Examination of Witnesses (Question Numbers
KNIGHT MP AND
27 OCTOBER 2008
Q140 Chairman: I was hoping you would
say that because nowhere in the Bill does it say that there will
be a duty on the Secretary of State through the various organisations
to provide accommodation support for those living-away-from-home
Lord Young of Norwood Green: We
are clear that we are offering a choice between two sectors, not
specific occupations. What we cannot guarantee is that there will
be apprenticeship places in all occupations in all locations of
England, for example. We just could not meet that. Our task is
to maximise the number of apprenticeships that are available,
which is a fair old task in itself, and offer what we think is
a reasonable choice. If the two sectors do not meet either the
particular requirements or choice of a young person then they
have a difficult choice to make, but that applies to any young
person's decision about how far they want to go to pursue a particular
Q141 Mr Wilson: As I understand it,
the Government wants to put the employer right in the driving
seat of the whole apprenticeship system. Indeed, we had evidence
from the Chamber of Commerce weeks ago that they should be right
at the heart of the system, so what does this still do when you
take into account that businesses want freedom from all the red
tape, the costs, the multiplicity of agencies they have to deal
with? How does this Bill deliver those things that business actually
Lord Young of Norwood Green: First,
yes, we do believe that they should be employer-led; they should
relate to their requirements. Again, it harks back to what I said.
If we want to maximise the number of apprenticeships it needs
to be demand-led. Are there any parameters? Yes, there are, in
terms of the fact that any framework that is agreed between a
Sector Skills Council and employers will have to fit in with the
blueprint of the Learning and Skills Council, which in itself
in this Bill is going to be made more rigorous. That is one aspect
Q142 Mr Wilson: I want to know about
the obstacles to business.
Lord Young of Norwood Green: You
want to know about the obstacles, absolutely. We do want to remove
the red tape. One example of that was a requirement to keep records
on apprentices for six years. It is intended that that should
go. In terms of assisting employers with removing the burden of
administration, again, we would hope that skills brokers would
be able to do that, so a one-stop shop, if you like. If they approach
the skills broker and it is clear that there is an apprenticeship
requirement then they would be referred to the National Apprenticeship
Service which ought to be able to meet all the requirements. There
is also the vacancy matching service. Trials on that are taking
place and that would ensure that apprentices who were looking
for apprenticeships were matched with employer vacancies, so we
think there are a number of areas where we will be making it simpler
for an employer to find out about but also establish apprenticeships.
Mr Marston: The consequence of
that is that there are some components of this draft Bill that
are designed very much to help employers, particularly by saying,
as we touched on earlier, that an apprenticeship must always contain
an employment relationship. The point about bureaucracy though
not in the Bill itself, is in the way we put all these provisions
into place, and there is absolutely a commitment to make sure
that that is simple and streamlined and responds to those concerns
from the BCC
Q143 Mr Wilson: It is very expensive
to train people these days and apprenticeships are a very big
commitment for businesses. We have got evidence from Network Rail
that it costs about £60,000 to train an apprentice over three
years. The business is going to want a pretty good return on that
sort of investment. Again, how does this Bill deliver a return
on investment for all that cost commitment?
Lord Young of Norwood Green: The
evidence is that it does. It is a pretty detailed analysis. You
started off from the aspect of the SMEs,
I presume, when you were referring to the British Chambers of
Commerce. There are other arrangements, for example, the Group
Training Associations, where they can pool the responsibility,
if you like, for apprenticeships, so that is one way of keeping
the cost down, and then draw from that particular pool. Certainly
the analysis that we have had done on what they call the net present
value has demonstrated that it is very worthwhile to employ apprentices,
and the overall analysis for companies is that their chances of
survival in these difficult times are about 2.5 times better with
a better trained and skilled workforce.
Q144 Mr Wilson: Where is this analysis?
Is it an internal departmental thing or is it something we have?
Mr Marston: I think some of it
is in the impact analysis. There is other published evidence about
the effect of training on business bottom line and survival rates.
Q145 Mr Wilson: The Chancellor told
us at the weekend that we are about to enter a recession, if we
are not already in one, that will be deep and prolonged, as he
put it. What impact do you think that might have on a business-led
apprenticeships system, as is proposed in this Bill?
Lord Young of Norwood Green: Clearly,
businesses have to believe that their chances of survival will
be enhanced with a better skilled workforce, and that taking on
apprentices will benefit their business rather than be a burden
to it. We do genuinely believe that, but we do not discount the
fact that it is going to be a somewhat harder task in the current
situation. However, we ought to put it in context. We have already
made significant progress on driving up the number of apprenticeships,
so we do not believe it is an impossible task, but neither are
we underestimating the effect of current circumstances or the
impact on businesses.
