There’s never been a better time to talk about how we train young people for the jobs of the future.
The economy is starting to turn. This country is on course to grow faster this year than any other advanced economy. Employment is at a record high, and wages are rising faster than inflation.
It’s more important than ever to make sure that our education system gives young people the skills and knowledge they need to get jobs; and gives employers the skilled workforce they need in those jobs.
So today I’d like to talk about one of the most important ways we do that, one of the most formal ways we link the world of education and the world of work – world-class apprenticeships.
Our goal is to make them the new norm for school leavers, alongside university.
With each option just as valuable and just as valued; each option helping young people make the best possible start in life, and reach their full potential.
That’s what apprenticeships do. University is important, but not for everyone – and apprenticeships can break open the door to the professions for more people than ever before, ensuring that no young person is let down, left behind, or left out.
That’s why we’ve come here today; that’s what we’re all working to achieve. And that’s what our economy, our society and our country need.
So I want to set out first how we are expanding the number of apprenticeships.
Second, how employers are now designing the new standards.
And third, how our reforms to apprenticeship funding are set to give employers like you more power to drive up standards and drive up quality.
A growing success story
It is a truth universally acknowledged that no one can please all the people all the time.
But at first sight, apprenticeships seem to be bucking this trend.
There are more people in apprenticeships in this country today, working for more employers and in more sectors, than ever before.
Top apprenticeships are now as competitive as undergraduate places in top universities – and a recent survey found that the majority of young people would like to do an apprenticeship.
In fact – as I can announce today – new research shows that more apprentices are now progressing to higher education – including a greater proportion from disadvantaged backgrounds, who are otherwise less likely to participate in higher education.
Since 2005 over 32,000 advanced apprentices have taken the opportunity to progress into higher education level study
And 2 other reports also published today show that apprenticeships are revolutionising recruitment for employers as well.
Our new health care apprenticeships are winning strong support, opening up new vocational routes into senior clinical support roles, and allowing employers to recoup their costs in as little as 1 to 2 years.
And our new Higher Apprenticeship in Accounting provides – for the first time – a wider, broader training scheme than employers have used before, backed up by government, with a progression route into higher level study, and chartered status.
Last year alone, apprenticeship applications increased by almost 50% – with more from young women than ever before too.
These facts all point one way. Apprenticeships have never been more popular.
More rigorous, more responsive
But there are still loud voices calling for reform to drive up quality; voices comparing our apprenticeships unfavourably with apprenticeships in Germany.
Yes, it’s right to be concerned about quality.
But these concerns are increasingly out of date.
Because since 2010, we have taken action to drive up quality.
Our reforms have already raised standards – and apprenticeships are now more rigorous and more demanding than ever.
Thousands of apprenticeships which didn’t meet our tough new quality benchmarks have been scrapped.
In all, since 2009 to 2010, we’ve stripped out 172,000 short duration apprenticeships and 24,000 so-called ‘programme-led’ apprenticeships, which were apprenticeships without jobs.
Instead, all apprenticeships must now last for at least 12 months; must involve meaningful on-the-job training; have higher expectations for English and maths, and more rigorous assessment and grading.
Every apprenticeship is a paid job. In 2010 we introduced the apprentice minimum wage too – and most employers in fact pay much more.
These tougher apprenticeships are booming – over the last 4 years, ‘full apprenticeships’, as they’re known, have doubled among young people between 16 and 18 [from 53,600 in 2009 to 2010 to 110,900 in 2012 to 2013] and trebled overall [from 144,000 in 2009 to 2010 to 475,900 in 2012 to 2013]. We’re on track for 2 million apprenticeship starts over the Parliament.
For young people who aren’t yet ready for a full, rigorous apprenticeship, we’ve created traineeships – a new programme to help young people get the skills, behaviour and experience that employers need, from teamwork and punctuality to top-quality English and maths.
We want the new norm to be that when young people leave school or college, they either start an apprenticeship or a university course.
And our new higher apprenticeships, of course, achieve the double – a university course within an apprenticeship.
These are already running in sectors like accountancy and life sciences.
And we’re putting rocket boosters under the programme – funding an extra 20,000 higher apprenticeships over the next 2 years, as well as an extra £20 million to fund employer investment in higher apprenticeships that include higher education courses.
These go all the way up to the equivalent of a Masters.
Which means that apprenticeships today are better than ever – and from space engineering to the law, they can take young people higher, further and faster than ever before.
Driven by employers
Second, as well as being rigorous, it is vital that apprenticeships are responsive to employer need.
