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Apprenticeships (EAC Report)

Volume 697: debated on Monday 7 January 2008

rose to move, That this House takes note of the report of the Economic Affairs Committee on Apprenticeship: A Key Route to Skill (Fifth Report, Session 2006-07, HL Paper 138).

The noble Lord said: My Lords, I am very pleased to introduce this debate. The report of the Economic Affairs Committee on apprenticeships was published last summer. However, the Government are now preparing their apprenticeship review for publication, I hope, within a few weeks and later in the year they plan to introduce a Bill reforming apprenticeship provision. On that basis, this debate is extremely timely. First, I should like to thank my colleagues on the Economic Affairs Committee for their painstaking work on our report. As usual, the report is evidence-based and entirely non-party-political, and has been agreed by all members of the committee. I also would like to thank our specialist adviser for this inquiry, Dr Hilary Steedman of the London School of Economics, as well as our clerk and his team.

Perhaps your Lordships will permit me to interject a personal note. This is the ninth report produced by the House of Lords Select Committee on Economic Affairs under my chairmanship. Along with our report on climate change some years ago, it is one of the most important. But more than that, if they are wise, all Select Committees produce unanimous reports. All of ours are unanimous, but some are more unanimous than others. I have chaired many committees and Select Committees in my time and I had absolutely no difficulty in getting members right across the committee to agree this report. We were all keen not to place the blame for the present situation, which is pretty serious, on the present Government. We recognise a point given to us in evidence: the problems we are dealing with go back over 100 years. So while those of us who have served in government and some distinguished advisers to governments in the past must accept some partial responsibility, it is to this Government whom we look for solutions to the problems of the present.

We thought that the Government response to our report was disheartening. It set out or reiterated many eminently worthy objectives, but what was sadly and blatantly missing was a coherent, credible action plan to achieve those objectives and thus address the skills crisis among Britain’s youth. Indeed, the Government even declined to acknowledge a number of the problems raised by the committee. However, I hope very much that the response does not represent the Government’s final word on the matters raised by the committee and I look forward to fresh thinking in the review and the Bill, of which I hope the Minister will be able to give us a foretaste today.

I shall briefly outline the committee’s findings. Britain’s record in vocational training is poor. This is a longstanding problem. Indeed, we found that it goes back for more than 100 years, and as a result, legions of young people—

My Lords, perhaps I may intervene briefly. First, I congratulate the committee on an excellent report. I think that the noble Lord will find that it is nearer 130 years, and on top of that some 20 committees of inquiry were involved. I suspect that the greatest mistake in education since the war was the abandonment of technical colleges.

My Lords, I am happy to give way to the noble Lord, who gave the committee very distinguished evidence. I suspect that he is absolutely right to say that the problem goes back 130 years, but I sought to make the task easier for the Minister by just saying “over 100 years”. As a result, legions of young people have been condemned to low-paid, low-skilled jobs; disaffection and a string of social problems have inevitably followed.

The failure in vocational training has not only wasted the potential of far too many young people, but has left employers having to look overseas to recruit the skills they need. So much so that in the construction sector, one newspaper cartoonist suggested that the slogan for the UK Olympic Games should be: “London 2012: Make Poland Proud!”. That quip illustrates the serious point that many Britons who could benefit from jobs created by the Olympic Games are unable to do so because of poor vocational training.

The committee argued that the solution is a radical overhaul of the system of apprenticeship provision to make it the centrepiece of vocational education in Britain today. The great strength of effective apprenticeship is that it gives young people the skills that employers actually need. This boosts their earnings and gives them firsthand experience of the workplace. However, under the present arrangements, countless young people who could and should benefit from apprenticeships are not doing so. This represents not only a heavy economic cost to the country, but an enormous personal loss to those individuals.

This is clearly a problem of numbers. Far too few apprenticeships are being provided. The Government have plans, or at least an idea, to almost double the number of apprenticeships, but as things are now, I am far from being alone in seeing this objective as pure fantasy. The Government have simply not begun to show how, in practical terms, they can achieve that objective. I hope that the Minister will be able to cast some further light on this, and I certainly hope for more specifics in the apprenticeship review when it appears. Alongside the problem with quantity is the equally serious problem with quality. At present, apprenticeships often do not meet basic minimum requirements. They may be too short to provide adequate training, and according to the latest figures from the Office for National Statistics and the Learning and Skills Council, completion rates are running at a disappointing 50 per cent, and even lower for advanced apprenticeships. Yet in response to our report, the Government have quoted completion rates of over 60 per cent. I shall be interested to learn how the Minister arrived at those figures, or whether he has now reviewed them. Further, there is not enough progression through the different levels of apprenticeship and on to higher education. Unless this is fixed, apprenticeships will continue to be perceived as a dead end.

Successive Governments, while full of good intentions, have failed to provide vocational education with the radical shake-up that is clearly needed. The lack of effective leadership, again from successive Governments, has been a big part of the problem. No single body is clearly responsible for apprenticeships, so we urge the Government to set up a powerful unit, directly answerable to a Cabinet Minister, to “own” apprenticeship. When the present Government were formed, we did finally get a radical shake-up, but it seems only to have made the situation worse, because we now have not one but two departments heavily involved. Indeed, the Government’s World Class Skills report on vocational training, published in July, was signed off not by one or two but by five Secretaries of State plus the Prime Minister for good measure. No doubt the intention was to show how seriously the Government take the skills crisis, but it revealed instead that the lessons of long-term failure in vocational training have still not been learnt. Too many cooks spoil the broth, and I fear that the new set-up looks like a recipe for more failure.

The committee urged the Government to put employers at the centre of apprenticeship provision. Under the current arrangements, employers too often become little more than passive partners and hence do not rush to provide apprenticeship places. Our recommendation was for all government funding for apprenticeships to go directly to employers within five years, in order to encourage them to provide more places. On this issue, the Government have apparently buried their head in the sand, making it clear that they will carry on as before. This is a particularly disappointing response as it is so crucial that more employers are brought on board to provide apprenticeships. It is one of the key points on which I hope the Minister will today be able to give some indication of new thinking within the Government.

Much more must also be done in schools. The appallingly high number of teenagers leaving school without the basic skills in reading, writing and arithmetic required to take up apprenticeships must be addressed much more urgently than it has been so far. But schools must also do more to inform teenagers about the opportunities available through apprenticeships. We were given a consistently gloomy picture of the inadequacies of the present arrangements to provide information and advice to school leavers. For instance, on a visit to a training centre in Aylesbury, we heard from apprentices who said that they had been told very little about apprenticeships during their school years. In their response, the Government concede that there is room for improvement, but they need to show more urgency in taking effective action. With that, students who are not suited to going on to university would learn much more about how they can benefit from apprenticeships.

It is also important that public policy should encourage a genuinely rigorous commissioning process. This should ensure selection from among the different types—private, voluntary and local authority—of providers of information, advice and guidance on apprenticeship, the very best services for young people.

It is not encouraging that over the past year a number of local authorities have decided to take these services in-house without tendering. In the past, when information and guidance on apprenticeship was commissioned by local authorities, it too much tended, I regret to say, to be a Cinderella service. A return to local authority control runs the risk of this area becoming a low priority for local authority funding, with the consequent threat to the quality of the services that has always been the bane of much of the entire apprenticeship system. So it is essential that the Government put in place adequate quality control processes. I hope the Minister will give the House some reassurance on this point.

However, I am glad to see that the Government are moving forward on another important point identified in our report and are preparing to start a clearing house for apprenticeships next year to match up young people with available places. If properly done, this should make it considerably easier for young people to find apprenticeship places.

I have already referred to the Government’s apprenticeship review. I hope that this will address many of the Committee’s continuing concerns. I trust that the Minister will be able to confirm today when the review will be published and perhaps he will also give us a taste of some of its conclusions. On the assumption that the review will address the key issues a good deal more effectively than the Government’s response to our report, I hope also that it quickly leads on to an apprenticeship Bill that tackles the long-standing problems that bedevil apprenticeships.

I want nothing more than for the fears that I have expressed today to be shown to be misplaced, but millions of young people have already missed out and the Government must move beyond good intentions. They must urgently and effectively act to see that today’s youngsters get the skills they need to compete in the modern world. I beg to move.

Moved, That this House takes note of the report of the Economic Affairs Committee on Apprenticeship: A Key Route to Skill (Fifth Report, Session 2006-07, HL Paper 138.—(Lord Wakeham.)

My Lords, it is very good that today we are once again discussing the issue of apprenticeships. It is always encouraging to have the presence of the Minister, the noble Lord, Lord Triesman, with his distinguished record in this House. Perhaps I may take the opportunity to congratulate him on his recent appointment as the FA chairman. It is very adept to be appointed once the new England manager has been put in place. It is also encouraging to have the Minister, the noble Lord, Lord Jones of Birmingham, in his position as he also has a great commitment to skills and apprenticeships. We are very hopeful that, as a result of the heavyweight people involved, we will see progress.

