FE sector responds to Summer Budget

George Osborne announced the first purely Conservative Budget for 19 years on Wednesday, outlining measures including welfare reforms and a company levy to fund apprenticeships.

Below is a selection of responses to the Budget from leaders in the education sector:

Martin Doel, chief executive of the Association of Colleges (AoC), said:

“In today’s Budget, the Chancellor of the Exchequer set out plans for a national training levy to be paid by large employers which will be used to support apprenticeships. This is a brave decision and an important step in ensuring the quality of apprenticeships is maintained at the same time as the quantity is increased.

“It is right that employers make a contribution to the costs of training the national workforce as they benefit from apprenticeships in terms of increased productivity among their employees and from access to a more skilled labour market. Levies are one way in which this can be achieved and they are already in use in many other countries.

“It will be important however that any levy system is not unduly bureaucratic and we believe a universal payroll charge is the best approach.

“The key announcement for colleges in today’s budget is the plan to implement spending cuts over a longer period but a slower rate than indicated in the March budget. We will continue to emphasise the need for the Government to invest in education and skills.”

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

“For skills and in particular Apprenticeships, the government has announced that all large employers will pay a levy to fund the Apprenticeship programme. It is very unclear how this levy will work, who will pay it and what it will fund. Without knowing that detail, it is impossible to say whether it will work and increase productivity across employers of all sizes.

“What we do know is that this signals the move away from the current funding proposals for Apprenticeships which we said all along would not encourage more employers, especially SMEs, to engage with the programme.

“There are clearly risks with any levy which ‘forces’ employers to pay an additional tax albeit targeted at Apprenticeships. The UK does not have a good record of making such levies work and we have said that we need to maximise employer choice, not legislate for their involvement. The CBI has said that it has concerns about levies and if the levy is only paid by large employers, there is a risk that they will determine how the money is spent. The drive for productivity means that we have to engage SMEs who will deliver much of the growth in the programme.

“AELP has many questions about how the new proposals might work and is very willing to be involved in the discussions about how they might work. In the meantime before any radical change which would not happen before 2017, we need to review the Trailblazer funding pilot which now appears to be unnecessary.

“It is interesting to note that the only thing that everyone agreed with before the election was that we needed a period of policy stability to deliver Apprenticeship growth. Our view is that the levy proposals will need time to develop and implement effectively. In the short term, we should focus on growing the programme and work towards a new way of funding Apprenticeships once that growth is embedded over a period of the next 3 or 4 years.

“The other major change that will affect these plans are the proposals around the Living Wage. The changes to the minimum wage will only affect 25 year olds and above. This means that we may end up with different rates for young apprentices, older apprentices, normal employees up to 21 and then 21 to 24 year olds. This may mean that employers will be encouraged to recruit young people, especially where there are additional national insurance incentives. It will be very important to balance any increases in rates for young people with the ability of employers to pay their costs. This issue has to be reviewed in line with any new proposals for Apprenticeships.

“For those who are unemployed and those on low pay, there will be a number of challenges with reductions in benefits. People going on to ESA benefits will see a cut in rates and there will be a lower cap for benefits of £20,000 (£23,000 in London). Young people will lose housing benefits and those who are 18-21 will go on to the Youth Obligation where they will have to consider a number of work options including Traineeships. What is not clear is how the government will provide the additional support that these people will need to get into sustainable and well paid work.

“Work Programme and Traineeships have to be at the core of any support and the funding needs to be made available. The government at the election set out the commitment to move towards full employment and create more opportunities for those most in need of jobs such as those with a disability. This is very much part of the productivity challenge and we will need to see a much more integrated employment and skills offer.

“People receiving benefits will lose their benefits when they increase their income, so we need to ensure that there is effective support for in work skills development that gets people out of the in work benefits cycle. We know from the evidence that there is a strong payback for government in funding this in work training. The drive for productivity has to focus on training and retraining at all levels of the economy from low paid roles to high level technical skills.”

