Jim
Knight: Will the hon. Gentleman give
way?
Mr.
Hayes: I want to make some progress, so that we can move
on, but I will then happily give way. Otherwise, you will accuse me of
delaying the Committee unduly, and I do not want to do
that.
The
Chairman: I would not consider doing that, Mr.
Hayes.
Mr.
Hayes: You would certainly never do that, Mr.
Chope, but the Minister might, because he can be mischievous.
The recent
House of Lords Select Committee on Economic Affairs supports that
simpler funding model and
says: “We
believe that handing the money directly to employers not only provides
companies with a greater incentive to provide apprenticeships but can
also help to reduce red tape as
well.” Conservatives
understand that a commitment to train an apprentice involves a
financial risk for employers. At base level, it takes time for an
apprentice to start to make a financial contribution to the business.
Under the current funding system, support for off-site training leading
to national vocational qualifications and technical skills is paid
month by month, with some of the money held back to ensure higher
completion rates, so it takes employers a long time to see any real
return on their
investment. The
difficulty is not for large corporates, which can absorb the costs, but
for small businesses it is a major disincentive; but it is through
small businesses that we will rejuvenate the apprenticeship system from
the bottom up. The House of Lords Select Committee report
“Apprenticeship: a key route to skill”, to which I
referred,
says: “In
the case of apprenticeship funding, the administrative chain separating
policy from practice on the ground is a long and, we would argue,
dysfunctional one.”
The Bill is unlikely to
improve that situation, as John Lucas of the British Chambers of
Commerce made clear in his evidence, which I shall speak about, having
first given way to the
Minister.
Jim
Knight: I am grateful for the hon. Gentleman’s
indulgence. He is extremely patient. He mentioned the average funding
for apprenticeship places. Is his party committed to sustaining that
level of funding per place at our projected
volume?
2.30
pm
Mr.
Hayes: We have no plans to do so, as the Minister will
know if he reads “Building Skills, Transforming Lives: A
training and apprenticeships revolution”, which should be his
bible, because it is the Conservative party’s green paper on
opportunity and skills. It makes it clear that we intend to create
100,000 new apprenticeships, to pay money directly to employers, and to
create an apprenticeship bonus, which I shall speak about in a few
minutes. We have no intention of reducing the level of funding for
apprenticeships. Our funding plans, which the Minister questions,
include a bonus for each apprentice taken on by small and medium-sized
enterprises to encourage them, because we know that SMEs have a vital
role to play if we are to produce a step change in the number
of employer-based apprenticeships. Proportionate costs to smaller
businesses taking on apprenticeships are much greater than for larger
companies. In a recent CBI survey, 29 per cent. of firms cited a lack
of in-house capacity as the reason for not getting involved in
apprenticeships. We want to change that through our SME bonus. The
Federation of Small Businesses pointed out in the consultation for the
draft Apprenticeships Bill that according to labour force surveys, 69
per cent. of all apprenticeships take place in small businesses but, it
said, an inherent problem for businesses with fewer than 10 employees
remains the cost to businesses of
training their apprentices. Subsection (2)(c) of new clause 8 refers to
consultation with SMEs in the science, technology, engineering and
mathematics sector. Many experts regard STEM business as key to our
future, as British firms increasingly need to compete in a high-skill,
high-value world economy and as competition from emerging nations puts
further downward pressure on labour costs. The STEM sector has a high
proportion of SMEs and its ability to train people will be
crucial.