I congratulate the noble Lord, Lord Wakeham, and the committee on their excellent report and on the robust way in which the noble Lord put forward the committee’s views today. I am glad that there was a united view on the committee. I am very impressed as a new Member of this House to see such a high level of care given by the committee and others to the report on Apprenticeship: a key route to skill. The Economic Affairs Committee report has identified many issues which we hope the Minister will address.

The Government must take their commitment very seriously because we face a very complex situation in apprenticeships. We must publicise apprenticeships, encourage young people and the business community to engage and ensure that our education system prepares young people for the workplace. On the latter issue, time and again the concern is expressed that our children must have literacy skills. Indeed, in this connection I can call in support the evidence given by Sir Digby Jones, as he then was—now the Minister, Lord Jones of Birmingham—to the Economic Affairs Committee. Along with many others, he identified that as a key issue and pointed out that we achieve good literacy in this country at primary school level but lose momentum after that. At secondary school level there is not the needed continuity to carry forward literacy and to address the problems particularly of those who are not quite as literate as others. It is a grave concern. I am sure that the noble Lord, Lord Jones, now that he has his ministerial role, will still be making this crucial point. With his declared interest, I hope he will provide the necessary influence, input and enthusiasm to carry forward and deal with the many problems that there are.

We had a debate on the Leitch report last summer and I should like to repeat a couple of points that I and others made then, starting with the need for good careers advice. Careers staff do not always offer adequate or positive advice and guidance early enough to people for whom a vocational education and career might be more appropriate than academic or university education. In this connection, later this year it is proposed to introduce an education reform Bill. The Bill will emphasise duties and rights but I hope it will also be seen as appropriate to consider the need to encourage apprenticeships—for example, as I say, through the Careers Service. If they are not encouraged and not publicised, they will not happen.

Another point I would like to repeat from that debate is the need to raise the status of apprenticeships so that young people will see them not as a second best choice but as something interesting and with status, something for which to strive.

I turn now to the question of small and medium-sized businesses, a subject raised by a number of contributors in the evidence sessions of the Select Committee. While a number of submissions drew attention to the need to engage with small business, I wonder whether there could not have been a contribution, via written evidence or otherwise, from a small business organisation or association to ensure that its views were asked for and put specifically. I may have missed something in that respect but it could be quite useful as a general principle to ensure that small businesses, be it those with apprenticeships or business in general, have their voice heard in a specific way.

Some good points were put forward—for example, by Sir Roy Gardner and the Minister, the noble Lord, Lord Jones—and various suggestions were made, including providing financial inducements, which has been referred to, or help specifically for the smaller business community. The bureaucracy and paperwork needed can be a very big stumbling block for small firms. Larger companies are better equipped to deal with bureaucracy and red tape. It is often said that small and medium-sized enterprises are the backbone of this country. If we do not concentrate on ways and means of helping and encouraging SMEs, a whole tranche of opportunities for expanding apprenticeships will be lost.

The debate is welcome, as is the work that many are putting in to make vocational training and education operate and work. The matter is urgent. On the train here today I was speaking to someone who, as luck would have it, had experience in the engineering field. He told me of the grave concern that there is about the aid profile of those engaged in technical fields, particularly in engineering. He made some startling points. For example, each member of a significant group of six engineering experts will retire in the next five years but no young people are in a position to take their place. The question of urgency can be centred around the age profile, as he referred to other areas in which there is a similar situation. Young people have not been encouraged to come in and there is a grave risk of losing the knowledge and expertise that have been built up over many years.

I know that others have many points to make and we look forward very much to the maiden speech of my noble friend Lady Garden. I hope that as a result of the report, the fact that we have had a number of debates on apprenticeships in this House and the Bill that will come before us later this year, we can ensure that we are fit to meet the increasing competition from around the world.

My Lords, it is not often that a report from this House is followed within four months by the promise of a government Bill. As a member of the committee, it would be nice to think that this is a case of post hoc, propter hoc. Whether or not that is so, the prospect of a Bill is extremely welcome. I would like to say a few words about why a Bill is necessary and what it needs to contain.

The issue is nothing other than the future of half the population—the half that does not go to university. As has been said, we have always done well in higher education and very badly when it comes to those who do not go on to higher education. Our graduates get paid as well as any elsewhere in Europe, whereas our manual workers get paid something like two-thirds of the amount paid in a typical country north of the Alps. This reflects their low productivity and is a major cause of the low productivity—the aggregate average—of the British workforce.

This has been recognised as a national problem, therefore, but how do we deal with it? There is only one way, and it has been obvious for some time. We should reinstate the part-time route to a skill which has been so shockingly neglected for the past 30 or 40 years. We have to make apprenticeship work, and work on a much larger scale. Why the part-time route? Because employers like people who have been trained that way; they have been doing an apprenticeship at the same time and have acquired learning that is relevant to the job for which they will be employed. Young people like the system, partly because it is more interesting to learn something that is obviously relevant and partly because they get paid while they are doing it. This is the obvious solution to the problem, yet for decade after decade, we have been trying to deal with the below university-level skill problem by expanding full-time vocational education, GNVQ, and so on. This has never delivered the trained manual workforce that we want, because those who took such full-time courses were the kind of people who wanted to go on into full-time academic study and higher education. The others have been left in the soup, and it is quite extraordinary.

We have an almost unimaginable situation where 15 per cent of men between 16 and 25 are doing nothing. They are not in education, employment or training because we have not offered them anything which made any sense to them. For young ladies, the proportion is even higher.

The Government took a really important decision in 2007 that apprenticeship is the only way in which to deal with the huge problem of lack of skill and lack of engagement in the educational process. They took two really important steps last year. First, there was the decision to extend the education-leaving age—full-time or part-time—to 18 by 2015. That was a really historic decision. Secondly, access to an apprenticeship is guaranteed to everybody with minimum qualifications who emerges from the school system and would like to have one. The second step is the only way to achieve the first; unless you have something serious to offer people, there is no way that you can get them to participate in learning up to the age of 18 on the 100 per cent scale at which we are aiming.

The challenge facing the Government in delivering this is how to get enough apprenticeship places and how to make sure that the quality is simultaneously strengthened, as our chairman said earlier. That is why it is so valuable to have a Bill—it gives us purchase on guaranteeing the quality and setting out the structures within which we can deliver the quantity.

Let me mention four key features which would be necessary elements in the Bill. First, there must be a dedicated national apprenticeship service. Unless we establish that, there is no way we can possibly find the places or maintain the quality. There has to be a body which is almost missionary in character committed to finding opportunities for young people in the world of employment. Some people have suggested that this role could be tagged on to the role of the existing brokers who are doing the Train to Gain scheme for adult employees, but that would be the wrong route to take. Those people are trying to help existing employees, not encourage employers to take on new employees, which is a much more difficult task. There is almost a conflict of interest between those two objectives. We need a dedicated service; not only will it have to find places, it will have to support the employer in providing a quality on-the-job training environment, including having a mentor. It will have to sell the idea of an apprenticeship to young people from the age of 14 onwards and then operate the system that matches the young person to the opportunity for apprenticeship.

Some of us have spent some time thinking through the idea of an apprenticeship service since the Bill was mooted. It would naturally receive its funding directly from the department rather than indirectly through local authorities. That would give it the financial security needed to carry out its remit and deliver the guarantee. That gives rise to the obvious question of who has the statutory obligation to deliver the guarantee. What should be written into the Bill? If there is a commitment to adequate funding and the service is given the funding direct, it should be the obligation of the apprenticeship service to deliver the guarantee. The service might be part of the Learning and Skills Council but that obligation should be statutory.

What would the service do other than finding places? It would deal with issues of quality. It is really important that, if this is part of a serious educational effort, a guaranteed amount of time away from the employee’s workstation is dedicated to the off-the-job learning that leads to the technical certificate, which is part of the requirement for getting an apprenticeship certificate completed. There has to be a guarantee of something like 350 hours a year. For the on-the-job training there also has to be a mentor provided by the employer to supervise the young person and to provide that training. All of that—the mentor, the time off the job—will cost the employer money. It is being done partly for the benefit of society as a whole and the employer should be recompensed for the cost they incur. There is no chance of getting the number of places needed unless we recompense the employer for the costs they incur on behalf of society.

That means—and this is my third point—that there has to be an employer wage subsidy for apprentices under 18. If we think it is that important that they should be studying, we have to be willing to pay for it. That is not a recommendation that we made originally in the committee’s report, but over the past four months I have been convinced that there will have to be a well advertised wage subsidy for taking people on, by whatever route the funding goes. Some funding may go, as the committee recommended, in total to the employer, but some of it may still go through intermediaries. Either way, there must be a wage subsidy separately identified and paid separately to the employer.

