Speech by Urban Institute, Washington, DC Monday, 9th June 2014

Speech by
Global Lessons in Apprenticeship: International Seminar
Urban Institute, Washington, DC
Monday, 9th June 2014
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It’s a real pleasure to be with you all this morning. And
it’s a privilege to share the platform with Secretary Perez,
especially on what I hear is the White House’s ‘working dads’
day! So that puts us both in the same boat.
Mr Secretary, I admire the scale of your ambition to double
the number of apprenticeships in the United States over the
However, I’m reminded of a warning from the independent
Leitch Review, which we commissioned in 2006 when I was
in the UK Treasury. He said of our skills programmes:
“ Despite substantial investment and reform plans
already in place, by 2020 we will have managed
only to ‘run to stand still’ and the UK’s comparative
scale of the challenge is daunting.”
of the Union Address. It recognises the challenges that are
now central to the labour market in our age of continuing
Leitch Review, December 2006
they just can’t get a decent start to their working life.
I know bi-partisanship has become all too rare in US politics,
but I hope your reform gets the wide backing it deserves,
both in Congress and in the individual states.
As a Member of the UK Parliament, I am proud of the
broad consensus in Britain behind sustained investment
in apprenticeship. Support for a publicly funded scheme is
shared across parties and between employers and unions.
After all, better skills bring shared gains and should be a
shared responsibility.
That assessment is even more telling now than it was then.
People in both our countries are struggling. Many feel left
behind as their wages, living standards, and opportunities
are all squeezed. The belief that the chances for their
children will be better than their own – the American Dream
or Promise of Britain – seems beyond reach.
When record numbers of young people are either
unemployed or underemployed – many of them college
jobs and growth in our societies.
priority, as you have argued this morning.
This waste of talent and potential shames us all.
It is also the standout brand, one with extraordinary resilience
and potential reach, both in your country and in mine.
Nothing less than a national mission is needed to back our
young people and create more middle-income jobs, which
are the backbone of any country’s aspiring middle classes.
And perhaps we should look to measure our ambition
against the powerful New Deal of President Roosevelt or
President Johnson’s Great Society programmes.
We did, however, legislate a little earlier than you for a
national system of apprenticeship training – in 1563! – with
Four hundred years later, in the mid-1960s, one third of male
school leavers in the UK still entered apprenticeships.
But by the time the Labour government I served in was
elected in 1997, apprenticeships had all but died out – just
65,000 started that year.
We gave great weight to supply-side reforms – on raising
school standards, rebuilding community colleges, expanding
further and higher education, improving adult basic skills – as
well as demand-side changes with new employer-led sector
skills councils, a national apprenticeship service, and trade
union learning reps that boosted training in the workplace.
starting that year had more than tripled, to 300,000.
As some of the best economies in the world demonstrate,
high-class apprenticeship and skills training can help answer
the challenge.
Research by INSSO and others has shown that countries
with advanced systems of apprenticeship generally have
lower youth unemployment, less skills shortages, and a
workforce that can compete to make the higher value-added
goods and services that the world wants to buy.
apprenticeship that consistently found at least a ten-fold
return on every pound of public expenditure.
So, in public policy terms, we have to frame this debate as
an economic investment, and not just as an exchequer cost.
© INSSO (UK) Ltd. 2014 All rights reserved.
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275,900 / 328,700
+19%
Australia 86
83,814 / 85,470
+2%
Canada 87
224,800 / 520,600
+132%
England 88
Ireland 89
6,763 / 1,434
-79%
192,128 / 104,332
-46%
United 90
States
2007
2012
% Change over 5-year period
Source: FISSS (2013) ‘21st Century Apprenticeships’
And, as politicians, we have to avoid presenting
apprenticeship either as the single big solution or as a
social inclusion initiative. Fundamentally, apprenticeship is a
contract between an employer and an employee.
In 2010, the Coalition was certainly able to build on Labour’s
strong apprentice legacy but they made policy mistakes that
could also serve as a useful caution to you here in the US.
So, I think our current UK skills minister is making a serious
mistake. He declared in a speech last week that his goal
is ‘that all young people when they leave school or college
should go on either to university or into an apprenticeship’.
Other government-funded schemes re-badged
as ‘apprenticeship’
his coalition predecessor made four years ago.
Last summer, INSSO led a piece of international research
that looked at the performance of the English-speaking
world in apprenticeship.
that we as near cousins had been put in the spotlight, as
opposed to the usual comparisons between our AngloSaxon and the Germanic models of apprenticeship.
16-week training programmes qualifying
as ‘apprenticeships’
One in 5 employers not paying apprentices their
legal minimum wage
Double and triple-counting as providers registered
growth in apprenticeship numbers.
This chart shows the comparative growth of apprenticeship
An increase of 132 per cent is either miraculous or ludicrous
alongside similar economies – and, remember, all of us were
Outright provider fraud and phantom apprentices
Recent work in the UK has had to concentrate on putting
right these policy problems.
