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Apprenticeships (EAC Report)

My Lords, it is not often that a report from this House is followed within four months by the promise of a government Bill. As a member of the committee, it would be nice to think that this is a case of post hoc, propter hoc. Whether or not that is so, the prospect of a Bill is extremely welcome. I would like to say a few words about why a Bill is necessary and what it needs to contain. The issue is nothing other than the future of half the population—the half that does not go to university. As has been said, we have always done well in higher education and very badly when it comes to those who do not go on to higher education. Our graduates get paid as well as any elsewhere in Europe, whereas our manual workers get paid something like two-thirds of the amount paid in a typical country north of the Alps. This reflects their low productivity and is a major cause of the low productivity—the aggregate average—of the British workforce. This has been recognised as a national problem, therefore, but how do we deal with it? There is only one way, and it has been obvious for some time. We should reinstate the part-time route to a skill which has been so shockingly neglected for the past 30 or 40 years. We have to make apprenticeship work, and work on a much larger scale. Why the part-time route? Because employers like people who have been trained that way; they have been doing an apprenticeship at the same time and have acquired learning that is relevant to the job for which they will be employed. Young people like the system, partly because it is more interesting to learn something that is obviously relevant and partly because they get paid while they are doing it. This is the obvious solution to the problem, yet for decade after decade, we have been trying to deal with the below university-level skill problem by expanding full-time vocational education, GNVQ, and so on. This has never delivered the trained manual workforce that we want, because those who took such full-time courses were the kind of people who wanted to go on into full-time academic study and higher education. The others have been left in the soup, and it is quite extraordinary. We have an almost unimaginable situation where 15 per cent of men between 16 and 25 are doing nothing. They are not in education, employment or training because we have not offered them anything which made any sense to them. For young ladies, the proportion is even higher. The Government took a really important decision in 2007 that apprenticeship is the only way in which to deal with the huge problem of lack of skill and lack of engagement in the educational process. They took two really important steps last year. First, there was the decision to extend the education-leaving age—full-time or part-time—to 18 by 2015. That was a really historic decision. Secondly, access to an apprenticeship is guaranteed to everybody with minimum qualifications who emerges from the school system and would like to have one. The second step is the only way to achieve the first; unless you have something serious to offer people, there is no way that you can get them to participate in learning up to the age of 18 on the 100 per cent scale at which we are aiming. The challenge facing the Government in delivering this is how to get enough apprenticeship places and how to make sure that the quality is simultaneously strengthened, as our chairman said earlier. That is why it is so valuable to have a Bill—it gives us purchase on guaranteeing the quality and setting out the structures within which we can deliver the quantity. Let me mention four key features which would be necessary elements in the Bill. First, there must be a dedicated national apprenticeship service. Unless we establish that, there is no way we can possibly find the places or maintain the quality. There has to be a body which is almost missionary in character committed to finding opportunities for young people in the world of employment. Some people have suggested that this role could be tagged on to the role of the existing brokers who are doing the Train to Gain scheme for adult employees, but that would be the wrong route to take. Those people are trying to help existing employees, not encourage employers to take on new employees, which is a much more difficult task. There is almost a conflict of interest between those two objectives. We need a dedicated service; not only will it have to find places, it will have to support the employer in providing a quality on-the-job training environment, including having a mentor. It will have to sell the idea of an apprenticeship to young people from the age of 14 onwards and then operate the system that matches the young person to the opportunity for apprenticeship. Some of us have spent some time thinking through the idea of an apprenticeship service since the Bill was mooted. It would naturally receive its funding directly from the department rather than indirectly through local authorities. That would give it the financial security needed to carry out its remit and deliver the guarantee. That gives rise to the obvious question of who has the statutory obligation to deliver the guarantee. What should be written into the Bill? If there is a commitment to adequate funding and the service is given the funding direct, it should be the obligation of the apprenticeship service to deliver the guarantee. The service might be part of the Learning and Skills Council but that obligation should be statutory. What would the service do other than finding places? It would deal with issues of quality. It is really important that, if this is part of a serious educational effort, a guaranteed amount of time away from the employee’s workstation is dedicated to the off-the-job learning that leads to the technical certificate, which is part of the requirement for getting an apprenticeship certificate completed. There has to be a guarantee of something like 350 hours a year. For the on-the-job training there also has to be a mentor provided by the employer to supervise the young person and to provide that training. All of that—the mentor, the time off the job—will cost the employer money. It is being done partly for the benefit of society as a whole and the employer should be recompensed for the cost they incur. There is no chance of getting the number of places needed unless we recompense the employer for the costs they incur on behalf of society. That means—and this is my third point—that there has to be an employer wage subsidy for apprentices under 18. If we think it is that important that they should be studying, we have to be willing to pay for it. That is not a recommendation that we made originally in the committee’s report, but over the past four months I have been convinced that there will have to be a well advertised wage subsidy for taking people on, by whatever route the funding goes. Some funding may go, as the committee recommended, in total to the employer, but some of it may still go through intermediaries. Either way, there must be a wage subsidy separately identified and paid separately to the employer. That will make apprenticeship more expensive than sixth-form education—and it should be. It is important that we accept that. If you think, in terms of fairness, ““What do these people get?””, most of them are likely to have no more than two years’ education beyond the age of 16. Is it not fair that they get more in any one year than people who will have five years of sixth-form and university education? Of course it is. It is economically sensible, too; we know from studies of social rates of return to apprenticeship that good social product comes from this system. We should bite the bullet and come up with the money. We also have to come up with enough places. At present the proportion of 16 to 18 year-olds who are on apprenticeship is between 7 per cent and 8 per cent. That has to go up to at least 20 per cent if we are going to have anything like a serious apprenticeship guarantee. To go back to our chairman’s remarks, that is way beyond the figures that the Government have already committed themselves to. They have to show that they can both deliver what they have promised and adopt a further target if this is going to be a serious affair. How do we make all this happen? In this field there are an almost uncountable number of fingers in the pie: the Learning and Skills Council; the local authorities, which have an important role to play; the Sector Skills Council; the Qualification and Curriculum Authority; and Ofsted. Given that situation, it is understandable that we have not been making the progress we needed to without someone knocking everyone’s heads together. There has to be a completely new approach to this issue. As the chairman said, the Government have to set up a powerful unit whose head must report directly to a Cabinet Minister. The head can be a public figure, well recognised in the way that, for example, Sir Michael Barber was a recognisable figure in the literacy campaign. Someone of that type and stature is required to make all this happen, otherwise we are talking pie in the sky. There has to be strong organisation and the clear message: ““If you don’t want to get a degree, get an apprenticeship certificate””. That must be said over and over again by every MP and every Minister. Then the message will get through and we will deal with these hordes of unskilled, inactive young people. There is no other way to do it. We have a huge opportunity here. Although the review is not finished, I hope we are going to hear what it will say.