Neil O'Brien MP: speeches

Speeches

• 21 May 2025 · Business and the Economy · Hansard source

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  I want to continue on the subject of deindustrialisation. Is it not the case that the manufacturing share of the economy dramatically fell under the previous Labour Government and then stayed the same under the last Conservative Government?

• 21 May 2025 · Business and the Economy · Hansard source

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  We inherited a situation where unemployment had doubled. One of the great achievements of that Government was to halve it again. This is confidential, but the first time I met Nick Clegg, I was accompanied by a gentleman wearing a chicken suit—this is the kind of serious economic analysis I am famed for—but I have to say that Nick Clegg was not a chicken when it came to making difficult decisions to clean up that huge mess; the Liberal Democrats made some difficult decisions along with us to try to do that. I have talked about the increase to national insurance contributions, and I will return to that in a little more detail. We have also talked about APR and BPR. One of the most striking developments in my constituency, though, has been the effect of the doubling of business rates for the hospitality, leisure and retail sectors through the ending of the relief that we introduced—an effect that is very visible, particularly in the high streets such as the Parade in Oadby, and in Wigston and South Wigston. The situation is also bad in Market Harborough. The problem is compounded by some local decisions—the council has increased parking charges, which was a big mistake—but it is the ending of those reliefs and the huge increase in national insurance contributions that have been especially bad for our local high streets, and for pubs in particular. When I was talking to a brilliant pub landlady who owns several pubs in my area, she said, “We hoped so much that this new Government would be a morale-lifter and there would be a boost and a feel-good factor, but now we have a feel-bad factor.” I often drive past a number of pubs that have recently closed because of the confluence of the ending of the reliefs, the higher energy costs, and a number of the tax measures that the Government have introduced. It is desperately sad to see all those closed pubs that used to be huge centres of community life. When people lose their local pub, they lose a piece of their social fabric as well. Pubs are important local businesses, especially in rural areas. We have had the tax increases, and we have also had the increase in energy costs as a result of everything that the Secretary of State for Energy Security and Net Zero is doing. We were promised a £300 reduction in our energy bills but instead we have seen a £281 increase, and that can only rise as the Government do all sorts of ill-advised things to hit their ill-advised target of fully decarbonising electricity by the end of the Parliament—something that will massively increase the costs of going green in comparison with the counterfactual. At the same time, we have seen a massive increase in employment red tape. One of the bright spots in the UK economy over the last 30 years has been a relatively liberal labour market, but there has now been an extraordinary moment when all the big five business groups in the country came together for the first time—they have never done this before—to criticise the Employment Rights Bill. A Member on the Government Benches said earlier that it was all right because some Cambridge professor had said it was fine; on the other hand, every single business in the UK is saying it is a disaster. The fact that Members are accepting that kind of donnish approach to managing the economy, rather than listening to the views of the people who actually create jobs and drive our economy, really says something about the contemporary Labour party. This is no joking matter, though; it is a serious issue and a major economic detriment. At a higher level, the wealth creators have been affected: the non-dom changes, some of which have already been rowed back on and more of which may be rowed back on in future, have driven away people who have a great deal to give to our economy. There are plenty of reasons for this picture of economic underperformance and gloom. I would not mind so much if all the tax increases, leading to a record tax burden, had been imposed against a backdrop where the Government were bringing our debt and deficit under control. Perhaps the Minister will be able to correct me, as his knowledge of fiscal factors may be greater than mine, but I cannot recall any fiscal event when the Government have presented a Budget and at the end of the forecast period, public sector net debt was still rising. There have been plenty of fiscal events when debt has risen, because of events such as the pandemic or the war in Ukraine, but they have all shown a path towards falling debt. This is the first time I have seen a chart—I think it is chart 7.3 in the Office for Budget Responsibility’s economic and fiscal outlook—that shows debt still ceaselessly rising even at the end of the forecast period. I cannot remember another Budget like that. We are seeing the confluence of a stalling, stagnating economy, rising unemployment, increasing tax and, as a result of all that, debt rising and storing up major problems for the future. I want to go into a bit more detail about a couple of matters, the first of which is that national insurance increase. Labour in opposition promised that there would be no tax increase for working people, so I was stunned—jaw on the floor—when the biggest tax increase that they introduced fell squarely not just on working people, but on low-income working people. It is like a laser-guided, heat-seeking precision missile, targeting those low-income workers, particularly women, who graft hard and are not paid a lot. I find it incredible that a Labour Government—a Labour Government!—should have chosen, as their big tax increase, to lower the threshold for national insurance while increasing the rate. It hammers those on the lowest incomes. That is amazing. Why was that option chosen? It was chosen for all the wrong reasons. It was chosen because the Labour party hoped that it could say, “This isn’t a tax on the workers; this is a tax on businesses.” Of course, everyone can see through that. The problem for the Government is that the Office for Budget Responsibility immediately popped up and said, “No, three quarters of this will be passed through to people’s wages.” The OBR says that people on £13,000 a year will lose £500, which is a lot to lose for someone who is on only £13,000. People earning £9,000 a year are the biggest losers proportionately. According to the OBR, they will lose 5% of their income as a result of the huge tax increase being passed through into their wages. It is amazing that Labour Members are not up in arms about the fact that the Government have just implemented one of the biggest tax increases ever and have targeted it at lower-income workers. That is incredible for the Labour party—absolutely unbelievable. On the other side of the ledger, what has happened to public services? Of course, they are all hit by the national insurance increase. We were promised in the autumn Budget that they would be looked after, but that is not what has happened in practice. First, we found out that lots of bits of the NHS would not be compensated, including primary care—that GPs, opticians and dentists were all going to have to suck up the increase in tax. We also found out that social care would not be protected and would have to suck it up. Intriguingly, and as I pointed out at the time, there was a difference between the Budget document and the OBR’s EFO, which I am sure the Minister will remember. The EFO cited a different number for the cost of protection and it mentioned that social care would be included. One of the joys of having the OBR—although it is not a joy for those in the Treasury—is being able to see the Government’s handwriting and the last-minute changes; in this case, we can see that they were thinking very seriously about exempting social care from the big increase in tax, but that they chose not to do so at the last minute. That was the wrong decision.

