My Lords, we are implementing a range of reforms to continue to improve the quality of apprenticeships for all, ensuring employers can access the training and skills they need. We recognise that our reforms have resulted in a number of changes for apprenticeship training providers. We are keeping the impact of the reforms under review and we continue to work closely with providers and their representative bodies.
My Lords, independent training providers deliver three-quarters of all apprenticeships, especially for non-levy-paying employers, many of them SMEs, and for 16 to 18 year-olds. The current funding system gives them no certainty about how many apprenticeships they will be able to offer. Will the Minister and his colleagues look at renewing and adapting the system so that providers can plan with confidence to support SMEs in providing the apprenticeships that young people and the nation need to drive up skills and productivity and, indeed, to meet the Government’s own targets?
The noble Lord is right, in that we do recognise this is a period of uncertainty for providers. The Education and Training Foundation is running a programme specifically to help the ITPs prepare for the transition and change. The Government are also making available £440 million for non-levy-paying employers, to cover the costs of new starts during the transitional period from January 2018 —that is until all employers use the new apprenticeship service, from April 2019. The SMEs are also very important for our economy and the Government are paying 90% of the training and assessment costs for 16 to 18 year-old apprenticeships in this area.
Does the Minister agree that, given the industrial strategy, Brexit, technological advancement and low productivity, there has never been a more urgent need to address and sort out our skills shortages? But apprenticeship registrations have fallen off a cliff because businesses—large and small—do not like the changes the Government are introducing. Is it not time to cut the business world a bit of slack and let them use their own money, raked in through the levy, in a more flexible way to address their actual training needs, and not force all the levy money into an apprenticeship straitjacket which serves little purpose, other than saving the Government’s face in their boast of creating 3 million apprenticeships?
My Lords, it is not a boast; it is a clear aim. As the House will know, a great deal of emphasis has been put on training and skills in the industrial strategy document. On the demand for apprenticeships, it is true that there has been a 59% fall-off, but that is not the whole story because between March and May there was a 47% increase, so the net decline was 2.8%. However, the overall picture—for which there is anecdotal evidence—is that over the next 24 months employers are looking to bed in the changes, and they are working very hard to do so.
My Lords, although it is probable that many large employers are perfectly content to see the Government do as much as they can to encourage apprenticeships, is the noble Viscount aware that in some sectors—I particularly refer him to the creative industries—the apprenticeship levy does not work terribly well? Those sectors do not resist paying the levy, obviously, but they do not find it particularly helpful because of the inflexible way the benefits from it can be accessed by larger employers who pay it. Looking to the future, and building on the question from the Liberal Democrat Benches, is there a rather more flexible way large employers can develop their own apprenticeship schemes?
The noble Baroness makes an interesting point but we believe that there is enough flexibility in the system. A lot of work is being done with the Institute for Apprenticeships and with employers on the design of apprenticeships to ensure that the approach and the job descriptions are correct for the individual sectors. I know that the noble Baroness has a lot of experience in the creative sectors, which we are looking at very closely.
My Lords, is the Minister aware that in Bradford a social housing association runs an excellent training scheme for the building trades? It took 10 people this year and has had 400 applications. When there is so much unfulfilled demand—particularly from what we have to call the white working class—obviously there is still something wrong. I am told that in Yorkshire the big building companies still prefer to recruit already-trained people from outside Britain rather than go to the expense and trouble of doing their own training. That is clearly a major problem. Can the Government assure us that the new apprenticeship levy will push companies like that into training our own people?
I hope I can give the noble Lord that assurance. The construction sector is particularly important. Regarding the temporary drop that we have seen, 3,000 apprenticeship vacancies have been posted this month by 40 employers. So I think this comes back to the point that employers are taking their time—which they need to do—working with HMRC and the Treasury to bed in these new changes.
My Lords, is the Minister aware that the number of apprenticeships for those aged 16 to 18 declined this year, as they did last year? These are the important ages for apprenticeships, and that decline will persist if the Government continue their school education policy of eliminating all technical education below the age of 16. If they do that, very few students at 16 will want to take an apprenticeship. He has to join up apprenticeships with the education policy and try to get it changed.
My Lords, whichever way the noble Viscount dresses it up, a 59% decline in new apprenticeships year on year is hardly an auspicious start to the main plank of the Government’s attempts to address the skills gap. One issue is pay. The Department for Business reported in July that one in five apprentices was not receiving the correct national minimum wage, even though it is only £3.50 an hour. Another question relates to flexibility, which has been raised by other noble Lords, although I would like to put a slightly different angle on it. The Chancellor said in his Budget speech last week that he would keep under review the flexibility with which levy payers can spend their money. I very much hope he will, because part-time apprenticeships have a role to play here and flexibility would certainly be valued by young parents. Will the Government offer advice to employers to make sure that they make more part-time apprenticeships available, not only for their own benefit in terms of skills but to boost the overall number of necessary apprenticeships?
The noble Lord has raised a number of points but I shall pick up on two. As he will know, the national minimum wage is going up from £3.50 to £3.70 per hour from April 2018. However, we do not see pay as being a particular issue in the way he has suggested. Apart from that, his point about part-time apprenticeships is important, and that is very much part of our plans.