UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 1843-i

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

Business, Innovation and Skills Committee

Apprenticeships

Thursday 1 March 2012

Denis Hird, Alex Jackman and Graham Hoyle OBE

Evidence heard in Public Questions 1 - 79

USE OF THE TRANSCRIPT

1.

This is an uncorrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.

2.

Any public use of, or reference to, the contents should make clear that neither witnesses nor Members have had the opportunity to correct the record. The transcript is not yet an approved formal record of these proceedings.

3.

Members who receive this for the purpose of correcting questions addressed by them to witnesses are asked to send corrections to the Committee Assistant.

4.

Prospective witnesses may receive this in preparation for any written or oral evidence they may in due course give to the Committee.

Oral Evidence

Taken before the Business, Innovation and Skills Committee

on Thursday 1 March 2012

Members present:

Mr Adrian Bailey (Chair)

Mr Brian Binley

Paul Blomfield

Katy Clark

Rebecca Harris

Margot James

Simon Kirby

Ann McKechin

Mr David Ward

Nadhim Zahawi

________________

Examination of Witnesses

Witnesses: Denis Hird, Chief Executive, JTL Training, Alex Jackman, Senior Policy Officer, Forum of Private Business, and Graham Hoyle OBE, Chief Executive, Association of Employment and Learning Providers, gave evidence.

Q1 Chair: Can I welcome you and thank you for agreeing to come and speak to the Committee today? I just have a few opening remarks. Obviously, we have got a lot of questions and there are three of you, so I will repeat what I have said to many panels before: you do not need to answer every question if you feel that there is nothing to either add or subtract from the answer given by another of the panel. Could you just introduce yourself for voice transcription purposes? We will start with you, Mr Hoyle.

Graham Hoyle: My name is Graham Hoyle. I am Chief Executive of the Association of Employment and Learning Providers.

Alex Jackman: I am Alex Jackman. I am Senior Policy Adviser at the Forum of Private Business.

Denis Hird: Denis Hird, Chief Executive, JTL.

Q2 Chair: I will start off with a question to Mr Hoyle in particular. There has been a big debate about what exactly constitutes an apprenticeship. How would you define it?

Graham Hoyle: We have actually come up with a proposed definition, and the key parts are: they must be employed; they must be following a fit-for-purpose training programme designed by employers, critically; it must include elements that are properly and independently accredited; and it should be done on the job with support from off-the-job training-by all means-with elements that are learnt in a classroom or wherever. Basically, the learning should take place on the employer’s premises as part of a job under the supervision, primarily, of the employers that they are working for and will be working for later on. It is a combination: employerdesigned; must be employed; independently accredited; and on the job. Those are the key factors.

Q3 Chair: Could you just amplify, shall we say, a little on employer design?

Graham Hoyle: Yes. There are obviously different ways of doing this. It could be that the individual employer designs an apprenticeship for themselves.

Q4 Chair: Presumably an organisation-for instance, RollsRoyce- would have the capacity for that.

Graham Hoyle: Yes, indeed. But there again, if you are going to take that as an acceptable example, it means you have to put some kind of differentiation in to say, perhaps, that this would not be appropriate for a small employer. What we have tended to do is to go for some kind of employer grouping over recent years-it used to be the National Training Organisations; it is currently Sector Skills Councils-who collectively have designed the framework, which, in fact, incorporates all the elements that I have mentioned. There is actually a great danger in having an apprenticeship designed by an individual employer, including a large one. If I could just give you a personal anecdote from many years ago when I first started working in the Ministry of Labour-some of you will not remember that nomenclature.

Q5 Chair: Ray Gunter, wasn’t it?

Graham Hoyle: Ray Gunter, yes. I could give you a few other names, but I guess we have not got time this morning. It was very interesting, as a very young man, starting at the Bristol Employment Exchange, when the Government cut its funding for a big project, TSR2, in the defence industry. I was confronted as a teenager with 40 to 50-year-old RollsRoyce apprentices, who were acknowledged as the RollsRoyce apprentices. They were unemployed and they were nontransferable. They were unemployed and they were recognised to be at the top of their tree, but so narrow were their skills that they were not transferrable into general engineering. That taught me a lesson very early on about the dangers of narrow apprenticeship.

Now we tend to do it through SSCs. It is not the only answer. Certainly, they are employer-designed but they must have-and we have it now and I believe it is right-an element of transferability within them, in the framework, which allows people not to be trained for one company-especially in this fastmoving world-but enables them to be fit for the purpose in that company, of course, and have sufficient transferable skills so that, when they are required to, they can move on to other companies. You have this balance of generic transferable skills, which the specific employer may or may not be overly interested in, and the particular skills that the employer needs to conduct their business at the end of the day. There is a balance in there somewhere.

Chair: Paul Blomfield has a supplementary question on this.

Q6 Paul Blomfield: I represent a city with a long tradition in steel and engineering apprenticeships, and I think that most people would probably agree with-perhaps with different wording-everything that you have said, Mr Hoyle, except that most people see an apprenticeship as a route into a job. That was absent from your definition. Was that deliberate?

Graham Hoyle: Yes, it was deliberate because in my definition-and I think it is an interesting point-an apprenticeship is employed from day one. The route into the job is achieved by the actual start point of the apprenticeship itself, so in some respects the route into a job precedes the actual attainment of an apprenticeship.

Q7 Paul Blomfield: Perhaps I should have been clearer: I mean a route into a career. The reason I ask the question-and it is an issue we are going to come back to in our inquiry, I am sure-is because in some contexts it looks as if inhouse training has been rebranded as an apprenticeship. In terms of getting the apprenticeship brand right, is this an issue we ought to be looking at?

Graham Hoyle: If I may, I would say two things on that very valid point. The protection about inhouse training and, if you like, the narrowness-which I have already suggested is not a good idea-is currently protected by the frameworks, which do incorporate the generic skills, the basic skills and the transferable skills. That is part and parcel of a framework and is often covered by some of the off-the-job training. We used to call it day release. It is still not a bad term; it is still pretty accurate. You still have that in frameworks, so you have this transferability element currently within the 200odd frameworks that we are following through at the present time. That is the first point.

The second point is that we do not want a big debate on jobs and careers. They have slightly different meanings to different people. I think we do need to be careful. I was around when modern apprenticeships were introduced in 1994, and one of the big revolutions that happened when they came into being was that we opened up this form of training-apprenticeships-beyond the traditional male-dominated industries of engineering, manufacturing and construction that they had operated in for a couple of centuries. We massively opened them up into the growing service sector in this country, and they were designed on the same basis but also to be fit for purpose within those sectors.

Now when you start looking in hospitality, catering, retail or care, they are huge industries and sectors in this country that have grown dramatically. First of all, they are not necessarily maledominated, so that is an interesting argument, which I guess we perhaps won’t have today. They had to be fit for purpose, and for most of the frontline operations in those sectors it is at Level 2, not Level 3, so we have to be very careful about our aspiration. That is what those sectors need. There are progression opportunities to move to Level 3 and, indeed, into higher apprenticeships, but the fit-for-purpose mainstream route into a job-and, indeed, progression-is through an apprenticeship, but they look rather different to the ones that we had before 1994, which in this day and age with the economy we have got, looks rather limited and narrow. We have opened them up, which I think is a perfectly good thing, but it means that the descriptors and the nature of those apprenticeships have changed somewhat as we have embraced different industries and sectors.

Q8 Mr Ward: One of the problems for the hospitality industry, when trying to encourage training and development, is the transferability. There is the concern that once they are trained the staff will move on for a few bob more. Is there a conflict on this issue of transferability? Whilst they were with RollsRoyce-or Nissan or whatever it may be-wouldn’t they be enticed or encouraged to go elsewhere? It is a protection for the employer to have very specific training programmes for their employees to stop them going elsewhere.

Graham Hoyle: It is an argument I still hear and there is some validity to it. It is still there. I have been in this field for-and I am going to say it-several decades: too long, probably. I have to say the poaching argument, which has not disappeared off the scene, has reduced dramatically, I would say, over the last 10 years in particular. If you take hospitality-simply as it is the example you use, but elsewhere this is valid, too-it is the most extreme. There is a massive labour turnover in that sector anyway, which is nothing to do with apprenticeships and nothing to do with training. It is the nature of that particular sector. What has happened very much over the last decade-and this is a very positive observation-is that British business and industry have belatedly signed up to the returns on investment and training, and realised that it is something you have to do, although there may well be some leakage. They have realised that it is absolutely essential to have high-quality-and I would say on-the-job-vocational training in order to profitably run their organisations and businesses. That message has gone in.

Twenty years ago, I was on platforms and we were all bemoaning the fact that training was not seen as an investment; it was seen as a cost. Every time you had a recession, the first thing that went were apprentices. That has not happened this time. When the particular economic problems started a couple of years ago, it was interesting that almost on day one there was a full-page advert in the national press featuring about 70 FTSE leaders saying, "We must not jettison training; we need to keep it going in order to be ready to deal with the upturn." I will tell you now that I have not experienced that kind of message coming straight from the business sector.

So, yes, I do come across the poaching argument. It is still there. I think it is narrowminded, but it is nothing like as big as it used to be. We just have to accept that there is going to be leakage and poaching. I do not think it is the big issue of the day.

Q9 Chair: Can I just follow on? You have given a definition of an apprenticeship. I suppose, just simply, is it important that there is a definition? Secondly, should any definition of an apprenticeship-and again you have partly covered this-refer to a minimum time to complete, or do you think learning and the intensity of the experience is more important?

Graham Hoyle: Those are two separate questions. Thank you. I think it is important, quite frankly, to have debates like this-and there are many other debates going on, though perhaps not as important as this-based on different perceptions of apprenticeships: as they are, as they should be. Quite frankly it is very difficult to have that debate if you do not have a core definition against which to compare. We have got apples and pears and oranges being debated and it is a bit hard.