• 21 May 2025 · Business and the Economy · Hansard source

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  Labour Members who were not in the House at the time—it is before their time—will not remember that the deficit we inherited in 2010 was twice the size of the one that Labour has inherited, and the structural deficit was twice as big. Indeed, we went into the global recession—the financial crisis—with the largest structural deficit in our peacetime history. That is the record of the last Labour Government. We had had a recession that was the size of the 1980s recession and the 1990s recession put together, and when I say we were cleaning up the mess—I am afraid I am going to use a generation X metaphor—I mean it was like one of those enormous brontosaurus poops in the film “Jurassic Park”. We were cleaning up a big mess, and it took us a long time. We had to make some difficult decisions, particularly during the coalition years, to clean that up. Members have referred to my peroration, but I am afraid I am only getting started. [ Interruption. ] The House groans at the prospect.

• 21 May 2025 · Business and the Economy · Hansard source

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  In one moment. I want to talk about some other public services that have been affected by the national insurance increase. There are a lot of examples in education. Nurseries have lost out, and they are screaming right now; they are in real difficulty. Lots will close and lots will fail to deliver the places that parents have been promised. If Ministers meet representatives of nurseries, they will hear a tale of incredible woe, because nurseries are caught by both the large increase in national insurance, which squarely hits their workforce, and the increase in the national living wage. I am not against the national living wage—in fact, I helped to give it its name—and I believe in fair pay for fair work, but we have to be conscious about what we are doing with tax, because we cannot have a big increase in the national living wage and then wallop those exact people with a massive tax increase. That way lies disaster for our public services and for our small businesses. Nurseries have lost out, and schools are losing out. Schools were promised that they would be fully compensated. It is not us saying this; it is the Association of School and College Leaders, which is a trade union, and the Confederation of School Trusts. They have discovered that schools are losing out by up to 35%—that is how much they have been shortchanged by this Government. The Government have deliberately obfuscated the funding and they are not even attempting to compensate each individual school for however much money they are losing. The result is that schools might sack about 13,000 teachers. In fact, I have been meeting representatives of schools and school trusts in recent weeks, and they are currently sacking teachers. The Harris Federation—one of the best trusts in the entire country, with an amazing and proud record of turning around London schools—is sacking people. The Synergy multi-academy trust is sacking people. Sir Jon Coles, who runs the largest school trust in the entire country, has said that schools are obviously going to have to sack people, because schools have been shortchanged over national insurance. It is pretty poor that they were promised something that has not been delivered. It is the same for our universities, and I have to say that this was a masterclass in un-joined-up government. First, the Government broke their promise on fees. They said graduates would pay less, and they increased tuition fees instead. That was the first broken promise. Secondly, the universities did not even get the money; it was entirely wiped out by the increase in the national insurance rate. Thirdly, with industrial action looming across the sector because they had taken away all the money they had put in, the Government made it easier to strike through the Employment Rights Bill. It is now rumoured that the Office for Students are to bring in a new mechanism to make it easier for students to sue universities if there are strikes. This is a case of left