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Apprenticeships (EAC Report)

My Lords, first, I sincerely join all noble Lords in thanking the noble Lord, Lord Wakeham, and the Economic Affairs Committee for a painstaking and helpful report. I will try to do justice to it. It is encouraging to know that it was the ninth report and that—taking these two points together—they have all been unanimous. I remember that the first report I did under the auspices of the TUC was carried by four votes to three with 12 abstentions. I am keen one day to emulate that level of success. I have also noted, as I am sure the House will have noted, a number of former apprentices in the House. I suspect that there are a great many more when we are all assembled together. Perhaps there are more in this House than in another place; that may well be true. Much has been done over the past 10 years to develop the apprenticeship programme. The Government are now determined to accelerate the growth of apprenticeships and to continue to raise the quality of the programme. The point made by the noble Lord, Lord Dearing—that we must remedy something like 130 years of history—may be beyond what I can do this evening, but I will have a go. It is obviously important that this area remains under continued review and constant consideration, not because we need to keep reinventing things but because we cannot afford any further failures. In July 2007 we published World Class Skills, setting out how we plan to improve the skills of our people in order to compete successfully in the global economy. Apprenticeships are completely vital—central—in the drive to do this. The Prime Minister described them as ““keys to the future””. The noble Lord, Lord Macdonald, asked whether the current Administration will do better through the tripartite system. I believe that we will. Diplomas cannot and will not devalue, and must not be allowed to devalue, apprenticeships. The CBI welcomed diplomas for the role that they would play. It is right to say to the noble Baroness, Lady Sharp, that apprenticeships are a third route, and enjoy a considerable amount of employer support in their design. The specific question about the alignment of the different routes leads me to say that the sector skills councils have been involved in the development of the diploma partnerships and also the apprenticeship frameworks. This will provide the synergy necessary for the cross-over required if a young person wants to move from a diploma to an apprenticeship, and it ought to ensure that the routes are secure. The Government are committed to providing 400,000 apprenticeship places in England as our contribution to the overall aim of 500,000 apprenticeships in the UK by 2020. By 2013, all school leavers who meet the entry criteria will have the right to an apprenticeship if they want one. This brings me to the important and enormously thoughtful points of my noble friend Lord Layard. As part of our preparation for this, the Education and Skills Bill, which was published on 29 November, will amend Section 2 of the Learning and Skills Act 2000 to make clear that the Learning and Skills Council is under a duty to provide proper facilities for apprenticeships for 16 to 18 year-olds. This is to ensure that apprenticeships are given explicitly equal legal status to other post-16 education and the options that there are in schools or in further education. My noble friend is right to say that we must deal with part-time modes of study because it suits employers and apprentices; it is vital to secure engagement, which is part of the formula; it makes sense of the extension of the education age to 18; and it encompasses the wishes of many people. I return to the point about a dedicated service, which is under active consideration in the review. I am not able to comment on guarantees, but I am able to tell the House that I expect that the review will report by the end of this month. I hope that that turns out to be an accurate assertion. It will have to take account of the proper balance between on-the-job and off-the-job hours. I completely accept the argument which has emerged from all Benches that we are talking about a high-cost option. It is not a cheap option in any respect. Investment is basic. Should places be available, they will be funded. We are committed in the CSR and we are committed to doing this right the way through. On the question asked by my noble friend Lord Macdonald and the noble Baroness, Lady Sharp, we are committed to doing what it takes. There is no point in arguing that apprenticeships are an apex of skills unless we have something like a Rolls-Royce ambition for making sure that they are delivered. Apprenticeships are crucial not only for the skills agenda, as the noble Lord, Lord Wakeham, rightly said; they also contribute to the development of a fairer and more inclusive society in which people are not left behind. They help people to secure a better future for themselves and, in due course, for their children. I completely and wholeheartedly agree that we cannot afford to waste anyone’s talent. I hope that some of the programmes running through schools—from Sure Start, at the beginning, to the one-to-one mentoring in numeracy and literacy announced by my right honourable friend Ed Balls in December—will make sure that people have immediate guidance all the way through the process of improving their abilities. These should make a