That will make apprenticeship more expensive than sixth-form education—and it should be. It is important that we accept that. If you think, in terms of fairness, “What do these people get?”, most of them are likely to have no more than two years’ education beyond the age of 16. Is it not fair that they get more in any one year than people who will have five years of sixth-form and university education? Of course it is. It is economically sensible, too; we know from studies of social rates of return to apprenticeship that good social product comes from this system. We should bite the bullet and come up with the money.

We also have to come up with enough places. At present the proportion of 16 to 18 year-olds who are on apprenticeship is between 7 per cent and 8 per cent. That has to go up to at least 20 per cent if we are going to have anything like a serious apprenticeship guarantee. To go back to our chairman’s remarks, that is way beyond the figures that the Government have already committed themselves to. They have to show that they can both deliver what they have promised and adopt a further target if this is going to be a serious affair.

How do we make all this happen? In this field there are an almost uncountable number of fingers in the pie: the Learning and Skills Council; the local authorities, which have an important role to play; the Sector Skills Council; the Qualification and Curriculum Authority; and Ofsted. Given that situation, it is understandable that we have not been making the progress we needed to without someone knocking everyone’s heads together. There has to be a completely new approach to this issue. As the chairman said, the Government have to set up a powerful unit whose head must report directly to a Cabinet Minister. The head can be a public figure, well recognised in the way that, for example, Sir Michael Barber was a recognisable figure in the literacy campaign. Someone of that type and stature is required to make all this happen, otherwise we are talking pie in the sky. There has to be strong organisation and the clear message: “If you don’t want to get a degree, get an apprenticeship certificate”. That must be said over and over again by every MP and every Minister. Then the message will get through and we will deal with these hordes of unskilled, inactive young people. There is no other way to do it.

We have a huge opportunity here. Although the review is not finished, I hope we are going to hear what it will say.

My Lords, it is a great privilege and pleasure to join your Lordships’ House. The range of experience and the quality of debate are truly impressive, as instanced by this very debate. I join others in congratulating the noble Lord, Lord Wakeham, and his committee on an excellent and trenchant report. It is vital that we rekindle in this country the co-operation between education, industry and Government that underlies the concept of training through apprenticeships. This report, as do so many reports from your Lordships’ Select Committees, tries to unravel some of the confusion in recent developments and to point to a coherent route forward.

I feel I have been going through a form of apprenticeship myself since I was introduced to the House last October, listening and learning. I look forward now to beginning to contribute somewhat more to the work of this great institution.

The last months have been a turbulent time. These Benches were a place where my much-loved husband Tim, Lord Garden, participated in, initiated and influenced debate, and used his clear thinking and expertise to contribute to your Lordships’ business. Your Lordships have been gracious in tribute to him. His commitment was matched by the purpose he found here over the past three years, as well as by the good fellowship of your Lordships. I sense his loss to public life, and know how very greatly he is missed at home.

In the circumstances, the renowned friendship of this House towards new Members has been particularly appreciated. I am most grateful to your Lordships and also to the House staff, the Doorkeepers, the librarians and the catering staff for the warmth of their welcome. I have met with unfailing readiness to offer guidance in the customs—and indeed around the Corridors—of the House, and with generous levels of collegiate support. I still have much to learn.

I take great interest in the topic of this debate. During many years as an Air Force wife, with frequent moves, my professional employment was intermittent. In those days a graduate was regarded as qualified to teach, so my Oxford degree in French and Spanish led to a succession of teaching posts in a range of secondary schools, and a range of subjects, in England and Germany. Coming to London, I moved from academic to vocational education and from teaching to administration. I have worked with City & Guilds for 20 years, developing and promoting work-based qualifications and discovering a world of exciting and inspirational practical achievement that is woefully and illogically undervalued when set against academic results. I worked on the very first national vocational qualifications, and then on one of the early forerunners of the new school diploma. I then set up the City & Guilds Senior Awards programme, which involved forging partnerships with higher education, employers and professional bodies, not unlike those for apprentices.

Successful examples of constructive collaboration for apprenticeship go way back to the early guilds and livery companies; they are historic but with much contemporary relevance. Livery companies continue to be actively involved in monitoring standards and encouraging achievement in craft, technical and business skills, often alongside initiatives by the City of London, which gave evidence to the committee. Government funding can benefit from considerable economies on quality assurance if there is this sort of proven track record for those charged with standards and training. The Department for Innovation, Universities and Skills has a stated commitment to streamline the system:

“Simplifying funding and audit arrangements, better and more coherent use of data, and developing better, more strategic relationships built on trust”.

Increasing the trust placed in skilled and experienced professionals can, and should, minimise the resources used for external monitoring. In this, further education colleges are natural partners with local employers. They play a crucial role in providing work-related training, assessment and qualifications, for which they merit reliable funding. The 25 sector skills councils are not short of “best practice” on which to build. The report highlights concerns,

“that too much responsibility is being devolved too fast to SSCs, which require more time and resources to operate effectively”.

Currently they are variable in their effectiveness, but as they cover nearly 90 per cent of the workforce, ongoing developments should ensure that they all operate at the levels of the best.

The report highlights another major concern, which has been raised by noble Lords, about the low levels of numeracy and literacy among those young people who have left school ill-equipped but who could be motivated by, and benefit from, purposeful, paid learning. The Ofsted estimate that,

“some 300,000 16-19 year olds are unable to access training or any worthwhile employment as a result of a lack of basic skills”,

is deeply disturbing for society, for the economy and not least for those individuals. How can they gain a sense of self-esteem and value to the community if they are cut off from a route into productive work? Replacing “key skills” with new “functional skills”, as proposed in the government response, may not be tackling the root of the problem.

With an ageing population, as my noble friend Lord Cotter remarked, and a decline in the birth rate, it has been estimated by the Institute for Employment Research that 1.35 million new jobs will enter the economy in our current decade, with only an additional 500,000 young people entering the workforce. In the decade from 2010, the position is projected to become more acute. The shortfall will need to be made up by adults already in the workforce, by immigration and by those currently not in employment joining the workforce. The figures provide powerful additional reasons why the country can ill afford not to engage as many young people as possible in productive work and why removing the upper age limit for apprenticeships makes social and economic sense.

The challenge of engaging employers in training has been raised recently in the debate on adult learners in your Lordships’ House. Many businesses encourage experienced workers to pass on their mastery to the next generation. Large organisations can justify training expenses against quantifiable long-term benefits, although it is all too easy to see training budgets as a soft target when economies need to be made. For small businesses, the hurdles to taking on apprentices can include real or perceived burdensome regulation, time-consuming recruitment, daunting employment responsibilities and simply not knowing what is available.

It is made more difficult for employers when there are constant government changes, such as changes in name and in the remit of departments, with a spaghetti soup of initials which come and go. With lack of clarity, it is understandable if formal training combined with rigorous assessment lose out against the daily challenges of running a viable business. As low-skilled jobs become fewer, there is an increasing need to promote apprenticeships to schools, careers advisers, young people and parents, as well as to make a better business case to employers. The global economy demands that the country has a world-class workforce. This important report has constructive proposals to help the country to rise to these challenges.

My Lords, I congratulate the noble Baroness, Lady Garden of Frognal, on the excellent contribution that she has made to this debate in her maiden speech to your Lordships’ House. What she said tonight was based on a distinguished career in teaching and, in particular, on her long-standing role in the administration of City & Guilds qualifications, whose standards have done so much to improve the skills of so many young people over the years. Clearly, from what we heard in this debate, we can look forward to the noble Baroness sharing with this House her wide experience of educational and business affairs and, I am sure, of many other matters of public interest. In doing so, she will continue the outstanding service given to this House and to his country by her much admired husband, Tim, who made such a great contribution in all too short a time.

I also pay tribute to the chairman of our Select Committee on Economic Affairs, the noble Lord, Lord Wakeham, for his able and affable handling of this complex subject in the committee and his leadership of the debate today, as well as to my noble friend Lord Layard for the expertise that he brought to our deliberations and the powerful points that he made tonight.

Our report is yet another milestone on a very long route. As the noble Lord, Lord Dearing, told us during the recent debate on the Address, the shortage of skills in British industry was first investigated by a Select Committee back in 1868. Since then, many other parliamentary committees have continued the search for solutions to this seemingly very British problem. One explanation was offered by Professor Martin Wiener in his fascinating study, English Culture and the Decline of the Industrial Spirit: 1850–1980. England may have been the cradle of the new industrial age but, alas, Professor Wiener argued, its bucolic myths and innate conservatism esteemed the gentleman above the entrepreneur, the landowner above the factory owner, and thus contributed to our economic decline.

At the start of the 1980s, that academic critique was shared with a mass audience through Granada television programmes broadcast in peak time. As a Granada producer at the time, I remember well the angry chorus of agreement tinged with real sadness at the eclipse of traditional industries that had once made Britain the workshop of the world. Along with millions of others, I shared that sense of loss, having served a five-year apprenticeship as a marine fitter in a Clydeside shipyard now long gone. It is worth recalling what it was about those lost crafts that meant so much to many skilled working people.