I said in one of our papers recently that there are people-and there may well be people here today-who focus on the traditional apprenticeship. I mentioned engineering, manufacturing. They tend to be three or four years; I can remember when they were seven, certainly five, and they tended to be maledominated and so on. That still happens-though hopefully not the maledominated bit-and they still carry on at a high level. Indeed, one of my colleagues here runs them, and very effectively, too. That is a perfectly good example of an apprenticeship: it starts at 16; it is job creation; it is very intensive-and I am not going to say high quality, as quality is a dodgy word-it takes a long time; and it is technically at a very high level. That is excellent, but that is not the definition, and we should not say, "That is the definition and everything else does not count." I believe we need a definition that is very allembracing, and I gave you an outline in answer to your first question.

The second one is very topical: the length and duration. Nearly all of the frameworks designed by Sector Skills Councils-the proxy for employers-do indicate a norm. The norm is incredibly helpful, because that is what employers perceive they need to get people to the level they can use. That seems to be eminently helpful. We ought to take notice of it-and I believe the funding agencies do take notice of it-but it should be a norm where there are some exceptions.

In the socalled academic route of GCSEs, A-levels and higher education, how do we celebrate those very bright young people who get their GCSEs aged 11 and they get their A-levels aged 14 and they get their Oxbridge degree aged 16? We see a few of them, don’t we? They are frontline news, and everyone says, "Tremendous." But you start saying that someone has got to the level required a little quicker than others because they are bright, and that suddenly is bad quality. I think that is inconsistent.

I think that the length of stay is important as a norm for most 16 to 18-year-olds starting from scratch-and would be very helpful to them-and most people would take a minimum period of time. We have just set it at 12 months, and my association agrees with that. We have had 12 to 13-week ones; that does not seem right, and some of them are run by members of our association. That does not seem to be sufficient to get the experience required in there.

My biggest concern at the moment on length of stay is that one of the other revolutions in 1994, which I referred to, was that we took away time serving and we also, at that stage, took away the length of stay and entry age. Up until then, you became an apprentice at 16 or 17, or you missed the boat. That has held generations down in terms of skills and development, which has done the country no good whatsoever. I think the need to have a comprehensive framework to a level that the industry wants and can use is the critical thing, and we should then allow people of any age, partqualified, to finish the job off, quite frankly, as quickly as possible. It is in the interest of the individual, the company and the economy. When you get to 19-plus, I am very edgy about putting in a minimum period-even one as modest as 12 months-when we find 35 to 45-year-olds who have got most of the way by accident, who can have a chance of being properly qualified, with all the kudos that brings, and who can contribute to their own future development and profitability as well as their companies. If they have done most of it already and we suddenly say they have to stay and put in another 12 months, it will be debilitating and people won’t turn it on.

Q10 Chair: That was interesting. Now, we have got a lot of questions, so I do want to move on, but I do feel the need to bring in other members of the panel, if they wish to add or subtract from what Mr Hoyle has said.

Alex Jackman: I would like to add, very briefly, if I may, that we sat on an employer panel looking at apprenticeships before the Growth Review, and we sat down and tried to come up with a one-page sales pitch to businesses to sell apprenticeships. We could not get past the definition. We were curtailed a little bit by the deadlines imposed on this by the Growth Review, because we were reporting in time for that, but I think that gives you some idea of the sort of identity crisis that there is at the moment with apprenticeships and the rate at which more and more courses-whether that is on-the-job training or not, and we will come to that later-are to be included within the definition.

On the transferable skills point, I would just like to make a really quick comment. Our members are 99% small employers, and even within the one business we value some of the apprenticeship being transferable skills, because a lot of our members will want them to be taking on different jobs within their business. Yes, that gives rise to the problem of poaching at the end or an individual getting their certificates going off and creating their own company, but, nevertheless, having that transferable component is immensely valuable.

The final thing I wanted to say is, with regard to the minimum time spent on apprenticeships, there is a little bit of a danger of throwing the baby out with the bathwater. There are some very good 12 to 13-week courses that are around. As an example, Lidl run a management course, I think, as an apprenticeship, and after that 12 weeks they are put in charge of managing a store, which is immensely scary for such a short period, but that scheme is very highly regarded, so I think we have to look very carefully at the time limits with apprenticeships, but not throw everything out.

Q11 Mr Binley: I think there is something in front of all of this. We have been talking about branding as much as we have been talking about anything else during this whole discussion, and isn’t that the problem? Shouldn’t we be having the situation where a 12week NVQ course-which can clearly work very well in the boot and shoe industry from an operative perspective-has just as much status in terms of what it means to the person who has got that as an apprenticeship or a degree? Isn’t the branding of this important and don’t we need to think about that first?

Denis Hird: Can I make a comment? Just to give you a bit of background, I have 6,500 fully employed apprentices doing an advanced Level 3 apprenticeship in building services, and that is at the top end of apprenticeships. You will understand that electro-technical is at the top end. The average length of stay is four years and two months, with success rates of 80%, in 3,500 employers, many of them very small. If we go on length of stay, I do recognise that in other sectors arrangements are quite different. I have not just been in building services. For all my sins of the 1980s, I was in a little cottage industry called British Coal. I was fortunate to be Head of Training for British Coal. Statutory employment, driven by statute and timebased: it took me seven years to get a definition of competency out of Her Majesty’s Chief Inspector, because it was laid down in statute, so getting one for apprenticeships may take a little longer.

I think Graham’s assessment is probably as close as we are going to get for a while, and I think it is a good one and one that we support. In terms of length of stay on apprenticeships, we need to take into account sectoral needs and look at types of apprenticeships. For instance, while a Level 1 might be three months, it needs to recognise that a Level 2 is different, a Level 3 is different and a Level 4 is different. There may be a Level 5 that is a qualified engineer. People need to be able to see on a scale that there are different degrees of apprenticeships that might infer different lengths of stay. Also, we have moved into a standardsbased economy. If you take your driving test, it does not say that you must have 20 lessons before you can sit the test; you can sit the test without any lessons. It is about competency, isn’t it?

Q12 Mr Ward: But the difference in that example is that the end test brings it all to an equal point. Whether you have one lesson, no lessons or 100 lessons, it brings you to that point. In your example, the 12 weeks at Lidl, that may be fully sufficient, but I think the thing we are querying is calling that thing the same thing as something that has lasted four years. That is the question we are asking there.

Denis Hird: That is a fair point.

Chair: In what was almost a complete mental aberration, I got Rebecca Harris and Simon Kirby mixed up. It is, in fact, Simon I want to bring in now. I am sure you are very flattered.

Q13 Simon Kirby: Thank you, Chair; I am. The National Apprentice Service seems to be quite pleased with its progress to date. Do you agree it is doing a good job?

Graham Hoyle: Again, I think we need to be quite clear about which jobs it is doing or should be doing. Inasmuch as the National Apprenticeship Service is promoting apprenticeships, their benefits, and so on, one can say the figures speak for themselves. If you look at the growth, both under the last Government and the current Government, there has been a very strong growth. One has to say that the takeup and growth of apprenticeships has gone up during that period. As an organisation that has been promoting it, you have to give them some credit for that.

There has always been a little bit of concern, certainly from my members-the providers who deliver them at the end of the day-that the sales force for getting apprenticeships has always been the training providers, be that colleges or further education or independent third sector-they all in the same game-and we are the people who are effectively knocking on employers’ doors, ringing them up and so on and so on. We believe we are best placed to do that. To turn that into some kind of national sales force, with the kind of staffing that the NAS has, is a nonstarter.

We have to be quite clear that we have always believed that there is a role for a national agency promoting the value of workbased learning in the form of apprenticeships, notwithstanding branding and definitions, and we believe they ought to almost be more focused on promoting that, though not to employers except the very large ones, where individual providers have a bit of difficulty breaking in. I can think of exceptions to that, but there is a real chance that they can go in with the big national companies-and they have done some good work there-and the big local authorities, the National Health Service and so on. We see a role there, but we do not believe they ought to be directly attempting to get in to the millions of small businesses. Where I think they could do more work is promoting the value of apprenticeships through the education service, making sure the next generation understand the benefit of that apprenticeship or workbased learning route.

Q14 Simon Kirby: That having been said, how should we judge their success? Is it purely a numerical issue?

Graham Hoyle: It is difficult. My members would say that at the end of the day we deliver them, but we do value the context within which we are able to work and sell our apprenticeship schemes. It is quite hard, therefore, to determine, because I do not think they can take sole credit for the increase. I give them part credit. My members would have me up in irons, saying, "Hang on, Graham, we deliver all of this lot." Clearly, you cannot differentiate it quite like that. I think it has got to be the extent to which the concept and the value of apprenticeships is increasingly being accepted by society as a whole, and they do deserve some credit for that.

Q15 Simon Kirby: Does anyone else have a comment?

Denis Hird: If I could make a comment on that, it would be that there are some very good people in the National Apprenticeship Service trying to do very good things, but we ought to be asking whether the country needs an NAS or whether it needs a function, and what are those functions and where should they sit? I think the NAS is good for establishing national policy and maybe dealing with the media and promoting the brand, and perhaps as a guardian of the brand. In terms of engaging with employers, that is what I and my colleagues do day in, day out. Last year, we contacted 28,000 businesses. We had 25,000 applicants. We had 7,500 good quality young people. We had 2,500 jobs. That is what we do, and we know everybody in the framework and everybody in the industry backwards. Now, the NAS does not have that sort of expertise and I would not expect it to. My question would be, "What do we need and where should it sit?" That is all I am saying: where should it sit?

Q16 Simon Kirby: Well, where should it sit?

Denis Hird: That is not for me to decide. It is for the powers that be that establish these organisations to think, "Well, what do we need to do; where should it sit; what do we think the notional cost might be; and is it affordable in today’s climate?"

