We have a major focus on improving apprenticeship quality through our employer-led reforms and the new Institute for Apprenticeships. We are supporting young apprentices in smaller businesses through the apprenticeship grant for employers. We have removed the requirement for employers to pay national insurance contributions for apprentices aged under 25. From April next year, when employers take on an apprentice aged 16 to 18, they will receive an additional payment.
I thank the Minister for that slightly unenthusiastic Answer. However, the Government’s own social mobility commission rightly expressed its alarm that 90% of current apprenticeships go to those aged 25 and over, and as a direct consequence young people are becoming ghettoised in low-skill and low- or minimum-wage areas of the economy. Does the Minister accept that this evident imbalance, which embeds a lack of opportunity, mobility and aspiration among young people, is bad for the economy and the nation as a whole? Can she tell the House what specific measures the Government are going to take to address this mounting problem?
My Lords, on the Social Mobility Select Committee we heard excellent evidence, particularly from engineering companies, of 18 year-olds who join and go all the way up to the board of directors. We also heard that some City firms are addressing their recruitment needs by moving from recruiting only graduates to recruiting a proportion at 18. Can my noble friend the Minister please outline how the 750 or so Whitehall Civil Service apprenticeships, including the Civil Service Fast Track, are put into the system so that young people who join at 18 have the structures and the encouragement that they can go all the way to being a Permanent Secretary in the Civil Service?
My noble friend is absolutely right to emphasise what is happening in companies right across the board, and the way that accountancy firms and retailers are moving to attracting people at 18. In the Civil Service, we have set a target so that by 2020 2.3% of new staff will have to be apprentices. I have an apprentice in my own team and I am absolutely clear that this will provide that second path to opportunity, which we see in other countries such as Germany and Switzerland but so far we have not had here.
My Lords, I applaud the Government for seeking to provide more apprenticeships for young people. Those are certainly badly needed but is the Minister aware of the number of apprentices who leave their jobs as soon as their apprenticeship comes to an end, only to be replaced by another set of apprentices? In other words, employers are simply using apprentices as a source of cheap labour, with little or no benefit to the apprentices themselves? Do the Government have any plans to resolve that problem?
The latest Apprenticeships Evaluation survey found that nine in 10 of recent completers of apprenticeships were either in part-time or full-time employment after finishing their apprenticeships, so we are seeing people getting into the labour force. The reason that I love apprenticeships is that they give a portfolio or skillset which you can take elsewhere. That allows people the opportunity to move around. The whole point about the changes in apprenticeships is to make the employers lead. If they decide what is needed, it ensures that people stay in the workforce—and often with the employers that they first started with.
May I draw the Minister’s attention to the contribution made by the Baker-Dearing university technical colleges? They are teaching both vocational skills and standard O-levels and A-levels. This enables the people attending and coming out of them to do much higher-quality apprenticeships, in the spirit of the noble Lord’s Question.
I am not sure that I agree with the noble Lord but, looking forward, we are clear that younger apprenticeships matter a lot. That is why the system tries to encourage them. We also want to give the younger people the jobs, without stopping older employees being able to apply for apprenticeships as well, but I agree that the cliff edge between the younger apprenticeships and the older apprentice is an important issue.
My Lords, the apprenticeship levy that is coming in next year is in danger of having some unintended consequences. Imposing a cap on what can be claimed per higher apprenticeship may drive employers towards more low-level apprenticeships, so that they can claim more of their own money back. Making the levy exclusively for apprenticeships may deter them from offering a wider range of training opportunities for their staff. Do the Government recognise those dangers, and what are they going to do to address them?
We will be publishing further proposals on funding and the logistics of this scheme in June. I note the noble Baroness’s points but we should focus on apprenticeships. I am a great one for focusing on an area and getting it done right, rather than trying to extend it right across the board of training, as she suggests. But of course we can learn from our experience.
My Lords, I think that it is the turn of the Cross Benches and then we need to move on.
My Lords, Carolyn Fairbairn, the director-general of the employers’ organisation, the CBI, said last week that a radical rethink of the plans for the apprenticeship levy is needed if the Government are to meet their target of 3 million new apprenticeships, and that they need to be trialled before a full rollout. What is the Minister’s response to these concerns?
We have of course been trialling them through our trailblazer scheme, but the suggestion from the CBI that we should delay the levy and the new apprenticeships is a mistake. The year 2017 is a long way away. For decades, no Government, including ours, have sufficiently addressed the fact that business invests too little in skills development. Frankly, it is time we made the change.