Switching off Treasury cash for apprenticeships is a big mistake

31 Jan 2022, 14:34

Many of the same problems plague the apprenticeships system as a decade ago. We need a big review, writes Tom Bewick

This week, the Treasury switched off the £3,000 incentive scheme to boost England’s apprenticeships during the pandemic.

That’s a real pity. Because by all accounts, the scheme had been an incredibly successful way of arresting the slump in employers hiring more apprentices.

For the first time since coronavirus became a part of our national consciousness, the numbers of recorded apprentices being taken on are now at their highest levels since 2017.

As reported by FE Week, the Treasury “bonus” handed out to firms (with an eligible start of any age) available up until today had resulted in over 161,000 taking up the opportunity.

Crucially, the policy had helped jump-start a declining trend, with a 43 per cent increase in starts in the last quarter of 2021, compared to the same period a year earlier.

Meanwhile, the Australian government has made its apprenticeship incentive scheme permanent. Employers can access payments of between AUS$750 and AUS$4,000 for hiring apprentices depending on the prior attainment level of the apprentice and the extent to which the occupation is a priority skill area.

It adds up to a far more comprehensive incentive package, with both “commencement” and “retention” bonuses linked to the types of apprentices and the kind of skilled roles the federal government is trying to incentivise.

The list of 65 skilled trades are mainly at level 2 (academic equivalent to five GCSEs in England). Incentives are geared towards helping Australian employers take on more cooks, hairdressers, gas fitters, vehicle body repairers and welders.

Closer to home, France has also taken a proactive approach. Its apprentice incentive scheme is exclusively about giving a boost to the hiring of young people under the age of 26.

The “1 young person, 1 solution “ plan earmarked €1 billion in the initial period, with wage subsidy grants handed out to employers of up to €8,000 per apprentice. It’s a far more generous scheme than just across the Channel here in the UK.

What all the international evidence shows, however, is that England’s apprenticeship programme is increasingly an outlier.

The majority of opportunities go to much older workers. Is this fair?

In world leading systems like Germany and Switzerland, two-thirds of apprentices are under the age of 21.

Great Britain ranks 19th out of 32 countries for the quality of industry placement for 15-year-olds, behind Albania and Bulgaria

They are taken on at level 3, and trained up to sub-degree level education (levels 4 and 5) – precisely the areas where most skills gaps and shortages occur.

The great success of these systems is the fact that youth unemployment has been virtually eradicated by these countries.

The availability of work experience placements, leading to quality 3-year apprenticeships, is one major reason for why the “Germanic systems” top all the international league tables.

Yet the OCED has ranked Great Britain 19th out of 32 countries for the quality of industry placement for 15-year-olds, behind Albania and Bulgaria.

In England, the latest data shows that while over 40,000 starts went to under-19s last autumn (30.8 per cent), these figures were easily dwarfed by the two-thirds of older adults aged 25 plus who currently benefit.

This simply continues a worrying and long-standing trend.

Of course, we should continue to support an all-age, all attainment level programme.

But  when 453,000 under 24s are unemployed (11.3 per cent), serious questions have to be asked about whether the current focus is the right one.

It is why switching off the Treasury incentives is so short-sighted.

It comes at a time when withdrawal (non-completion) rates are higher on new apprenticeship standards, compared to the old frameworks .

This feels like a major failing of a system that underwent the Richard Review in 2012.

The government accepted the recommendations at the time.

Yet, a decade on, and we find the sector still asking many of the same questions.

Who are apprenticeships for? Why aren’t more employers making use of them? And how do we boost quality?

As we approach another celebratory National Apprenticeship Week, I believe it’s time that ministers at the Department for Education ordered another major review.

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One comment

  1. “In England, the latest data shows that while over 40,000 starts went to under-19s last autumn (30.8 per cent), these figures were easily dwarfed by the two-thirds of older adults aged 25 plus who currently benefit.”

    Perhaps I am misreading this but it doesn’t add up
    under 19s, 30.8%
    Over 25, two thirds (66.6%)

    That leaves less than 3% starts for 19-24, which is not correct.

    Having said that – I agree with most of the underlying sentiment.