John Hayes: Cutting apprenticeship red tape for employers

John Hayes MPA speech to the Confederation of British Industry, London. 6th September, 2011

Good morning everyone.

Most of us might think of this time of year as one of endings rather than beginnings. With the nights starting to draw in and a cold nip in the morning air, summer holidays are over and harvest-time is upon us. Whether or not they amount to mellow fruitfulness, the temptation is for us all to sit back and admire the results of the work we did earlier in the year.

But as we stand on the threshold of autumn, we should remember that this can be a time of important beginnings as well as endings. My children, like millions of others, returned to a new year at school yesterday. Take today, 6 September, for example. William the Conqueror landed in England and set in motion amongst the most profound social and political changes that this country has ever seen. Nearly six centuries later, this was also the day on which the Mayflower set sail for America, not just starting the rise of a new superpower, which in crucial ways sowed the seeds of the modern business environment in which most of you operate.

And what we do in the future can be as glorious as all the best of what we’ve done in the past. So I want to speak today of a future which is better for Britain because it’s better for business. Specifically, I’d like to share some thoughts with you about the steps we are hoping to take with you to spread the social and economic benefits of Apprenticeships even more widely.

That’s not merely a technical issue – it’s about investing in human capital.

Anyone who has seen for themselves just what an Apprenticeship can do to turn someone’s life around, knows the power of that investment, whether the apprentice is an adult looking for a new direction or a young person just starting out. Power not only to give them new skill, fresh hope and undreamt-of earning potential, but even more importantly power to give new pride in new abilities, people with a constructive purpose in life, real self-respect reinforced by the respect of those around them.

You know that, our Government is facing two profound domestic policy challenges. First, promoting renewed economic growth and prosperity for British businesses. And second, giving renewed hope and purpose to British people, especially the young, whose disaffection with things as they are was shown so graphically recently.

Building an Apprenticeships programme that delivers to its maximum potential is highly relevant to increasing the chances of meeting both challenges successfully.

And it’s highly relevant to you. Some businesspeople say that they’re reluctant to become involved in training because it’s easier to just go out and buy the skills they need to grow and to thrive, if necessary by looking abroad. But that’s a short term fix not a long term solution to Britain’s skills shortages.

I appreciate that many of you already engage apprentices in large numbers as well as offering training to your existing staff. You know already what they can do for your businesses’ performance and for their standing within the community, you value the difference skills make to productivity and competitiveness. I know, too, that many of you have been powerful advocates of training among other businesses in your own sectors. And I want to pay public tribute to that this morning.

Your efforts have played their part in allowing us to offer at least 250,000 more Apprenticeships over this Parliament than the previous Government had planned. Thank you.

But with nearly one million young people not in education, employment or training, I think it’s obvious that we haven’t yet done enough.

Too often in the recent past, businesses have been asked to collude in Government numbers games. Getting more so-called NEETs off the unemployment register by setting arbitrary targets and creating schemes just to meet them is just not right.

We must also make progress in increasing the range of Apprenticeships, and improving their quality. Their reach must become as wide as the scope of learners’ abilities and aspirations. Their quality must be such as to make the apprentice sought after by employers, envied by their peers and admired by the rest of us.

That necessitates, among other things, for creative thinking and for expanding our own perceptions of what Apprenticeships are.

They certainly remain highly valuable for traditional crafts. The special quality of the interface between an apprentice and his mentor, the vital symbiosis, can inspire both; between one generation eager to pass on all it knows and the next ready to learn. Too rarely are, these days, generations brought together in that way. But the potential for knowledge to be passed on from one generation to another, and for them to find common cause as craftsmen, goes far beyond a particular discipline.

I said last year that craft is as much about learning to be a film technician as furniture maker; as much about learning to be a fashion designer as a fishmonger. I did not have Pinewood Studios in mind when I said that, but I’m still glad that you will hear from them later on about how they have brought together a network of small employers in their supply chain to deliver successful Apprenticeships.

This variant on the Group Training Associations theme, with small employers working with a large totemic employer, is something that is worthy of further consideration. Its very nature generates cross-Sector Skills Council working and a sector-led approach to generate growth. This is something that I obviously welcome and about which I have been talking to the UK Commission for Employment and Skills.

A second key area where we must make progress, one that I think will strike a particular chord here. The Government said in its response to the Wolf Review in May that we were committed to simplifying Apprenticeships, in order to remove unnecessary bureaucracy and make them less onerous for employers to offer.

And I, for one, see no contradiction between our wish to raise quality and our commitment to cut red tape. That’s why we have started a specific project looking further at how we can facilitate greater engagement with small and medium-sized enterprises in skills, training, and Apprenticeships. That project will report to me this Autumn.

But I also recognise that reducing bureaucracy and burdens for large employers is not easy. Tinkering would not be the answer. It had – as some of you may recall – been tried before and had made little difference. Instead, we needed to start from some robust analysis of the systems and burdens imposed on large employers to allow us to step back and think about the way the system operates as a whole.

What we do must be evidentially based.

Which is why I was so delighted to give my full support to a commission by the Employer Reference Group, in which the CBI and many large employers played an important part. The commission’s aim was to review the processes faced by large employers seeking to take on apprentices and the result of its work is the excellent report being published today. This sets out in detail the processes involved in taking on apprentices and how bureaucracy can be reduced for large employers who contract directly with the Skill Funding Agency.

The report has been co-sponsored by two of the Employer Reference Group members – BT and TUI Travel, and I am delighted that Andy Palmer from BT will speak to you in a moment. The study and the report were produced by the Learning and Skills Improvement Service – LSIS – who are also here today.

The report has made a series of broad recommendations to simplify the system and help encourage more large employers to recruit apprentices. Naturally, we were reluctant to wait for publication of the report before taking action, and I have here an Action Plan that we are implementing to take forward the report’s recommendations.

One key measure suggested by employers – that we look at paying large employers by outcomes only, thus stripping away a significant number of data collection and audit burdens – has, I am delighted to say, started this month with a pilot of over 20 major employers.

But we will go further:

  • Providing an online, plain-English, toolkit for employers that clearly explains the end-to-end processes employers need to undertake for apprenticeships;
  • Streamlining contracting arrangements;
  • A commitment to no “in year” changes to contracting arrangements;
  • A more proportionate approach to audit and inspection – reducing preparation time for employers;
  • Greater use of electronic information, thus reducing paperwork;
  • A more streamlined certification process.

Progress against this Action Plan will be monitored via a Task and Finish Group of employers being set up by the National Apprenticeship Service, with the Skills Funding Agency. This group will not only keep me informed of progress and the impact that the changes are having but will also report regularly to the Employer Reference Group. And I will insist on 6 month and 12 month progress reports tested against the views on major employers, the CBI and other key players. I know that many of you, too, will also be keen to see how this work is progressing.

It remains only for me to thank the CBI, for their hospitality this morning, their championing of Apprenticeships in general, and the work they, and all the employer members of the Reference Group, especially Andy Palmer from BT and Andy Smyth from TUI Travel, have done to support this study and the resulting report and action plan.

Apprenticeships: time honoured, but right for now.

Right for business because they boost productivity.

Right for those that gain the skills to prosper.

Right for Britain because by fueling economic growth and fostering the common good they feed our national interest.