Our post-Budget reflections

The last time a Chancellor delivered an all-Conservative Budget, Twitter was 11 years away from launching, the Backstreet Boys were at the top of the charts, and many of those currently on an apprenticeship had not yet been born. So this month’s statement by George Osborne was always going to be eye-catching; the question was whether this would be for the right reasons.

We’ve now had time to digest and discuss it, and in my view there is plenty to welcome. For example, the Government’s ongoing commitment to apprenticeships is encouraging, as is the fact it’s exploring different funding solutions. And the sentiment around skills in the Government’s much anticipated plan to address the UK’s stagnant productivity is positive. UK productivity is 28% lower than in France, 29% lower than Germany and 30% lower than the US, so the Government is right to acknowledge that skills will be at the heart of tackling the productivity problem.

We cannot underestimate how important skills are to our economy. The City & Guilds Group recently commissioned the CEBR to research the return on investment for training an apprentice which, it found, contributed an extra £10,280 in productivity gains per year. Meanwhile a 1% increase in vocational skills would uplift GDP by £163bn in a decade’s time.

It’s vital we address the pressing issue of whether or not we have the right skills – and the right skills system – for an efficient and effective workforce. For that reason, there are some elements of the Budget that need our deeper consideration.

First and foremost is the apprenticeship levy, which has been a hot topic for both our sector and businesses since the Budget was announced. As I’ve already said, the Government’s plans to find a long-term funding solution is certainly needed – particularly to help maintain the quality of the three million apprenticeship target the Government wants to achieve. However, as the City & Guilds Group Chief Executive, Chris Jones, pointed out at the time, if this new levy is implemented it must not add to the burden of red-tape for businesses which may discourage employers from supporting on-the-job training in their companies.

A second issue that received little interest in the mainstream media is around the Youth Obligation for 18-21 year olds on Universal Credit. From April 2017, they will be provided with support from the day they start to claim benefits, and after six months they will apply for an apprenticeship or traineeship, or join a work experience programme so they can enter employment.

Don’t get me wrong – I truly believe that learning can change people’s lives for the better. But the national skills debate is being linked so closely to the changes in welfare policy, which is cause for concern. Over the past few years, we’ve all promoted the benefits of apprenticeships and highlighted the opportunities they offer everyone, not just those who didn’t succeed in academia. We’ve seen a noticeable shift in perceptions around apprenticeships, and challenged the idea that university is the best and only route to success. Associating the likes of apprenticeships and traineeships with something that young people are forced to do to avoid benefit sanctions may risk undoing this good work.

And of course, the Budget provided no funding for alternative pathways to academia at 15 and 16, nor was there any additional funding for post-19 education. When the Government announced the 3.9% cuts to non-apprenticeship qualifications and training earlier this week, I doubt anyone was particularly surprised. Unfortunately, this is a very short-sighted view because while we should support helping young people get into work, we risk cutting provision for adult learners who want to enhance their skills, and the long-term unemployed. With less than encouraging unemployment results last week, we need to help people learn whatever age or stage they’re at in their careers.
As ever, there are still a lot of unanswered questions for us in the wake of the Budget – we’ll have to wait for the forthcoming Spending Review in November for more detail. But we should take comfort in the fact that skills and apprenticeships continue to be a core focus of the Government. As the then leader of the Opposition said of Kenneth Clarke’s Budget in 1996, the Budget is all ‘smoke and mirrors’. By working together on the solutions to these challenges, we can begin to step through the smoke and into the fresh air.

Kirstie Donnelly is UK managing director of training body City & Guilds Group