We may have left school at 15, but apprenticeship was a rite of passage to adulthood and the status of a time-served tradesman. What we missed in schooling was compensated for by the disciplines engrained by skilled manual work. As an engineer, for instance, you would grind away to one-thousandth of an inch until the job was just right, knowing that if you got things wrong it would not work and, worse, it might break and do someone damage. With that came a sense of responsibility and, in heavy industry, teamwork—and, perhaps in time, leadership. Back then a good apprenticeship was the foundation of many successful careers to the highest levels of industry.

Of course, the education system has changed radically since then and mostly for the better. For instance, when I left school in the 1950s, only one pupil in 20 went on to university, mostly boys. Today by contrast the status of women is transformed and nearly half of all young people go on to higher education. That is as it should be in a very different world, where our universities have become the factories of the emerging knowledge economy.

Elitists still claim that in higher education more means worse, but I would argue that their overly academic view fails to appreciate the range of expertise required in a changing economy or indeed to value properly the natural aptitudes, emotional intelligence and social skills of many people now excluded from worthwhile employment. As a former visiting professor of media studies at Stirling University, I am familiar with the mockery of so-called Mickey Mouse degrees, but our record for graduate employment was very good—and there was nothing Mickey Mouse about the profits that my company used to make, producing “The Disney Club” in Scotland.

In recent decades, the growth in service industries and financial services has more than compensated for the loss of traditional manufacturing jobs, yet too many have been left behind as their options have narrowed with the decline in unskilled jobs, with hundreds of thousands of young people not in education, employment or training—the so-called NEETs—or living on disability allowances. The social benefits of putting significant numbers of these youngsters into apprenticeships could be considerable.

It is worth noting that almost half of all jobs now require computer skills and that the proportion of jobs needing less than one month’s training has fallen to just 19 per cent. We can see ever tougher challenges ahead in the rapidly globalising economy. All this gives renewed urgency to the historic parliamentary search for a solution to Britain’s skills shortages, in particular to proposals for a revivified system of apprenticeship, recruitment and training as outlined in our Select Committee report. The noble Lord, Lord Wakeham, in his characteristically fair-minded introduction, summed up our continuing concerns very well, and I wish only to underline some issues and ask some questions.

Can we trust government departments to deliver on recent promises? The former Department for Education and Skills and its predecessors had a pretty poor record of innovating and nurturing vocational education and apprenticeship schemes in particular. Recruited as they are largely on academic prowess, one fears that there might have been a cultural aversion among senior civil servants to giving vocational training its proper priority. Of course, the same may also be true of Ministers, very few of whom have now climbed up from the shop floor. Whatever the reasons, our concern, as the most recent Select Committee to address the issue, is that having so many unskilled young people with restricted employment opportunities is one reason why productivity in Britain still cannot match that of other advanced economies.

We suggest, as we heard from my noble friend and Professor Lord Layard, that the main route to skills below graduate level should be through apprenticeships combining work and learning. I therefore welcome the recently published Education and Skills Bill which, at long last, raises the educational leaving age to 18 and establishes new rights for young people to take up opportunities for education and training. This Bill also places a duty on young people to participate in these options, including apprenticeships.

As I understand it, a tripartite structure will be put in place. First, A-levels remain as the principal academic route to higher education. Secondly, new diplomas are being introduced, and thirdly, there will be work-based apprenticeships. The new diplomas are being designed to bridge the gap between academic and vocational studies. Diplomas in languages, humanities and science will, it seems, be largely academic. However, most are vocational—construction industry careers, for instance—yet they will be based mostly on classroom learning. I hope that we can be reassured by the Government that the introduction of diplomas will not leave apprenticeships branded by vested academic interests as the inferior low-status option. What prompts that particular concern is evidence that we took suggesting that schools, with their laudable academic aspirations, sometimes do not appreciate the importance of apprenticeships to many young people and to our economy, and that teachers, consequently, fail to promote apprenticeships as an attractive career option.

I look for assurance that the new diplomas, with their classroom bias, will not be allowed to become a vehicle which takes away either esteem or resources from apprenticeships. That would be particularly damaging since the world-class skills that the noble Lord, Lord Leitch, seeks to encourage in his report, will surely require many more young people to progress through the apprenticeship route into higher education, as they aspire to greater professional expertise.

Our committee’s conclusion that apprenticeships should be the main route to skills below graduate level implies that there should indeed be a shift in the balance of resources away from other post-16 provision in favour of apprenticeships. Since the Government's response to our report did not address this matter, perhaps the Minister can today.

Our committee also expressed concern about the lack of encouragement given to apprenticeships through careers advice in schools. The new Education and Skills Bill intends to transfer careers responsibilities to local authorities. That will be most welcome if we can anticipate that this switch will lead to more impartial information, advice and guidance being given to young people in the future, particularly about apprenticeship opportunities.

The Bill also strengthens the duty of local authorities to collaborate with partners in the provision of education and training for 14 to 19 year-olds. The most important local partners, in our view, will be local employers. They should be at the centre of all apprenticeship provision. Additionally, I support the noble Lord, Lord Wakeham, in saying that we believe apprenticeship funding should be routed through employers, who could then subcontract off-the-job training and other services which they cannot themselves provide—subject, of course, to appropriate regulation and supervision.

It was encouraging to read last week that the Institute of the Motor Industry wanted to double the number of its apprentices over the next five years. Retail motor businesses at present have more than 11,000 vacancies— almost half for skilled technicians—and reckon that they will have to train 120,000 more skilled workers over the next decade. Gathered more widely throughout business, that kind of information would help us to estimate more accurately the employer demand for apprentices.

The positive counterpart to that problem of skills shortages is on the supply side—the reported demand from young people for high-quality apprenticeship places, with no fewer than 200 applicants for every apprenticeship place offered by BT. This shows the potential for well planned progress based on employer demand. Already, 130,000 employers offer apprenticeships in 180 different lines of business. I hope that the CBI and other industry bodies will encourage companies to create even more training opportunities, particularly for young people from ethnic minorities who are not well served at present. A wider range of opportunities for young women would also be welcome. At departmental level, government should insist on more comprehensive monitoring and reporting to strengthen the statistical base required for better delivery across this field.

That said, I applaud the relative success of the Government’s policy on apprenticeship in the past decade. Since 1997 the number of young people in apprenticeships has trebled to about 250,000 in England. Completion rates, which were such a problem, are also improving. We should note the energetic promotion of the skills agenda by the Secretary of State, John Denham, at the new Department for Innovation, Universities and Skills. Particularly welcome was his announcement in November that funding would be made available for the 400,000 apprenticeship places in England targeted by my noble friend Lord Leitch in his review of skills.

A departmental review of the existing apprenticeship programme is under way on the scope for reform and the need for any legislative change. Echoing the noble Lord, Lord Wakeham, I am sure that your Lordships would be interested in any “preview of the review” that could be offered to us today.

In conclusion, I hope that the report of the Select Committee on Economic Affairs will be judged to have made a useful contribution to the continuing debate on this issue of national importance and, indeed, to the forthcoming apprenticeship Bill.

My Lords, I am happy to follow my noble friend Lord Macdonald, who spoke about his five-year apprenticeship, because I also did an apprenticeship but many years earlier than he did. I do not think that mine was as good as his. The important thing is that a higher number of people took those apprenticeships. Not only the quantity but the quality was greater than we have now although we should bear in mind the way in which these matters have changed over the years.

The noble Lord, Lord Wakeham, rightly dealt with the Bill to reform the apprenticeship committee. That will be very valuable. I am not sure that it will deal with most of the matters that we had in mind but we shall need to examine it with care. He mentioned the nine reports that we had produced, all of which were unanimous. Much of that success is due to the role that he played as chairman of the committee.

The noble Lord, Lord Layard, mentioned the very important combination of the learning and skills experience. It is not only learning that you require but skills as well. The ability to combine them is enormously important and has been very much underplayed over recent years.

The number of apprenticeships has declined greatly. In 1988, it was 341,000; in 1996, it fell to 174,000—half the figure that it was only eight years previously. It has risen a bit—215,000 is the latest figure, but I think that it is probably a bit more than that now. There was a very big drop-out rate and it is important to tackle this.

At question 354 of the evidence, Sir Digby Jones, as he then was—now the noble Lord, Lord Jones of Birmingham—said:

“We have a lot of apprentices who do not complete the course … If employers were better engaged with schools, let alone colleges, so that it would be a natural progression, it would be seen as part of an education system and not something that is completely divorced from it, that would probably help”.

He is quite right in that very useful contribution. It is important to have a link between employers and schools. The education system must take account of that.

