Instead of taking back unspent cash, the DfE and Treasury should look at reallocating this underspend as a new training allowance, writes Ian Ross
It is hard to escape the media frenzy and coverage of the Conservative Party leadership contest.
Most of us have probably thought about what the next Tory government will have in store for the FE sector.
While politicians and ministers have short shelf lives, the imminent change in leadership gives us the opportunity to influence the FE agenda.
Undoubtedly the next prime minister will want to differentiate their premiership after Downing Street has been rocked by months of scandals.
One quick fix to addressing youth unemployed is to tweak traineeships.
In Wales, where skills funding is devolved to the Welsh government, young people on a traineeships programme receive a weekly training allowance, paid dependent on learner attendance. That is now part of the Jobs Growth Wales+ initiative.
For example, young people on the Jobs Growth Wales+ engagement strand receive a weekly training allowance of £35 per week.
Meanwhile those young people on the advancement strand receive £55 per week.
It is worth highlighting that in Wales this does not affect their universal credit entitlement.
This means those receiving universal credit who are in the intensive work search group can take advantage of more sector-specific training while still receiving financial support. This training can range from digital skills to social care and engineering.
As it currently stands, in England jobseekers can also take part full-time in the free Department for Education skills bootcamps for up to 16 weeks.
Ministers in England had hoped to achieve 43,000 starts on the traineeships scheme in 2021-22 after investing an additional £126 million through the Chancellor’s budget last year.
This was on top of a £111 million investment to achieve 36,700 traineeships in 2020-21.
But the target was missed by more than half, with only 17,400 starts.
It resulted in the Department for Education handing £65 million of the funding back to the Treasury.
It’s a travesty so much traineeship cash is returning to the Treasury
The Chancellor’s goal was to triple the number of starts on the pre-employment programme after 14,900 were achieved in 2019-20.
A similar underspend is looking likely for this year as figures show just 8,900 traineeship starts in the first half of 2021-22 between August to January.
In February to April 2022, 455,000 young people aged 16-24 were unemployed. The number who are economically inactive stands at 2.61 million.
Meanwhile 61,000 more young people have become economically inactive compared to pre-pandemic levels, an increase of two per cent.
Paying young people a training allowance in England will incentivise young people to sign up to a traineeship.
With the cost of living crisis continuing to bite, providing a £35 to £55 per week training allowance will make traineeships more accessible for young people.
As inflation continues to rise young people who claim universal credit will find the real value of their benefits decline.
As young people spend more on essentials like rent or bills, this is a serious problem that we must solve. It’s crucial so that young people are not excluded from participating in a full-time skills programme.
And although the former chancellor, Rishi Sunak, is to be congratulated for investing in traineeships, in my opinion it is a travesty that so much of this funding is being returned to the Treasury.
From our own experience we find that many young people think short-term and opt for whatever pays more, often opting for a minimum wage part-time job over a Traineeship.
Part-time employment may provide short-term income. But a traineeship is a longer-term investment in their skills and qualifications, enabling learners to widen their future opportunities including moving into apprenticeships with better career prospects and pay.
My preferred option is for the DfE and Treasury to look at reallocating this underspend as a new training allowance.
I believe this will greatly help towards achieving the government’s ambition of tripling traineeships.
Another option is giving traineeships providers the flexibility to use their existing funding allocations to pay discretionary training allowances.
If Conservative Party leadership candidates are serious about addressing youth employment, now is a good time to announce their position.