Another thing I just wanted to say-and I am not being critical-is that there is a matching service. We have all heard of the matching service, which has aspirations-I just read yesterday-to be able to upload an employer’s vacancy in a month. It takes a minute with us and has done for the last 20 years. If an employer rings up today and says, "I want six apprentices off your approved list in my postcode tomorrow at this time for an interview," they will find that if they select two we will have them starting on Monday morning on the apprenticeship with the induction. It has worked for 20 years; it is demand led with employers.

Graham Hoyle: Could I answer Mr Kirby’s question about where it should sit? I am very clear where it ought to sit and we may well be moving towards getting there. The promotion of apprenticeship and their value should sit with employers. Unquestionably, the whole point is-whether it is our definition or something else-that it is about training programmes that are fit for purpose for employers to run their companies, industries or sectors. It is an investment with a return; I have used all those terms. We have almost cracked it when that message is fully taken on board and sold by employers themselves to their peers: you cannot afford not to be under this training game. I think we are getting quite close to that; I said I am optimistic. We have not been there in the past when it has been wrongly positioned as a Government programme. It never actually has been; it has always been an employerled training programme for employees, supported and sponsored by the Government. We have used the wrong terminology. We may be getting close to where we can switch that over. You might see almost the same people doing almost doing the same job, but I would like to see it owned by employers pushing out that message, not the Government on their behalf.

Q17 Mr Ward: Some of the figures that we have had are immensely impressive: 78,000 apprenticeship opportunities; 500,000 apprenticeship accounts enabled. These are big, big figures. But I suspect that the people on the NAS database are not the people you have. On your database, you have got people who want to do jobs in those particular industries; that is what they want to do. I guess that this database includes people whose mums and dads have said to them, "Ring this number up and get your name on that list."

Alex Jackman: If I might just add, very quickly-and I will come to that point-in general the National Apprenticeship Service is still a very young body. We tend to get pretty decent feedback from it. Just under half of the members on our Training Skills Panel go down that route when they are looking to take on an apprentice.

Regarding recent developments, I accept that one month to advertise and the three months, I think, to get a placement is still quite a long time, but given that on average it was around about six to eight months respectively beforehand, that represents a very positive leap. There were announcements about Health and Safety, not having to go above and beyond national standards, and there are also a couple of small-business-specific proposals that are coming on stream in the coming months. It is a very young body. We do get quite good feedback on it and we would be quite keen to see how it develops in the small business arena, specifically.

In terms of how success should be measured, we are very much focused on the idea that it should be outcomes: how many apprenticeships are finished? That would give you an indication of how successfully NAS is matching up the candidates to the small businesses.

Q18 Simon Kirby: I was just going to say that speaking anecdotally from my Brighton experience, where the apprenticeship potential is perhaps outside the traditional sectors, would you agree with me that not only are NAS well placed to provide support to small businesses in particular but perhaps also to some of the sectors that have not traditionally been seen as places where, if you were an employer, you might choose to have an apprentice. Do they serve a marketing and information function in that particular case?

Denis Hird: I think NAS offer a great potential for signposting. I have been in many other industries. Building services has a very good, solid internal arrangement that works very well and has done for many decades. Other sectors do not have those arrangements. They do not have a network where employers, unions, industry bodies, employees’ associations and trainers come together for the common cause of bringing young people into the existing structured apprenticeship programmes. In that area, I think the NAS could potentially offer help in trying to bring those sectors into the arena, and I would be happy to give up some of my company’s resources to help them have a look at how it particularly works in our sector, to share good practice. That is the reason why we are all members and work together in AELP to do that. We help each other, even in competition. I think NAS would have a role to play in that.

Also, there is a huge opportunity for preapprenticeships with schools and getting young people interested in apprenticeships at a much younger age. There is a role there they can play as well. Of course, even with the resource that they have, with that sort of demand it would be hard to facilitate every request that came forward, but working together with all the bodies involved we could do something very positive, and NAS would have a key role to play in that.

Simon Kirby: That is very useful.

Q19 Margot James: Is the funding structure for apprenticeships efficient?

Graham Hoyle: That is your province, not mine.

Denis Hird: Seeing as we hold one of the Government’s biggest contracts, what can I say? We recognise that we are in difficult times. We recognise that we have had to take a unit value cut for the fifth consecutive year, and our costs are rising so we bring in whatever efficiencies we can. I am very fortunate because my organisation is a charity, so there are no highly paid people in it, including me. Every penny of surplus is reinvested into the front end of training. Any of you can come and visit my organisation, and I can guarantee that I do not know of any other organisation that takes a Crown pound and puts more money into the front end of training, and we are allowed to do that because we are a charity.

Now, in terms of what employers want, bear in mind that, out of our 3,500 employers, 95% are SMEs and if you look at the ratio, 6,500 employed apprentices in 3,500 companies requires quite a huge resource to be able to maintain. What we do is we hide the wiring-for want of a better word-from employers, all of the bureaucracy and all of that. They employ the apprentice and we do everything else for them, and it is all funded either by Government or from the charity.

Now, with funding, inevitably, the target is the guaranteed group, the 16 to 18-year-olds-because that is fully funded-but employers particularly like those that are a little bit more mature, the 19-plus, but the funding is reduced to 50%, so what we do there is we split the difference between us as a charity putting money in and the employee making a financial contribution. Of course, we do not pay minimum wage; we pay industryagreed rates with the union, which are quite extensive, so we have a compromise. What I am saying is that there will be-and still is and always has been-a demand for 19-plus, but I think we need to look at the wider 18 to 24-year-old group and have a look at how best we can use the funding. Whatever we do, it has to be used in a full and proper way that offers value to the Crown.

Graham Hoyle: Although all of my members expect me to have funding at the top of my agenda for them, I think some of the issues we are talking about this morning-getting the fundamental structures right-are more important. I think funding is complicated, but at the present time we and the Skills Funding Agency are looking at making that much simpler. This follows the expectation of a reduction in bureaucracy and so on, which, of course, we all support.

Some of my members have yet to get their minds around this as well, but funding is simplified by taking an average position as opposed to having a very accurate assessment-almost for each apprentice, but not quite. There is an interesting balance there between simplicity, or streamlining, and the fact that will move much more towards an average, which will make administration much easier but averages mean that there will be winners and losers within that average pot. It is just an interesting one.

The bigger question, which is sometimes ignored within funding, is not so much the funding system but who is paying for what. I still think there is a big issue to be resolved in clarifying exactly what the Government is paying for and what their contribution is to what I say is an employerowned thing.

Chair: We will be coming on to those issues later.

Q20 Margot James: How many official organisations do you think are involved in the overall funding of apprenticeships? It is not a trick question; it is just to tease out the scale of the issue.

Graham Hoyle: Again, Denis is closer there because he is actually receiving the funding, though I am supposed to know about it. Basically, our funding is received from the Skills Funding Agency for apprenticeships, and that includes the funding that comes from DfE through the YPLA. It does come through a single point. That is something that was won a couple of years ago. So-unless Denis is going to correct me-we are contracted with one organisation. NAS, which we have just discussed, is interesting; they are not a funding organisation but they are, if you like, involved-some of my members might say interfering-with some of these quality assessments and deciding what does and does not count, which gets very close to funding because it has an impact on it. How many are involved? It is really only the Skills Funding Agency on behalf of them and DfE, with NAS having a role that is slightly less than clear. Denis, is that accurate?

Denis Hird: Very much so, but if I may add to it, Chairman, the Skills Funding Agency works very well. It is a seamless approach. It is built on trust. There are financial measures in there; there is accountability on the programme; there are reviews-there is everything, and it works very well.

Alex Jackman: Can I add very briefly-I know you would like to move on; I will be brief-that there is a pilot out there at moment from UK CES of £250 million, looking at employer ownership skills, which I think will have some interesting results? That is a pot of money that employers will be able to bid for and try to dictate a little bit more about the kind of skills that they want to get into their organisation, and that is something we hear from our employers all the time. They feel that ownership of the money themselves will mean that colleges are forced, by dint, to become a little bit more flexible in what they can offer.

Q21 Margot James: I just wanted to come back to you, Mr Hird, on there being really only one organisation involved, because there are all of the training providers, aren’t there? They are involved in the funding as well as the NAS itself and the Skills Funding Agency. It is not so much the awarding bodies, but there are many organisations involved in the funding stream, wouldn’t you say? There are more than you have indicated.

Denis Hird: There is a plethora. There is YPLA; there is European Social Funding; there are lots of what I call slush funds that people can tap into. Going back to the employer, we once gave money to individuals and called it the individual learning account. It got abused. Whilst employers would like it, if we were to give money to employers in our industry, they would disengage from apprenticeships. The other thing, as well, is to look at it from the funders’ point of view: do they want to manage one contract and let us take all of the hassle and the risk, or do they want to manage 3,500 contracts? How much is that going to cost? The notion of employers having money comes with a caveat, and it is called Government bureaucracy, which we manage because that is our day job. That is all I am saying.

Chair: Can we move on to Paul Blomfield? A cautionary note: I think we are about one-sixth of the way through the questions that we want to ask. At the current rate of progress, we could be here until three o’clock in the afternoon. Please keep both questions and answers as brief and to the point as possible. I will bring in Paul now.

Q22 Paul Blomfield: Still focusing on NAS, a significant measure of their success has been the number of apprenticeships starts. Now, we have received mixed evidence on that. Do you think it is appropriate to measure them by the number of sells?

Alex Jackman: I would just repeat what I said earlier: I think a much bigger focus should be on the outcomes, because that will give you an idea of how well they are placing candidates.

Q23 Paul Blomfield: Mr Hird, do you agree with that?

Denis Hird: Yes. Apprenticeship starts would not happen without the employers or the provision network that exists. In my own view, the way to measure NAS is to have a look at their activity, and hold them accountable and make them justifiable for that, to see if it offers value for money to you or the people that are funding them, because they are not clinical measures.