The major difference that I had in mind was from my experience and that of the noble Lord, Lord Wakeham, when we went to Germany and saw the apprenticeship system there, which was very different from what we have in this country. In the United Kingdom we have a system of apprenticeships that average about one year, and only half of apprentices complete them. In Germany, the apprenticeships last for three years and are important decisions for employers and apprentices; some 75 per cent complete their three-year apprenticeships. There are great expectations and subsequent employment is pretty well guaranteed. In the United Kingdom, such employment is more limited and frequently there is none at all. In Germany, we saw people with great enthusiasm and expectation during their period of apprenticeship. They had great hopes as to what they were going to achieve—quite different from the experience of the sort of people whom we would see in a similar situation here.

There is no record kept in the United Kingdom, as compared with Germany. In paragraph 44 on page 18 of our report we state:

“There was strong competition for apprenticeships in the Düsseldorf department store we visited; this was symptomatic of increasing difficulties in Germany in providing sufficient places to meet the demand from young people”.

We saw those people and they were impressive and felt that they had a great future ahead of them. Our report continues:

“Currently, around half the age group in Germany enters apprenticeship but often only after a considerable waiting period. We learned that it was normal for young people to improve their qualifications in fulltime further education in order to be considered for an apprenticeship; the average age on entry is now 18 years. The apprentices we met in both the hotel and department store saw apprenticeship as the gateway to further career advancement; they appreciated the support and training provided by the company, less so the courses provided at the vocational school they attended”.

That was very important for those people and we do not have that situation here. Apprentices felt that they were successful and had achieved what they wanted. Apprentices here do not have anything like the same feeling of achievement and of the wide opportunity that lay ahead for those in Germany.

We cannot copy Germany, of course, but we should have a role in encouraging and possibly in determining the role of apprenticeships. There needs to be in the Government some responsibility for apprenticeship that does not exist at present. Neither the Department for Education and Skills nor the Learning and Skills Council have a proper attitude to this. There is a division between the two departments; they collect information, but different kinds of information. The important thing is that there are no data on the number of people seeking apprenticeships and we do not know how many are doing so. We do not know how many people are being employed in apprenticeships. We do not know how many businesses employ apprentices. This is fundamental information that we should have in order to deal with these matters.

Perhaps I may quote from paragraphs 75 and 76 of the report. It states:

“It is clear that many young people who have the capacity to benefit from apprenticeship fail to find a place. There should be an effective clearing house where all apprenticeship places are advertised and through which young people can apply—as for university entry. It should be operated by the LSC … The DfES has neglected to compile any record of young people who unsuccessfully seek an apprentice place and keeps no central record of employers seeking apprentices. No reliable data are compiled on prior qualifications. Urgent measures are needed to ensure both the production of proper statistics on apprenticeship and also effective monitoring”.

That is absolutely essential here—to know what is happening and to be able to meet requirements that follow from this. We hear from the response that the review is to look at ways of improving data on apprenticeships. That is pretty modest, is it not? I was hoping that it would be much clearer than that, and perhaps we might hear about that from my noble friend when he replies.

My Lords, I join others in thanking the noble Lord, Lord Wakeham, and his committee for producing this excellent report on a very important topic. Rightly, it was critical of the Government for their failure to develop a set of coherent initiatives and to carry them through consistently and with consistency over time. I agree very much with the noble Lord, Lord Wakeham, that the answers that we have had from the Government in their response are very disappointing. In most cases, they merely repeat the initiatives that the Government are already making and in no way respond to the criticisms in the report.

At this point, I declare an interest. I am a member of the Guildford College Corporation, which is involved in work-based learning and, in that sense, in training apprentices.

At present, apprenticeship is in essence, as we heard from the noble Lord, Lord Layard, training on the job, which combines earning and learning with a career progression pathway. As my noble friend Lady Garden pointed out, in medieval times the guild system was the main form of training by which those seeking to become craftsmen made their way into a profession. Here, perhaps I disagree slightly with the noble Lord, Lord Macdonald, but it seems to me that the system survived the Industrial Revolution to provide the main distinction between skilled and unskilled and semi-skilled craftsmen. Quite a few of our leaders of industry in the 20th century rose to that position through the apprenticeship system. However, in England, unlike in much of northern Europe, it did not survive the post-Industrial Revolution.

In 1975, there were 400,000 apprentices in the UK, many of them on five-year or even seven-year apprenticeships. By the early 1990s, this number had dropped to fewer than 100,000, and that led to the introduction of the modern apprenticeship programme. This was to be a three-year post-16 training programme, rather like the one in Germany mentioned by the noble Lord, Lord Sheldon, leading to a vocational qualification judged to be equivalent to A-level. Sadly, this proved to be too difficult for most of those entering the new programme and, in 2000, the intermediate, or level 2 NVQ, qualification was introduced. Today, of the 250,000 studying for modern apprenticeships, three-fifths are doing the one-year level 2 training and only 100,000 the full three-year level 3 training, in spite of the fact that, as came through very clearly in the evidence received by the committee, most commentators agree that the level 3 qualification is required to confer full craftsman status and that it is at this level of skilled craftsman or technician that Britain’s key skills shortages lie.

Why do we find ourselves in this position? The committee pinpointed a large number of issues but perhaps I may start with the two identified by the noble Lord, Lord Layard. The first is the fact that for the past 40 or 50 years the secondary school curriculum in this country has failed to interest or motivate some 50 per cent of young people. In consequence, far too many leave school having been turned off learning and have a totally inadequate command of literacy and numeracy to be able to join the world of work. The Tomlinson proposals for an overarching diploma that offered a mixing and matching of academic and vocational qualifications was supposed to be the answer to this, and Mike Tomlinson worked with a group of experts for two to three years to try to come up with the right answer. Sadly, the Government rejected those proposals and instead have chosen to introduce a separate diploma stream, with specialist diplomas that will be rolled out from September this year and which will provide an alternative practical and vocational option to the GCSE/A-level route.

At present, it is not at all clear where apprenticeships lie in relation to those diplomas. In his evidence to the committee, the Minister implied that apprenticeships were a third and different route to qualification. Surely it would be logical to align the two and to make, say, a level 2 diploma the requisite entry point to an apprenticeship. I would like the Minister to clarify the relationship between apprenticeships as the Government see them now and the diploma system that they are introducing.

Side by side with the failures of the school system have been the failures of careers guidance. The committee points out that neither teachers nor young people and their parents know what is involved in apprenticeships these days. Many of them assume that apprenticeships are for those who fail GCSEs, yet, when they learn more about them, many young people and their parents are very interested and like the thought of being able to earn and learn and gain substantive qualifications. I pay tribute to the programme being put forward by the Edge group in promoting apprenticeships. Its advertisements on television are opening up the minds of many parents about what is involved in apprenticeships. We need to see more of that kind of initiative.

In many respects, as the committee indicated, an apprenticeship should be the career of choice for many students. I was very taken by the evidence of Mr David Sherlock, the Chief Inspector of Adult Learning, when he spoke of his visit to Land Rover. I shall quote the paragraph, because it is very interesting. He said that Land Rover,

“had not only a substantial apprenticeship scheme and a foundation degree scheme, but they got in kids for summer schools from the age of six for a couple of days to be involved in what industry was about, what Land Rover was about and so forth. They had then junior apprenticeships from the age of 14, kids coming in from school a day a week with the company taking all the responsibility for looking after 14-year-olds and the difficulties that are associated with that. By the time young people reached the age of 16, they were enthusiastic about the whole business of working in industry and they were aware of the status of it, they were aware that the experience could be just as enriching and exciting as going to university and they were fully signed up to Land Rover”.

That should be the experience of many of the 50 per cent who are failed by the system at the moment. The noble Lord, Lord Dearing, and I would like to see the development of skills academies for those post-14 because we feel that they could more easily lead to that sort of experience.

The Government are reforming the secondary school agenda, they are introducing the new diplomas, they are reorganising the careers service and they are backing the Leitch agenda, which puts employers in the driving seat. Can we be confident that they will now be able to achieve their goal and double the number of people in apprenticeships? The committee rightly expressed reservations about whether we are now in a position to enable young people to have the Land Rover-type experience. The Government response does not answer those reservations.

First, as the committee and others have pointed out, there are too many fingers in the pie. The responsibility is split. Now the Government have added to the alphabet soup—the LSC, SSCs, QCA, SSDA and so on—by splitting responsibility between two departments. The split is right down the middle, at the age of 19. Those who are under 19 are dealt with by DCFS and those over 19 are dealt with by DIUS. Who will champion apprenticeships in the face of competition from GCSE and A-levels and these new diplomas? The Minister said that he hopes that the diploma will become the qualification of choice for young people, universities and further education colleges seeking candidates for foundation degrees.

Secondly, there are far too many initiatives and no coherent relationship among them. We have already instanced the lack of clarity between diplomas and apprenticeship qualifications. The major initiative now for employers is Train to Gain, with £500 million going in this year. By 2011, the figure will be £1.4 billion. Again, however, it is quite unclear whether Train to Gain comprehends apprenticeships. Indications are that it does not. In his evidence, the Minister stressed that Train to Gain is the upgrading of qualifications for those who are already members of the workforce. If an employer is to be paid for training an employee to gain an NVQ level 2 qualification but not for taking on an apprentice for training for a similar level of qualification, what incentive is there to take on an apprentice? Can the Minister clarify the position? The information issued with the draft legislation on apprenticeships indicates that there will be funding. If so, can the Minister tell us the answer to the question?