While in the past the training in apprenticeships may have been designed by committee or quango, our reforms are putting employers in charge of apprenticeships.
This isn’t an experiment, but a fundamental, root and branch reform, changing apprenticeships for ever – and for the better.
No longer will apprenticeships be designed and delivered from the top down by civil servants, politicians and quangos.
Instead, employers are taking the lead – are being given the pen to write down the competence required in a successful apprenticeship – and employers large and small have shown a huge appetite to get involved.
More than 400 employers and professional bodies have signed up as apprenticeship ‘Trailblazers’ , working together to draw up new, world-class apprenticeship standards – designed by employers, for employers.
From huge employers like PwC, Microsoft, John Lewis, British Airways and BMW to small businesses like The Test Factory and Walter Smith Fine Foods, and many, many more – including, I’m pleased to say, many of you in this room – our trailblazer employers span a total of 37 industries and occupations, from accountancy, insurance and law to maritime industries and retail.
And the learned professions are in the vanguard.
The Financial Services Trailblazer, for example, is developing the first degree-level apprenticeship standard, for a relationship manager in the banking sector, with the first apprentices expected to make a start this autumn.
Other trailblazers are – as we speak – developing standards for the ever-increasing number of higher apprenticeships, training young people for sought-after occupations like dentistry and software development.
Our aim is for all new apprenticeships started after September 2017 to follow these new standards. And I’d like to take this opportunity to thank all of our trailblazers for their hard work.
Some of these companies already employ apprentices; some have never been involved in apprenticeships before.
Now, large or small, world-leader or local expert, they’re working together to decide, design and deliver world-class apprenticeship standards.
Funding reforms to put employers in the driving seat
Third, just as we’re putting employers in charge of what apprenticeships cover – so too we’re giving you more control over how they’re funded.
At the moment, government – by funding training providers directly – holds the purse strings too.
The drivers of quality of training are on the supply side.
But it’s employers, not government, who know what training their apprentices need – and it’s employers, not government, who know which courses deliver best value for money.
For years, people have been talking about rebooting the funding system to make it work better for employers – shifting the focus from supply to demand.
Making training like a normal supply chain: with you, the customer, buying from responsive suppliers.
This government is actually doing it.
In the same way employers manage their own budgets for staff training, we will give employers greater control over the budget for government-funded apprenticeship training too.
That means that employers will be in the driving seat over the quality, price and delivery of the training their apprentices receive.
Some people are concerned that our reforms will go too far.
There are already some myths about what these changes will mean in practice and I want to address them head on.
Some of the myths include: that our plans will work for big businesses, but not for smaller employers; that employers will need to fork out the full cost of training up front; that every employer, even the smallest, will have to be inspected by Ofsted, and submit extensive and bureaucratic data returns; and that training providers will no longer be allowed to offer employers help with apprentice recruitment or wraparound services, as they do now.
But these concerns couldn’t be further from the truth.
Let me go through each in turn.
First, small employers. I come from a background in small business. I know how it feels and I know the dead hand of bureaucracy.
I will not cut out small employers or training providers, add any unnecessary bureaucratic burden or make apprenticeships more complex and more confusing.
I want the system to be attractive. And to be attractive to massive, multi-national corporates or the smallest small business, it must be simple, clear and user-friendly.
Our Apprenticeship Grant for Employers gives support direct to small businesses already. It works, though it could be simplified further.
Training providers will still play a vital role in helping employers to engage with apprenticeships, small businesses in particular.
In March this year we set out 2 options to do this.
One would use the Pay As You Earn (PAYE) system, building on the existing model which employers of all sizes already know and use.
The other would set up a new system, the ‘Apprenticeship Credit’, putting government funding into an online account which employers can access and use to buy training and assessment from a range of registered providers.
I’d like to thank everyone who took the time to respond to our consultation – including representations from over half a million employers.
We’re considering all the responses now and taking the time to get this right.
These changes have the potential to help employers of all sizes get a better-skilled workforce; to drive up the quality of training offered to young people; and to deliver far greater value for taxpayers’ money.
It’s a big ask. But it’s the right thing to do. And it will transform apprenticeships for the better.
It’s great to see employers like BSA, Barclays and DWF LLP coming together to champion and celebrate apprenticeships today – and to hear that for the first time, the BSA has brought together data showing that their full members employ 11,500 apprentices nationwide.
Your commitment, your expertise and your experience, will hopefully encourage even more companies to get involved.
And that will help drive up standards for everyone – ensuring that all employers can make apprenticeships part of their future, and giving more young people the chance to do the same.