Jim Knight: Clearly, there are
a lot of things that are difficult to predict as we look forward
on the economy, but it is probably fair to predict that in terms
of demand for apprenticeships that might increase as a result
of an economic downturn because people who might otherwise think
it was okay to continue on a fairly low-skilled basis would see
the benefit of spending time uprating their skills.
Q146 Chairman: Why would employers,
when they are shedding workers, want to take on more apprentices?
Jim Knight: That is what I am
saying. On the supply side of apprenticeships you have more difficulty
potentially in terms of employers wanting to take them on. That
is why it is significant that the CBI,
and the UK Commission for Employment and Skills wrote an open
letter to employers this week, and I am not sure the Committee
has seen that. It is a really strong letter setting out all the
arguments why it is in businesses' best interests to invest in
skills, to invest in apprenticeships. There is targeted work that
we will also do with an expanded workforce in the National Apprenticeship
Service. We have currently got a field force of some 230. That
will expand to 400. Currently we are doing some targeted work
with Construction Skills, for example, around sustaining construction-based
apprenticeships because whilst we have got a reduction in the
amount of housebuilding going on we have got public sector building
going on and we need to maximise our leverage through procurement
and other routes in order to sustain that in construction as well
as win the arguments with employers.
Q147 Mr Wilson: But even in the answer
from Lord Young and you, Jim, there does seem to be a tension
at the very least in what you are saying. On the one hand you
are saying, Lord Young, that you hope that apprenticeships will
not drop, but they probably will, and, Jim, you are saying that
they will probably increase.
Jim Knight: No, what I am saying
is that demand from young people, from potential apprentices,
may well increase, so that side of things may be made easier.
I think it would be extremely complacent of us to believe that
it is not going to make it slightly more difficult in respect
of engaging employers. That is why we need to deepen what we are
doing in the public sector because we have more leverage over
the public sector. There is huge room for expansion of apprenticeships
in the public sector, and it will also be targeted with our expanded
resource that we are putting into this. It is human resources
and marketing resources. This is the tip of a large iceberg in
terms of the legislation, and we will bring all of that to bear
on ensuring that employers are persuaded that it is good for their
medium and long term future to invest in apprenticeships.
Lord Young of Norwood Green: There
are another couple of points. Certainly there is this battle of
hearts and minds that we have to have with them that there are
real benefits in improving productivity if the people they employ
have the skills. After all, we do still suffer from a skill shortage,
even taking into account the downturn. We have to remove all the
barriers, and there have been barriers that people have complained
about in the past when they wanted to take on apprenticeships,
and we believe that we can do that, we can simplify the system
for employers with our National Apprenticeship Service. The other
thing we are looking at specifically in relation to SMEs is the
question of trialling wage subsidies. We are not absolutely sure
about the effects of this but we are certainly seeking to trial
Q148 Mr Wilson: Government-provided
wage subsidies, at least to apprenticeships?
Lord Young of Norwood Green: Yes.
Q149 Mr Wilson: To what level? Will
you be paying at least minimum wage?
Lord Young of Norwood Green: I
am not in a position to give details. I think the best thing we
could do about that one is that if there is more information available
we will let you have that, but it is a clear intention that we
will try that. Do not forget we are already picking up the costs
of training, but what we are not dealing with is the cost of wages.
Also, do not forget the idea of the Group Training Associations
where SMEs form a group training company which employs apprentices,
so again we are very cognisant of the costs, the impact of this
in the current climate.
Q150 Mr Wilson: How will the Bill
make sure that apprenticeships deliver to existing employees,
that they do not just accredit existing skills but take them on
from where they are?
Lord Young of Norwood Green: We
are looking at how they can move into further and higher education
as a result of that, so yes, we are
Q151 Chairman: Lord Young, you have
missed the point. The point is that we heard clear evidence both
in this and indeed in our Leitch inquiry that the largest group
of apprentices is those already in work, already being trained,
and that this is really a re-badging exercise which is going on.
The question that we want answered is how does the Government
justify the dead-weight costs which are there to meet your targets
but are not doing anything extra for the employee?
Jim Knight: Can I start and then
others carry on? I know there is a statistic out there that over
70% of those starting apprenticeships are currently in employment.
When you look beneath the surface of that what you find, and it
is spread fairly evenly between young people and older people
starting apprenticeships, is that there are quite a number of
employers who will take people on first and then decide whether
or not they are suitable for an apprenticeship, and there is a
certain amount of logic attached to that. Equally, amongst young
people it might be that they are working part-time and then they
decide that they want to pursue an occupation with that employer
and so they apply for an apprenticeship. There are all sorts of
reasons why starters might be in employment at the point at which
they start. In terms of this being just a badging exercise, my
response to that would be that we are deliberately putting this
in the hands of employers. I do not know that there are very many
employers that would be complicit in a badging exercise. They
will want to pursue apprenticeships because they are adding skills
and value to their employees and getting the consequent benefits
of in improvement retention rates and improved productivity as
a result. They are not going to faff about helping Government
achieve their targets, if that was the implication.