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

“The Chancellor’s Budgets may attract headlines but simply do not add up for Britain’s future. Boosting the country’s economy will be limited as long as the Government’s policies make it hard for people to take advantage of opportunities and fulfil their potential.

“The Chancellor cannot continue to hold teachers’ pay behind private sector pay and expect teaching to remain an attractive profession. It would be a recipe for disaster to have fewer teachers when it’s expected that there will be thousands more pupils in schools.

“George Osborne is right in his assessment that skills need a radical overhaul, so an apprenticeship levy on large employers is a good first step. One third of employers offered their workers no training, of any sort, last year so radical measures are needed. However, the levy needs to ensure apprenticeships are of high quality, not just increase the quantity.

“We fear scrapping maintenance grants will stop some young people from going to university.

“The new national living wage is a living wage in name only. Low paid workers will welcome a rise but will not be fooled by the fact Osborne’s hourly rate by 2020 does not compare well with today’s independently set living wage.

“Today’s Budget does not paint a rosy picture for either education or society.”

David Hughes, chief executive of NIACE, said:

“The Chancellor made a great start to his speech today when he admitted that as a country, ‘we do not train enough’. However, despite all the emphasis and rhetoric on a low tax, higher wage and low welfare economy, he is clearly leaving the detail on skills and learning until the publication of his Productivity Plan on Friday. This will, we hope, recognise the invaluable contribution the FE sector must play in transforming our economy.

“Securing investment from employers through the Apprenticeship Levy is a great move if it leads to increased employer investment in skills and more employers taking on apprentices but quality of, and access to, Apprenticeships have to improve at the same time.

“Apprenticeships are not enough though to fill skills gaps and drive productivity. People already at work need training and for those in low pay many need basic and digital skills. We need to address low-level productivity in retail and care as much as we do in engineering and manufacturing. For the 5 million people in low pay the Productivity Plan will need to a new offer of training and support because an apprenticeship will not be available to them.

“The plans for further devolution to Greater Manchester and the ambition towards devolution deals to further areas across the North are vital if we are to achieve the truly joined up local commissioning that’s needed on employment support and employer engagement in skills.

“Funding maintenance support for full-time higher education students through loans underlines the need to safeguard the student opportunities fund to ensure that rising student debt doesn’t start to impact on opportunities for disadvantaged students. We strongly urge the Chancellor to use this opportunity to extend maintenance support to part-time students and for those in FE, arresting the dramatic decline in part time learning over recent years.

“Despite some eye-catching (new national living wage for over 25s, for instance) and detailed (cuts to tax credits for instance) announcements, we will have to wait until Friday to find out what he plans to do about the ‘failing skills system’. We will soon learn how the in-year cuts of £900m to DfE and BIS will be achieved – 16-19, 19+ further education and higher education are all in line for more tough news.”

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

“We welcome the Chancellor’s support for apprenticeships in today’s Budget Statement. Sustainable long term-funding solutions, such as the proposed apprenticeship levy for large firms, will be critical to not only meeting the 3m apprenticeship target, but making sure each and every apprenticeship is high quality.

“With the annual productivity gains from training an apprentice at £10,280 per year, the investment is well worth it. However, if this new levy is implemented, it must be done in a way that does not impose additional bureaucracy on businesses, and does not discourage employers from supporting on-the-job training in their companies.

“It is also important that support for would-be apprentices does not overshadow the need to help people up the ladder at every stage of their careers, including later in life. Today we are disappointed that the Chancellor was silent on the need to boost provision for over-19s in areas such as vocational qualifications and employability support. We also need alternatives to a purely academic curriculum at 14 or 15 – again, something that wasn’t covered.

“As I wrote to the Chancellor last week, broadening high-quality vocational education provision can make a substantial difference to employment, productivity, and our GDP.”

Regarding the proposal for a company levy to fund Apprenticeships, Sally Hunt, general secretary of the University and College Union said increasing the contribution from employers is a longstanding UCU policy, and it will look in detail at what the chancellor proposes.