Apprenticeships

Lord Sugar Excerpts

Thursday 14th October 2010 Lords Chamber

[Lord Sugar]

My Lords, I thank my noble friend Lady Wall for bringing this debate to the House; it is on a topic in which I have a great interest. At the tail-end of 2008 I was invited by the Government to head an advertising campaign to promote apprenticeships. Before agreeing to do so, I decided to research the message that needed to be projected. I concluded that the campaign needed to be directed at employers as well as prospective apprentices. It was clear to me that there was a lack of understanding as to what was on offer to both the employer and the employee.

In the early part of 2009 the campaign went to air and created a lot of interest. Hits to the apprenticeship website rose from 52,000 to 120,000 per week. There were also 4,000 firm inquires. It is important to note that back in 1997 there were just 60,000 apprenticeships but by May 2009 there were 250,000. Encouragingly, there was a completion rate of 70 per cent. This is an undisputed statistic, and the rise came about under the previous Government. I have heard that the pre-election promise of the current Government—pledging 400,000 apprenticeships over the next two years—has been somewhat watered down. We have to avoid by all means undoing all the hard work of the past. Any proposed government cuts should not be directed at this sector. Indeed, cutting funding for training would repeat the mistakes made during the last recession.

In 2009 I held four seminars on apprenticeships, where I spoke to audiences of employers in London, Birmingham, Leeds and Newcastle. At these meetings the frequent comment from employers was that they would employ more apprentices if the Government gave them some financial incentive. While I could not agree with them at those meetings at the time, I now have to admit that I agree with them. Now, the money provided by the Government to pay for the training of apprentices goes to fund colleges and so-called learning providers. While I believe that these establishments are needed to a certain extent, to cater for such things as day release, I question full-time training courses in manufacturing or any other physical skill trade.

I am confident that what I am about to say will be not be disputed by any of your Lordships. No matter what professions your Lordships embarked on, and what academic qualifications you attained, I am sure you will agree that you gained virtually all your knowledge and experience by working in your chosen occupation. Therein lies the key to where any government funding must go. We must encourage employers to train people. To do that, they have to employ them. In any industry that requires skills, be it manufacturing, building or software development, there is a need to grow your own labour force to make sure that the staff are instilled with your firm’s culture and, more to the point, loyalty.

However, I say now what others might be frightened of admitting; while it is important to train staff to grow a future workforce, the reality is that every person you train requires an experienced member of staff to mentor them. From my own companies, experience has shown that to do it properly the mentor has to devote a lot of time to the individual before he or she can be let loose, so to speak. The fact is that while members of staff are mentoring, they cannot do their own jobs fully. Therefore, training the newcomer does not just cost the salary that you are paying, albeit at the minimum wage. More importantly, there is the cost of the loss of the time of experienced staff. So your Lordships might see why employers are saying, “Okay, we will take on and train young people, but we want you—the Government—to pay us or compensate us in some way”. In this day and age, when most businesses have to tighten their belts to fight their way out of recession, they can ill afford to have their staff deflected.

Trust me when I say that, from my experience of taking on young people from college or other so-called training facilities, when they enter my company they really know nothing. In my experience they learn while they earn. I conclude that young people will get far more satisfaction and motivation from working in a firm than from sitting in a classroom, theorising. The Government need to think hard about how they can divert money from training facilities to employers. After all, some of these training facilities are not government-owned; they simply send the Government a bill for every apprentice who passes through their hands. There are people in the Government who are clever enough to work out ways either to create tax breaks or to award grants to companies, small and large, instead of what I consider to be blowing the money on these so-called further education facilities.

Let us look at what is happening instead. Right now the Government and the taxpayer are playing out something of a charade by providing a place for young people to hide for a while. The Government are giving money to training providers to avoid the embarrassment of having people out on the street. In reality, all they are doing is delaying the inevitable because the end product in many cases is still unemployable and unskilled. The young people will have greater dignity if they are taken into a firm and given a real goal to aim for but do not expect the firms to do it for nothing. While they may get the benefit of a trained employee eventually, anyone who says that an apprenticeship means cheap labour is totally deluded.

I see that I am not out of time, so I will throw in a last curve ball on a completely different subject. One final thing that the Government might do to promote apprenticeships is to ensure, by way of contractual agreement, that firms that are awarded government contracts must employ a proportion of apprentices.