Skip to content
24 July 2026

Latest news from FE Week

Pearson rebuked over ‘repurposed’ A Level maths paper

Ofqual has rebuked awarding organisation Pearson for preventable failures in an Edexcel A Level maths exam last summer.

Ian Bauckham, chief regulator, said the problems caused “anxiety, stress and uncertainty” to tens of thousands of students in his second “rebuke” to an exam board.

He introduced the sanction last year for cases serious enough to warrant a public outcome, but below the threshold for a fine.

The regulator said Pearson Edexcel repurposed contingency exam papers from 2022 as assessment papers in 2025 – sat by more than 75,000 students.

This produced some content that was “unreasonably similar” to its 2022 A Level maths paper.

Pearson acknowledged that students who noticed similarities in their first paper might have tried to predict the questions on the planned second paper.

But the board replaced this planned second paper with a contingency paper.

This paper was not designed in conjunction with the first paper so did not ensure the same degree of content coverage. This meant some topics were over-assessed and others under-assessed.

Ofqual said the board accepted the substitution “did not ensure the same degree of content coverage as the original pairings” but “nonetheless provided coverage that was in line with the specification”.

Results trusted for progression

The regulator concluded the results could be trusted for progression to university and other destinations.

It also accepted analysis from Pearson which indicated that any effect on students’ results was “so small as to be statistically insignificant” but added that “a sound outcome” did not “diminish the seriousness of the failures identified”.

While Ofqual said the failures were “serious” and “entirely avoidable”, it decided to issue a rebuke rather than a fine, taking into account Pearson’s “assurances on the validity and reliability of results, its admission of the breaches and co-operation”.

Bauckham said: “Tens of thousands of students sat these exams trusting that they had been properly designed and delivered. The failures by Pearson caused anxiety, stress and uncertainty at a time when students needed it least.

“The problems that arose were foreseeable and preventable. We will always act to protect students and maintain confidence in qualifications.”

Detailed review

A Pearson spokesperson said they “take responsibility for not fully identifying and managing the risks linked to the use of contingency papers”.

“We are sorry for the concern this has caused. We want to reassure learners and centres that all papers used in the 2025 summer series were valid and aligned to the specification. Students can be confident in the results they received.

“We addressed the matter at the time and carried out a detailed review of our processes. As a result, we have strengthened our risk management, commissioning arrangements, and contingency planning.”

Ofqual’s first rebuke was to WJEC, which failed to collect and monitor centre declaration forms over a six-year period.

Phillipson demands action to trace ‘phantom NEETs’

More than two dozen councils with the worst records of tracking teenager outcomes have been given six months to improve.

The Department for Education said 32,100 so-called “phantom NEETs” aged 16 and 17 were recorded by local authorities on the basis their activity was not known.

Education secretary Bridget Phillipson told 26 councils facing the “greatest challenges” they must agree improvement plans by the end of the year. Every other council will receive a letter setting out expectations for improving how young people at risk of becoming NEET are tracked and supported.

It follows an FE Week investigation in March which found local authorities held no record of whether 44,000 school leavers had received an appropriate post-16 offer through the ‘September guarantee’ policy. Councils blamed poor data sharing, staff pressures and delays receiving information from schools and colleges for the poor quality of information they held on young people.

Phillipson said accurate and timely tracking was “not a box-ticking exercise” but “the difference between a young person getting support early or falling through the cracks entirely”.

“While local authorities do incredibly difficult work, often against real constraints, it’s not consistent enough,” she added.

Tracking gaps

The DfE data reveals North Lincolnshire reported the highest “not known” rate for the whereabouts of its 16 and 17-year-olds at 48.3 per cent. It was followed by Somerset at 19.6 per cent, Herefordshire at 17.6 per cent and Northumberland at 15.7 per cent.

Peterborough’s figures were suppressed because complete returns were unavailable. The DfE has been asked to name the 26 authorities singled out by Phillipson.

The number of young people aged 16 to 24 out of work, education or training topped one million last month, and a landmark report from Alan Milburn said the current one-in-eight NEET rate could rise to one in six without action.