Graham Hoyle: Again, as I mentioned before, I think they clearly have to take some of the credit for the growth in apprenticeships, which is what they are charged to do, but you cannot separate them out away from the providers and, indeed, the employers, as you say. It is very hard to have a very firm measure in that situation, and in actual fact there is also the issue that the growth of apprenticeships-whoever takes the credit for it-is still in part constrained by the budget that has been allowed by the Government, on the basis that they still are a major contributor. That complicates things even further as well. We are under some pressure now that the all-age concept of apprenticeships has brought in adult starts and older worker starts.

Q24 Paul Blomfield: Can I come on to that specifically? That is an area that we have received evidence on. I think a lot of people would be surprised to see the number of starts in over-35s, which have been fairly significant. They would be gobsmacked to see the eightfold increase in over-60s in apprenticeships

Graham Hoyle: It is a very small number, isn’t it?

Q25 Paul Blomfield: It is a small number, but nevertheless a significant area of growth. Is it something we should be concerned about? Most people’s sense of apprenticeships is about 16 to 24-year-olds.

Graham Hoyle: It is back to the definition of an apprenticeship and the way we move from the traditional apprenticeships that I mentioned: 16 to 18 job creation. That still happens and that is fantastic. It ticks all of the boxes. But apprenticeships have moved in the last 15 years-and branding was also rightly raised-to become a much more allencompassing title for the skill development of UK plc. Now, either we like that and accept it, or we do not. We either limit the definition back down again-that is fine-and find a different definition for the rest, but I will tell you now: we need the rest.

At the moment, personally I am very comfortable with allage apprenticeships. If people-and they do-have different perceptions about a tighter definition of apprenticeships, there is nothing wrong with that as long as we still make sure that the rest continues. I think-and it is a personal view-that there is a certain clarity with the right definition of talking about workbased learning with an employer with all of the ramifications for an employer.

Q26 Paul Blomfield: Can I push you on what is driving the growth in adult apprenticeships? Is it employer demand or is it the level of applicants?

Graham Hoyle: I would say it is employer demand, because all of the adult apprenticeships, as with all apprenticeships, are employed, and whilst there may well be applicant demand, as I would expect there to be, that is going to be done within the context of the conversations within the employer. It is the employer with whom providers deal, not with the individuals. Employers are absolutely releasing their employees for continued training, so we would see the demand as coming from employers, though it is difficult to see how much pressure the employees are putting on in that. I do not know the answer to that; there will be some.

Denis Hird: I just have a quick point. Because there is no, or limited, funding beyond 25, we fund places out of the charity. We have to manage it because we have got limited resources. But last night we held our awards at the Banqueting House next door, and we made a special achievement award to a gentleman in his 40s. He had been in the armed forces, found it difficult to integrate back into meaningful work, got a job as a labourer with an electrical company, and had aspirations to become an electrician. We funded him as a charity-a great, great use of charity money. He was so good we interviewed him as part of our national awards, and we thought that we could justify making a discretionary award for outstanding achievement. He was absolutely over the moon; it has changed his life.

Alex Jackman: Finally, I do not think you should underestimate the perceptions there are out there from employers about the employability of the younger demographic. We received so many case studies-when we were putting together our response to this consultation-regarding 17 or 18-year-olds who are not able to turn up on time, unwilling to be in at seven o’clock or did not have a good phone manner. It was those kinds of attributes. We got a lot of criticism about common sense: not learning, perhaps, about Health and Safety basics at school. It was things like that, which do have a huge impact when you looking to fill an apprenticeship, and it could explain why some of the older apprentices are being taken on.

Q27 Paul Blomfield: Is there not a challenge for us there in making sure there is proper pre-apprentice training, which a lot of employers are very successful at?

Chair: Perhaps I may make the general point that, given the uncertainties of political life and the proposed reduction in parliamentary boundaries, politicians are probably the last people to complain about apprenticeships for older people.

Mr Binley: Absolutely right.

Paul Blomfield: Taking that to heart, on a different point, Mr Hoyle, you have mentioned this morning, and in your written submission to us, schools and young people. What do you think the role of NAS should be in schools?

Graham Hoyle: I think there is a better role for them to ensure that young people are fully aware of the apprenticeship route, however defined, and the increasing benefits that can accrue right the way through to higher education for a small proportion. We are getting that progression route absolutely in place with higher apprenticeships and so on. In some respects that makes it even more important to ensure that young people in school and their parents understand that the work-based learning route-the apprenticeship route-can offer progression to any level if the ability is there. It ought not to be necessary to do that because, surely, that should be being done through some form of career service or school input.

I have a daughter who is a schoolteacher. Colleagues of mine have heard this story too many times. Quite recently, when sitting round our dinner table she told us that she had just taken a whole year cohort of, I think, 11 to 16-year-olds as their tutor-because of my age and generation, I have not got the years right yet-and she took it very seriously. She took 30odd youngsters through it, and some stayed on. I guess I was rabbiting on about apprenticeships, and she looked at me and said, "Dad, I’ve done a really good job; I know them all by name and have tried really hard. I don’t know what you’re talking about. I went to school, got my O-levels and went to university. I have not input this route into my tutorship support for my charges, for the reason that I’m not the careers teacher." This ought to be known by all teachers. Schools cannot deliver it; they do not have the knowledge to do so.

Q28 Paul Blomfield: Should NAS be the agency that does it?

Graham Hoyle: I am saying it is a job they could do. I am not saying it has to be NAS, but that it would be a really good use of their time as they are promoting apprenticeships to promote them to individuals as well as employers.

Q29 Ann McKechin: The main source of Government funding is between BIS and the Department for Education. Do you think NAS has been successful in bridging the gap between these two funding Departments? I would be interested in your experiences.

Alex Jackman: They have helped. To give you an example, we sit on an advisory board for the employer-led SME inquiry into apprenticeships that is currently going on. That is the one to which Jason Holt has just been appointed. There is another group within DfE that is discussing very similar issues. There is a NAS and Civil Service presence in both groups, but I do not think there is one individual who sits on both. Whether or not that would help I am not sure, but that is one element that shows you there are still steps that could be taken to improve it somewhat with joint thinking, but overall the apprenticeships unit has done an awful lot to bring that policy together.

Q30 Ann McKechin: Following on from that, do you think that support for apprenticeships should come from just one Department rather than two, and which Department should that be?

Alex Jackman: No, I do not. I think funding should come from both Departments, as it does, but perhaps there is an element of improving the policy formation across both Departments.

Q31 Ann McKechin: Do Mr Hird and Mr Hoyle concur? Is your conclusion the same, or do you have anything to add?

Graham Hoyle: I am not sure it is NAS that brings the two funding streams together; it is really the Skills Funding Agency that does it. The way different Departments are delineated does tend to change from time to time. To say that it should be all one or the other is an interesting political debate that is probably not for me. Simplicity says that it is one, but there are massive issues. If there has to be more than one, we can accept it. As long as the funding comes together, and it does through the Skills Funding Agency, I believe we would cope and make the best of it. I think that is where we are.

Denis Hird: NAS has helped in that direction, but I can go back to the DTI and DFES; they were the same issues. As a simple starting point, at least the Departments ought to be singing off the same hymn sheet. I think it would help to simplify and operate with clarity if the funding did come through one, provided both Departments had good communications.

Alex Jackman: I think DfE have a role in the employability skills of pupils at schools, and the best way to get buy-in from DfE is to have some money attached to it.

Q32 Ann McKechin: To turn to NAS directly providing support to employers, I think I am right in saying that both Mr Hoyle and Mr Hird were critical of it in terms of established sectors of skill training. To what extent have you had any practical experience of the vacancy matching service offered by NAS? Have good or bad experiences been reported by your members, or are you just not really using it?

Denis Hird: We have totally rejected it; it is not necessary. We have our own system, which has worked well for 20 years and operates within a minute, not a month. I am not saying it might not be useful for some other areas, but we have our own arrangements.

Q33 Ann McKechin: Mr Jackman, you mentioned that it may be useful to your membership. Has your membership any practical experience of it?

Alex Jackman: We did not get much coming in in terms of case studies. Just under half tend to go down the NAS route, but the nature of our members-we are talking about those with nine or fewer employees-is such that taking on an apprentice is a huge thing. It is not just about ensuring that a candidate has the relevant skills to do the apprenticeship, but that they are also a good cultural fit and they are willing to take on more than perhaps the core focus of the apprenticeship and take part in different elements of the company. If you have somebody on sick leave, you could well have the apprentice coming across and covering a bit of that. Our view is that NAS provides a good basic level of support, but there is a whole range of other routes out there you could go down.

Q34 Ann McKechin: Do your members give any reason for not using NAS as opposed to other potential routes?

Alex Jackman: I go back to the previous point about taking on an apprentice being such an important decision. That is one reason for trying to keep it in-house. You could have existing relationships. I know that Leicester College, for instance, has a particular relationship with a care home in the area. It has a rolling programme of apprentices for that care home.

Q35 Ann McKechin: Do you think that provides more flexibility than this particular Government central service?

Alex Jackman: I do not think I would be in a position to say whether or not it offers more flexibility. Because our members cross all different sectors, we tend to try to look at the overarching issues of apprenticeships rather than necessarily drilling down into specific sectors, unless those issues are brought to our attention by members.

Q36 Rebecca Harris: I would like to go back to the question of how we judge quality, although I am a little nervous because Mr Hoyle said it was a dodgy word. I will instead use "standards". Recently, the Government announced a range of measures aimed at improving the standards of apprenticeships. Where does quality assurance of apprenticeships need improving in your opinion?

Denis Hird: If you are delivering apprenticeships in the current regulatory framework, it is driven by quality. I think we have agreed that employed status is the best route for apprenticeships. Within SASE frameworks, which are statutory frameworks under the Sector Skills Councils, are qualifications, to which Graham alluded earlier, that require awarding organisation regulation. You have Ofsted inspection; SFA contract reviews; financial reviews; financial audits; measurement both by overall success rates and timely success rates; and we are measured on programme payments. Anybody can tap into our system 24 hours a day and look at where all 6,500 learners are at any one time. When they do the reviews electronically, they are docked at tea time, and the employer can see where the apprentice is at seven o’clock at night. I do not know what other measures we can put in place to improve that. We are always looking for technology to improve it, but we are driven by quality. We are focused on the learner and driven by quality and value for money. That is what it is all about.