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Apprentices per
1000 Workers
Youth Unemployment
Rate (2013)
Completion Rate
Employers Hiring
Apprentices
Female
Apprentices
Total Score
Overall
Ranking
Australia
Canada
England
USA
Ireland
40 (1)
30 (2)
20 (3)
14 (4)
10 (5)
12.1% (1)
12.9% (2)
21.1% (4)
16.3% (3)
28.5% (5)
55% (4)
50% (5)
74% (3)
80% (2)
87% (1)
26.9% (1)
19% (2)
8% (4)
4% (5)
11% (3)
34% (2)
14% (3)
54% (1)
9% (4)
2% (5)
9
14
15
18
19
1
2
3
4
5
Source: FISSS (2013) ‘21st Century Apprenticeships’
And the INSSO research also holds other policy lessons for
our two countries.
For overall performance on apprenticeship, we came third
and fourth.
The central challenges facing us both were underlined in
the report:
High quality apprenticeship experience is too hit and
miss, for both employers and apprentices
by the mediocre
Not enough employers take on apprentices – less
It seems to me that, as we contemplate the part that
apprenticeship can play in the big economic and social
challenges we face, our experience leads us to conclude
that we need to build on the best of what is already in
Vocational training seen as inferior to college-based
learning
to devolve responsibility to the real key players, employers
and apprentices.
Completion rates and opportunities for women are
too variable
Our UK skills system is still largely a complex and
centralised state bureaucracy, so this means reform in
three essential dimensions, which can be captured in
one word: control.
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Control of funding
Control of design
Control of quality
Second, we need to devolve the design and development
of apprenticeships more to employers based on industry
sector and city region areas. Policies and targets fashioned
First, if we really are serious about driving employer demand
and extending choice in the system, then we have to hand
control of the public subsidy to individual apprentices and
their employers.
like PwC – will not serve areas like mine in South Yorkshire,
where we’ve seen a 15% fall in apprenticeships available in
the last year.
Our current government plans to provide this subsidy via
employers’ payroll systems, which, on a cash basis, is open
Such a decentralisation and demand drive could see
these developments:
Instead, I believe we need a virtual skills accounts system,
with a virtual skills currency deposited in both the individual
Apprenticeships respond to labour market demands,
led by employers
The skills credits could then buy the vital on-the-job training
that all apprentices need from public or private providers.
economic development
Cash payments would be routed directly from government
to the training provider, though purchasing decisions would
like Apprenticeship CarolinaTM – possible
National funding and national framework of
occupational standards remain
And the days of bureaucrats making the calls on what to
fund by second guessing employer needs or market demand
would be over.
Such a system of individual skills accounts (ISAs) would
have the following features:
Third, we have a problem with consistent quality in our UK
system, as recent scandals show.
We have at least 24 bodies – from funding agencies to
advisory commissions to awarding bodies – all responsible
for quality assurance, yet no one is held to account when
things go wrong.
Training providers compete for employers and
apprentices on quality and value for money
Employers and apprentices rate their training and act
as consumer guides for others, like TripAdvisor
Employers and apprentices can add to their
skills accounts, and co-payments become
more commonplace
Fraud risk is reduced by linking ISAs to employers’
unique tax reference (UTR) and apprentices’ national
insurance (NI) number
Public subsidy cap agreed by Parliament, as with
higher education
So, we need a new streamlined system with a single
overarching and accountable regulator or commissioner
– like OFSTED does for schools, or the Children’s
Commissioner does for children’s services.
The remit of such a skills commissioner would be based on
these principles:
Be light touch, risk based with tough guarantees to
protect whistle-blowers
Safeguard the integrity of the apprenticeship system
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Report publicly to Parliament and ministers
Ensure all apprenticeship statistics are approved by
employer involvement increased, and apprentice
opportunities expanded.
This current century will belong to those countries that can
recognise and meet the global competitiveness challenge.
And truly world-class apprenticeship has a huge potential
part to play in this.
Our companies need nothing less.
Our young people deserve nothing less.
Our countries should settle for nothing less.
Thank you.
The Rt Hon John Healey MP is a non-executive director of INSSO. He is Member of Parliament
for Wentworth & Dearne, South Yorkshire, and served as a government minister from 2001
to 2010. During his time as Adult Skills Minister from 2001-2, he developed the new trade
union learning fund and legislated for workplace union learning representatives. He also
being responsible for the introduction of sector skills councils. As Treasury Minister, John was
for further education colleges.
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About INSSO
The International Skills Standards Organisation (INSSO) is an
independent workforce development consultancy and standards
setting body. Our vision is of a highly skilled global workforce
that delivers prosperity and inclusive growth for all. Our mission
is: shaping the global workforceTM. We achieve our aims by working
in a number of innovative ways to meet the needs of our clients.
We provide expert strategic consultancy, carry out research,
develop and approve skills standards, as well as help
our customers develop international opportunities to collaborate
on groundbreaking projects.
Published by INSSO (UK) Ltd. Company in England and Wales, number 7703188.
Email: [email protected] Website: www.insso.org
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