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Institute for Apprenticeships and Technical Education (Transfer of Functions etc) Bill [Lords]

As co-chair of the all-party parliamentary group on apprenticeships, alongside my hon. Friend the Member for Peterborough (Andrew Pakes), I welcome the Government’s focus on this crucial aspect of skills policy. They have inherited a wildly diverse and dysfunctional skills landscape. I would not go so far as to describe what we have as a skills system, which would seem to suggest something far more considered and structured than what currently exists. This Bill is the Government’s first very small legislative step towards addressing the skills crisis that is one of our nation’s biggest barriers to growth and productivity.

It is almost impossible to have a meeting with an employer—private or public sector—without the issue of the UK’s skills deficit arising. Apprenticeships are a crucial but criminally underutilised dimension of providing Britain’s learners with an opportunity to earn while they learn, and provide our employers with skilled and qualified workers who contribute in the workplace as they develop the skills they will need. Indeed, the Government’s ambitious aspirations for growth will remain purely aspirations if the current failure in our skills approach is not rectified.

The right hon. Member for Sevenoaks (Laura Trott) suggested that the previous Conservative Government’s record on apprenticeships was world class, but I beg to differ. In discussing apprenticeships, it is worth first identifying what is wrong with the current system before considering the extent to which the Bill moves us towards resolution of those issues.

First, it is estimated that around £480 million will be left unspent in the major employers’ apprenticeship levy pot this year. FE News reported in February 2024 that SME apprenticeship starts had fallen by 49% since the introduction of the apprenticeship levy, with the cost, rigidity and bureaucracy of the current system all cited as reasons why SMEs do not take on apprentices. Level 2 and 3 apprenticeships, in particular, have suffered, with a 53% reduction since the introduction of the levy, while a growing portion of the levy pot is being spent on degree-level courses.

Degree-level apprenticeships should be a huge social mobility tool, with learners from poorer backgrounds who might be dissuaded from attending university relishing the opportunity to secure a degree while working and without accruing debt. However, recent research has shown, shockingly, that degree apprenticeships are being swept up by the wealthier students, with free school meals pupils less likely to get a degree apprenticeship than to get a place at Oxbridge.

Finally, the completion rate of apprenticeships is worryingly low, at just 54.3% of all students, compared with 97% of A-level students passing across all subjects. This is due to many causes; the Government have set about addressing one by removing the need to pass functional maths and English in order to complete an apprenticeship for under-19s. However, there also needs to be a much greater link between the completion of the apprenticeship and the fitness-to-practise requirements. Many learners do not complete the apprenticeship, but not because they have failed—they may well have secured the skills they needed to start work, and do not see the apprenticeship as being relevant once the job has been secured. There is, therefore, a great deal for the noble Baroness Smith, in the other place, to sink her teeth into.

This Bill is the Skills England Bill that dare not speak its name. By abolishing IfATE, it lays the groundwork for the creation of Skills England. There are important questions for the Government to answer, and I hope that when my hon. Friend the Minister responds to the debate, she will be able to enlighten us on a number of them. First, is she concerned that Skills England will have the necessary weight and independence to bring about the scale of change that its own report acknowledged was necessary? What will the extended scope of Skills England be, beyond the identification of standards and the potential alternative use of the Government’s new growth and skills levy?

If the Minister is not clear about what shape Skills England will take post IfATE, is she concerned about abolishing IfATE without being clear on what will replace it and where the responsibility for those functions will fall? Can she say any more about how the voice of employers will be heard when the powers are centralised with the Secretary of State? There may be huge enthusiasm for the Secretary of State taking a more streamlined approach, on occasions, to the process of creating new standards, as IfATE is seen as too cumbersome. However, does she agree that that must be the exception rather than the rule? How will she ensure that employers’ voices are still heard? Can she also confirm that the powers to approve standards will indeed pass to Skills England once that has been created, and can she say any more about the role of Skills England with regard to the growth and skills levy?

I very much welcome Baroness Smith’s announcement about removing the need for passing maths and English for students who are over 19, but has the Minister done any assessment of the merits of that for students under the age of 19? I am interested in understanding the arguments in favour of that change for over 19s that do not apply to students who are under 19.

I hugely welcome the Government’s commitment to this area of policy and the positive initial steps. I suspect that it will not be news to my hon. Friend that I think that far greater systemic change is needed if we are to deliver the more transformational change that our employers, our learners and, indeed, our nation desperately need.

5.41 pm