In our new report, Edge set out our concerns that, unless the growth and skills levy is carefully designed, greater flexibilities for businesses could squeeze funding for apprenticeship opportunities. As a result, the worrying decline of young people participating in apprenticeships, especially at entry levels, will continue.
There are always winners and losers when it comes to levy reform. However, there are currently no guardrails or pledges of additional money to ensure that the growth and skills levy will be invested in apprenticeships or young people.
Granted, the government has promised traineeships will be in scope. But without strong incentives, the apprenticeships that should follow might simply not be there.
Levy-paying employers are far less likely to hire young apprentices compared to SMEs. Since the apprenticeship levy’s introduction, the number of under-19s starting an apprenticeship has dropped by 37 per cent.
Looking at these trends over the past few years, it’s hard to comprehend how giving them more flexibility to spend this money on other skills training (in tandem, squeezing the pot available for SMEs) could result in more opportunities for young people.
Our report identifies that the growth and skills levy could also risk compromising achievement of other government policies and missions. The opportunity mission, aiming to break “the pernicious link between background and success”, hinges partly on delivering a ‘youth guarantee’. This promises every 18-to-21-year-old that they will have access to training, support to find work or, critically, an apprenticeship.
This is a hugely welcome pledge, given the number of young people not in education, employment and training has risen to 872,000.
Apprenticeships are the unrealised heart of the government’s growth mission. Bridget Phillipson said it best in a recent op-ed about the construction sector being the manpower that will deliver Labour’s promise to build 370,000 more homes/year: “to get Britain moving again, we also need skilled technicians […] But too few young people are pursuing these careers and it’s holding Britain back.”
All of these missions are potentially in jeopardy
Growth also means investing in our domestic workforce. Home secretary Yvette Cooper has singled out IT and engineering as her first areas of focus. As we highlight in our report, these two industries are crying out for more young apprentices.
An NHS Fit for the Future? Not without apprentices! A representative from NHS England warned us that allowing apprenticeship numbers to drop will seriously impact their ability to deliver the health service long-term workforce plan.
Make Britain a clean energy superpower? Sounds like we’ll need a few low-carbon heating technicians for that.
All of these missions are potentially in jeopardy unless the levy is carefully designed to protect apprenticeship opportunities for young people. As well as presenting the options at its disposal, in our report, we urge the government to use the many levers at its disposal to make a substantial difference to employers’ ability to use their levy to create more, lower-level opportunities for young people before jumping to – or at least, in conjunction with – flex of the levy.
This could include building on best-practice examples here and internationally to broker apprenticeships and support employers to understand their skills needs.
It might involve reforming the EPA and functional skills qualifications that are holding back apprenticeship completions.
And it should comprise streamlining the application and advertising of apprenticeships towards a meaningful one-stop shop, in the same way we have for university admissions. It’s not an easy fix, but a crucial one if we want to get serious about opportunity.
We also present a series of options available to the government and Skills England in considering the proportions of the levy that can be spent on non-apprenticeship skills training, the types of training courses that should be eligible for funding and who should benefit.
As Labour prepare for conference, they are right to focus on what businesses want. After all, they are the backbone of our economy. However, it is crucial to remember that they also depend on a skilled pipeline of new talent.
We will inevitably need to make short-term sacrifices to achieve long-term gain, but we now need the government to show courage in its own vision for change.
Read the full report, Flex Without Compromise: Preserving Apprenticeships for Young People Under a Growth and Skills Levy, here
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