difference. My noble friend Lord Macdonald hit the nail on the head. Securing the future will rely on both universities and apprenticeships. I strongly support his points on women and ethnic minorities. I know that my right honourable friend John Denham has spoken on this point frequently and recently. Perhaps I may go through some of the facts. The noble Baroness, Lady Verma, described some of the statistics from the past and the difficulties that they illustrate. I do not accept her view that there are too many initiatives. I believe that the initiatives are proportionate to the task that is now faced. Currently, there are around 240,000 apprentices compared with about 75,000 when the Government came to power in 1997. More than 130,000 employers offer apprenticeships in more than 180 types of business, from construction right through to IT. The proportion of those leaving an apprenticeship having completed the full framework for the apprenticeship has risen from 24 per cent in 2001-02—a lamentably low baseline, which I acknowledge immediately—to 63 per cent now. The noble Lord, Lord Wakeham, asked about the basis for the figures that I am quoting. The last published statistical report, for 2005-06, showed completion rates of 53 per cent for apprenticeships and advanced apprenticeships, but the latest management information figures that I have to hand, for 2006-07, show an overall rate of more than 63 per cent and similar levels for apprenticeships and advanced apprenticeships. I believe that these figures will be confirmed when the statistics are published in March or April. We will see when the figures are published, but I am reasonably confident that I am providing reliable information. I think that the noble Lord, Lord Sheldon, was also concerned with the next point. As we looked at the rates of completion and the relatively rapid growth in the rates of completion, I was concerned to know whether it was roughly a straight line rate of growth, but I was told that it was relatively slower in the earlier years and that it picked up speed considerably. The curve looks more or less exponential now. I cannot say how long it will continue on that trajectory, but if it continues on the trajectory we expect, the reality is that the next 12 to 18 months should show considerable rates of improvement. I say to the noble Baroness, Lady Verma, that we will not be far adrift of Germany and Switzerland or the data that she introduced into this debate. In 2005-06 there were 99,000 completions, and a similar number is expected when the 2006-07 data are published in April. The former wide differences in completion rates between sectors and age groups have been largely eradicated, and as I have said, we are on track to achieving similar completion rates to the best in Europe over the next few years. The number of advanced apprenticeships has fallen since 2001 while the general numbers at level 2 have grown. That is plainly not welcome, and I will not say that it is. We need to bend our efforts to doing something serious about it. However, the number of young people actually completing the full advanced apprenticeship framework has grown from around 17,000 in 2001-02 to some 33,000 in 2006-07. I take heart from that because I am more concerned with outturn data than input data, although there is usually a relationship between the two. I want to know what we have achieved at the end of it all. I do not want to put words into her mouth, but the noble Baroness, Lady Sharp, said that there is still not enough at the advanced level. That argument has some merit, but the truth is also that the balance between the higher and non-higher levels seems to reflect what employers are saying they want from the system at the moment. The overall number of apprentices in learning has declined slightly in the past year, but that is now more because apprentices are working at the right level, and that is reflected in the rising completion rates. My noble friend Lord Sheldon was right to detail again the differences between the German and UK systems, and I agree that the anecdotal evidence suggesting that there is greater demand for apprenticeships in the United Kingdom is not as good as having hard data. That is plainly needed and I accept the point. Statistics and monitoring are indispensable and they must be more effective. Overall, there is not a bad story to tell, but the Government and the country cannot afford any complacency, so we aim to do better in a number of areas. In response to the noble Baroness, Lady Verma, the commitment across government is to reduce bureaucratic burdens. I am a compulsive deregulator by instinct, an attribute which I believe is shared by others, but it is plain that we need to make sure that burdens are wholly proportionate to what they are intended to achieve and do not go beyond that. As I said before, we need to increase the number of advanced apprenticeships. Many employers see their needs being met predominantly at level 2, and that is why apprenticeships at that level have grown since they were introduced in the early part of the decade. For example, Sir Terry Leahy of Tesco has made it clear that that is a level of skill, if properly achieved, that is essential for his business. However, even in these sectors advanced apprenticeships will offer excellent work-based preparation for supervisory roles and more specialised functions. We are working to persuade more employers and learners