Government’s apprenticeship incentive payment is failing to create promised opportunities

In the #PlanforJobs announced in July 2020, the Government announced a cash incentive of either £2,000 or £1,500 for employers to take on a new apprentice until the end of March 2020. At the March Budget this was increased to a flat incentive payment of £3,000 and extended until July 2021.

The Government budgeted for 100,000 hires under the scheme: “Includes the indicative cost of 100,000 incentive payments for new apprenticeship hires.”

Just 34,810 apprenticeships had been started under the incentive scheme by 3 March 2021. Apprentice starts have fallen 18.5 per cent in Q2 2020/21 compared to the same period last year.

Toby Perkins MP, Labour’s Shadow Minister for Further Education and Skills, said:

“Young people are being let down by the Government’s irresponsible handling of this crisis which has led to soaring unemployment and the worst economic crisis of any major economy.

“It is clear their apprenticeship incentive is failing, having created just a third of the promised opportunities.

“Ministers have no plan to reverse the fall in apprentice numbers, they should adopt Labour’s plan for a ‘Jobs Promise’ for young people including using a structured wage subsidy to create the apprenticeship opportunities young people need to gain productive skills and long-term employment.”

Labour’s jobs promise would guarantee young people out of education or work for six months a training or job placement

Under Labour’s proposed wage subsidy employers would receive a full wage subsidy for a new apprentices’ first three months, a 50 per cent wage subsidy for six months and 25 per cent subsidy for the final three months. This would mean half of a new young apprentices’ wages would be paid by the Government, saving employers over £3,500 per apprentice.

This wage subsidy would be funded from the over £300 million underspend from the apprenticeships levy and could have created 85,000 jobs for young apprentices age 16 – 24 this year.