hand, right hand—or of arse and elbow, if I am completely honest—and a masterclass in totally chaotic government. The same is true in lots of other bits of our public services—public transport, culture, housing and local government. According to the Local Government Association, local authorities have been short-changed by £1.8 billion, which is an enormous hit. They were promised they would be compensated, but they have not been compensated. However, the worst example for me is our charity and voluntary sector. As the Minister knows, at least 7,000 charity and voluntary sector leaders have written to the Chancellor asking her to change her mind and reverse the massive increase in national insurance on these small, vulnerable organisations. When I talk to charities and voluntary groups in my constituency, they tell me some pretty disturbing things about what they are having to do to their staff because of those big increases. I pay tribute to organisations such as Helping Hands up in South Wigston, Voluntary Action South Leicestershire, Loros and Rainbows. I am afraid we were recently forced to use one of our brilliant local hospices, Loros, to help look after my mother-in-law, and it provided wonderful care. However, its job is not made easier by the fact that it has been hit by this enormous tax increase. If the Minister wants a really good measure for the next Budget, he should reverse that. It would be hugely popular, but more importantly, it would be the right thing to do. Public services have been short-changed, and low-income workers have been the hardest hit, which is a pretty bad combination. I want to mention something that has not been much explored in recent days, which is a tax increase—a stealth tax increase—that has gone unrecognised. By linking the UK emissions trading scheme with the EU scheme, the Government have increased the tax on energy that firms face, because the ETS is of course a tax, albeit a traded one. Prices in the UK ETS have been driven upwards for the last couple of months not just by the final deal announced the other day, but by the prospect of a deal and the prospect of connecting those two different markets. Two different things have become a bit muddled in the public discussion—one is about trading electricity and the other is about the actual ETS as a tax. In January, UK allowances were trading at about £36 a tonne for December 2025 delivery, and EU allowances were about £25 a tonne more expensive, so £36 plus £25. As of today, the UK ETS is £54 a tonne and the EU ETS is only £4 a tonne above that. We have seen a tremendous price convergence, with the UK tax rate—the UK carbon price—shooting up to match the EU one. Although the price had been ticking up on the prospect of connection to the EU scheme, it went shooting up on the announcement of the deal: it is up by a further 10% since Monday’s reset announcement. That is increasing the cost to businesses, and it will ultimately pass through to the wider economy and to the rest of us. Looking at the EU ETS price movement so far, it seems to me that the UK Treasury will accrue about £1.2 billion extra as a result of these increased ETS costs, which would certainly outweigh the supposed benefits from the carbon border adjustment mechanism—not that that tax is necessarily paid by firms in the UK, because it is paid by importers in the EU—so the wider cost of this stealth tax could be more than that. I mentioned that the potential increase to the Exchequer is about £1.2 billion, but the overall cost could be higher at more like £2 billion or so. That is an immediate result of the deal announced on Monday, and it is in effect a stealth tax, because it has given us a higher carbon price immediately. I thought it was ironic that the Draghi report—the EU’s own report into how it can become more competitive—was quite critical of the EU’s ETS. It said it had given the EU one of the highest carbon prices in the world—a high and volatile price. The Government were telling us what a wonderful benefit it was to be part of it, even as senior people in the EU were saying that it is a problematic scheme. That part of the deal has been a bit underappreciated so far.