of their benefits. The public sector, I am sad to say, although it accounts for 20 per cent of the workforce, still provides only 10 per cent of apprenticeships. We will be working hard to make sure that those figures are changed. We are working with our partners to improve participation rates and to broaden the range of occupations available to women, black and ethnic minorities, and to under-represented groups where it is not only numbers, but also peculiar distributions that we need to overcome. Men are very dominant in some areas while women are almost the only workers in others; hairdressing is an example of that. We aim to ensure that advice and guidance provision for young people in the new advancement service will give them and adults a more comprehensive picture of the range of career options open to them. This will be dealt with in the review. Indeed it has to be addressed, as the noble Lord, Lord Wakeham, said in his introductory speech. A sentiment also expressed in the debate this evening, and one that I feel as well, is that the school culture itself needs to change. It has been so focused on higher education that it has not hit some of these other targets. I have begun to wonder whether the very many hours that pupils in schools spend with specialist subject teachers much more attuned to working out where the higher education options in their specialist subjects may be is proportionate when compared with the time spent with careers teachers. It may be out of kilter and we shall need to see more done about that. We are for the first time targeting funding specifically at apprenticeships for adults over 25 and 30,000 additional adult apprenticeships will be available over the next three years. In order to make that work, the Connexions Service needs to be improved. It is currently going through a process of transition and discussions are taking place in all local authority areas to determine future delivery arrangements for services that are funded by the Connexions grant. A transitional fund is in place to assist with reasonable costs. It has features that are quite popular, including its award winning national website and its helpline, but there is plainly more to do if people are to understand the options that are open to them. We aim to increase significantly the number of apprenticeships available in order to meet the challenges set out in World Class Skills and the fulfilment of this ambition is dependent on more high-quality employer places becoming available. However, I am confident that employers will want to participate as they become more aware of the benefits to their businesses of apprenticeship. This leads me to a cardinal point: the best advocates of apprenticeships are those businesses involved in the programme. The Government are very fortunate to have the assistance of the Apprenticeship Ambassadors Network, led by Sir Roy Gardner, in promoting apprenticeships to employers of all sizes. It is in this spirit of seeking to achieve greater things that I welcome the report, which will help guide the further discussion and work which is inevitably needed. The response from the Government so far is of course not the final word; they presented their response in early October but there is much more to do. The Government agree unreservedly with the report in reaffirming the benefits and value of apprenticeships and we have outlined a number of actions being taken which relate to some of the recommendations made in the report. Let me mention one or two of the recommendations. The clearing house system for apprenticeships, which was one of the key parts of the report, is very important. We are trialling such a service and the national rollout will begin in 2008—a practical response to a very practical proposal. In this context it seems to have a parallel to UCAS: it is the beginnings of something which will place people alongside the opportunities that should be there. Why should that not be the case in this area as it has been in higher education? It is for those reasons that I say to the noble Baroness, Lady Garden of Frognal, that, like everyone else, I greatly admired her speech. I thank her for it and I look forward to her speaking often. The late Lord Garden was a remarkable man who often gave me a very hard day when I was a Foreign Office Minister; I hope that I am none the worse for that. The noble Baroness’s reach across higher education and further education brings much knowledge, and that reflects the knowledge that the FE sector has. The sector skills councils should draw on that knowledge in FE; there is no question that it is a huge resource. However, identity of the skills needed by the FE or the sector skills councils, or by all of us, is best provided by employers. That was also a sentiment which, if I understood it properly, the noble Baroness emphasised. I should say to her that keeping up with all the acronyms is not easy and I have long since abandoned the effort. The report asserts that too much emphasis has been placed on the quantity of apprenticeships and not enough on quality and subsequent destinations. For the past six years at least the focus of our attention has shifted towards quality rather than numbers. There has been a rigorous inspection regime; there has been a quality assurance arrangement; and thorough contact management, funding changes and incentives are being used among the mechanisms to drive up quality. The result has been