The Budget Speech we’d like to hear

by Mark Corney

Mr Deputy Speaker, my Budget today announces far reaching reforms of our education, skills and employment systems.

I am determined to unleash the potential of our young people, prevent a lost generation of 18 to 24 year olds, transform training opportunities for adult workers and revitalise lifelong learning.

The Coalition Government is full-square behind the raising of the participation age to 18 in 2015. This will provide a step change in opportunities for all young people in England.

But by itself, the RPA will not ensure higher participation and greater achievement. We accept middle and lower income families facing cuts in real incomes and welfare benefits will find it harder to support their children to stay-on in education and training.

I have, therefore, decided that in future 16 to 19 child benefit and child tax credit will be treated as financial support rather than welfare transfers.

The Secretary of State for Education will announce shortly plans for a new means-tested Participation Allowance worth £3.2bn paid to parents for 16 and 17 year olds in full time education.

Mr Deputy Speaker, despite the need to bear down on the deficit and the continued fall in the number of 18 to 24 year olds in jobs but not in full-time education, the Coalition is determined not to preside over a lost generation of young people.

But if we are to get to grips with rising youth unemployment and inactivity, policy responsibility must reside with a single Whitehall department.

With the consent of the Prime Minister, this Budget announces the formation of a new Department for Business, Industry, Skills and Employment.

This new department will be responsible for employment programmes and employment relations, higher education and further education from 18, adult apprenticeships and industrial policy.

The Prime Minister has agreed that a Minister for Youth Unemployment should attend cabinet. A Minister for Higher and Adult Further Education will also attend.

I know young people want jobs. I get the message.

I have therefore decided to reduce by 2 percentage points employers' national insurance contributions for 18 to 24 year olds.

Mr Deputy Speaker, this intervention will give young people an edge in the labour market. But we must do more for our young people.

Instead of paying them to be on the dole we intend to pay them to be in full time further education.

Instead of paying young people Jobseekers' Allowance we intend to pay them maintenance support.

Job Seekers Allowance for most 18 to 24 year olds will be abolished.

In its place will be a new National Education and Training Allowance offering 18 to 24 year olds a mix of maintenance grants and loans in line with their peers in full-time higher education.

For too long, we have a permitted the unfairness of providing young people entering full-time higher education access to maintenance grants and loans independent of the benefit system whilst offering 18 to 24 year olds wishing to study or train full-time in further education hardly anything  other than JSA.

Young people in full time HE do not suffer the indignity of signing on every two weeks and neither should full time FE students.

Our National Allowance for 18 to 24 year olds in full-time further education and training will start to end the divide between FE and HE.

Mr Deputy Speaker, the cost of the National Education and Training Allowance will in part be met by savings in 18 to 19 child benefit and child tax credit, and the withdrawal of JSA for most 18 to 24 year olds.

Mr Deputy Speaker, the prevention of a lost generation of 18 to 24 year olds must not be thwarted by the existence of three different funding systems.

The Business Secretary will shortly announce a single funding agency for adult skills, higher education and employment.

The new agency will work alongside the Student Loans Company which will manage grants and loans to all students and trainees over 18 whether in full-time further education, full-time training or full-time higher education.

The Council for Adult Skills, Higher Education and Employment will be able to breakdown funding barriers between adult further education and higher education, and assist in the rapid expansion of Higher Level Apprenticeships.

Mr Deputy Speaker, Britain needs a new industrial policy to rebalance our economy and help British companies compete in the world economy.

Apprenticeships should be an industrial intervention not an unemployment intervention.

I am determined that more private employers in all sectors of the economy engage in apprenticeships and employers can pulled down funding directly rather than through providers.

Mr Deputy Speaker, we must strike the right balance between excessive regulation and business support. But today I can announce a review of levy raising powers for Local Enterprise Partnerships to fund business and apprenticeship support staff to help small and medium sized enterprises to grow. I am also announcing a review of employer tax systems as a mechanism for distributing the adult apprenticeship budget directly to employers building on the employer ownership pilots.

But an industrial strategy must be more than a skills strategy. It is about investment, innovation and technology as well as skills.

As an example of this new approach, Sector Innovation and Skills Councils will replace sector skills councils.

Taken together, these measures will help our people meet the economic challenges of the years ahead.

But, Mr Deputy Speaker, the Coalition is committed to creating a 'big society' in addition to a 'growing economy'. And access to lifelong learning is central to our aim of creating a 'big society'.

Today, I am announcing an extra £250m over three years to prevent the closure of local libraries and make library services more efficient and accessible.

Mr Deputy Speaker, each of these measures will be funded through restricting tax relief to private pensions to 20%.

Mark Corney is policy adviser to the Campaign for Learning and writes in a personal capacity.