30 September shouldn’t be the end for apprenticeship incentives

The continued uncertainty around the pandemic keeps having an impact on education, skills and employment. The mainstream media likes to get its hooks into eye-catching developments such as recent graduates going on to take “panic Masters”, but official data often offers a more nuanced picture of how young people are responding to these unprecedented circumstances.

Nonetheless we can generally see a picture of more young people, either at 16 or 18, choosing to stay on in full-time education because of covid. In fact UCAS has just published figures showing that 272,500 UK students aged 18 have been accepted into university or college so far this year, a 7% increase on 2020 and a new record. Entering the world of work, often with only short-term contracts on offer, can’t appear a very attractive proposition to many young people at this time despite the economy picking up and vacancies also being at record highs.

Don’t get me wrong. I’m not suggesting that young people are making the wrong choice, especially if they end up with a good qualification at the end of their course. But there is a real issue around whether they are aware of all the options which are available to them. Apprenticeships offer the opportunity to earn and learn up to and including degree level in many sectors. Since the beginning of 2021, the number of apprenticeship vacancies have been increasing every month and there were 19,550 vacancies in July to coincide with the end of the academic year. It just seems odd right now that employers are experiencing challenges to fill them, but the evidence suggests that some potentially strong candidates are choosing to stay on to learn in a lecture room instead.

Starts still down

Apprenticeship starts overall are still down 7% from a year ago because the three lockdowns closed workplaces to potential new recruits, but a definite ray of light has appeared since the Chancellor’s Budget in March in the form of increased employer incentives to take on new apprentices. The incentives have undoubtedly worked and have helped to mitigate the negative impact which the pandemic has had on apprenticeship starts. As of 10 August 2021, the number of apprentices recorded on the Apprenticeship Service for whom incentive claims have been submitted by employers totalled 85,430 and that’s a really impressive outcome.

More importantly in the context of the debate around whether the levy system needs rebalancing, 75% of the claims were made for apprentices aged between 16 and 24. This is very encouraging when starts for that age group are only half of the overall total. Similarly 83% of claims were made for level 2 and 3 starts when those levels have declined from 80% to 68% of starts overall.

Incentives helping SMEs

I’ve said to ministers that while AELP strongly supports the embodiment of employer choice in the levy system as part of an all age, all level and all sector programme, we have become concerned that apprenticeships might lose the social mobility element with which they have been traditionally associated. The incentives, which are due to end on 30 September, have helped ITPs to encourage SME employers to take on new apprentices and SMEs tend to offer proportionately more opportunities to young people and at the lower levels. This should also be seen as a positive development in terms of levelling up across the country.

The fact that the government is keeping the employer incentives in place for traineeships and T Levels at least until 31 July 2022 is a good argument for maintaining a consistent approach in protecting young people’s futures which means that the apprenticeship incentives for 16 to 24 year olds should be extended until at least that date as well.

Spending Review wishlist for apprenticeships

We now know that the outcome of the Spending Review 2021 (SR21) will be announced with the Autumn Budget on 27 October and in addition to an extension of the employer incentives for apprenticeships, AELP is recommending that:

1. To ensure the financial sustainability of the apprenticeship system for all sized employers and all ages of apprentices in the long term, overall funding for apprenticeships needs to match employers’ demands, including a standalone annual budget of at least £1bn for SMEs’ apprenticeships.

2. To build on the success of the employer financial incentives first deployed in the Plan for Jobs, there needs to be an ongoing basket of incentives to support young people, create entry-level programmes and routes into key industries, and help SME employers. To further support young people climb the ladder of opportunity, the Department of Education should fund all the apprenticeship training for 16-18 apprentices out of its mainstream 16-19 budget instead of the levy.

3. To bring true equality between academic and technical education, apprentices needing to develop English and maths functional skills during their apprenticeship should get fair funding which is equal to the current classroom-funded rate.

The Chancellor has done a great job over the last 18 months in championing apprenticeships and traineeships but the programme start numbers suggest that a major effort of in terms of support for skills is still required and the Autumn Budget offers that opportunity.

Jane Hickie is chief executive of Association of Employment and Learning Providers