I find myself in complete agreement with the hon. Member for St Neots and Mid Cambridgeshire (Ian Sollom), and our amendments—new clause 4 and amendment 6—are suggested in the same spirit. There were good reasons why standard setting was put at arm’s length and closer to employers, but now the Government are bringing it into the Department. Alongside other changes, such as shortening apprenticeships and axing higher apprenticeships, that risks damaging the status of these qualifications, which we have been working to build up.
The Budget was bad for employment, and it will make it less likely that businesses will take on apprentices. Rather than addressing the problems that they are creating, the Government are reorganising. It is the umpteenth reorganisation in recent decades. The Government’s own recent impact assessment says that the reorganisation will lead to a delay and drop in apprenticeships, hence our amendments.
For decades, politicians have said that they want to make apprenticeships more prestigious. On average, twice as many people started apprenticeships each year under the last Government as under the previous Labour Government, but higher apprenticeships grew fastest of all. The number of people on higher apprenticeships went from just 3,000 in 2010 to 273,000 last year—a huge increase. We increased the quality of apprenticeships, too, which was much needed, as has already been alluded to by my right hon. Friend the Member for East Hampshire (Damian Hinds).
In 2015, a devastating Ofsted report found that some apprentices who had been on an apprenticeship for more than a year were not even aware that they were on an apprenticeship, and the skills they were learning were things like making a cup of coffee, which are not life-changing skills. Things were being funded that did not benefit young people, but did allow employers to pay a lower wage. Whereas we lengthened apprenticeships, this Government have cut the length of apprenticeships to eight months. By abolishing IfATE and bringing it in house at the DFE, they are eroding that employer ownership that we worked to build up. Whereas we grew higher apprenticeships, they are about to abolish most level 7 apprenticeships. That is a taste of what is to come if our amendments are not accepted. The Government are doing this because in opposition they promised that employers could take 50% of their levy funds and spend them on other things.
On 20 November, the Parliamentary Under-Secretary of State who will respond to this debate said that this commitment was “currently being reviewed”. But just weeks later, on 9 December, the Secretary of State said the Government were still fully committed to “50% flexibility for employers”. When I asked the Minister in Committee whether that was still the policy, she said that she would have to get back to me. As the Skills Minister said in the Financial Times, far from the 50% being a promise—as employers were led to believe—it will, in fact, all depend on the outcome of the spending review.
Businesses are starting to raise the alarm. The British Chambers of Commerce has said that a “lack of clarity” about the levy is creating “fresh uncertainty among businesses” and is “worrying and destabilising”. Employers say that this is leading to firms pausing hiring of apprentices.
Since the levy was introduced in 2017, real-terms spending on apprenticeships and work-based training have increased by about a quarter from £2 billion to £2.5 billion. Moving 50% of all that money out of apprenticeships would obviously lead to a substantial drop in the number of apprenticeships. In a written answer to me, Ministers have confirmed that the Department has an internal forecast for the number of apprenticeship starts, but they have also said that they will not publish it—I think we all know why that is.
The previous Government moved to make it more attractive for small and medium-sized enterprises to take on younger people. Since April, 16 to 21-year-olds have had 100% funding, rather than requiring the 5% employer contribution. We need to build on that and cut bureaucracy for smaller businesses, but the Government’s answer is different: they plan to abolish the highest-level apprenticeships and redistribute the money. I thought the brilliant speech by the hon. Member for Stoke-on-Trent Central (Gareth Snell) on his amendment 2 was so right. I will not be as articulate as him, but I will try to add to the points he made, and I hope the Minister will listen to her wise colleague. Employers and educators can see that this is a trial run of what it will be like as Ministers take more control with this Bill, and they are warning that it is a big mistake.
Dan Lally at Sheffield Hallam University says that level 7 cuts will
“disproportionately impact on public services…We are meeting vital skill gaps in disciplines such as advanced clinical practitioner…These are NHS workers, civil servants and local authority employees. A high number of our level 7 apprentices…come from the areas of highest deprivation.”
For example, level 7 apprenticeships are absolutely central to the NHS’s long-term workforce plan. Last year, we saw the Government’s disappointing decision to cancel the level 7 doctor apprenticeships. That means there will be a shortfall of about 2,000 medical places a year. Students who had already started on the medical doctor apprenticeship have sadly been left in limbo, and I am concerned the Government will do something similar to nurses as part of the level 7 cuts. The NHS’s workforce plan proposed an extra 50,000 nurses coming through the apprentice route. Around a quarter of them tend to be on an “Agenda for Change” band 7, which typically requires a master’s equivalent, so we would expect about 11,000 of those nurses to be coming via level 7 apprenticeships. If the Government get rid of them, that is a huge hole in the NHS plan.
As well as the NHS, local government makes huge use of level 7 apprenticeships, including the extra town planners that the Government say are needed to deliver on housing targets. Deborah Johnston at London South Bank University says:
“Over half of the employers we work with…on level 7 apprenticeships are local authorities. Our apprentices enable councils to deliver projects in the wake of…reintroduced mandatory housing targets. The suggestion that, as employers, local authorities should step in and pay for the level 7 apprenticeships themselves is fanciful.”