Graham Hoyle: I will try not to repeat myself too much. "Quality" is a good word, but it means different things to different people. We come back to definitions. We have talked about the need for a definition of "apprenticeship". In a sense you need that first, and we will not go over that ground again. At the present time, the key quality definition is not about the internal processes, which are critically important, but about whether the framework, with all its different and complex elements, is fully achieved. It is very hard fully to achieve off-the-job training certificates signed off by awarding bodies; to have the competencies signed off by independent awarding bodies; to put together all the experience, blah, blah, blah.

At the moment-you will have the figures-76.4% of apprentices fully complete apprenticeships to an independently accredited standard, and it is against that that we measure it. I think it is staggering. When I came into this job nine years ago, the completion level was below 25%. It has gone from less than 25%, which is not acceptable, to 76.4%. I remember saying during that process that we would not get to 75%. I am delighted to have been proved wrong. You have some noncompletions for reasons that are outside certain training providers. Some young ladies become pregnant and do not complete. That is hardly a quality issue. People at that age still move away with their parents, and so on. As for others, employers say, "Hang on. You’ve got the technical certificate and the skill level I want, but you don’t have the basic skills stuff, which is a bit hard. I don’t need that anymore; I’ll put you on. Don’t bother to complete," and there is employer pressure. That is a great shame, but at the end of the day, the end product is reached.

With all those barriers, we still have 76.4%, and rising. I am very satisfied with that. They have completed all the requirements of the framework. That was why I said earlier that we seem to be talking under the heading of quality of time spent or served, and so on. They are legitimate issues, but I do not think they are quality issues. You set what the end product should be and the outcome everyone demands, and at the present time we are now starting to push 80% in quite tricky situations with an incredibly complex arrangement. The framework is far different from the qualification; it is a combination often of three or four qualifications, some off the job, some on the job and some in the classroom. It all sits together in a coherent way, and that is what an apprenticeship is.

At the moment, I am not complacent, but I think we have a very good quality standard, and it is still going up. We get there, as Denis said, because of the attention of the process quality that must be there, but we do not want to be distracted into the other issues we have discussed this morning about time serving. That is an issue, but I do not think it is a critical quality issue.

Q37 Mr Ward: The labour market is different from a year ago. Is it possible-I am not saying it is-that people who started apprenticeships basically got a better job and moved on and did not complete, whereas now if you get an apprenticeship and are doing a job, you want to stay there?

Graham Hoyle: Absolutely. There has always been a level of turnover within apprenticeships, because they are jobs. What do people in jobs often do? They go and get a better one. There has always been that element. It is incredible that we have squeezed a lot of that out. The vast majority of apprentices do not give in to temptations that are there. At the moment, you are absolutely right that, with the economy as it is, those temptations are a little more difficult to find; jobs are hard to find. One would reasonably expect people, having got their job, to stick with it anyway, because the external temptations of a better job are not there. We may see that move slightly, if and when the economy picks up, but I am not particularly pessimistic. I think the high level of completion will be retained, but I accept your point that at the moment premature withdrawal from apprenticeships is not as high because there are few jobs to go to outside. It is a factor, but I suspect not a big one.

Alex Jackman: I agree with most of what has been said. One issue I would throw in is the level of adaptability of courses. We have heard of examples-for instance, within construction-where an apprentice will complete and get a qualification but that qualification is no longer recognised across the board. So it is a matter of making sure that, even within an apprenticeship, the qualifications keep up to date with what is happening. I guess that the rate at which the IT sector has expanded would be a perfect example.

Q38 Margot James: We have heard about the completion of frameworks. Could you quickly summarise what you think the Government should be using to measure the quality and standards of these? What are the key components? Do you think that the measures the Government have brought in recently have got it right? This is a big flagship scheme and we need to keep up the quality, not just for UK plc but to ensure that the brand is protected and not undermined by nasty stories we occasionally hear about short courses and abuses. Can you summarise how you think that we, as politicians and the Government, need to measure these standards?

Graham Hoyle: I think it is completion of the framework. Therefore, the critical issue is who devises it. Currently, they are devised by SSCs, which are the proxy for employers. You can always argue about that, but basically the employer bodies at the time have to design an apprenticeship framework that is fit for purpose in their sector, with all the elements. That is what we have. They can always be changed, and we expect the SSCs constantly to review and modify them, but, having got the employers to tell everybody what they need then, surely, the quality standard is that and you measure the extent to which it is reached, and currently it is 76.4%.

Denis Hird: I would concur. Our measure is satisfaction by employers. We have to provide a fully skilled competent person. If we do not, they will tell us and will not reengage, so that focuses our mind clearly. I think that the current measures of the Government are good, and they should use them to drive out poor providers.

Chair: Brian Binley is jumping up and down.

Q39 Mr Binley: I am delighted by what I am hearing. I shall say nothing about apprenticeships. Of course, Mr Jackman would not dream of going there. May I raise a point about involving business in setting the parameters of the apprenticeship NVQ or, indeed, degree? There is a whole range of possibilities here, and it is the flexibility within that range about which Mr Jackman has talked. Can I ask you whether the practical elements are incapable of being properly carried out now by our FE colleges and universities, simply because in many cases the equipment needed is beyond their capability to purchase and set up and is too diverse for them to do so? Are we talking about employers not only helping to set the course but also helping with the training in the workplace during the day or in the evenings?

Graham Hoyle: Absolutely. You also point to a difficult area of tension on the cost of up-to-date equipment. It has always been an issue in the college, which is mainly the off-the-job element, but in some respects your question goes to the heart of work-based learning and apprenticeships. My chairman prefers the title "work-located training". I think that is a rather nice and possibly even clearer expression of what is going on here. What it actually says is that, at the end of the day, it is the vast majority of the learning-I will use that word, which incorporates training and assessment-that counts. How much did I learn from this? That is a product of training, assessment and so on. But the vast majority of learning in an apprenticeship is done at work on the up-to-date equipment that my company is using. So, in some respects, your question does not worry me too much, because it is done on the employer’s premises under the supervision of skilled people. That is what an apprenticeship is, and it always used to be that.

However, as I mentioned earlier, there has always been day release, as we used to call it. I do not know why we do not call it that anymore. It became "block release" and was confusing. We now call it "off-the-job training", which does not have quite the same ring to it. That is supplemented by the theoretical knowledge that underpins the practical element. An apprenticeship is the combination and mixing of those two in the right proportions. In that situation, it is important that whoever does the off-the-job theoretical training-colleges or independent providers is not the issue-has the right kind of equipment, or whatever. That can be difficult in a fast-moving technological economy. It is quite interesting that the pressure, therefore, is to do more and more of the job, including the theory, in the employer’s establishment where the equipment is. I think that is an ongoing tension within the further education system.

Denis Hird: That is not really a big issue. What happens in reality is that off the job, day release or block training-we do both-is knowledge based. There is wide agreement. It has to be up to the standards laid out in the framework, but 80% of the time they are on the job. Openly, we move around 3,000 apprentices a year into other employers to give young people a breadth and depth of exposure to different types of processes and machinery. They are then assessed on the competency element of the NVQ. At the end of the apprenticeship, we have a two-day assessment off the job on up-to-date equipment. They are given a time, a task and fault-finding to do, and that closes off everything.

Q40 Mr Ward: What you are describing is a really good state of affairs. You mentioned the figure of 3,000. If it were Germany, how big would the figure be?

Denis Hird: Germany is an apprenticeship economy. I was over there in the 1970s, as part of my training and development. It would be huge in Germany because it is driven by apprenticeships; it is integral to the German system. In Germany, you would be talking of tens if not hundreds of thousands of apprentices.

Q41 Mr Ward: Inevitably, by this stage we have covered some of these areas. Just to affirm some of them, in your submission, Alex, you talk about the need for more flexibility tailored to an individual firm’s needs. On the issue of quality, is there a conflict between freedoms and flexibilities in locally based employer schemes and trying to get national consistency in these things?

Alex Jackman: It is hard, because a business cannot have access to every type of apprenticeship in every locality. Where that happens, it is a question of the route down which the business chooses to go to employ someone, because obviously there is a shortage. I am trying to think of an example. We had a fire alarm business based in Staffordshire that was looking to recruit someone. They could not find an apprenticeship course that was particularly local to them, so they went to a college in Coventry. That led to the problem that the apprentice had to spend blocks of time with the business, rather than having the kind of flexibility that could be enjoyed had the provision been a little more local. You can find one-off case studies, which are probably replicated quite frequently throughout the country, where, because of a lack of local provision, you lose the flexibility that a business might want.

Q42 Mr Ward: Denis, you have made comments on the need for higher level apprenticeships. Can you give us some of your thoughts on the need for more higher level apprenticeships?

Denis Hird: It is well known in the engineering and building services sector that for many years it had the status of technician. In terms of electrical work, it might well mean that when you go beyond 3.3 kV or 11 kV you need a technician-type level with a wider technical knowledge base on electrical theory, and also supervisory experience in terms of a permit to work, safety and protecting the consumer. It is well known in our sector that that is done with an approved electrician in that trade, but it has never been formalised. There is a great need to bring back what we had, because employers value that and recognise that technician. I think that would be best served by a higher apprenticeship. At the moment, it is done ad hoc. They do additional technical training, generally in the form of an HNC or a degree, and then there is informal training within the company, but there is no structure. The industry, particularly the unions and employers, want to agree an industrial relations framework and recognise that as part of the framework. We are interested because it provides structured career opportunities to young people on progression. We are quite happy to put some of our resources into that to develop that with the industry.