• 21 May 2025 · Business and the Economy · Hansard source

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  The outlook for business and the economy is really not good, to be brutally honest. We learned today that inflation has gone shooting up to 3.5% in a surprise increase. The Chancellor said she is disappointed by that, but it is entirely the result of her own policies. She was warned by the OBR, among others, that if she increased taxation to record levels and increased borrowing to record levels, it would have an inflationary impact. We are now seeing that, and normal people are literally paying the price through higher inflation. That is more alarming because it is against a backdrop in which unemployment is up by 150,000 people and growth is stagnant, with the IMF downgrading its forecast for growth for both this year and the next. Business confidence is down at levels last seen during the pandemic, when the entire world economy was brought to a stop. Businesses are clearly very anxious, and that is apparent from talking to businesses in my constituency. When business suffers, ultimately it is living standards that suffer. The brilliant Minister, the hon. Member for Swansea West (Torsten Bell), produced loads of good work when he was a think-tanker for the Resolution Foundation. He used to produce lots of wonderful charts—I am a great enjoyer of charts—about real household disposable income, and he was worried about that. Now the Government have come in, and the measures they took in their first Budget reduced the forecast for household disposable income. The post-measures forecast, in technical terms, was lower than the pre-measures forecast. The outlook for living standards in terms of disposable income is one of the worst for many decades, as shown in the OBR’s forecast for living standards; growth is a tiny fraction of what we have considered to be normal since 1945. The outlook is bad, and it is not difficult to explain how we got here. The Government have taken the tax burden up to an all-time record high, and in lots of different ways. They increased national insurance and they cut agricultural property relief and business property relief. It is interesting to see how that is percolating out across the rural economy. People often think of the family farm tax as something that just hits farmers, but I have been struck by the multiplier effect. When I met local businesses, there was a whole group of people there—farmers, sure, but also suppliers of tractors, insurers, vets and those from the whole wider rural economy. It is all being dragged down. We have already heard from Welsh colleagues about the massive reduction in investment in their rural economies as a result of that unfair tax. As has been noted by various Members, the family farm tax has been floated many times. It was certainly put in front of us when I was at the Treasury, and we said no. My right hon. Friend the Member for East Hampshire (Damian Hinds) said the same thing. This terrible idea has been produced many times, and I am afraid that there has been a mugging on Great George Street; naive, totally innocent young Ministers have come in and been mugged by wily civil servants, who have finally been able to have their way. We have all had that piece of paper on the winter fuel payment put in front of us, but we chose not to do it. Civil servants must not have believed their luck when these Ministers agreed to do it. The Government are now hastily trying to do a bit of a U-turn, but let us see what comes forth.

• 16 May 2025 · Terminally Ill Adults (End of Life) Bill · Hansard source

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  I am one of those people who is against the Bill, not in principle but for the reasons set out brilliantly by many articulate Labour Members. When my constituents ask what I think about this, I have no way of telling them; there is no way for me to get into the nuance of my position on it, because there has been no time to have a proper debate, and so many Members will now be unable to say a single thing about this totally transformative Bill.