The professions are also worried. The Institute of Chartered Accountants has said that axing level 7 apprenticeships will lead to work leaving the UK. It says:
“removing Level 7 apprenticeship funding will mean that fewer UK training roles are created. Instead, organisations are likely to turn to offshoring to replace UK training roles”.
The hon. Member for Stoke-on-Trent Central rightly said that it would lead to people being outside Stoke-on-Trent, but in some cases it would lead to them being outside this country altogether. That is why the Campaign for Learning has called for a skills immigration worker test before defunding level 7 apprenticeships, so that we do not simply go from investing in British workers to importing workers from other countries.
Likewise, the Chartered Management Institute has said:
“cutting funding for level 7 apprenticeships would risk creating gaps in leadership…at a time when business and the public sector need them most.”
I have been contacted by several firms worried about the abolition of the solicitor apprenticeship—a way into the law for people from less privileged backgrounds. Attwells Solicitors, for example, says:
“Reducing funding to level 7 apprentices runs the risk of removing opportunities into professions”
and that
“Apprenticeships help break down barriers into not only Law but all career paths which could be inaccessible to young people without them.”
As well as hitting employers, on the other side of the ledger—this is why our amendment is important—axing level 7 will be destabilising for university providers. It will particularly hurt those institutions that have tried to do the right thing for those who traditionally do not go to university. Sixty-six universities deliver level 7 apprenticeships, and a prestigious institution such as Cranfield University, which is a postgraduate-only institution with deep industry links, will be hugely exposed if the Government wield the axe in the way they plan. York St John University has something like 100 level 7 apprentices. Other institutions such as the Open University, Manchester Met and the University of West London are all exposed, too.
Culling level 7 is a big mistake. These apprenticeships are vital across the public sector and are a way into the professions for people who might otherwise struggle to enter them. Above all, they are the capstone of a drive to make the apprenticeship system more prestigious. British Airways carried on running the Concorde even though it was a small part of its business because of what it called the halo effect. It knew that it changed the way the organisation was seen. By creating the top of that pyramid—the very top of the ladder; people can go all the way—level 7 apprenticeships create a halo effect around apprenticeships, and that is a vital part of why we should not get rid of them. Worse still, it was crystal clear from the Minister’s replies in the Bill Committee that the Government are keeping open the option to move on and take an axe to level 6 apprenticeships too, which would make that mistake even bigger and will not, in fact, drive money towards L2 and L3.
The other day we learned that the DFE is to cut the adult skills budget by 6%—something for which Ministers criticised the previous Government but are now doing themselves. Ironically, that came out at the same time as, and was overshadowed by, the welfare reform Green Paper, which mentioned training 18 times. In Committee, the Minister refused to confirm whether the Government would continue to provide the extra 10% funding to get T-levels going, even though providers are crying out for clarity on that. It is no wonder that many employers would like the certainty that comes with a degree of independence from politics.
Wise people on the Labour Benches want that, too. Lord Blunkett said in the other place:
“When two years ago I led on the learning and skills document that was a precursor to Skills England…we never envisaged that an agency inside government would have to take on the assurance and accreditation of the relevant sector standards.”
He noted:
“A Skills England that has no legislative backing and no parliamentary references but is down merely to the changing face of ministerial and departmental appointments is in danger of losing its birthright before it has got off the ground.”—[Official Report, House of Lords, 21 November 2024; Vol. 841, c. GC98.]
Even those on the Labour side who were involved in dreaming up Skills England have argued for its independence. Likewise, various employer bodies, including the Institute of the Motor Industry, the Skills Federation and the Construction Industry Training Board, have argued that it should be more independent.
As Labour peer Lord Knight has pointed out, the problem that some of us have with the Bill is that it feels as if the second half is missing, and that second half is the establishment of Skills England as a statutory body. The original draft of the Bill did not even mention Skills England. As Baroness Blower, another Labour peer, has pointed out, the appropriate move from where we are now would be to make it a statutory body. That is why our amendment would make the Bill do what the Government are pretending it does by actually setting up Skills England, which was clearly the intent of many on the Labour Benches.
Given all the problems that the Government are creating, the very act of a further reorganisation is likely to compound the effects of the Budget. The impact assessment states:
“The transfer of functions from IfATE to the DfE could potentially cause a temporary slowdown in the growth rate of new apprenticeships and technical education courses due to potential delays in the approvals process resulting from the Bill… This may disproportionately impact disadvantaged learners, who rely more heavily on these pathways”.
So there you have it, Madam Deputy Speaker. Employers and educators are criticising the uncertainty that the Government are creating; Labour peers are arguing that Skills England should be made independent, but the Government are ignoring those on their own side with experience; and employers are warning against axing valuable qualifications, but the Skills Minister is determined to end them. Yet another reorganisation, yet more centralisation, no clear vision—it is another big mess.