Thirdly, are the SSCs up to the job? One of the perennial problems with apprenticeships in Britain has been to get sufficient support from employers. Many see this as the classic example of the free rider. Employers are reluctant to spend money on training because they fear that they will lose their trained, skilled craftsmen to the unscrupulous employers who spend nothing and then poach from those who have spent, so we end up with no one being prepared to invest in training. This was the logic that led to the levy grant system, which was not popular, so instead we tried to develop institutions that instil a training ethos into employers. In the late 1980s, we had the local TECs and the NTOs. We then replaced those with the employer-led local LSCs and the SSCs. Now we have Leitch, the training pledge and Train to Gain, with the SSCs being elevated to a role where they are entrusted both with enthusing their sectors with a training ethos and with the role of setting and accrediting standards.

There are two questions to ask. First, are employers up to providing the training places? The noble Lord, Lord Layard, was enthusiastic about this solution, but experience shows that it is extremely difficult to gain training places from employers, even though they are key players. Secondly, as the committee suggested, there are problems relating to whether the SSCs are up to the role that will be imposed on them in both enthusing and accrediting. Some SSCs can and undoubtedly will live up to this role, but others may struggle.

Fourthly, there is the unclear role of brokers. This was one of the committee’s main criticisms, which has been mentioned by others. Then there is the problem of standards. The committee detailed the sorry story of the technical certificate, which at one point differentiated those with the ordinary NVQ level 2 from those studying for apprenticeship, but was then dropped in favour of the apprenticeship blueprint. But that still leaves the situation very unclear. It is not helped by the fact that, according to evidence, what constitutes a completed apprenticeship in one sector would be seen as only just the beginning of one in another.

There surely has to be a clear framework on what constitutes completion at the different levels and incentives for young people and others to progress from one level to another. It is an indictment of the present system that so few progress to the advanced apprenticeship and from advanced apprenticeship to foundation degrees. We are told time and again that all will be solved by the new qualifications framework coming soon from the QCA, but it has been a bit like waiting for Godot. Can the Minister tell us when this new qualifications framework will be published? Will it be based on a system of credit accumulation and transfer, enabling those who are half way through a qualification to transfer to a new base if their work is moved? Will it link the SSCs and the new diploma framework?

The story told by this report is a sorry tale of government failures to develop joined-up, coherent initiatives, to think through the consequences of their actions and to carry them through consistently and with consistency over time. As always, part of the blame lies with the inheritance, but after 10 years that argument begins to wear a little thin and much of the inconsistency is of the Government’s own making. Now with the introduction of the new specialist diplomas in schools and with the Leitch agenda for skills dominating the industrial scene, it is argued that we are entering a new era. I have suggested that an apprenticeship ought to be the career of choice for many young people, as it is in Germany, the Netherlands and much of Scandinavia. Is that likely to be the case? Have the Government got it right? I very much doubt it. As I and others have suggested, there are still a lot of questions to be answered and far too many inconsistencies to be ironed out for us to be confident that the future is rosy for apprenticeships.

My Lords, I congratulate the noble Lord, Lord Wakeham, and the committee on an excellent report. It highlighted the many key areas that are in urgent need of attention. The committee found that while the UK has an excellent record in higher education it has a dangerously poor one in the provision of skills and in meeting basic needs in literacy and numeracy for those not choosing a path through higher education. Over a quarter of all employees—approximately 6.3 million people—have less than a level 2 qualification and almost 2 million employees have no qualifications. Of the 7.8 million economically inactive people in the UK working-age population, around 2.2 million people have no qualifications and approximately 3.7 million people lack a level 2 qualification. The Leitch review on skills found that over one-third of adults of working age in the UK do not have basic school-leaving qualifications and 5 million adults have no qualifications at all. I agree with the noble Baroness, Lady Garden of Frognal, who made an excellent maiden speech, that it is unacceptable that around 300,000 young people cannot access apprenticeships because they lack basic literacy and numeracy skills.

While it is crucial that we do not lose sight of the need for young people to be properly skilled, what plans do the Government have to widen access to apprenticeships to adults? The report was clear that apprenticeships need to be demand-led with far greater input from employers and with emphasis being placed on the quality of the apprenticeship rather than on the quantity of apprenticeships. No one doubts that the Government have recognised the difficulties facing employers and the economy and the need for a skilled and qualified workforce to compete in an ever-competitive global market, but introducing initiative after initiative without appropriate monitoring or data collection has led to poor information about what, if anything, is working and where ongoing improvements could be made.

There are a number of areas in the report that I would like to concentrate on, and I look forward to the Minister’s response. It is significant that the UK’s performance in improving skills after the age of 15 is worse than that of other OECD countries and significantly worse than countries such as Germany and Switzerland whose apprenticeship programmes are longer and more employer-led. That has resulted in the UK lagging behind in productivity and in poorer job prospects as the economy demands better qualified people to replace those retiring with lower skills. As has been recognised by other noble Lords, the report identified that in Germany and Switzerland almost all employers, parents and teachers are familiar with apprenticeship programmes. Students are prepared to think about occupational choice and the range of apprenticeships open to them. Around 75 per cent complete their apprenticeships in Germany compared with around 50 per cent in the UK. In Germany and Switzerland, employers are far more involved in the design of the training requirement for apprenticeships in their sectors. The process is managed through trade associations and other professional bodies. In evidence from the IoD, the committee was told that better involvement from employers in delivering apprenticeship would mean better input from employers. The IoD also stressed the need for progression from apprenticeship to advanced apprenticeship. However, due to lack of data, it is impossible to quantify exactly what percentage may want to continue to level 3 apprenticeships.

Although the committee welcomed the Green Paper proposal that all satisfying the criteria for apprenticeship placement will, from 2013, be able to find a placement, there is a worry that the Government's introduction of a much wider variety of work-based training that comes with funding and accreditation will encourage employers to ignore the apprenticeship framework. The CBI has stated that take-up and completion of apprenticeships will improve if bureaucracy is reduced. Can the Minister tell the House why there was nothing in the Government's announcement on 16 November 2007 about cutting bureaucracy and enabling more employers to offer apprenticeships?

Evidence from Connexions stressed the huge gap between what is taught in education and what skills at actually important in the labour market. The response from Connexions to the question, “Are existing training programmes failing to provide young people with appropriate skills?”, was, “Sadly, yes.” It stated that existing programmes are not meeting the needs of young people and that entry-to-employment programmes were not organised, lacked discipline and did not prepare young people for the world of work. However, Connexions itself comes in for criticism in the report. It is criticised for failing to reach a great many of those who need its services. In evidence, Mr West said:

“I must say that it is in a state of disorganisation. I cannot give you chapter and verse ... but everyone I have met says that it is not working terribly well”.

That is Connexions, to which young people look for advice for future career prospects.

As my honourable friend David Willetts has said:

“The real problem in expanding apprenticeships is the limited number of employers who wish to take them on. They are put off by the costs and the bureaucracy, but there is nothing in this announcement to tackle that problem. There is another danger: that the Government may achieve their target by renaming existing provision rather than increasing it. That’s what they’ve been doing for the past 10 years. We need a better approach”.

The Select Committee found that there was no information from the Learning and Skills Council on its most recent marketing initiatives. There are no records of the number of young people seeking apprenticeships. Therefore, it is impossible to know whether there are sufficient places to accommodate those wanting to apply.

It appears that there is no one government agency that has sole responsibility for apprenticeships. Can the Minister confirm which department will take on the committee’s concerns? Does he agree with the committee that a unit that is designed to report to a Cabinet Minister on all matters to do with apprenticeships should be set up?

The committee should be applauded for an in-depth report that has highlighted huge failings in how apprenticeships are delivered, the muddled way in which the Government respond, the confusion within which employers, users and administrators are expected to work, the lack of proper co-ordination with other schemes and their impact on the apprenticeship programme.

Where doubt has been expressed by some partner agencies about the ability of the SSCs to take on the greater responsibility of developing apprenticeships more closely with employers, the option of doing nothing cannot exist. A more co-ordinated approach must be guaranteed by the Government. There is an obvious need to get assurances from the Government that that will not become another headline-grabber that will disappear as quickly as it is initiated.

As my honourable friend John Hayes said:

“We want to see the value of vocational training elevated within society. In any other field, if only half of those people enrolled on courses completed them it would be a national scandal—this is the case with apprenticeships and it is unacceptable. Apprenticeships must be the right vehicle for boosting skills in the economy and adding value to the organisation and individuals involved”.

The noble Lord, Lord Dearing, made a most enlightening point when he was called as a witness to give evidence. He said:

“it is important to make the point that there is so much at stake it should be got right rather than done quickly”.