• 16 May 2025 · Terminally Ill Adults (End of Life) Bill · Hansard source

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  Will the hon. Member give way?

• 16 May 2025 · Terminally Ill Adults (End of Life) Bill · Hansard source

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  Will my hon. Friend give way?

• 16 May 2025 · Terminally Ill Adults (End of Life) Bill · Hansard source

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  Will my hon. Friend give way?

• 28 Apr 2025 · Freedom of Speech: Universities · Hansard source

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  At the start of January, the Secretary of State said that she needed more time to consider the overseas funding transparency measures in our freedom of speech legislation. It is now nearly May. In the meantime, there have been several concerning the reports in the press about UK universities working with Chinese institutions that are designated as high risk and have ties to their defence and security apparatus. This legislation was passed in 2023. When will the Secretary of State reach a decision?

• 28 Apr 2025 · Child Rape Gangs · Hansard source

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  On a point of order, Mr Speaker. It is not correct that Oldham council had written to the last Government. An individual councillor had, but Oldham council had not. That is the whole point.

• 28 Apr 2025 · Child Rape Gangs · Hansard source

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  The Government are blocking a national inquiry into the rape gangs and say instead that we should have five local inquiries, but we know there have been 50 places where these things have happened. In some of those places, such as Bradford, the council is blocking a local inquiry. We also know that local authorities often do not have the powers they need to requisition evidence and summon witnesses. Indeed, this whole story began when representatives of Oldham council wrote to the Minister after the election asking for the national powers that the council needed. Why did the Minister refuse to meet them?

• 28 Apr 2025 · Child Rape Gangs · Hansard source

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  No, it had not.

• 28 Apr 2025 · Apprenticeship Funding · Hansard source

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  The British Chambers of Commerce has said that the lack of clarity around the future of the apprenticeship levy is creating uncertainty among businesses, and is “worrying and destabilising”. Employers in universities are worried about plans to cut higher apprenticeships, and the Institute of Chartered Accountants has said that plans to axe level 7 apprenticeships will lead to work leaving the UK altogether. Will Ministers agree to the proposal from the Campaign for Learning for a skills immigration worker test to be carried out before any cuts are made to level 7 apprenticeships, so that we do not go from simply investing in British workers to just importing workers from other countries?

• 28 Apr 2025 · SEND Provision · Hansard source

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  Having told this House in answer to an urgent question from the hon. Member for Twickenham (Munira Wilson) that the adoption and special guardianship support fund would continue, Ministers somehow did not manage to mention that the funding per child would be cut by 40%. They then slipped that out during recess. Meanwhile, Ministers will spend £90 million on advertising. Can they at least agree to publish the impact assessment on cutting what is available from this fund?

• 28 Apr 2025 · SEND Provision · Hansard source

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  When will the Government publish the impact assessment?

• 22 Apr 2025 · “For Women Scotland” Supreme Court Ruling · Hansard source

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  The Minister says that her position on these issues is very clear and has not changed at all over the years. She is promising to work at pace now, yet nine months into her time as Education Secretary the guidance on gender-questioning children that was consulted on over a year ago has still not been published. Will she help schools by answering this question: can it ever be right for a school to socially transition a child without talking to the parents first?

• 2 Apr 2025 · School-based Nursery Capital Grants · Hansard source

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  Answer the question!

• 1 Apr 2025 · Draft Cornwall Council (Adult Education Functions) Regulations 2025 Draft East Midlands Combined County Authority (Adult Education Functions) Regulations 2025 Draft York and North Yorkshire Combined Authority (Adult Education Functions) Order 2025 · Hansard source

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  Could the Minister find out what proportion of the devolved ASF goes on statutory entitlements at the moment? That is the measure of whether this is really devolved. We all agree on the importance of devolution and so on, but is it real devolution or, in fact, are these devolved authorities ultimately having to spend money on things that we have decided? What proportion of the devolved budget is currently being spent on those four statutory entitlements?