Graham Hoyle: It has to be the right way to go. We know that in our economy we are quite good at the university end; we are weakest, and need to do more, at Levels 3 and 4, and apprenticeships have to be, and are being, expanded into that. That follows the needs of the economy. At the end of the day, we have said that apprenticeships are training programmes for employers to make them fit for use. That has to be right. I believe that higher apprenticeships should incorporate foundation degrees, which some years ago were thought to be this theoretically, but they never got close enough to the workplace. I think there is a tremendous opportunity to link Levels 2 and 3 apprenticeships through to Levels 4 and 5.

To talk about branding-speaking off the wall for a minute-if you want to sort that out for apprenticeships and make sure people really understand the breadth of them, the kind of courses I would love to see called apprenticeships are those that we offer for accountants, doctors, teachers and lawyers. Of course, we call them university higher education qualifications, which they are, but they are work-based learning for the most part; it is work practice supported by off-the-job theoretical training. I think you will find that in my definition. Call them apprenticeships and suddenly we are really starting to move.

Mr Binley: That is an exercise in elitism, is it?

Chair: It certainly affects the branding.

Q43 Mr Ward: As an accountant, I did day release and, obviously, work-based learning and also, for part of it, distance learning through a correspondence course. It all added up to the final qualification. There was also a very detailed CPD scheme for me once I had reached that point. I am a little worried that some of the criticism of the older apprentices is simply about ongoing professional development, or, if not, personal development. It should just be happening anyway, and why badge that with this apprenticeship title? That is the thing about which I am not quite sure.

Graham Hoyle: We keep coming back to definition, don’t we? That is why I think these debates need a definition. Even though some of us will not like it, we have a base point on which we can discuss, and I think that is missing at the moment.

Q44 Mr Ward: Something else that is niggling at me is the accusation that this great success story and huge expansion is just Train to Gain by another name. Are there any comments on that?

Denis Hird: It is unfortunate that there have been large volumes in a supermarket chain. They have badged up some of their induction programmes as apprenticeships to rack up the statistics. I think that has damaged the brand. While I think that is good, the chap from Asda, who is a former work colleague of mine, said that, although they had put 25,000 through, they had not created one extra job. That is very sad, isn’t it? They would normally have provided that as a major employer anyhow, but people are looking for numbers. I think we got caught out by that a bit, and it has damaged the brand.

Do not get me wrong; we can recover from all of that. There is nothing wrong with it; it is just that we need to understand what apprenticeships, in-company training, in-company induction and training programmes are; what should and should not be funded; and what employers contribute to. There is nothing wrong with it; we just need to be careful.

Q45 Chair: You have partly anticipated a number of further questions.

Graham Hoyle: Train to Gain, despite much that was written about it, was a very successful scheme in up-skilling the adult work force. I think that in many places it was rubbished too easily and superficially. That is my view, and the view of my members and the employers who worked with it.

I am quite prepared to say that we have moved it forward. Train to Gain was changed. I put a quote in our submission from a Conservative paper in 2009 to the effect that they would take the money out and turn it into all-age apprenticeships. What my members have had to do is convert the work they were doing with employers on Train to Gain and do very similar bits of bite-size training, but the focus was the apprenticeship framework completion. Whereas you had lots of bits and pieces all over the place of real value, basically we converted all of those and did them within the discipline of employer-designed frameworks. It seems to me that is the development of something that was pretty good, and arguably is better now. I am sorry but we come back again to branding and definitions. If we can get that right, many of these things can be very easily accommodated.

Q46 Margot James: Where do you think the returns on investment in apprenticeships are greatest? The Government obviously want to prioritise investment where the returns and impact are greatest. In your view, where would that be? I am aware that there will not be one answer to that.

Graham Hoyle: I mentioned earlier the return on investment. I do believe that, however we badge them and describe them, apprenticeships have always been employer-owned, driven and designed, and where they are successful it is because they have been investment and returns have come back to the employer. There is a massive return to the employer community. At the same time, the breadth with which it was introduced by Government intervention in 1994-it was not there before-brought in at least basic skills and transferability, and recognised that there was also a return to the individuals in making them more marketable, to put it crudely, and more fit for use in the world of work. The combination of those two things-developing the individual, from which they get benefit, and the effectiveness and, hopefully, the profitability of the company-means that the economy is well served. There are returns in three major boxes here, and that describes how the frameworks have been developed over the last 15 years. They develop the individual beyond perhaps what the employer would do themselves; they give the employer the skills they need to run a profitable business; and the combination of that lot is a massive input into the economic welfare of the country. Those are three big boxes with three big ticks.

Alex Jackman: I think the Government have to be honest about where they are directing some of the money and who it is aimed at. If you look at the announcement by the Deputy Prime Minister during apprenticeships week, which was funding up to £2,200 for certain apprentices, nothing in the PR that accompanied that scheme said it was directed at large businesses; it was there for the business community as a whole, but, if you drill down into it a little, you are looking at individuals who have no GCSEs and have been out of employment for X number of weeks. It is a laudable aim, and for a small business-we spoke to a number ahead of this inquiry-it is a lot of money and a big incentive, but not enough for them to take on one employee and risk some data entry going wrong. I do not think that it is necessarily a scheme that small businesses should be taking part in.

One of the positive things that came out of it, however, is that Barclays in particular are taking on 1,000 apprentices who are all NEETs; they are training them up and putting them in branches and call centres. What they are looking at in phase two of that scheme is how some of those apprentices could benefit their small business customers. Currently, they are developing ideas about how they can bring in those small businesses that might have a need for an apprenticeship, and then you have these individuals who are already conditioned and ready to go out into the marketplace. There are benefits, but you have to be a little more honest about the individuals at whom those schemes are targeted in the first place.

Denis Hird: In terms of value, bearing in mind we pay industry union-agreed rates, our model is that, two years after the apprenticeship, it has paid for itself in taxes. Throughout the duration of the apprenticeships, some of our third and fourth year apprentices earn in excess of £500 a week. Because over eight out of 10 complete, ours is self-financing. It is just like a loan upfront, and we are paying back the Government. It is an easy sell for us, and I would like to think that protects what we want to do.

In terms of incentives, we are constantly scanning with our radar small employers, many of whom operate their business from a kitchen table. I have been out to see them. What they particularly like, which was an idea we put through the LSC, is the employer expansion project. That was £30 a week for a year, paid three months in arrears, which tied the youngster in. They thought that was really good, so much so that we supported another 1,000 places out of the charity the following year to get another 1,000 or 1,200 starts. That works well. It does not sound a lot, but a sole trader who is prepared to take the risk has an order book that is generally no more than two or three weeks in front. They make a four-year commitment to a young person. They never know from day to day; they have orders two weeks in front and operate from the kitchen table, but, to get that cheque after three months, switches them on and engages them.

Q47 Margot James: That is very good. Mr Hird, did you refer to Asda?

Denis Hird: Asda was one. I am only repeating what I saw on TV.

Q48 Margot James: We also heard last week about Morrisons. To what extent do you feel that investment in apprenticeships is supporting large companies’ training budgets?

Denis Hird: It is not for me to have a judgment. Having spent the first 24 years of my life in one of the biggest organisations in the country, we never took anything from the Crown because we had our own schemes and were driven by statute. Therefore, we could afford it. That allowed us to have our own schemes; we were not covered in bureaucracy. Why take the Crown’s pound when you know as a business you can afford it?

Q49 Margot James: What do the other witnesses think? When times are tough, it is quite attractive when you want to keep your training going. You did say earlier, Mr Hoyle, that this was one of the first recessions where companies have not rushed to cut the training budget. Could this be the reason why?

Graham Hoyle: Just now I alluded to the fact-the Chairman said we would come back to it-that not only do we need a definition of apprenticeships but far more clarity about the beneficiaries. I have given three beneficiaries. If they are indeed beneficiaries, presumably each should be contributing in some way to the investment being made. It is a really tricky one, and I understand why it is a nettle yet to be fully grasped, but, if I am correct and businesses really are understanding the return on investment to much higher levels than I have experienced before, we need to revisit who is paying for what within an apprenticeship. The prime contributors and payers at the present are employers-we do not put it in that way-with a contribution from the Government. The Government are not the main contributors to apprenticeships, and there is a lot of hard data over many years, especially from the traditional sectors, where the costs are very high indeed. We need to come clean on this to deal with the potential issue raised in your question, whether it is retail or anything else. I do not think it is necessarily a retail issue.

Who are the beneficiaries? Who should get what? I believe-this is my own view-that the Government should be making sure that individuals continue to be funded to get them up to a basic level of English, maths, literacy, numeracy and functional skills so they can play a full part in the labour market and have the transferable skills they need to move to the next employer. I believe the state has a reasonable responsibility to complete the education of those people, many of whom do not get there at the age of 16 or 18, even at 21, I hear. I think we need to be quite clear that the Government will pay for that, irrespective of age. The Government stopped paying their full sponsorship at 19; they cut it in half. Hang on. Some people at 19 have the same problems and need for remedial or extra work as an 18-year-old. That seems to be wrong.

For individuals, we are starting to move into potential loans at the higher levels. That is yet to be put in. That is well worth checking through. I was talking to the Minister last night. We do not have the details right, which is important, but the concept is to start to get individuals to contribute at the higher levels. We have always had that with sandwich courses and day release, which people have paid for themselves. It is not new. But the one we have not yet tackled is: what are the employers paying if they are getting a return? My view is that they should be paying for the basic skill competencies. That is a very crude division and it would be very hard to do, but, if you had something split that way, in some respects the formulation of your question, which I have not quite answered, might be slightly different. If we really knew that the Government paid for that, employers paid for that and in some cases individuals paid for that, life goes on; we know exactly where we are.

Q50 Margot James: Last week, we heard from Nick Linford about a company called Elmfield, which provides training and has been in the press, making extortionate profits out of participating in all this Government-funded work. I am very concerned about that. There is huge scope for profiteering across government, whichever party is in power, from wellmeaning schemes. Where do you think the red flag should be flying? What would you advise us to look out for?

Chair: I never thought I would hear Margot advocating the flying of the red flag.

