Keegan, to a Written Question from the shadow Apprenticeships Minister Toby Perkins MP. We know from that reply that between May 2019 and April 2021 there was an underspend of £2.1 billion, according to the Government. I know that the Government do not use the term “underspend”; they prefer to call them “expired funds”. What Ministers do not say is what happens to those expired funds: do they simply return to the black hole that is the Treasury? How much went to the small companies that do not pay the levy? Like my noble friend Lord Young, my main concern is small and medium-sized enterprises,
where there is a need for a stand-alone budget, as I have said. That must be considered alongside the review mentioned in the amendment.
In small towns, SMEs are the main source of employment and, if they do not receive funds, the availability of apprenticeships in those sorts of areas will be very limited. This should be part of the levelling-up agenda, we believe. The Government talk a lot about that but are yet to deliver on it. We believe that the apprenticeship levy needs more time to grow and that employers, especially non-levy-paying employers, should make greater use of it. As I said, while supporting the intent of Amendment 39, we believe that, at this stage, to consider spending levy funds on anything other than apprenticeships is probably premature.