• 1 Apr 2025 · Draft Cornwall Council (Adult Education Functions) Regulations 2025 Draft East Midlands Combined County Authority (Adult Education Functions) Regulations 2025 Draft York and North Yorkshire Combined Authority (Adult Education Functions) Order 2025 · Hansard source

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  It is entirely my fault that I did not explain clearly what I meant. We are in complete agreement about the policy, but what I am keen to understand from the Department—the Minister may need to write to me on this point—is: how much of the money that has already been devolved is being spent on statutory entitlements, and what proportion of it can, therefore, be spent on things that are not statutory entitlements? It is a question of fact rather than of great policy disagreement.

• 1 Apr 2025 · Draft Cornwall Council (Adult Education Functions) Regulations 2025 Draft East Midlands Combined County Authority (Adult Education Functions) Regulations 2025 Draft York and North Yorkshire Combined Authority (Adult Education Functions) Order 2025 · Hansard source

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  It is a pleasure to serve under your chairmanship, Ms McVey, and to have the draft statutory instruments being put into effect. The agreements were struck under previous Conservative Governments; as we agreed the devolution of powers, we will not pray against them. I want to put the draft regulations and order into a little context, however, because the Government have just cut the adult skills budget by 6%—something that Ministers previously condemned the previous Government for, only to do exactly the same. We need to see devolution in that context and in that of the wider uncertainty created by Government about skills funding. For example, providers are crying out for certainty about the 10% uplift for T-levels. They want to know whether that will continue this year, but Ministers seem unable to tell them. Also, in the main Chamber yesterday, I quoted the British Chambers of Commerce and other employer organisations’ warning about the funding uncertainty for apprenticeships, with the Government’s plans to allow 50% of the money to be taken away to spend on other things. That is already causing real damage and leading to a reduction in hiring decisions, yet the uncertainty continues and the damage from the Budget likewise. That is the context of the skills devolution. Earlier in the House, the Minister announced ongoing funding for special guardianship, after the money had gone out. When Ministers were dragged before the House was the point at which they made the decision—when they were literally a day overdue. I hope that we will not see the same thing in skills policy, because that would lead to real damage to skills in this country. I want to ask the Minister a couple of specific questions, even though we agreed these devolution deals and welcome them. Firstly, what share of the budget will be devolved once all the already agreed devolution of adult skills spending is complete? The explanatory memorandum says that 62% of the ASF is already devolved. What share will that be once the devolution is complete, and what sum in total will be devolved to the delegated authorities once complete? Secondly, obviously a very large part of the ASF is already bound up with statutory entitlements, which are listed at paragraph 5.6 of the policy context in the explanatory memorandum. Those who work in the mayoral combined authorities have said to me, “Look, you get this budget devolved to you, but you find that a lot of it is gone once you’ve funded those statutory entitlements, so you have less real flexibility than you might think.” What is the Department’s assessment of what proportion of the devolved budget, for those authorities where it is already devolved, goes on things outside those four statutory entitlements that are listed at paragraph 5.6? In a sense, what proportion of the budget is really devolved versus just going to a local level to be spent on nationally set statutory entitlements? How much of the money is really devolved? With those questions in mind, I will not pray against these regulations, but I hope that the Minister will be able to tell me what devolution will really mean in practice.

• 31 Mar 2025 · Institute for Apprenticeships and Technical Education (Transfer of Functions etc) Bill [Lords] · Hansard source

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  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.

• 31 Mar 2025 · Institute for Apprenticeships and Technical Education (Transfer of Functions etc) Bill [Lords] · Hansard source

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  I have already read out quotes from employers and those in education and the public service warning about the problems building up in the skills system because of the decisions the Government are making. This evening the Government have decided not to listen to some of the wise people on their own side, including a former education Minister, but I hope that they will listen to the hon. Member for Stoke-on-Trent Central (Gareth Snell), because they are on the edge of making a huge mistake by butchering higher apprenticeships —a huge mistake that they will live to regret. They are not listening to their own Members this evening, but I hope that they will in the future. Question put, That the Bill be now read the Third time.