Mr Binley: May I suggest that we sing the anthem to close the meeting?

Nadhim Zahawi: Margot meant the red light.

Graham Hoyle: If I may be as light-hearted in attacking private enterprise, how mischievous can I be? Perhaps I may move away from the specifics because I do not have the data, so that is dangerous, but I am aware of some of these things. You say there is huge potential for abuse. I would question that. There is undoubtedly potential for it.

Q51 Margot James: I do not mean just here but across Government.

Graham Hoyle: Of course there is potential for abuse. There is a difficult balance here. If I may say so, the traditional view about the protection of Government money, which is absolutely right and proper, is to have an auditing bureaucratic machine that is so allencompassing that it certainly knocks out innovation. You can forget that. You have a rulebook as thick as whatever, and a team of auditors that costs a fortune. That is also not what we want. It is the balance between risk and freedom to be cost-effective, and that pendulum continues to swing. I would work with quality-assured preferred suppliers with a track record and a reasonably trusting relationship, but with the capacity not only for self-assessment and self-regulation but also for external checks. You hit the people who have abused the system very hard with a rifle shot, not a blunderbuss, please.

As to my 600 members, there are a few issues. You had an example; maybe there are others. We do not suggest there is no abuse round the edges-we suspect and believe there will be, and, for goodness’ sake, sort them out-but we are really worried that the mass of innovation, development and quality across the sector is held back and played down by an overreaction of detailed micro-management and auditing. That would be the wrong approach. Sort out the problems.

Q52 Chair: Perhaps I may say at this point that we are getting Morrisons in; we are also trying to get Elmfield in as well, so they will have an opportunity to respond to some of the points that have been made. Alex, do you wish to come in?

Alex Jackman: If I may make a couple of brief comments on the last point and the previous one, you can argue that we have spent years, maybe decades, devaluing GCSEs and A-levels. We cannot do the same thing with apprenticeships; they are vital for rebalancing the economy, and they are strategically important in terms of our international standing. We have to keep the reputation high. If there is a view that shorter term apprenticeships, like the ones that might be rebadged on-the-job training, are devaluing the brand, that is an issue. Equally, if we feel that those types of apprenticeships are sucking money away from SMEs, that is also an issue. Although apprenticeships are in danger of becoming a catch-all brand, that is not to say the term should not evolve. Could we not look at those kinds of jobs just being rebranded perhaps as entry level, or basic level apprenticeships? We have to recognise that businesses require all types of skills, and the types of skills learnt on some of the shorter courses out there are perfectly transferable and useful to some more niche businesses, and an apprenticeship might be able to continue from that point.

Q53 Mr Binley: I want to probe the point about Government funding. I welcomed Mr Hoyle’s remark that the Government are not the major contributor to training in this country, and never have been. Consistently, Government think they are the only people who train and that companies do not train at all. The very obverse is true, and we need to get that on record. You have already made the point about apprentices aged 16 to 18 getting 100% funding, while apprentices aged 19 to 24 get only 50%. That seems incredibly illogical to me, too. In terms of where the focus of the money is, how do you think the Government should act to change that rather foolish situation in a more practical way?

Graham Hoyle: You referred to our paper. I do not have the detailed answer yet. I believe there ought to be a debate to come up with a sensible set of proposals. We have some outline thoughts, and I referred to some of them. I think the 50% 19 cut-off was arbitrary. By pure chance, I was in the room when a group of civil servants made that decision.

Q54 Mr Binley: It is the bureaucrats again.

Graham Hoyle: I am afraid it was. I was only an observer at the time, not one of them, but recall the very short non-evidence-supported decision that cut it at 50%, mainly because it was budget-related, which is perfectly legitimate. Interestingly, it was done on the basis that a lot more 19-plus bring more to the party than 16-year-olds. Therefore, there is less to do. That is probably correct, but it is not true in every case. If we can get a rough division, as I suggested just now, as to who pays for what and let that apply, age does not come into it. If you have people with basic skills who do not have their English and maths or their transferable skills at 19, or even 23, the Government might well say they will carry on funding the elements that do that. However, when you get to the stage where some of the fundamental skill competencies are there, which are what the company wants, then they take them over and you shift it. An arbitrary guillotine at 50% seems to be taking the average that I mentioned earlier and simplicity much too far. I think it comes back to the point I made just now about getting an answer as to who pays for what.

Q55 Mr Binley: Are you suggesting to me that the scheme was created in that way to fit the needs of the civil servant and not the needs of sectors of industry?

Graham Hoyle: I am prepared to go along with that. I was sitting in a room in a building not very far from here when the decision to cut apprenticeship training by 50% at 19 was made by a group of civil servants based on how they could apply the budget available at the time. I have a total understanding of that. That was the answer they came to. It was arbitrary, and they are rarely correct. It has not been reviewed, and now the myth that has arisen is that it was cut to 50% because employers should contribute the rest. That may be true-I do not think it is-but that was not the basis on which it was set up. It needs a proper investigation, and it may well be something you are looking at here.

Q56 Mr Binley: Does anybody else want to add to that? I am perfectly happy if you do not; it does not matter.

Denis Hird: For 19-plus, we make a contribution and take a risk. I can tell you now off the top of my head that our liability over the next four years is £6 million of our own money. If an employer comes to us and says, "I’m minded to take on six people but want three in the guaranteed group and three in the 19-plus," I am unlikely to want to turn them away, but I have to take the risk. They might make a contribution but to us. Are you with me? We have some investments, but who knows where they are going? I have committed, because I live, breath and eat what I do, to taking a £6 million hit over the next four years of our own money.

Q57 Mr Binley: I understand that, and that is repeated in other companies in different ways.

Denis Hird: But it is for a good cause.

Q58 Mr Binley: Do companies have a preference in terms of the age of the apprentices that they recruit, or does it depend upon sector?

Denis Hird: There is a variant, but it depends on who comes forward. If you are an employer and, like us, you get 25,000 applications, you do not discriminate on the basis of age. We put them through an initial assessment. If they pass, they go on to an approved list, and if an employer wants to see some youngsters in that postcode area, we present them. At my age, I do not know whether people are 18 or 22, but after the selection process you might pick the 22-year-old because you think that is the right decision. You get back in touch with us and say, "We want to start that youngster tomorrow," and you do, but we then have to discuss how we are going to work it out and who is going to fund it. In terms of employers, they are looking at the best young person irrespective of age.

Q59 Mr Binley: So the preference is not based necessarily on affordability but success.

Denis Hird: A business is looking to succeed in life and growth through a skill base, and therefore it wants the very best people. If it can, it wants to attract some financial assistance from the Government. In our case, that is paid back over a period of time. It works pretty well, but from an employer’s point of view he wants a range of opportunities to bring in different people at different ages.

Q60 Mr Binley: What I am trying to get at is whether that preference has an impact upon the gap between the recruiting preference of employers and the supply of potential apprentices. You say that you are all in the market for the very best, when the nation’s need is to ensure that the great majority are usable over a 40-year period.

Denis Hird: Absolutely.

Q61 Mr Binley: How do we bridge that gap?

Denis Hird: As a nation, we have a huge problem with a million young people looking for a job. The way to address that is to encourage and engage employers, and we have to find meaningful ways to do that. Some employers tell me, "Denis, if you gave me fully funded apprentices whose wages were paid for, I would have no work for them." This is of no use to anybody.

Q62 Mr Binley: So we need growth, do we?

Denis Hird: Yes. We have all sorts of problems. A lot of them are saying, "If the bank would let me have £20,000, I could take on two apprentices because I have a bigger contract." I cannot do anything about that. Mr Cable can help me; he is being very good in doing that.

Q63 Mr Binley: I have been slightly flippant in saying, "So, we need growth, do we?" but it is absolutely essential to ensure that our young people-all of our people-perform successfully in their lives, and this is a vital part of that process, isn’t it?

Denis Hird: Yes.

Q64 Mr Binley: We need to be making that point again, particularly at this time just before the Budget, don’t we?

Denis Hird: Yes. If I may quickly explain something else that is really hitting us, now people do not have to retire at 65 and are staying on. Because of that there is no natural progression in terms of demographics. Therefore, people are working beyond 65, but that is at the sacrifice of young people coming in five decades down the line. That is starting to have an impact. People cannot afford to retire because their industrial pensions are not sufficient to sustain a reasonable income, so they stay on at work. People are not retiring, and that is not helping us to bring in young people.

Q65 Chair: I want to pick up a point Brian made earlier about growth, because it is a problem. Unless you have a growing economy, there may not be the capacity for apprenticeship. On the other hand, when an economy is not growing but will grow in future, that growth could be constrained unless you train sufficient people during the low period of growth to meet the demand when it occurs. How do you think that can be coped with?

Denis Hird: I have a plan, which I will share with you, on which I am in discussion with the funding bodies. We have run it before. What we can do is look at the guaranteed group, the young people, and we can have a scheme that is more affordable. So we can bring in more people and work with employers to offer paid work experience at a lower rate than industry agreed rates, and we can take funding, which is not as much as full apprenticeships, to get in higher volumes of which the majority will flow in at a later stage to advanced apprenticeships and full employment, like deferred apprenticeships. That does two things. First, it enthuses young people and stops them getting involved in things and wasting time, and it gives them a meaningful purpose and lifts their morale. Secondly, it also helps employers to take a longer look at good people. Whenever I have done it in the past, as I have in many sectors, generally when they like these young people and have seen and measured them over a period of time, with a longer assessment, they create jobs for them because they are so good.

Q66 Chair: How do you get over the problem of young people effectively being trained and then having no job at the end of it and thinking it is a waste of time?

