Oral answer (Lords) on Apprenticeship Levy: Creative Industries - July 23

To ask Her Majesty’s Government what plans they have to amend the working of the apprenticeship levy to take account of the concerns of the creative industries.

My Lords, we introduced the levy to fund a step change in apprenticeship numbers and quality. This is putting funding on a sustainable footing while improving the technical and professional skills of the workforce. We recognise that some sectors and employers, including in the creative industries, have challenges in taking advantage of these reforms. We continue to work closely with employers in this sector to inform them about the benefits and to encourage apprenticeship take-up.

I am grateful to the Minister for that reply but, rather more than challenges, does he not accept that the apprenticeship levy is fundamentally unsuited to delivering the skills that the creative industries need? It does not align with the sector’s own voluntary training, there are only a dozen approved apprenticeship standards for a sector with thousands of different job roles, and there is insufficient flexibility to share training vouchers with the SMEs that make up 95% of the sector. The Creative Industries Council and the Bazalgette report have made a clear business case for an industry-specific training model that is better suited to provide the skills and the apprenticeship needs of the sector. Will the Government accept those recommendations to ensure that the success story of our creative industries can continue?

My Lords, we will certainly look at the recommendations and we recognise that the creative industries sector comprises a workforce that is different—it is more diverse, and largely made up of freelance and sole-trader businesses. However, if an apprenticeship linked to the levy is not suitable, then the apprenticeship training agencies could provide a solution for this important sector. ATAs recruit, employ and arrange training on behalf of employers, which includes the 20% off-the-job training. A further solution is for the major levy-paying employers to transfer up to 10% of their levy funds to help the sector.

My Lords, in giving evidence to the Select Committee on Communications of your Lordships’ House last year, the Skills Minister, Anne Milton MP, said this on apprenticeships in the creative sector:

“One of the challenges for the DfE … is to make sure that we have a flexible system that is fast and constantly renewing itself”. 

Further to the comments from the noble Lord, Lord Foster, about the Bazalgette report, Creative Skillset—the strategic body that works to ensure that the UK’s creative industries have access to sufficient skills and talent—produced a four-point report seeking to enable appropriate apprenticeships to be delivered within that sector. One of the points in that report was structural flexibility involving longer apprenticeships and periods between placements. It seems that the Minister is in agreement with Creative Skillset, so can he explain why his colleague has not yet taken steps to ensure that flexibility for the creative sector has been introduced?

I have already said that we need to do more for the creative sector and that it is an unusual case. That is why, as part of the creative industries sector deal announced on 28 March 2018, there are shared commitments laid out by the Government and industries to address the current and future skills needs in the creative industries. That includes working with employers to monitor the impact of the levy, and to continue to analyse apprenticeship starts. It also includes funding to support the development of priority apprenticeship standards.

My Lords, can the Minister confirm that many organisations in the creative industry regard the apprenticeship levy as little more than a cost of doing business? They find it extremely difficult to get any advantage from it. Many of them operate on very narrow budgetary constraints. For example, the Royal Shakespeare Company, with which I am connected, offers apprenticeships in engineering, prop making, sound technology, carpentry, automation, venue management and catering—I could go on. Does the Minister think it is right that it should offer all those opportunities but not be able to get any benefit from the levy?

We continue to work with the creative industries sector to be sure that that it has the apprenticeships that it needs. I remind the noble Baroness that this is employer-driven. Three hundred apprenticeships have been approved so far under the new standards system, while 41 standards are in the process of being created in this sector, of which 27 are in development and 14 have already been approved. There is more work to be done and I take note of what she says.

My Lords, the Minister said in his Answer that the Government’s plan was to introduce a step change in apprenticeships, and indeed they have—they have stepped down by 50% so far. The reason is that SMEs in the creative and media industry and throughout other industries are struggling to make this work. In order for the Government to get the step up rather than down, will the Minister first admit that there is a problem and then undertake to try to solve it, rather than lumping it on to the industries?

The noble Lord will know that I have acknowledged in this Chamber that there is a drop in apprenticeships, but the main reason for it is that we have moved from the old frameworks system of apprenticeships to the standards one. That is why there is a drop if one looks at it year on year. We have acknowledged that and are doing something about it.

Is the Minister aware of the large growth of courses offered in business schools that satisfy the demands and requirements of the levy? There are now 147 of them. Was it the Government’s intention to give such a boost to management training for the creative industries and the rest of industry?

The apprenticeship at the higher level can be defined at quite a senior level. I say again that it is up to employers to engage with the Institute for Apprenticeships to define and describe the standards that they think are right. Some of them are quite senior and would include management levels.

My Lords, with hindsight, does my noble friend think that setting a target of 3 million new apprenticeships might have been a mistake that encourages quantity over quality? Would it be better to have a target for those who have completed apprenticeships rather than started them, given that 40% do not complete them?

We have always said that quality comes before quantity. It is good to have a target of 3 million quality apprenticeships that will change the lives of apprentices and the prospects for businesses.