• 20 Mar 2025 · Institute for Apprenticeships and Technical Education (Transfer of Functions etc) Bill [ Lords ] (Third sitting) · Hansard source

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  Will the Minister take an intervention?

• 20 Mar 2025 · Institute for Apprenticeships and Technical Education (Transfer of Functions etc) Bill [ Lords ] (Third sitting) · Hansard source

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  Clause 11 talks about the geographical extent of the Bill, which it says is England and Wales. This is a very small point, but it is worth noting that the Bill and decisions under it will actually affect other parts of the UK as well, not least because they affect degree apprenticeships and higher education. For example, the University of Strathclyde is a leading provider of graduate apprenticeships and degree apprenticeships across Scotland and England; I will return to that overlap later on. On a more substantive note, Government amendment 1 seeks to overturn the one-year pause inserted in the House of Lords. Why did peers insert that? Why was there so much debate, and such wariness about this Bill? First, because there were good reasons that standard setting was put at arm’s length and closer to employers. We heard from all parts of the House of Lords that this Bill is a centralisation and, alongside other changes the Government are making, it will risk directly damaging the status of these qualifications. Secondly, the Government are doing several things that will make it less likely that businesses will take on apprenticeships, starting with the Budget. Rather than fixing those problems, the Government are reorganising. Skills England will be the 13th skills body in 50 years. It is abolishing IfATE, which was created only seven years ago—yet more reorganisation, rather than a focus on the real issues. Thirdly, peers had—and we have—real concerns that the reorganisation of the machinery of Government will lead to harmful delays in addressing some of the most important strategic issues we face. Those concerns are borne out by the Government’s impact assessment, which states that there may be a drop in apprenticeship starts while IfATE’s functions are transferred to the Secretary of State. It says: “The transfer of function 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 for career advancement.” Fourthly, peers inserted the delay because of concerns about what will happen as DFE tries to absorb all the staff of IfATE. Lord Blunkett, who was one of the most interesting speakers in the Lords, said: “My fear…is that given the number of people currently transferable from IfATE, full- and part-time, which nudges 200…there is a real danger that IfATE will swamp Skills England at birth. 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 continued: “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.] That argument is somewhat different from the others. His argument, as somebody sympathetic to the creation of a body like Skills England, albeit outside the Department, is that it needs time to establish its own culture and balance, and to grow and develop some roots, before the IfATE elephant steps into the Skills England rowing boat. Since we last met as a Committee, we have received further written evidence from the Skills Federation, which brings together 18 employer-led sector skills bodies, representing more than 150,000 employers. They add their voices to the concerns. The organisation warns: “Transfer of IfATE functions risks disruption and a focus on operational rather than strategic priorities…The movement of functions and the people that carry them out will always be challenging. It is important that the transfer is planned effectively, and the time taken to think through the implications for IfATE staff, but also the impact on the system. Compromises will no doubt have to be made to balance the need for pace with the requirement to retain operational continuity. However, there is a key risk that transfer of functions from IfATE will become the key focus for the set-up of Skills England and less attention (and potentially resources) placed on achieving the overarching aims.” That is a direct reinforcement of the argument that Lord Blunkett made in the Lords. It is very sensible advice to take our time. In contrast to employers’ groups, Ministers say there is no time to wait. In truth, there is no great obstacle to the Department doing all the things it might want to do, and establishing Skills England a little bit more before that big transfer of staff, but Ministers want to take this one-year pause out of the Bill with their Government amendment 1. They would be wiser to listen to the grey-haired people in their own party, such as Lord Blunkett, but it seems they are not minded to do that. This group also includes Government amendment 2 to remove the Lords’ privilege amendment. For the benefit of those following the proceedings, as the Minister said, the Lords automatically insert these