When speaking
of STEM businesses it is easy to focus on information systems,
information technology and so on, but we should not ignore the creative
and cultural sector—a big growth area in our
economy—which fares very badly from the Government’s
Train to Gain scheme. The Minister will be able to tell us precisely
what proportion of such businesses benefit from Train to Gain, but the
scheme is certainly not providing a significant contribution to
training in that sector. Whereas, apprenticeships can indeed play a
useful, highly valuable role in enabling Britain to continue to lead in
the creative and cultural skills field. Subsection (3) of new clause 8
aims to provide funds to make it easier for employers to come together
and pool their resources and talent to create their own apprenticeship
schemes or group training associations. When a substantial body of
employers within an industry is committed to sponsoring apprenticeships
they should be encouraged and enabled to develop their own
apprenticeship scheme. This is key to ensuring that employers—it
could be small employers—are committed to apprenticeships. To
ensure greater employer involvement in apprenticeships, funds should be
provided for pilot schemes for new GTAs led by employers who already
run successful apprenticeship schemes. In oral evidence to the
Innovation, Universities, Science and Skills Committee on the draft
Apprenticeships Bill, the British Chambers of Commerce added its
support for group training associations. It
said: “The
concept of a group training association will be at the heart for many
small and medium sized businesses because the world of apprenticeships
has changed from...where you had very large companies that were
embedded in the regions that would often recruit 50, 70 or 100
apprentices at a time for both their own purposes and then for other
business as well. Those have now gone. What we are looking at is a
concept where one or two apprentices perhaps are being taken by a
number of companies and we have effective delivery of training for
those which brings in the group training
association.” Even
the Government, albeit slowly though I will not say reluctantly, have
recognised the potential of group training associations—their
impact assessment accompanying the draft Apprenticeships Bill explained
that the creation of GTAs is specifically intended to ease the
administrative burden on small businesses. The Innovation,
Universities, Science and Skills Committee report recommended
that “the
draft Bill be revised to place a duty on the National Apprenticeship
Service to facilitate the setting up of bodies such as group training
associations, to assist small businesses to carry the administrative
burden of setting up apprenticeships, organising training and securing
financial
support.” In
response, the Government stated in their special report of 2008-09,
published on 12 February, that the Bill will require the chief
executive of Skills Funding to secure apprenticeship training and
encourage the provision of apprenticeship training among employers.
These duties will be delegated to the chief executive of the National
Apprenticeships Service.
The
Government, I think grudgingly, have recognised that merely adding
apprenticeships to those well established programmes of well respected
large employers is not sufficient to make apprenticeships reasonably
accessible to large numbers of people who could take up apprenticeship
places in those areas of the country where there are fewer corporates.
A glance at the breakdown of the number of apprenticeships in different
areas shows extraordinary differences. Indeed, even across London there
is an extraordinary disparity; some boroughs have very few
apprenticeships—Greenwich, for example, has just
200—whereas other boroughs have 270 or 300. Some cities and
towns have a small number, while others have long-established
apprenticeship programmes and a large number of opportunities for young
people and others. There are problems in parts of the
country, and reinvigorating the system through SMEs, with the support
of group training associations, will help to even out some of the
variety.
In urging
Members across the Committee to support new clause 8, I emphasise that
I do not think that there is much difference in our ambitions for
apprenticeships, but there are real differences in how we believe those
ambitions are most likely to be realised. There is a disconnect between
the Government and employers, which is why the new clause is vital.
There was disappointment during the witness sessions from organisations
such as the British Chambers of Commerce and the sector skills councils
about the Government underestimating the role of employers and so
understating it in the Bill. A bigger role for sector skills councils
would also help to achieve our shared ambitions for apprenticeships.
Their role is barely mentioned in the Bill, although I accept that it
is dealt with liberally in the explanatory
notes. Because
I do not want to unduly delay the Committee, I will just emphasise that
the new clause would improve the Bill. It is certainly not destructive,
although frankly, it does not sit terribly easily in the convoluted
structure set out in the Bill, which my hon. Friend the Member for
Bognor Regis and Littlehampton was so critical of a few moments ago.
However, it at least goes some way towards improving the prospects of
achieving the ambitions that the Government have rightly identified as
essential to re-equip Britain with the skills it needs. Apprenticeships
matter too much for us fail to deal with funding, support for small
businesses, and the importance of group training associations and the
STEM and high-tech industries. We have tabled the new clause for all of
those reasons, and I am delighted to propose it on behalf of
my hon.
Friends.
Stephen
Williams: I shall speak briefly to the amendment and the
new clause as we still have a lot of ground to make up this afternoon.
I have no difficulty supporting amendment 107, which states that the
chief executive should be responsive to employers’ needs,
however, it would be extraordinary if the chief executive was
unresponsive to their needs. Although, as we established in the
discussion on the previous clause, that person will be directly
accountable to Ministers and so directly responsive to their targets
and requirements, it is useful to make clear that the chief
executive’s primary purpose is to be responsive to
employers’ needs, rather than to Government targets. Perhaps,
that was the intention behind the amendment.
I have general
sympathy with new clause 8 because it is similar to our proposals in
our policy review. The hon. Member for South Holland and The Deepings
has been charged by his leader with reviewing his party’s skills
policy and has already waved his document around. I performed a similar
function for my party. I do not have a document with me to wave
around—I have left it in the office—but I know that the
ministerial Front Bench read it avidly and are, no doubt, sending
circulars out to their colleagues in the country with lines of
criticism.