While the DfE’s announcement covers 16 and 17-year-olds, Milburn warned there was a “stark post-18 cliff edge in tracking and support”. Latest estimates suggest there are 57,000 teenagers aged 16 to 17 classified as NEET.

The DfE’s data, built on estimates and not official statistics, suggests only four English local authorities, Redcar and Cleveland, City of London, Thurrock and Cheshire East, were fully aware of the education, employment and training status of their 16 and 17-year-olds.

RONI on the table

Councils will be supported by a new risk-of-NEET indicator (RONI) tool which is designed to collate information on attendance, special educational needs, mental health needs and care experience. The DfE said the tool would help councils identify at-risk youngsters sooner.

It could, for example, trigger interventions such as a place at a college, mental health support or taster sessions to entice young people back into education or training.

The tool was first mentioned in the government’s ‘Get Britain Working’ white paper in 2024. It was then restated in the post-16 education and skills white paper, published in October, alongside new guidance for schools and colleges on identifying at-risk young people.

Other measures floated in the white paper included automatic enrolment at a local “default” college or training provider for young people with no job, training or college place lined up.

Laura-Jane Rawlings, chief executive of Youth Employment UK, said poor council tracking was a “structural weakness in how we identify and support young people before they fall through the cracks”.

She added: “Youth Employment UK’s 2023 research for The Careers & Enterprise Company found that access to and sharing of NEET data was the single biggest driver in preventing and reducing NEET among 16 and 17-year-olds. It also found a patchwork of local systems, inconsistent risk of NEET indicators, and major challenges around capacity, data-sharing and accountability.

“It is welcome that the DfE is now recognising the scale of the problem, but better data alone will not support a young person. Councils need the capacity, tools, guidance and local partnerships to act on that data.

“A credible youth guarantee has to start with knowing who young people are, where they are, what barriers they face and what support will help them move forward.”

FE gets £485m to help match school teacher pay rise

Colleges and training providers will receive £485 million over two years to help match pay rises for school teachers, the Department for Education has announced.

Education secretary Bridget Phillipson confirmed “colleges and other further education providers” would share £120 million in financial year 2026-27 and £365 million in 2027-28 to contribute towards staff pay awards.

However, it is unclear how the department will distribute the funding. In recent years, funding designed to go towards pay awards has been distributed through the 16 to 19 funding formula, which disadvantaged colleges with larger adult education and apprenticeships cohorts.

Updated guidance suggested 16 to 19 national funding rates, T Level rates, the disadvantage rate related to low prior attainment, and the rate supporting students in care and care leavers would be increased, but it doesn’t say by how much.

Providers that receive national insurance contribution grants for non-16 to 19 education delivery and local authorities with centrally employed teachers will see those grants increase. Again, the DfE has not said how the extra funding will be split across the base rate, formula and other grants.

Meanwhile, grants covering teacher pension scheme employer contributions are set to reduce.

The FE funding announcement comes two weeks after the Association of Colleges (AoC), the University and College Union and Unison jointly warned Phillipson that without a “material change” to funding, a “very low pay award, possibly zero” was the limit of affordability for 2026-27.

Their joint letter also flagged the growing pay gap between school and college teachers, which is now estimated to be £12,500 in favour of school teachers. The AoC’s recommendation for staff pay rises in FE colleges is non-binding.

College leaders told FE Week it would be hard to determine pay awards without sight of how the new funding will be allocated.

In a written ministerial statement to Parliament, Phillipson also announced that, from April 2027, employer contributions to the teachers’ pension scheme (TPS) will fall following its March 2024 revaluation. Phillipson confirmed employer contribution grant funding would reduce but remain “proportionate”, and stressed the change would not erode the value of the scheme to current or retired teachers. It means the cost of TPS employer contributions will drop by £3 billion in 2027-28.

David Hughes, chief executive of the AoC, said the two-year funding boost would help fund a “meaningful pay increase” for staff this year.

He added: “Until now, we had feared we were heading towards a potentially very low or even zero pay award recommendation.

“It shows that the government has been listening to the case we made as a sector and recognises that its funding decisions are critical for ensuring colleges can address the cost-of-living crisis their staff face.”