Q152 Chairman: I think the implication
is they get money for it. Perhaps you would let us know, Jim,
how many apprentices come from this trial basis. Do you have some
stats on that?
Lord Young of Norwood Green: The
fact that they are merely asked to put in a box whether they have
been in employment prior to starting an apprenticeship does not
Q153 Chairman: You do not know, do
Lord Young of Norwood Green: No,
we have not got a precise statistic for that.
Q154 Chairman: That is all right.
Lord Young of Norwood Green: What
I do not understand is why you seem to imply that that is somehow
a negative approach. If a young person has been in employment
with that employer or with another employer before they start
an apprenticeship --- in fact I did myself before I started my
apprenticeship quite a few years ago; I was in a totally different
employment. It did not negate the value of the apprenticeship
that I undertook or the other circumstances where they might be
with an employer. Let us take an example. It might be Tesco. They
might be involved in shelf stacking or whatever and then the employer
and the employee decide that they are suitable or the employee
decides they want to undertake a retail apprenticeship and the
employer agrees and that is converted into an apprenticeship.
Q155 Chairman: I do not disagree
with you. All we have asked you for is have you any stats to support
Mr Marston: Yes, we have got some
Q156 Chairman: Rather than have a
debate could we perhaps have those stats? That is all we want.
Jim Knight: I have many tables
in front of me.
Mr Marston: Chairman, might I
just add one other point which I think is relevant to this? One
of the best pieces of evidence we have is the rates of return
to apprenticeships, which are very good. In other words, if you
go through an apprenticeship programme on average you will earn
a higher wage than if you do not. Why would employers pay a higher
wage to people if all that was happening was the badging of skills
they already had? If you look at the effects of this, the outcomes
in the business, employers think it worth paying more to somebody
who has been through an apprenticeship programme. That is the
strongest evidence we have that this is genuine skills development.
Yes, it is at work, yes, it is in the workplace, but it is genuine
skills development. People are gaining skills they did not have
before and qualifications they did not have before, and that has
a value for them.
Chairman: You will let us have the facts
Q157 Mr Marsden: Jim, I wonder if
I could take you back briefly to what you have just said about
the public sector, public procurement and the economic downturn.
You talked about using public procurement as a lever to try and
encourage more private sector procurement. We notice today that
the Government has made a further announcement about doubling
the apprenticeship commitment in the public sector and that is
very good and all the rest of it. The reality, certainly in the
short term, is that in particular small businesses are going to
be extremely reluctant initially to take on people in this area,
so you are going to have to work much harder on that. Is it the
case that you are anticipating in the short term that the potential
slack in take-up in the private sector will be matched by take-up
in the public sector?
Jim Knight: I do not anticipate
that there is some kind of magic read-across. We are not going
to focus on the public sector and just ignore the private sector.
Q158 Mr Marsden: Have you done any
modelling yet on the likely consequences of the economic downturn
in terms of what you expect the public sector as opposed to the
private sector to produce over the next 12 months?
Jim Knight: The modelling that
we have done is at an extremely early stage, partly because it
is an ever-moving target, but when I, with Siôn Simon, had
the ministerial oversight meeting that we have regularly with
the Learning and Skills Council, we effectively commissioned an
urgent meeting with them to discuss the model that they are working
in respect of how this will work for apprenticeships but also
some of their other activity. It is worth saying, Chairman, that
when we appeared before your sister committee, the Children, Schools
and Families Committee, last week, I told them that we were having
a public sector apprenticeship summit on 29 October. Because of
the change in ministerial responsibilities following the reshuffle
we have had to postpone that, so it will not take place this week
but it will take place in a few weeks' time. There is a very strong
drive across Government to do what we can in this area, but we
will equally be pressing the NAS with this enhanced resource and
stronger leadership to chase after deepening and widening private
sector engagement with apprenticeships despite what is going on
in the economy.
Q159 Mr Boswell: We have already
touched on the Group Training Associations. Can you give us a
bit of a feel as to how proactive you want to be about this? Would
it make sense in the definitive Bill to put a duty on the Secretary
of State to encourage the growth of group training where that
is appropriate, and indeed in effect offer access to group training
for everyone right down to the micro businessI am talking
about the employersand obviously then the apprenticeship
follows from that.
Lord Young of Norwood Green: I
think it follows on from the last question. We are very much seized
of the importance of focusing on SMEs. Indeed, there was a £350
million package announced recently to give assistance on SMEs
in developing essential skills to help them survive in the current
situation. In terms of access to the Group Training Associations,
certainly we want to maximise that. We do not see any current
restriction applied to it. Let me put it this way. It is an essential
tool for trying to engage smaller businesses.
6 British Chambers of Commerce Back
Small and medium-sized businesses Back
Confederation of British Industry Back
Trades Union Congress Back