Finally, we are to encourage, as in the case of higher education having a clearing house, a similar delivery unit to be in place for those wishing to apply for an apprenticeship delivered by the LSC, as it is often argued that there remain some difficulties for those wishing to engage in apprenticeships in knowing how to and where to apply. I look forward to the proposed Bill. It is crucial that we get it right on how skills are delivered, and that those who need reskilling are provided with the appropriate vehicle through which they can properly engage with and meet the challenges that face us all in a fast-changing world. I agree with the noble Baroness, Lady Sharp of Guildford, that, thus far, the Government have disappointed in their response to the issues raised by the Select Committee.

My Lords, first, I sincerely join all noble Lords in thanking the noble Lord, Lord Wakeham, and the Economic Affairs Committee for a painstaking and helpful report. I will try to do justice to it. It is encouraging to know that it was the ninth report and that—taking these two points together—they have all been unanimous. I remember that the first report I did under the auspices of the TUC was carried by four votes to three with 12 abstentions. I am keen one day to emulate that level of success. I have also noted, as I am sure the House will have noted, a number of former apprentices in the House. I suspect that there are a great many more when we are all assembled together. Perhaps there are more in this House than in another place; that may well be true.

Much has been done over the past 10 years to develop the apprenticeship programme. The Government are now determined to accelerate the growth of apprenticeships and to continue to raise the quality of the programme. The point made by the noble Lord, Lord Dearing—that we must remedy something like 130 years of history—may be beyond what I can do this evening, but I will have a go. It is obviously important that this area remains under continued review and constant consideration, not because we need to keep reinventing things but because we cannot afford any further failures.

In July 2007 we published World Class Skills, setting out how we plan to improve the skills of our people in order to compete successfully in the global economy. Apprenticeships are completely vital—central—in the drive to do this. The Prime Minister described them as “keys to the future”. The noble Lord, Lord Macdonald, asked whether the current Administration will do better through the tripartite system. I believe that we will. Diplomas cannot and will not devalue, and must not be allowed to devalue, apprenticeships. The CBI welcomed diplomas for the role that they would play. It is right to say to the noble Baroness, Lady Sharp, that apprenticeships are a third route, and enjoy a considerable amount of employer support in their design. The specific question about the alignment of the different routes leads me to say that the sector skills councils have been involved in the development of the diploma partnerships and also the apprenticeship frameworks. This will provide the synergy necessary for the cross-over required if a young person wants to move from a diploma to an apprenticeship, and it ought to ensure that the routes are secure.

The Government are committed to providing 400,000 apprenticeship places in England as our contribution to the overall aim of 500,000 apprenticeships in the UK by 2020. By 2013, all school leavers who meet the entry criteria will have the right to an apprenticeship if they want one. This brings me to the important and enormously thoughtful points of my noble friend Lord Layard. As part of our preparation for this, the Education and Skills Bill, which was published on 29 November, will amend Section 2 of the Learning and Skills Act 2000 to make it clear that the Learning and Skills Council is under a duty to provide proper facilities for apprenticeships for 16 to 18 year-olds. This is to ensure that apprenticeships are given explicitly equal legal status to other post-16 education and the options that there are in schools or in further education. My noble friend is right to say that we must deal with part-time modes of study because it suits employers and apprentices; it is vital to secure engagement, which is part of the formula; it makes sense of the extension of the education age to 18; and it encompasses the wishes of many people.

I return to the point about a dedicated service, which is under active consideration in the review. I am not able to comment on guarantees, but I am able to tell the House that I expect that the review will report by the end of this month. I hope that that turns out to be an accurate assertion. It will have to take account of the proper balance between on-the-job and off-the-job hours. I completely accept the argument which has emerged from all Benches that we are talking about a high-cost option. It is not a cheap option in any respect. Investment is basic. Should places be available, they will be funded. We are committed in the CSR and we are committed to doing this right the way through. On the question asked by my noble friend Lord Macdonald and the noble Baroness, Lady Sharp, we are committed to doing what it takes. There is no point in arguing that apprenticeships are an apex of skills unless we have something like a Rolls-Royce ambition for making sure that they are delivered.

Apprenticeships are crucial not only for the skills agenda, as the noble Lord, Lord Wakeham, rightly said; they also contribute to the development of a fairer and more inclusive society in which people are not left behind. They help people to secure a better future for themselves and, in due course, for their children. I completely and wholeheartedly agree that we cannot afford to waste anyone’s talent. I hope that some of the programmes running through schools—from Sure Start, at the beginning, to the one-to-one mentoring in numeracy and literacy announced by my right honourable friend Ed Balls in December—will make sure that people have immediate guidance all the way through the process of improving their abilities. These should make a difference.

My noble friend Lord Macdonald hit the nail on the head. Securing the future will rely on both universities and apprenticeships. I strongly support his points on women and ethnic minorities. I know that my right honourable friend John Denham has spoken on this point frequently and recently.

Perhaps I may go through some of the facts. The noble Baroness, Lady Verma, described some of the statistics from the past and the difficulties that they illustrate. I do not accept her view that there are too many initiatives. I believe that the initiatives are proportionate to the task that is now faced. Currently, there are around 240,000 apprentices compared with about 75,000 when the Government came to power in 1997. More than 130,000 employers offer apprenticeships in more than 180 types of business, from construction right through to IT. The proportion of those leaving an apprenticeship having completed the full framework for the apprenticeship has risen from 24 per cent in 2001-02—a lamentably low baseline, which I acknowledge immediately—to 63 per cent now.

The noble Lord, Lord Wakeham, asked about the basis for the figures that I am quoting. The last published statistical report, for 2005-06, showed completion rates of 53 per cent for apprenticeships and advanced apprenticeships, but the latest management information figures that I have to hand, for 2006-07, show an overall rate of more than 63 per cent and similar levels for apprenticeships and advanced apprenticeships. I believe that these figures will be confirmed when the statistics are published in March or April. We will see when the figures are published, but I am reasonably confident that I am providing reliable information.

I think that the noble Lord, Lord Sheldon, was also concerned with the next point. As we looked at the rates of completion and the relatively rapid growth in the rates of completion, I was concerned to know whether it was roughly a straight line rate of growth, but I was told that it was relatively slower in the earlier years and that it picked up speed considerably. The curve looks more or less exponential now. I cannot say how long it will continue on that trajectory, but if it continues on the trajectory we expect, the reality is that the next 12 to 18 months should show considerable rates of improvement. I say to the noble Baroness, Lady Verma, that we will not be far adrift of Germany and Switzerland or the data that she introduced into this debate.

In 2005-06 there were 99,000 completions, and a similar number is expected when the 2006-07 data are published in April. The former wide differences in completion rates between sectors and age groups have been largely eradicated, and as I have said, we are on track to achieving similar completion rates to the best in Europe over the next few years. The number of advanced apprenticeships has fallen since 2001 while the general numbers at level 2 have grown. That is plainly not welcome, and I will not say that it is. We need to bend our efforts to doing something serious about it. However, the number of young people actually completing the full advanced apprenticeship framework has grown from around 17,000 in 2001-02 to some 33,000 in 2006-07. I take heart from that because I am more concerned with outturn data than input data, although there is usually a relationship between the two. I want to know what we have achieved at the end of it all.

I do not want to put words into her mouth, but the noble Baroness, Lady Sharp, said that there is still not enough at the advanced level. That argument has some merit, but the truth is also that the balance between the higher and non-higher levels seems to reflect what employers are saying they want from the system at the moment. The overall number of apprentices in learning has declined slightly in the past year, but that is now more because apprentices are working at the right level, and that is reflected in the rising completion rates.

My noble friend Lord Sheldon was right to detail again the differences between the German and UK systems, and I agree that the anecdotal evidence suggesting that there is greater demand for apprenticeships in the United Kingdom is not as good as having hard data. That is plainly needed and I accept the point. Statistics and monitoring are indispensable and they must be more effective. Overall, there is not a bad story to tell, but the Government and the country cannot afford any complacency, so we aim to do better in a number of areas.

In response to the noble Baroness, Lady Verma, the commitment across government is to reduce bureaucratic burdens. I am a compulsive deregulator by instinct, an attribute which I believe is shared by others, but it is plain that we need to make sure that burdens are wholly proportionate to what they are intended to achieve and do not go beyond that. As I said before, we need to increase the number of advanced apprenticeships. Many employers see their needs being met predominantly at level 2, and that is why apprenticeships at that level have grown since they were introduced in the early part of the decade. For example, Sir Terry Leahy of Tesco has made it clear that that is a level of skill, if properly achieved, that is essential for his business. However, even in these sectors advanced apprenticeships will offer excellent work-based preparation for supervisory roles and more specialised functions. We are working to persuade more employers and learners of their benefits.