While the DfE has not yet confirmed how pay funding will be allocated, Hughes said he was “pleased that these funds look like they will benefit not only those predominantly teaching 16 to 19-year-olds, but also those with large adult and other cohorts”.

“Today’s very positive announcement does not mean we will forget that, after a decade of neglect from 2010, college pay still lags a long way behind schools and industry,” he added.

“Our ask on that is that we want to work up and agree, with the unions and government, a long-term plan to close the gap which at the moment is in excess of £10,000 per year between school teachers and college lecturers.”

UCU general secretary Jo Grady said: “Colleges will only be blessed to fix the recruitment and retention crisis by closing the pay gap between further education staff and their counterparts in schools.

“This will require a pay award above 3.5 per cent.”

Last year, the Sixth Form Colleges Association (SFCA), which negotiates pay in sixth form colleges, came close to taking the government to court over unequal pay rise funding settlements between schools and colleges. Threats of legal action were dropped following assurances there would be additional funding to cover wage increases.

Bill Watkin, SFCA chief executive, said: “A fundamental principle established following the settlement of our legal action against the government last year was that colleges will be treated in the same way as schools when it comes to supporting the implementation of pay awards.

“Colleges will be pleased that this principle has been upheld for the second consecutive year. This will go a long way towards making it possible to afford a more appropriate pay award for college staff who, through their dedication, skill and impact on young people’s lives, have shown that they deserve nothing less”.

Meanwhile in schools, where the government does set teacher pay levels, ministers have accepted the School Teachers’ Review Body recommendation for a 3.5 per cent pay increase for 2026-27 and a further 3 per cent in 2027-28. Despite the extra funding being provided to schools, they will have to fund around a third of both years’ pay rises themselves, our sister paper Schools Week reports.

Jobs we dismiss are often the ones that shape us

We grow up imagining who we’ll become: a doctor, an engineer, a teacher, a writer. We picture a straight line from school to career, as if life moves neatly from one stage to the next. Spoiler: it doesn’t. Developmental psychologists have been saying for years that human growth is nonlinear, messy, and occasionally chaotic. In other words, life behaves exactly like a teenager’s bedroom.

It takes us down unexpected paths, through jobs we never planned, roles we never imagined, and experiences we didn’t think mattered. And yet those are the very things that shape us.

I remember sitting in my English class in high school. My teacher used to make us do hot seating after we finished reading Macbeth. Usually the confident students volunteered, the ones who practically lived with their hands in the air. I wasn’t weak or strong; I was somewhere in the middle, quietly hoping no one would notice me. But he did. He saw a spark I didn’t recognise in myself.

He didn’t start me off as Macbeth. He gave me the shorter side characters first, the ones who appear, say three lines, and vanish before anyone can judge them. Perfect. And then one day he said, “You’re Macbeth.” Just like that. Suddenly the class was firing questions at me, and I had to answer in character, not by remembering the “right” interpretation, but by giving my own. It was the first time I realised I could think, not just repeat. A very Bruner approved moment of constructivist learning though at the time I just thought, “Well… here goes nothing.”

Years later, I found myself doing the same thing with my own students.

One of them said to me recently, “Sir, I’m just a packer,” like the job meant nothing, and added no value to who he was becoming. So I asked him, “What did you learn?” He shrugged. “I just packed things.” I pushed: “What else?”

That’s when he paused. You could see the thinking begin, the slow realisation that even the jobs we dismiss teach us something. Time management. Accuracy. Stamina. Teamwork. Working under pressure. Adapting to change. Showing up even when you’re tired. Basically, half the skills employers beg for.

He has basic qualifications and is studying for a degree but still feels useless. But he was never useless. He was simply unseen, even by himself.

And as I watched him search for his own strengths, I recognised it was the same question I was once asked when someone challenged me to name the skills I’d gained from the detours in my own life. I didn’t see them at first either. I thought my path was broken, delayed, off track. But that question, ‘What have you learnt?’, is the one that turns experience into value, and detours into direction. Kolb would call this experiential learning. I call it ‘finally realising your life wasn’t a waste after all’.