Denis Hird: We have had 50,000 programme-led apprenticeships a year in the plumbing and electrical sector funded by the Government. What happens is that they do a programme that is badged up as apprenticeships. They have never seen employment or the work face; it is all simulated. It is a bit like training to be a nurse but only on a dummy, never a patient. Then they go out into the wide world believing they have these kills. They knock on employers’ doors and say, "I’ve done this course," and they are told there are no vacancies for labourers. They say, "I’m not a labourer; I’m an electrician." They are told they are not electricians. Then they get a van and start to practise on the cash market, which is very tax efficient, and take work away from bona fide employers who work on the kitchen table and who then cannot take on apprentices. They are pinching their business because they have no overheads. Mrs Wilkinson’s plug is a £40 cash job, rather than a £60 certified job. That is the reality, and we keep funding 50,000 of them every year. Tell me, is it a big sell to try to say to the funding bodies that they should put that in employed status apprenticeships? It is not a hard sell, is it?

Graham Hoyle: Growth is critical, and we all accept and know it. The fundamental of the whole thing is apprenticeships for jobs, so need to keep reminding ourselves of that. Therefore, for growth in the economy, it is important to grow jobs, so it has to be as important to grow apprenticeships.

To underpin your understanding of who would be taken on-young people, older people and so on-of which members may be aware, over many years the vast majority of apprentices do not start as apprentices on day one; they do not apply for an apprenticeship job at any age. The vast majority of apprentices are converted on to an apprenticeship programme having started work. There is nothing wrong with that. It becomes an up-skilling thing, and it is also one of the reasons you have the age stretch. I am not making a point about whether it is good or bad, or whether or not we agree with it; it is just an understanding that that is the reality of it. It comes back to the question of the matching system of NAS, which is bringing in people to start a job. It is at that end of the market. Most people, including young people, are employed, and a training provider, who has a good relationship with the employer, suddenly notices a new young person in the corner and does a bit of investigation work. He asks the employer, referring to Mary or John over there, whether he has considered taking them off what used to be called dead-end or low-skill jobs and into a full framework. You can understand that that is exactly the answer for older workers. It just needs to be understood that a lot of people think that apprenticeships are new jobs for which people apply and start as apprentices. When that happens it is fantastic, but it is only in a very small minority of cases.

Alex Jackman: One small thing you could do is introduce the £1,500 incentive to businesses to take on their first apprentice.

Chair: I am coming to that in a moment.

Alex Jackman: I will return to it later.

Q67 Mr Binley: You are talking about people who want to be in the world of work. One of the problems is that in relation to work experience, which is a forerunner in many cases of where you come in, particularly with regard to electricians, people are not able to claim for six months and have to be out of work for six months. Does that not also help those people are who are prone to thinking that a career can be made out of not working? Should we not be offering that and encouraging young people to take work experience almost from the beginning? This is a hot political potato at the moment, so I want you to answer it.

Chair: This is tangential to apprenticeships.

Mr Binley: It is supportive of them.

Alex Jackman: One thing you could do is reverse the current proposals to remove work experience for 14 to 16-year-olds, and get them into the world of work at an early stage.

Q68 Mr Binley: So do more with schools.

Alex Jackman: Yes.

Graham Hoyle: I was very interested in Denis’s reference to work experience, which fits in with my conversion reality and, as I understand it, maybe getting people in a preapprenticeship way to start at a lower level, say, at 4 and 2 level. Let’s start them off in a job that is not where they need to stay, but they get work experience. You can link it to the apprenticeship framework and start ticking off some of the elements. An employer may be prepared to take on a lower paid and lower skilled worker to start with, but as long as they are channelled and pointed towards apprenticeship frameworks and they start ticking off some of the elements and prove themselves to the employer, where will the employer look for his next apprentice? They are going to say that they have seen this young man or woman for six months, and they will promote that individual-it sounds funny, doesn’t it?-into an apprenticeship.

Denis Hird: We have run several projects, but we have one with Laisterdyke school in Bradford. We got money from the funding bodies and built a skill centre; we put in some of our own money. It cost a couple of million pounds. That centre, on the school curtilage, is for vocational training to give people a taste of building services. We got an awarding body to do the qualification. We got 28 schools interested in it. Rather than have similar arrangements, they come to ours. We have minibuses; we have the employers involved; and we have found our way round all the health and safety issues and other things people get frightened about. It works extremely well. They then flow into apprenticeships. Obviously, we are limited in what we can do with our resources. I would like to have at least one of those in every region of the country.

Q69 Mr Ward: There is also a construction centre at Carlton Bolling.

Denis Hird: That is absolutely right. I work closely with them.

Q70 Chair: We have had a long session, and I want to conclude with a couple of questions on the apprenticeship bonus and SMEs. We have recently had the announcement of the roll-out of £1,500 for up to 40,000 eligible SME employers. What are the barriers to SMEs taking on apprenticeships, and will this address it?

Alex Jackman: We touched on the announcement by the Deputy Prime Minister during apprenticeship week, which is slightly different. The £1,500 for 40,000 places is limited to those businesses that have not taken on an apprentice before. Our view is that, if you want to ensure that an apprenticeship leads to a job at the end of it, why not open that out to businesses that have previously run apprenticeship schemes and know what it is all about? They are more likely to take one on because they have a role at the end. I do not think that limiting it to businesses that have not been there before and have a lot of fears about the whole process is the right way to go, but we will see what take-up is like. If it is quite low, I would recommend expanding it.

Q71 Chair: How would you avoid in effect substitution-businesses taking the grant to take on apprentices who would have been taken on anyway?

Alex Jackman: It is a very difficult question. The same question could be asked of the short-term placements in somewhere like Morrisons. That training would have happened anyway; they have no need for qualifications.

Chair: We will be asking them.

Alex Jackman: I think you just have to work on the assumption that, over the next few years in taking on an apprentice, there is a huge hope on the part of all of us that the economy will begin to pick up and there will be growth, and that the additional skills the apprentice brings to an organisation will allow it to find new routes to expand if the growth is not there, or expand their existing work if the growth is there.

Q72 Chair: Mr Hoyle, I thought you indicated that you wanted to respond to this.

Graham Hoyle: No; I will pass on this one. Time is going on.

Q73 Chair: Mr Jackman, in your written submission, you say there should be alternative incentives for businesses that wish to provide their own apprenticeship schemes. What do you think the Government should do to those businesses that do not wish to go through the NAS?

Alex Jackman: This recommendation comes from a poll of our members and the feeling that some of the courses out there are not flexible enough to meet their needs. A whole range of suggestions were put to us. Interestingly, when we held a focus group with BIS and some of our members, there was no agreement on how the funding should be made; there was really no agreement on when the funding should come, and that was in a very employer-focused environment. There was a feeling that a sum in the region of £1,500 to £1,600 would be enough to incentivise a business to take one on. If we could look at value that could be applied in a way that best suited the business-it might be in the form of reduced national insurance contributions for a number of apprentices, which I know is an ongoing campaign for all job creation, or it could be in the form of vouchers, for instance-there is a case, which the BIS and employer-led SME group is looking at, for having flexible arrangements for funding, or additional incentives, for SMEs to take on apprentices.

Q74 Chair: How would you evaluate the success of this scheme? Obviously, it is too early at this point to do it. How do you think you would measure its success?

Alex Jackman: I would like to pass on that and say it is more a question for an awarding body to consider. I would like to say, if pushed, it comes down to outcomes-people having jobs at the end of it. We feel that an apprenticeship is taken on by a business partly because it offers additional skills and for other reasons. In part, it offers something that the business does not have necessarily at the moment and, as a result, might create more routes for growth.

Graham Hoyle: I will be brief. I think the current proposals to offer direct cash incentives to small employers have some merit, but the longer term approach should be an educational one to employers to persuade them of the returns to them of investing in training. We come back again to NAS. While Government may have a responsibility for putting over this message, I increasingly think it has to be pushed via the employer bodies and employers themselves. In some respects, I would much rather see us going in that direction than giving out very short-term bonuses.

Q75 Chair: What you have said is very valuable, but it does not address the question of how you measure the success or otherwise of this particular scheme.

Denis Hird: I can only go on the employer expansion project. We filled every place. We said we would fill 700, and we did so very quickly. They were all new people, but between 2004 and 2008 we had a fairly aggressive campaign to move into the SME market, and were putting some resource into it. In those four years, we grew the average earning of our employed status apprenticeships from 7,200 to 11,200. There were 1,000 additional apprenticeships year on year.

Q76 Chair: You are saying that, basically, it is an increase in numbers.

Denis Hird: Basically, you have to go out to employers. We engaged by telephone; there were 28,000 telephone calls. We went out to see employers. It is about convincing them of the merits of being engaged in apprenticeships, because major employers are no longer taking responsibility for training apprentices.

Q77 Chair: To take the 1,500 for this particular scheme, how do you measure it?

Denis Hird: We measure it on engagement.

Q78 Mr Binley: The number of one-man businesses in this country has grown by 13% over the past four years. That is a massive increase, except when you look at what is happening in Germany, where the figure is now 80%. There is a massive opportunity there if only we would recognise it, but I am not sure we are doing so to anything like the extent we should. The latent entrepreneurialism in the sort of area we are talking about is considerable. Is that a fair statement?

Denis Hird: Yes. Can I ask a question? How much more has Germany’s economy grown than ours?

Chair: It is unusual for the panel to be asking questions.

Denis Hird: I will give you a hint. That is why it is growing quicker.

Chair: As it is part of a dialogue, then I will agree.

Q79 Mr Binley: It is growing less than the British economy.

Denis Hird: Not in manufacturing, where apprenticeships are; that is a bit different.

Chair: Have we any further comments? Unless any member of the panel wishes to add anything, I want to draw this session to a close. What I say to you, as I do to other panels, is that in retrospect we may feel that we did not ask one or two questions we should have, and we might write to you for a response. Similarly, you may feel that you did not get the opportunity to give us an answer because we did not pose a question that perhaps we should have, so feel free off your own bat to write to us with any further points and it will then inform our deliberations. This has been a valuable and long session, and what came over loud and clear to all of us is your passion for an advance in training and apprenticeships, which obviously is very welcome and valued by the members. Thank you very much.

Prepared 6th March 2012