amendments when there is legislation starting in the Lords that involves levies and taxpayers’ money, to avoid formal infringement of the Commons’ privileges over those things. There is nothing unusual about that, but the privilege amendment is put in as a deliberate reminder that the Bill has a significant impact on spending of both levy and taxpayers’ money. The sums involved here are non-trivial—it is billions of pounds of spending, governed by IfATE today and by the Department for Education in future. The ongoing chronic uncertainty about the Government’s plans to allow employers to take money out of apprenticeships is not just damaging for business—it is damaging on a significant scale. In the last Bill Committee sitting, the Minister promised to write to me to set out the Government’s position on the 50% flexibility. I hope she will tell me today when that letter is likely to appear, because businesses are starting to raise the alarm ever louder. Since the Committee last met, even more businesses have come out with criticisms. Jane Gratton, the deputy director of public policy at the British Chambers of Commerce has said that the lack of clarity about the future of the growth and skills levy was creating “fresh uncertainty among businesses.” She said that some employers had told the BCC that they had put training plans on hold until they heard what alternatives would be funded in future. She called on the Government to lay out a clear timeline for reform and said that threats to cut the levy before it had even been established are “worrying and destabilising”. Likewise, Simon Ashworth, the deputy chief executive and director of policy at the Association of Employment and Learning Providers, said: “there’s little room for manoeuvre—scrapping level 7 apprenticeships won’t yield savings for years…Until the programme budget more closely matches the levy take, it’s imperative funding priorities are aimed at maintaining the sustainability of apprenticeship standards, rather than introducing further non-apprenticeship flexibilities.” That is a very important warning. This is all happening against a backdrop where other types of technical education covered by IfATE are shrinking too. I am old enough to remember when Labour MPs spent years saying that adult skills spending was not generous enough—yet yesterday we learned that the DFE is to cut adult skills budgets by 6%. Amazingly, that came out at the same time as the welfare reform Green Paper, which overshadowed it and mentioned training 18 times. In the Chamber the other day, the Secretary of State for Work and Pensions made an argument—a good argument—that it is better to get people into training rather than parking them on benefits; yet elsewhere, at the very same moment, DFE Ministers were cutting the training budget. Skills England was supposed to bring a joined-up approach to policymaking. There is not much sign of that here. Instead, it will reinforce the concerns of those who want technical education to be more independent and employer-led. I ask the Minister a specific question on the funding that IfATE regulates. Yesterday, we got an announcement on schools funding. The Association of School and College Leaders and the Confederation of School Trusts are warning that the funding only covers part of the costs of the national insurance increase and is leaving schools with a funding gap ranging from 10% to 35%—but at least schools are getting the funding announcement before the start of the financial year, albeit only days before. Technical education is not so lucky. Colleges and 16-19 institutions will have to wait. They will be told their allocations this May and will be paid in September, even though they will have to start making the increased tax payments from the start of the new financial year in just a few days’ time. As James Kewin, deputy chief executive of the Sixth Form Colleges’ Association points out: “16 to 19 funding is uncertain at the best of times, but this year colleges are also waiting for their post-16 budget grant allocations (scheduled for May) and a decision on the 10 per cent T-level uplift…This is all very late in the day”. He is right. Once again, technical education is being treated as the poor relation. We already know that independent training providers and specialist colleges will not get any compensation, and it is unclear how much of next month’s national insurance rise will be covered by the grant. Can the Minister stand up and reassure the sector today that all the additional costs, including those for indirectly employed staff, will be covered by the grant? Or will they, like schools, find that they have been short-changed? I will not labour the point, but many people, including employer groups and very experienced people on the Labour side, have warned about the rush to bring these powers and functions into the Department and the effect that that will have on the Government’s own plans for Skills England. Ministers would be sensible to listen.