Monday, 30 January 2012

Apprenticeships: Much to Inquire About

by Mark Corney

Apprenticeships are a flagship policy of the Coalition Government. The decision to conduct an inquiry into apprenticeships by the House of Commons Business Select Committee is timely and welcome. There is, indeed, much to inquire about and, incidentally, more than the terms of reference suggest.

Concerns that half of apprenticeships for 16-19 year olds are less than a year in length have grabbed the headlines in recent weeks. But little has been said about the implications for the raising of the participation to 18 in 2015. Under the RPA, a 16 year old, for instance, completing a Level 2 apprenticeship by age 17 will still have a duty to participate until their 18th birthday.

Equally important is the role of apprenticeships for 18-24 year olds in a youth labour market worsening by the day. The Coalition Government is at a crossroads. It really must decide once and for all whether 18-24 apprenticeships are a ‘skills measure’ – for new labour market entrants and existing low skilled young workers – or an ‘unemployment' measure targeted specifically on those who have been claiming Jobseekers' Allowance for, say, six months or more. Evidence from the Department for Work and Pensions will be just as important as that from the Department for Education, and the Department for Business, Innovation and Skills.

Rising youth unemployment also brings into question whether public funding for apprenticeships should be available for adults aged over 24. The Coalition has decided that Level 3 and Level 4 apprenticeships for those aged over 24 should be funded through loans rather than grants. Arguably loan funding for this age group should be extended to Level 2 apprenticeships as well. Even so, it looks rather odd to fund an employer facing programme through loans to individuals albeit in the form of the relatively generous income contingent loans. Employer loans should fund employer based apprenticeships.

And then, of course, there is the structural issue of employer engagement in publicly funded apprenticeship. A recent DfE report* shows employers in the private sector are more likely to engage in apprenticeships than the public and voluntary sectors. Employers in sectors of the private economy with a tradition of apprenticeships also tend to engage more. Yet, no detailed breakdown of employer engagement by sector is provided although the report states clearly that the sector with the highest engagement of employers is construction.

Interestingly, the report does not explain why this is the case. The explanation is well known to anyone with a modicum of knowledge of our skills system: a statutory training levy operates in the construction sector. Presumably, there must have been a worry in Whitehall that the logical conclusion would have been drawn that statutory levies should be extended more widely. And the Coalition has made it quite clear that regulation in general is an evil the economy can ill afford at this moment in time.

Constructed in a modern way statutory levies across sectors in the private economy might not be viewed as excessive regulation but part of the nudge agenda where limited intervention leads to large scale changes in behaviour. A statutory levy used to pay for the administrative costs of sector skills councils** could enhance employer ownership of SSCs and increase their capability of engaging employers in public funded apprenticeships as well as the innovation needs of small and medium sized enterprises. The select committee should certainly inquire into the idea.

Mark Corney is policy adviser to the Campaign for Learning

*Firms engagement with the Apprenticeship Programme Research Report 180, DfE, November 2011
**Apprenticeship policy in England: Increasing skills versus boosting young people’s jobs prospects, Centre for Economic Performance, LSE, December 2011

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