We live in a world that treats success like a spreadsheet, assets, income, job titles, things you can point at and say, “Look, I’m doing well.” But what about the things you can’t photograph, that are achieved internally? The resilience we build, the confidence we grow into, the courage to speak, the ability to think for ourselves. Those don’t show up on bank statements, but they’re the real indicators of who we’re becoming. Yet we rarely celebrate them because you can’t post them on Instagram or list them on a mortgage application.

Teaching doesn’t just happen through PowerPoints, whiteboards or homework apps on tablets. Real teaching happens in the moments where you ask a question that forces a student to reflect, not to hunt for the “right” answer, but to actually think. Anyone can memorise. Anyone can click through tasks. But when you ask a question that makes them stop, look inward, and name what they’ve learnt, that’s where education actually begins. Mezirow calls this transformative learning. I call it “the moment the room goes quiet and you know something real is happening.”

This is what education should be about. Not everybody on the same page, producing the same answer at the same time. Real education isn’t “Can you remember what I told you?” It’s “What can you do, see and make sense of?” It’s helping students recognise the value in their own experiences, not forcing them into a single mould. If everyone learned the same way, we’d all be walking around like photocopies.

We set out to become one thing, and life quietly trains us for something else. The jobs we think are “nothing” are often the ones that build the resilience, discipline, emotional intelligence and grit that shape who we become.

Careers aren’t chosen at sixteen. They’re carved, slowly, unevenly, through every job, every challenge, every moment that teaches you who you are and what you can handle.

And sometimes the path you never planned becomes the life that finally makes sense.

 

Employer sign-off on behaviours is a chance to strengthen apprenticeships

Recent reform changes in apprenticeships have prompted important conversations across the sector, particularly around the decision for behaviours to be signed off by employers rather than formally assessed through end-point assessment (EPA).

It’s understandable that some employers, providers, and sector professionals have questions or concerns about this shift. Any change to established assessment practices naturally brings a level of uncertainty, especially where there are worries about additional responsibility or consistency of approach.

However, when considered in practice, this reform may present a valuable opportunity to align behavioural assessment more closely with the realities of the workplace and the way employers already support and manage their people.

Enabling employers

Most employers already have established frameworks, processes, and expectations in place to monitor employee performance, professionalism, values, and conduct.

In many ways, the reform is not introducing an entirely new responsibility but instead recognising and formalising the important role employers already play in developing and observing behaviours throughout an apprentice’s journey.

Importantly, this approach also helps to avoid duplication. Apprentices demonstrate behaviours every day through their interactions, communication, teamwork, professionalism, and approach to work.

Enabling employers to confirm these behaviours within the natural working environment allows apprentices to evidence them authentically, rather than trying to recreate them within the constraints of a single assessment event which can feel like high stakes and cause additional stress for the learner.

Within the current EPA model, there can sometimes be challenges in demonstrating certain behaviours consistently or naturally during formal assessment activity. Behaviours are often best evidenced over time and through real workplace practice, where employers can observe how apprentices respond to situations, work with others, and apply themselves in day-to-day responsibilities.

Strong collaboration is essential

Currently in EPA, employers and providers already play a key role in confirming when a learner is gateway ready, including validating that the apprentice has met the required knowledge, skills, and behaviours (KSBs).

The reformed approach follows a similar principle. Employers will continue to work closely with apprentices throughout their programme and, through regular interaction and existing performance management processes, will naturally be able to identify where behaviours are being demonstrated successfully and where further development may be needed.

Although assessment organisations will no longer hold formal responsibility for the assessment of behaviours, they will continue to play a significant role in supporting both providers and employers through the implementation of clear, proportionate, and manageable processes.

Strong collaboration between employers, providers, and assessment organisations will be essential to ensure consistency of approach, maintain confidence in the process, and minimise unnecessary administrative burden across the sector.

Providers are particularly well placed to support this process by capturing behavioural evidence through regular reviews, workplace discussions, progress meetings, and ongoing learner support. These interactions can help provide employers with meaningful insight and evidence to support their final confirmation decisions, rather than creating additional paperwork or unnecessary complexity.

