FE sector reacts to Autumn statement 2014

George Osborne, the Chancellor, delivered an Autumn statement yesterday that included plans to scrap employer National Insurance contributions for apprentices aged under 25, while expanding postgraduate loans for young people.

Below is a selection of responses from leaders in the Further Education sector to the announcement:

Stewart Segal, chief executive of the Association of Employment and Learning Providers (AELP), said:

“The Association of Employment and Learning Providers welcomes the Chancellor’s announcement today regarding the abolition of employer national insurance contributions for apprentices under the age of 25. In the light of the 3 million starts ambition set by the Prime Minister for the Apprenticeship programme in the next Parliament, it is vital that the government commits to greater investment in the country’s main skills programme and supports employers in their recruitment of apprentices, and we are pleased that ministers have recognised this, knowing that the returns will be excellent.

“To help further bring down unemployment, we are calling for the next step to be an NIC exemption applied in respect of all previously unemployed apprentices taken on by an employer.

“Given the level of the government’s ambition, AELP has made a number of recommendations to build on the currently successful apprenticeship programme by giving employers more influence over the content of an apprenticeship and a real choice over how the funding of apprenticeships should be routed. Our view is that the government’s proposals for reforming the programme will create more uncertainty for employers, so we would urge a rethink before we embark on pursuing the new target.

“The Chancellor has also said that for those young people who are out of work and require the most help to look for a job, there will be a new intensive period of employment support at the start of their Universal Credit claim. AELP agrees that support can be strengthened by early intervention and effective assessment with local Jobcentres working closely in partnership with providers.”

Addressing measures to improve careers advice, Martin Doel, chief executive of the Association of Colleges (AoC), said:

“Pupils at the ages of 14 and 16 face important transitional decisions often with little help or support. In announcing the investment of £20 million to improve careers advice and support for young people the Government must now ensure that careers education is part of the curriculum.

“All young people should have access to a similar level of support and that’s why our Careers Guidance Guaranteed campaign calls for the establishment of careers hubs in every local area involving schools, colleges, local councils and others. We look forward to hearing the detail of how the Government will take this forward.”

On National Insurance contributions removed for apprentices, he said:

“Encouraging more employers to offer apprenticeships is important but the Government must work with colleges to ensure that employers are ready to take on apprentices. Colleges already work with an average of 700 employers in their local area and they are keen to do more.”

Mary Bousted, general secretary of the Association of Teachers and Lecturers (ATL), said:

“There’s not much joy for anyone in education from this Autumn Statement.

“Having longer-term certainty about education funding is only useful if the funding allocation is fair in the first place. It has to be the priority of next May’s government to deliver the fairest funding formula possible, which the Coalition has avoided doing, despite knowing there is a problem.

“We question the Government’s continued bias towards academies. Rather than pouring an extra £10 million into academy chains in the north, the Government should provide funding to the schools which need most help regardless of type of school.

“The Government’s promise to spend £20 million on the careers service will be good news, provided the money is spent on high quality face-to-face careers advice and guidance in every area of the country, training careers professionals, supporting partnerships with employer, rather than on IT-led solutions which don’t work for many young people, particularly those with the greatest need. It will go some way to repairing the damage this Government caused when it recklessly dismantled the careers service.

“The purpose of apprenticeships should be to educate and train young people, not just to provide cheap labour for employers. We hope the Government asks employers to put the NICs saving towards training their apprentices or developing apprenticeship training with colleges.

“While we welcome extending student loans to some post-graduates, we are deeply concerned about the student loans system. The government has made a complete hash of student loans which tax-payers will end up having to bail out because the majority of students are unlikely to ever repay them.

“Teachers, lecturers and heads have little to thank the Chancellor about since it sounds as though public sector cuts will continue, so it seems doubtful that they will get a decent pay increase any time soon.

“We do, however, welcome increasing the personal allowance as it will reduce the tax burden on the lowest paid, including teaching assistants.

“If the Government is serious about creating a high-performing schools system, it needs to learn to trust teachers and invest in high-quality training. And it needs to totally overhaul the inspection regime to create a self-improving schools system.”

David Hughes, chief executive of National Institute of Adult Continuing Education (NIACE), said:

“The Chancellor started today’s Autumn Statement promising a boost for skills, he made some encouraging announcements but fell short of what’s needed. There are very important investments to support older people who need to retrain, those with mental ill-health and those who need access to basic skills training. However, by making young people a priority there is a danger that the impending adult skills crisis – identified recently by NIACE, the CBI, OECD and UKCES – will continue to threaten future economic prospects and limit social mobility.

“The focus on training for young people is vital, but is only one part of the solution. Over the next 10 years there are anticipated to be almost twice as many job vacancies as there will be new labour market entrants to fill them. The Government must therefore support all ages if they are to achieve their central ambition of creating a ‘more highly-skilled labour market’ which enables the UK to succeed in the global race. The latest figures on Employer Ownership Pilots show that when employers are given the power to choose they focus training investment predominantly on those people over 25.

“Our manifesto, published in June, called for more balance of investment across younger and older people. We are determined to show how skills investment can address the challenges of low productivity and low pay. By helping people build the skills and confidence they need to progress in their careers, will help employers improve productivity and therefore increase pay. This improvement in productivity is crucial for inclusive and sustainable economic growth which will contribute to the deficit reduction which the Government has set so much store by.

“If the Government is going to deliver flood-defences, the ambitious road-building programme and create a ‘northern powerhouse’, this requires people of all ages and stages to train, retrain and stay in work longer. What the Chancellor didn’t mention was the overall collapse in adult skills participation, particularly at the technical and professional levels – where employers are already saying they have the highest skills shortages – which has been a consequence of the introduction of 24+ adult learning loans. We all have a role to play to get this right, a partnership of Government, employers, providers and learners is essential. The adult skills and community learning budgets, alongside giving adults more control over their learning, need to be a much bigger priority if the Government is going to succeed with its long-term economic plan.”

Chris Jones, chief executive of City & Guilds, said:

“The Chancellor’s move to abolish employer National Insurance contributions for apprentices comes as a welcome surprise. It is encouraging to see the Government making good on previous promises to support employers to take on more apprentices. This will incentivise them to invest in young people and reduce the financial and administrative burden of doing so. But we need to make sure that government assistance in the apprenticeship system does not stop at a tax cut. It is crucial that the Government continues to work with education providers and businesses to ensure we are developing the skills that our economy needs.”

Kirstie Donnelly, UK managing director of City & Guilds, added:

“It’s great to see the announcement about increasing the accessibility of postgraduate loans for young people. And in the detail, we are hoping to see that it includes higher level vocational courses as well. The Government’s focus is quite obviously on young people, but it’s also important that older people who are looking to re-train and re-skill receive support. In a world where the nature of work is changing, we need to be looking at developing the skills of everyone – not just those under the age of 30.”

Commenting on the abolishment of the jobs tax for employers taking on young apprentices, Patrick Reeve, managing partner of venture capital investor Albion Ventures, said:

“Apprenticeships play a vital role in growing our economy and getting young people into the jobs market. But our research shows that 56% of manufacturing firms, which have traditionally played a key role in providing apprenticeships, currently have no plans to launch a scheme in the future. While three million new apprenticeships is an ambitious target, abolishing National Insurance for those aged under 25 is a strong incentive and will soften employer attitudes. We’ll be watching with a keen interest how businesses respond.”