The public sector, I am sad to say, although it accounts for 20 per cent of the workforce, still provides only 10 per cent of apprenticeships. We will be working hard to make sure that those figures are changed. We are working with our partners to improve participation rates and to broaden the range of occupations available to women, black and ethnic minorities, and to under-represented groups where it is not only numbers, but also peculiar distributions that we need to overcome. Men are very dominant in some areas while women are almost the only workers in others; hairdressing is an example of that. We aim to ensure that advice and guidance provision for young people in the new advancement service will give them and adults a more comprehensive picture of the range of career options open to them. This will be dealt with in the review. Indeed it has to be addressed, as the noble Lord, Lord Wakeham, said in his introductory speech.

A sentiment also expressed in the debate this evening, and one that I feel as well, is that the school culture itself needs to change. It has been so focused on higher education that it has not hit some of these other targets. I have begun to wonder whether the very many hours that pupils in schools spend with specialist subject teachers much more attuned to working out where the higher education options in their specialist subjects may be is proportionate when compared with the time spent with careers teachers. It may be out of kilter and we shall need to see more done about that. We are for the first time targeting funding specifically at apprenticeships for adults over 25 and 30,000 additional adult apprenticeships will be available over the next three years.

In order to make that work, the Connexions Service needs to be improved. It is currently going through a process of transition and discussions are taking place in all local authority areas to determine future delivery arrangements for services that are funded by the Connexions grant. A transitional fund is in place to assist with reasonable costs. It has features that are quite popular, including its award- winning national website and its helpline, but there is plainly more to do if people are to understand the options that are open to them.

We aim to increase significantly the number of apprenticeships available in order to meet the challenges set out in World Class Skills and the fulfilment of this ambition is dependent on more high-quality employer places becoming available. However, I am confident that employers will want to participate as they become more aware of the benefits to their businesses of apprenticeship. This leads me to a cardinal point: the best advocates of apprenticeships are those businesses involved in the programme. The Government are very fortunate to have the assistance of the Apprenticeship Ambassadors Network, led by Sir Roy Gardner, in promoting apprenticeships to employers of all sizes.

It is in this spirit of seeking to achieve greater things that I welcome the report, which will help guide the further discussion and work which is inevitably needed. The response from the Government so far is of course not the final word; they presented their response in early October but there is much more to do. The Government agree unreservedly with the report in reaffirming the benefits and value of apprenticeships and we have outlined a number of actions being taken which relate to some of the recommendations made in the report.

Let me mention one or two of the recommendations. The clearing house system for apprenticeships, which was one of the key parts of the report, is very important. We are trialling such a service and the national rollout will begin in 2008—a practical response to a very practical proposal. In this context it seems to have a parallel to UCAS: it is the beginnings of something which will place people alongside the opportunities that should be there. Why should that not be the case in this area as it has been in higher education?

It is for those reasons that I say to the noble Baroness, Lady Garden of Frognal, that, like everyone else, I greatly admired her speech. I thank her for it and I look forward to her speaking often. The late Lord Garden was a remarkable man who often gave me a very hard day when I was a Foreign Office Minister; I hope that I am none the worse for that. The noble Baroness’s reach across higher education and further education brings much knowledge, and that reflects the knowledge that the FE sector has. The sector skills councils should draw on that knowledge in FE; there is no question that it is a huge resource. However, identity of the skills needed by the FE or the sector skills councils, or by all of us, is best provided by employers. That was also a sentiment which, if I understood it properly, the noble Baroness emphasised. I should say to her that keeping up with all the acronyms is not easy and I have long since abandoned the effort.

The report asserts that too much emphasis has been placed on the quantity of apprenticeships and not enough on quality and subsequent destinations. For the past six years at least the focus of our attention has shifted towards quality rather than numbers. There has been a rigorous inspection regime; there has been a quality assurance arrangement; and thorough contact management, funding changes and incentives are being used among the mechanisms to drive up quality. The result has been seen principally in the proportions of those who complete the full-time apprentice framework.

Rigorous inspection has also meant that we have reduced the numbers of poorly performing providers. You cannot have a proper inspection regime unless you live with the consequences of having it. It is no coincidence, in my view, that more people in these circumstances complete, because quality predominates. It is no accident that there is more progress from apprenticeship to further courses and qualifications.

We did not accept the report’s recommendation that funding for apprenticeship training should go exclusively to employers. While employers are clearly at the heart of the apprenticeship programme, not all of them wish to contract directly with the LSC. Many do, and the LSC has arrangements in place to satisfy that demand. But our experience is that many employers, especially those in small and medium-sized businesses, prefer to operate through a training provider, who takes on the administrative burden for them. That is a business choice which reflects a business model that they, not we, have chosen. I say to the noble Lord, Lord Cotter, that this is one of the key points about the operation of small and medium-sized businesses. You have to listen to what they say, as he was advocating, and take it seriously. In engineering, the largest of the apprenticeship sectors, some of the smaller firms have been very vociferous.

I have emphasised the role of businesses. The UK’s most successful businesses have been at the forefront of the design of apprenticeships. Firms such as Rolls-Royce, Tesco and many others have set the terms and tens of thousands, going into hundreds of thousands, of young people follow the courses. I celebrate the fact that great British businesses do that. I celebrate the application and achievement of those young Britons who have decided to do that. Since these firms and apprentices are under the spotlight this evening, I invite everybody, on all Benches, to celebrate their accomplishments, rather than feeling that this is almost always a futile effort. Perhaps people will say that I am overstating some of the criticisms that have been made, but I feel that the tenor of our debates does not always acknowledge fully people’s accomplishments and contribution, and I wish to do so.

The noble Lord, Lord Wakeham, argued in a very powerful letter to the Financial Times that successive Governments have not really supported traditional apprenticeships enough and that they have been allowed to wither. I do not wholly accept that view; I look around this Chamber and see my noble friends Lord Sheldon and Lord Macdonald, and think of the Speaker of the House of Commons, who left school at 15 to become a sheet metal apprentice at Rolls-Royce. I understand the standing that apprentices have, because that was their standing when I was in my teens. I have been given one other unhelpful statistic, which means that I should not go too far back alongside the noble Baroness, Lady Sharp, to the guild system. Two-fifths of those hanged at Tyburn in the 18th century were apprentices apparently; I am not sure what that says about the quality of the scheme then.

I share a lot of the sentiment, because I felt it as a young person. There are several causes for the decline of the system. The Government may have played their role; employers have invested too little and decided at one stage that the range of skills was too narrow and inflexible to deal with the sea changes in production and construction and other lines of work, let alone the newly emerging businesses. To be candid, some unions tried to use their influence on apprenticeship schemes to hold on to restrictive practices that flew in the face of modern and efficient forms of employment organisations. So businesses modernised or they went out of business and the old apprenticeship, for all its historic resonance, did not align itself at that time to the changes that were taking place. That is a wide current of economic change.

Businesses looked at this environment and decided that in the new environment, apprenticeships had to modernise. They reach wholly new areas; step by step, they fit people for jobs which employers insist are the jobs for the future. It is they who lead in this, not Whitehall. That is the basis for my optimism this evening.

We are improving numbers and quality, and I think we are improving the relevant levels of preparation for jobs. The character of employment will always change; nothing will be static in the economy; it is the economy, rather than Sir Alan, which finally says, “You’re fired” to any number of people whose skills do not fit the real circumstances of the economic world. The skills have to match what employers demand, and that is why apprenticeships will always be in flux. I do not believe that will ever change. Higher completion rates will also be essential if progression is to be appropriate.

I conclude by stating my belief that more is to be done. That is in the nature of what we are discussing. All in all, there are grounds for optimism rather than the reverse. The Government will take what has been said tonight not only as a set of constructive criticisms but even more as a thoughtful affirmation of an ambition to do vastly better in the area of apprenticeships. My noble friend Lord Sheldon urged greater ambition. I believe that he is absolutely right, and that that is the sentiment of the House.

My Lords, this has been an excellent debate. I congratulate and thank everyone who has played a part in it. I congratulate in particular the noble Baroness, Lady Garden, on an excellent maiden speech. Every time I hear an excellent maiden speech it takes me right back to when I made my maiden speech in the House of Commons many years ago. One of my friends said to me afterwards, “At least it will read well in Hansard”. The noble Baroness need not worry about that; her speech sounded well tonight and will read well tomorrow. It was full of matters of substance, which we appreciate.

I also thank the noble Lord, Lord Triesman. I am not absolutely sure about how timetables work or whether I am saying the right thing at the right time, but if he is off to pastures new in the not-too-distant future then this is the probably the last time he will be replying to a debate that I have started. I think I speak for everyone I know of when I say that he has been highly respected and admired in all the jobs he has done here. I tell him, though, that if he is going where I think he is going, I shall keep an eye on him. I went to one of the very few schools whose old boys have ever won the FA Cup. That was about 130 years ago, around the time when it seems to be the general view of the House that all the problems with apprenticeships started, so that may be a lesson for all of us.

On Question, Motion agreed to.

House adjourned at 9.37 pm.