Maintaining quality and integrity in apprenticeships

It is also important to recognise that behaviours are rarely demonstrated in isolation. In most occupational settings, behaviours are intrinsically linked to the application of skills and competence.

For example, within an observation of practice for an early years educator, behaviours such as care, compassion, honesty, trust, and integrity are naturally embedded within professional practice. In many cases, where an apprentice consistently demonstrates the required skills to a high standard, the associated behaviours are also clear.

Employers are best placed to understand the behaviours required to succeed within their organisation and sector. They see apprentices operating in real working environments over an extended period and are invested in developing individuals who will positively contribute to their workforce and wider industry.

The reform therefore offers an opportunity to create a more authentic and collaborative approach to behavioural validation – one that reflects how behaviours are genuinely developed and demonstrated in the workplace.

With the right support, guidance, and partnership across the sector, this approach can strengthen employer engagement while continuing to maintain the quality and integrity of apprenticeship standards.

 

Burnham’s devolution agenda could transform the youth guarantee

As Andy Burnham sets out his case for moving power out of Whitehall and into places, many of us in further education, skills and youth employment are asking the same question: what would this mean for our work?

Would he devolve more power over skills and employment? Would the Greater Manchester Baccalaureate become a national model? Would Alan Milburn’s review be strengthened, adopted or quietly absorbed into something else? And, critically, what would happen to the youth guarantee?

Burnham’s recent speech said less about young people than I expected, but the clues are there if we look back at Greater Manchester.

In 2020, before the national youth guarantee and mayoral trailblazers, Greater Manchester was one of the first places in England to develop a place-based young person’s guarantee. Burnham appointed the Olympian Diane Modahl to chair the Youth Task Force, bringing together employers, colleges, local authorities, voluntary organisations and young people as the pandemic threatened to create a lost generation.

Youth Employment UK supported that work as an independent adviser and subject expert, while leading the Youth Advisory Group.

What stood out was not that Greater Manchester had found a perfect answer. It hadn’t. What mattered was the method: local leadership, open collaboration, youth voice treated as evidence, and a willingness to ask the whole system what it needed to do differently.

That matters now because the national Youth Guarantee risks becoming exactly what it cannot afford to be: another programme.

If Burnham’s argument is that places should be trusted to lead, youth employment is one of the clearest tests of that idea. Young people’s transitions into work are shaped by schools, colleges, transport, confidence, mental health, employers, local opportunity, family networks and whether someone trusted helps them navigate it all.

Whitehall struggles with that complexity. Places live with the consequences.

The best version of Burnham’s approach would strengthen the youth guarantee not through another pilot, but by turning it into permanent national infrastructure: national expectations, local delivery, shared accountability and proper investment in the organisations that connect young people, employers and educators.

It would also shift the focus from crisis response to prevention. Young people do not suddenly become NEET (not in education, employment or training). The warning signs emerge much earlier, and a serious youth guarantee would intervene before unemployment through better careers education, meaningful work experience, trusted support and smoother transitions from school and college.

It would also recognise that an opportunity is not real simply because it exists on paper. If a young person cannot afford to reach it, does not feel safe accessing it, does not trust it or cannot see someone like them succeeding, then it is not yet a genuine opportunity.

Employers would also have a bigger role to play, supported by clearer standards and practical help. Young people need fair recruitment, meaningful work experience, good first jobs and managers who understand how to support them.

Finally, it would mean measuring what matters. The youth guarantee should be judged not by activity but by whether young people believe opportunity is improving, employers are becoming more youth-ready and places are closing the gaps we know exist.

If Burnham’s thinking shapes the next phase of national policy, youth employment could move from being treated primarily as a labour market issue to becoming part of a broader economic strategy. That would be a welcome shift. A stronger economy depends on more young people participating, more employers investing in talent and more places having the freedom to connect the two.

Greater Manchester showed in 2020 that youth employment works best when leadership is shared, young people have a genuine voice, employers are part of the solution and places are trusted to bring the whole system together.

The national youth guarantee can now go further. We have the benefit of the mayoral trailblazers, Alan Milburn’s review, years of evidence from employers and educators, and the voices of thousands of young people telling us what works and what still gets in the way.

