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Apprenticeships: Levy

Volume 792: debated on Monday 25 June 2018


Asked by

To ask Her Majesty’s Government what assessment they have made of the effectiveness of the Apprenticeship Levy.

My Lords, the apprenticeship levy is an important part of our reforms to raise the quality of apprenticeships. We are seeing real improvement in the quality of apprenticeships as a result of our wider changes. The number of people starting on new employer-designed standards is almost 10 times higher than last year, but there is still more to do and we continue to engage closely and regularly with businesses as they plan their future apprenticeship programmes.

My Lords, I thank the Minister for his Answer but, if he will excuse me, it is papering over the cracks. Last autumn we saw a big fall in the number of apprenticeship registrations, in February they were down 40% and in March—the latest numbers we have—they are down 58%. This is not a blip; this is a trend. When will the Government abandon their completely unreachable and unworkable 3 million target and really focus on quality?

We are certainly not going to abandon this: we believe that it is working well. We have explained already that it takes time to bed in. Yes, I acknowledge that starts have dropped, but we make a comparison year on year to last March when there was a considerable spike in the old apprenticeships. At the moment, 37% of people doing an apprenticeship are now starting on standards, compared to 3% last year.

My Lords, is the Minister aware that apprenticeships at 16 and 18 have fallen in the last two years? To call people in their 40s, 50s and even 60s apprentices is not really a meaningful expression of what they are doing. Is he also aware that youngsters at 16 will not be employed as apprentices by companies because at school all they are studying is a narrow, academic curriculum and all technical subject are being squeezed out of our curriculum? We are the only country doing this and it should be stopped.

The whole gist of our programme is to ensure that anybody who wants to become an apprentice can do so, but the main thing is quality. We are very much focusing on standards and the Institute for Apprenticeships has a mandate to focus on quality. Quality is important, rather than quantity.

My Lords, can the Minister say how long it will take for the British system to come up to the same level as Germany’s?

We are in a very favourable position in comparison to Germany because, for example, it has 30% off-the-job training and we are going for 20%. As the noble Lord will know, this is part of a two-year programme, so we have deliberately given employers who pay the levy two years in which to bed in these new changes and get used to the process. We believe that that is happening.

My Lords, is the Minister aware that for small businesses and voluntary organisations the process of drawing up the standards is very complicated and time-consuming, that there is little guidance on this and no financial help for it from government, and that since the levy was introduced the grant for apprenticeships has fallen from £6,000 for an 18-year-old to £2,500, so the YMCA tells me? That makes it unviable for the YMCA to offer apprenticeships.

I understand what the right reverend Prelate says. However, we have increased the funding for providers, particularly on the non-levy side. I hope that he can be reassured that small businesses are being helped by our encouraging better providers for them.

My Lords, apprenticeships and the levy are a key element in delivering the UK’s vital needs for skills and human capital, but they are not the only element. What are the Government doing to develop an overarching skills strategy, embracing not just apprenticeships but all the different elements of skills development, including the proposed T-levels? How do they plan to monitor progress towards reaching the overall goals of such a strategy?

The noble Lord is quite right that although the apprenticeships programme is a major one for us, it sits alongside other programmes. He will know that we announced in our industrial strategy in November 2017 that we wanted to up the progress, covering technical education. For example, we are investing an additional £406 million in maths, digital and technical education to address the shortage of science, technology, engineering and maths. This is a complementary programme.

The Minister will know that the Chartered Institute of Personnel and Development says that a fifth of employers and a third of SMEs are writing off the levy as a tax, rather than investing it into apprenticeships. Will the Government consider extending the deadline for spending the apprenticeship levy from 24 months to 36 months, to give sufficient time to develop new and more rigorous apprenticeship standards?

We have already extended it from 18 months to 24 months and we think that that is fine. We are seeing strong signs that it is picking up, with the employers buying into the system. We always said that it would take some time, as I think the noble Lord knows. For example, we are seeing vacancies up and that is very encouraging.

My Lords, the apprenticeship levy offers organisations the chance to review their workforce strategies, diversify their workforces and address skills shortages. Does my noble friend the Minister therefore think that any underspend of levy money should be ring-fenced to be invested strategically, to tackle identified sector skills challenges?

I think we made it clear that if there is any underspend, it will become apparent probably no earlier than May 2019. It is clear that if there is any underspend, the money available will go back into apprenticeships, so it is important that the focus is on these new level standard apprenticeships.

My Lords, the Minister will be aware that most business schools have set up management courses to be paid for by the levy. These courses are for mature managers. Was this part of the Government’s intention?

No. I know that the possibility of MBAs being attached to apprenticeships has been raised in the House before, but that is not the case. It is clear that the system is rigorous so it can check that apprenticeships are up to the right standard and are launched so that they cannot be dressed up as other types of qualifications.

My Lords, under the co-investment rule that applies as part of the levy, the 10% that members have to pay towards the cost of apprenticeships means that many of them are unable to access the levy funds. Given that the Government have next to no chance of achieving their target of 3 million apprenticeship starts by 2020 without the support of the small business sector, will they consider piloting the suspension of co-investment in order to let small businesses play their full part in boosting the number of apprentices?

The noble Lord makes a good point about the 10%, but we want to introduce the transfers in a gradual and well-managed way, allowing levy payers to benefit from the added flexibilities while protecting the integrity and affordability of the programme and the interests of non-levied employers. I reassure the noble Lord that we are carefully monitoring the implementation of the transfers, including how the 10% is working.