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Apprenticeship Levy Scheme

Volume 822: debated on Thursday 16 June 2022


Asked by

To ask Her Majesty’s Government what assessment they have made of the survey by the British Retail Consortium, published on 17 May, which concluded that the apprenticeship levy scheme was “not fit for purpose”; and what steps they intend to take to modify that scheme.

My Lords, the apprenticeship levy has enabled government to increase apprenticeship funding to £2.7 billion by 2024-25. We are continuing to improve apprenticeships to meet the needs of employers and drive up their quality even further. This includes developing more flexible training models that provide improved pathways for young people to access apprenticeships, while simplifying the transfer of levy funds, which will enable employers to make greater use of their funds and support smaller businesses.

I thank the Minister for that reply. Some of the Government’s so-called improvements were actually announced a year ago, but this report was issued last month, so they are not working. The BRC is not alone: the food industry and manufacturers are all equally critical of the levy in its present form—in fact, it faces opposition from 80% of employers. We all want to create a higher-skilled and more productive workforce, yet entry-level apprenticeships are declining, letting down the very young people who would benefit most, while more levy money is being spent on management and other courses for existing employees. When will the Government put this right and introduce the sensible changes proposed in this and other reports?

I do not accept the noble Lord’s assertion that the changes that the Government have introduced are not working. Clearly, the context of the last 12 months, with the pandemic, has had a major impact on the confidence and ability of employers to recruit more generally. But, in the year to date, apprenticeship starts are up 17.4% and the number of starts among young people under 25 has risen to 55%, up from 50% the previous year.

The creative industries have also found the apprenticeship levy scheme to be not fit and have asked for modifications; I thank the Minister for listening to these concerns. Around £55 million of apprenticeship levy funds raised within the creative industries cannot presently be spent to support the training of their own workforce, so we welcome the flexi-job apprenticeship agency pilot project, launched yesterday, which is looking to address these issues. Will she look into how this can be sustainable and affordable for the sector after the initial investment runs out—in other words, beyond the pilot?

I thank the noble Baroness very much for acknowledging that we absolutely have listened to the sector with the flexi-job apprenticeships. She will be aware that there is enormous flexibility for larger employers to spend up to 25% of their levy funds, potentially, with their supply chain, as might well apply in a case like this.

I congratulate the Government on what they are doing in focusing attention on apprenticeships. Does my noble friend agree with me that one of the things that is very necessary is for young people to see how successful apprenticeships can be? This can be done by promoting them through schools and her department; I know that the Secretary of State is keen on this. How many civil servants in her department have come from an apprenticeship scheme to get to their present status there?

I absolutely agree with my noble friend. We are doing a lot of work to make sure that we can connect young people in schools and colleges with employers and providers much earlier in their final academic year—rather like how they connect with universities—to give them confidence about where they are going. On my noble friend’s specific question, I say that the department has achieved an average of 2.6% of our employees over the four years of the target. We are increasing our apprenticeship starts, and I am delighted to say that one of my excellent private secretaries started in the department as an apprentice.

My Lords, as an officer of the Apprenticeships APPG, I hear two constant concerns from employers about the levy: its lack of flexibility and the difficulties for small employers wishing to offer apprenticeships. I too welcome the concept of flexi-job apprenticeship agencies to smooth the path for SMEs, but there are only 16 of these so far. What are the Government’s actual goals for SME apprenticeships, and how do they plan to achieve them, given that current incentives and support schemes are clearly not working well enough?

The noble Lord is a bit harsh; we are very focused on SMEs, in part because of the productivity potential that apprentices can offer them, but also because of the opportunities that they offer to young people. I am not aware that we have published targets for this, but it is a particular focus in the department.

My Lords, in February this year, IPPR North reported a 72% fall in entry-level apprenticeships since 2014. The London Progression Collaboration has revealed a major decline in entry-level apprenticeships in the capital, while starts in high-level apprenticeships, often taken by older people, have skyrocketed. SMEs report that apprenticeship starts fell by more than 36% following the introduction of the levy in 2017. I acknowledge the successes of the apprenticeship levy but, given the priority to help young people through skills training, including apprenticeships, and the levelling-up agenda, and given the obvious problems, can the Minister explain why the Government have ruled out a formal review of the levy as part of their wider considerations?

I think the noble Baroness would acknowledge that some of the changes that we have introduced, including the levy, to create a sustainable model of funding for apprenticeships, reflect some of the problems of quality identified in the Richard review in 2012. I hope that she would also acknowledge that we have seen an important growth in degree apprenticeships. She is absolutely right that we have seen a drop in intermediate apprenticeships, but that is a principal area of focus for the department going forward.

My Lords, following on from the question of the noble Baroness, Lady Bonham-Carter, are the Government continuing to consult the creative sector to assess how well the new flexi-job scheme fits the bill and, importantly, provides the necessary number of apprenticeships, including in the theatre industry, where such a scheme particularly needs to be targeted?

I absolutely reassure the noble Earl that the department is actively engaging with all key sectors, including the creative sector. On the specifics, obviously the apprenticeship model is push and pull. The department is delivering what employers are asking for, but we need employers to respond to that across every sector.

My Lords, what efforts is the department making to get schools to know about apprenticeships and go into them? Currently, schools are measured largely on GCSEs, A-levels and university entrants. When will they be able to celebrate their apprenticeship leavers with the same enthusiasm as they celebrate their university entrants?

As the noble Baroness will be aware from our debate last night, it is not the Government’s plan to micromanage schools in terms of how they celebrate. We are promoting apprenticeships in schools and colleges through our ASK programme—the Apprenticeship Support and Knowledge programme— the Get the Jump programme and the Skills for Life programme. She may have seen some of the materials from Get the Jump recently, which were very engaging.

My Lords, I respect the Minister’s good intentions, but how does she account for the catastrophic fall in the number of entry-level apprenticeships at intermediate level in the past five or so years? It is no good pointing to figures that show that we have done a bit better than we did in the disastrous Covid year. Let us have a look at the long- term position. She says that the department regards this as important, but what conclusions is it drawing and what is it going to do about it?

Our conclusion is that we listen to employers and respond to what they ask for. I shall give the noble Lord one example. Employers have told us that they need young people to be more work-ready. Therefore, we are funding up to 72,000 traineeship places over the next three years.