The next chapter should not be another short-term programme. It should be about building the permanent infrastructure that gives every young person, wherever they live, a better chance of making a successful transition into work.

If Burnham wants opportunity to define his vision for Britain, the youth guarantee is one of the clearest ways to demonstrate it. The evidence, partnerships and expertise already exist. Now is the time to get on with the job.

A pair of shoes taught me more about NEETs than any policy paper

It is reassuring to see the growing urgency around the NEETs (not in education, employment or training) challenge in this country. More concerning, however, is the apparent lack of joined-up thinking about how it will be addressed.

I have a somewhat unique perspective, having led a national training provider that delivered one of the strongest traineeship programmes in the country. I am now CEO of a small charity that works face-to-face with young NEETs every day.

The traineeship programme, discontinued in May 2023, was designed for 16 to 24-year-olds who were motivated by the prospect of work but not yet work-ready. I delivered the programme for more than a decade, primarily in Yorkshire communities with relatively low educational attainment and high unemployment.

The programme was not perfect, but it allowed providers to deliver a flexible, work-focused offer. Employers could support young people into work with the backing of a pastoral tutor who provided maths and English support, employability training, CV writing, interview preparation and guidance on workplace expectations.

Crucially, tutors could also provide practical support: helping learners understand public transport, plan journeys, manage basic budgeting and navigate the challenges that arise during the first few weeks of employment. They often helped young people overcome homelessness, domestic abuse and safeguarding concerns alongside more practical barriers.

The pair of shoes

One case has always stayed with me. A young man was excelling in a traineeship placement with a national retailer. Then, without warning, he stopped attending. Eventually, we discovered that his only pair of shoes had fallen apart. Unable to afford a replacement, he stopped going out altogether and quickly found himself in a difficult place.

We bought him a new pair of shoes. No bureaucracy. No lengthy assessment. Within days, he was back at work and ultimately secured full-time employment.

That story captures what traineeships did well. They were flexible enough to provide tailored support for young people who were motivated to work but faced barriers that many policymakers never see.

I remember attending discussions with the Education and Skills Funding Agency shortly after the decision was made to end traineeships. It was suggested that traineeships were primarily a route to entry-level qualifications that could be achieved elsewhere and were unlikely to lead directly to employment.

My argument then is the same as it is today: for most NEET young people, qualifications are not the main issue.

The real challenge is support, guidance and pastoral care.

Most of the young people we supported then, and most of those I work with now, do not have someone who can help them complete a job application, review a CV or explain how to write a professional email. Many struggle to navigate public transport networks or understand workplace expectations.

Big initiatives for NEETs

Over the past year, three major initiatives have emerged to tackle the growing NEET crisis.

The first is foundation apprenticeships. They have merit, but they feel too long, are not always pitched at the right level and remain heavily focused on vocational delivery. Many providers also appear to view them as carrying a level of risk that makes engagement difficult.

The second is the youth job grant, a £3,000 incentive for employers to recruit a young person who has claimed Universal Credit for six months or more. The principle is sound, but important questions remain. How will employers find suitable candidates? How will they support them when challenges arise? What happens if a young person leaves after only a few months? With 20,000 grants available, this represents a £60 million investment that must deliver meaningful outcomes.

The third initiative is the job guarantee, offering six-month paid work placements and training for 18 to 24-year-olds who have claimed Universal Credit for 18 months or longer. Again, there is much to like, but questions remain. What happens after six months if the employer cannot retain the individual? What about those with enormous potential who have been unemployed for 12 months and are equally in need of support?

Each initiative has been designed with good intentions. Viewed together, however, they reveal a system that remains too rigid, fragmented and ultimately not inclusive enough to meet the needs of the young people it is trying to support.

What’s missing

NEET young people do not fit neatly into funding bands, eligibility criteria or arbitrary timeframes. Some need intensive pastoral support before they can contemplate employment. Others are ready for work but need help overcoming practical barriers. Some would thrive in a work placement, while others need confidence-building and employability support first.

The question should not be which programme a young person qualifies for.