All three
parties want to encourage more people to be attracted by apprenticeship
training and for more employers to offer such opportunities. However,
employers need more of an incentive to create them and that is what
lies behind the new clause. In our own deliberations we identified a
pot of money, rather than a target, to create a number of new
apprenticeship places. That would come from the growth in the Train to
Gain budget over the next period, which is a little over £500
million. Rather than being left in the Train to Gain provisions, it
should be specifically directed to paying the off-the-job training
costs of apprentices in order to incentivise employers to offer those
opportunities. Subsection
(3) of the new clause, which encourages the setting up of group
training associations, is broadly similar to my new clause 13, which
also states that the National Apprenticeship Service should encourage
the setting up of group training associations. That is a new clause
that I know has the enthusiastic support—I am sure this will
gladden you, Mr. Chope—of the FSB. I look forward to
hearing words of encouragement from the
Government.
The
Chairman: New clause 13, however good the hon. Gentleman
thinks it is, has not been selected for debate, so I hope that he is
not going to debate it.
Stephen
Williams: I assure you, Mr. Chope, that that
was the end of my remarks on my own new clause. It was not selected,
mysteriously, for debate, but it is broadly similar. That was the point
that I was making to subsection 3 of new clause 8, which has been
selected for debate and we are discussing that.
What I was
about to say was that I look forward to hearing from the Minister when
he replies that the Government certainly will expect the NAS and the
chief executive of the Skills Funding Agency to encourage the setting
up of group training associations in various parts of the country, so
that small businesses and communities where apprenticeships are at a
low state, as referred to by the hon. Member for South Holland and The
Deepings, are
encouraged.
Jim
Knight: As we have heard, the intention of amendment 107
is to require the chief executive of Skills Funding to take account of
employers’ needs in delivering the apprenticeship programme. We
agree that employers’ needs are fundamental and that is why we
now have 130,000 participating employers. Of course, the apprenticeship
scheme is a demand-led programme and, if we do not take account of
employers’ needs, they will not participate; there would be no
supply and no programme, so their needs are fundamental.
The chief
executive of the National Apprenticeship Service will report regularly
to the Secretary of State on apprenticeships, and we will want to hold
that person to account on employer involvement. Sector skills councils
play, and will continue to play, a crucial and vital role in ensuring
that employers’ needs are fully reflected in apprenticeship
provision. Therefore, the amendment is not necessary and I ask the hon.
Member for South Holland and The Deepings to withdraw it.
It is
tempting to say that new clause 8 is slightly fanciful, given that the
hon. Member for Havant (Mr. Willetts) was unable to provide
the assurance, on Second Reading, that he had managed to secure the
protections to his budget that the hon. Member for Surrey Heath
(Michael Gove) has to his budget. Therefore, all the talk about
apprenticeships from the Conservatives is not going to come to
anything. However, I will focus on new clause 8.
Subsection
(1) of the new clause would require the chief executive of Skills
Funding to fund directly employers who take on apprentices, with the
funding provided in one lump sum at the beginning of the apprenticeship
framework and a further sum paid on completion. Funding for the
delivery of an apprenticeship framework is paid to who is actually
delivering the training, which may be the employer or an external
training provider. A proportion of the apprenticeship funding is paid
on enrolment to the apprenticeship framework, with a further payment on
successful completion.
Subsection
(2) would put a bonus scheme into statute for small and medium-sized
businesses to be paid once apprentices have completed a recognised
framework. Payment to training providers, at 25 per cent. on completion
of an apprenticeship, already acts as such an incentive. However, we
think that it is right to direct that to the training provider. While I
understand that the intention might be to incentivise employers to take
on apprentices, a blanket subsidy of that kind runs the risk of being a
dead-weight cost where we would have to fund things that have already
been incentivised by the current incentive system. We therefore think
that the suggestion is fundamentally
flawed. 2.45
pm The
intention behind subsection (3) appears to be to guarantee the ongoing
role of group training associations in delivering apprenticeship
training. I reassure the Committee that the Government are strongly
committed to group training associations. The “New
Opportunities” White Paper, which was published this year, set
out new plans for a fund to establish or expand group training
associations and similar consortiums, and we expect the National
Apprenticeship Service to announce a prospectus for a £7 million
funding stream by the end of next month. Given that we are already
committed to group training associations, which have the same standing
as any training provider, new clause 8 would not improve their
position. While
I understand the aims of much of the new clause, the right funding
arrangements to maximise employer participation and engagement are
already in place. To accept the new clause would mean a spending
commitment that I certainly cannot make—it is interesting
that the hon. Member for South Holland and The Deepings thinks that he
can—so it should not be pressed to a
Division. | 