seen principally in the proportions of those who complete the full-time apprentice framework. Rigorous inspection has also meant that we have reduced the numbers of poorly performing providers. You cannot have a proper inspection regime unless you live with the consequences of having it. It is no coincidence, in my view, that more people in these circumstances complete, because quality predominates. It is no accident that there is more progress from apprenticeship to further courses and qualifications. We did not accept the report’s recommendation that funding for apprenticeship training should go exclusively to employers. While employers are clearly at the heart of the apprenticeship programme, not all of them wish to contract directly with the LSC. Many do, and the LSC has arrangements in place to satisfy that demand. But our experience is that many employers, especially those in small and medium-sized businesses, prefer to operate through a training provider, who takes on the administrative burden for them. That is a business choice which reflects a business model that they, not we, have chosen. I say to the noble Lord, Lord Cotter, that this is one of the key points about the operation of small and medium-sized businesses. You have to listen to what they say, as he was advocating, and take it seriously. In engineering, the largest of the apprenticeship sectors, some of the smaller firms have been very vociferous. I have emphasised the role of businesses. The UK’s most successful businesses have been at the forefront of the design of apprenticeships. Firms such as Rolls-Royce, Tesco and many others have set the terms and tens of thousands, going into hundreds of thousands, of young people follow the courses. I celebrate the fact that great British businesses do that. I celebrate the application and achievement of those young Britons who have decided to do that. Since these firms and apprentices are under the spotlight this evening, I invite everybody, on all Benches, to celebrate their accomplishments, rather than feeling that this is almost always a futile effort. Perhaps people will say that I am overstating some of the criticisms that have been made, but I feel that the tenor of our debates does not always acknowledge fully people’s accomplishments and contribution, and I wish to do so. The noble Lord, Lord Wakeham, argued in a very powerful letter to the Financial Times that successive Governments have not really supported traditional apprenticeships enough and that they have been allowed to wither. I do not wholly accept that view; I look around this Chamber and see my noble friends Lord Sheldon and Lord Macdonald, and think of the Speaker of the House of Commons, who left school at 15 to become a sheet metal apprentice at Rolls-Royce. I understand the standing that apprentices have, because that was their standing when I was in my teens. I have been given one other unhelpful statistic, which means that I should not go too far back alongside the noble Baroness, Lady Sharp, to the guild system. Two-fifths of those hanged at Tyburn in the 18th century were apprentices apparently; I am not sure what that says about the quality of the scheme then. I share a lot of the sentiment, because I felt it as a young person. There are several causes for the decline of the system. The Government may have played their role; employers have invested too little and decided at one stage that the range of skills was too narrow and inflexible to deal with the sea changes in production and construction and other lines of work, let alone the newly emerging businesses. To be candid, some unions tried to use their influence on apprenticeship schemes to hold on to restrictive practices that flew in the face of modern and efficient forms of employment organisations. So businesses modernised or they went out of business and the old apprenticeship, for all its historic resonance, did not align itself at that time to the changes that were taking place. That is a wide current of economic change. Businesses looked at this environment and decided that in the new environment, apprenticeships had to modernise. They reach wholly new areas; step by step, they fit people for jobs which employers insist are the jobs for the future. It is they who lead in this, not Whitehall. That is the basis for my optimism this evening. We are improving numbers and quality, and I think we are improving the relevant levels of preparation for jobs. The character of employment will always change; nothing will be static in the economy; it is the economy, rather than Sir Alan, which finally says, ““You’re fired”” to any number of people whose skills do not fit the real circumstances of the economic world. The skills have to match what employers demand, and that is why apprenticeships will always be in flux. I do not believe that will ever change. Higher completion rates will also be essential if progression is to be appropriate. I conclude by stating my belief that more is to be done. That is in the nature of what we are discussing. All in all, there are grounds for optimism rather than the reverse. The Government will take what has been said tonight not only as a set of constructive criticisms but even more as a thoughtful affirmation of an ambition to do vastly better in the area of apprenticeships. My noble friend Lord Sheldon urged greater ambition. I believe that he is absolutely right, and that that is the sentiment of the House.