What is missing is a single, flexible programme that combines the best elements of all three approaches: employer engagement, work experience, targeted training, financial incentives and, crucially, pastoral support. A programme tailored around the individual rather than forcing the individual to adapt to the programme.

We have been here before. The success of traineeships was never simply about qualifications; it was about flexibility. It was about trusting providers and frontline practitioners to identify barriers, intervene quickly and provide the right support at the right time.

If we are serious about reducing NEET numbers, we need to stop creating multiple schemes that address different parts of the problem and start building a single, coherent pathway that supports the whole journey into sustainable employment.

 

 

 

Manufacturing SMEs are being squeezed out of apprenticeships

There is no denying that the skills challenges facing the government are stark. Today, the UK has close to one million young people aged 16-24 not in education, employment or training (NEET) and in two of the country’s biggest sectors – manufacturing and engineering – apprenticeship starts are well below the level they reached in the early and mid-2010s, with over 500,000 starts a decade ago compared with 340,000 starts in 2023-24.

Apprenticeships are essential for building our future workforce, improving productivity and creating accessible vocational routes into high-demand sectors. Yet, the route for young people to access these industries is lagging. Not only does this jeopardise the potential of these future workers, but it also undermines the UK’s global competitiveness.

This picture is particularly acute for SMEs (small and medium sized businesses). In our latest ‘SME snapshot’ survey, we found that labour and skills shortages are negatively impacting their businesses. Sixty per cent of businesses have engaged in recruitment over the last six months, and of those, 80 per cent said they experienced difficulties getting suitable staff, with 60 per cent citing lack of candidates with appropriate technical qualifications as the biggest driver of skills gaps.

If SMEs don’t succeed, the economy doesn’t succeed. Over 90 per cent of UK manufacturing organisations are SMEs: given the manufacturing sector accounts for 9 per cent of UK employment and is a key source of highly skilled and highly paid jobs, it is vital that SMEs can thrive.

For some time now, it has been clear that SMEs fall through the cracks of government policymaking, especially where there is a tendency to focus on policies that work for bigger business. On the apprenticeship system specifically, SMEs can often feel locked out, with its complexity and inflexibility being incredibly challenging to access.  Many directors and managers of manufacturing SMEs are apprentice trained and they know firsthand the value of this route into the sector. If these SMEs feel locked out and priced out of apprenticeship recruitment then we do have a problem.

Employment costs as a barrier to recruitment is well talked about but there is another tax that increasing numbers of SMEs are facing; More SMEs than ever are falling over the apprenticeship levy threshold and becoming levy payers. Using the latest labour market and employer data, we’ve calculated that the average mean salary is now nearly £124 more in manufacturing than this time last year. Consequently, an SME becomes a levy payer with only 68 rather than 70 employees. Going back five years, the wage bill would tip an SME into being a levy payer in the manufacturing sector at 88 employees. This is a 20 person difference in only five years, a monumental and overlooked shift, only compounded by other cost pressures in recent years such as high energy bills and increases to National Insurance. The difference is more stark in manufacturing than in all other sectors combined.

This is a clear example of an unintended policy consequence. SMEs currently pay the levy at well under the 250-person threshold (the formal definition of an SME), resulting in enormous disincentives to engage with the apprenticeship system. This is bad for manufacturing and engineering, and it is bad for young people’s life chances. A simple tweak to public policy here could be all that’s needed to drive real change.

SMEs, with the right support and skills, can be the driving force of the country’s future economic growth.

To achieve this, we’re asking the government to collaborate closely with SMEs on skills reforms and labour market improvements. By co-designing policy, we can ensure that it will genuinely work for SMEs. Enginuity’s Policy Centre for Supply Chain and SMEs was designed to do just this – provide facilitated communication between manufacturing SMEs and government decision makers.
There is a golden opportunity for the government to harness the immense talents within SMEs to drive local and regional economies, creating sustainable and productive employment that can tackle the burgeoning NEETs crisis. Not only that, but we can also turbocharge the uptake of apprenticeships in crucial sectors, fulfilling the government’s ambition of a modern industrial strategy.