by Mark Corney
One by one representative bodies have proclaimed surprise and disappointment at the decision by the Coalition to restrict ‘traineeships’ primarily to 16-18 year olds and delay them for 18-24 year olds.
Economists would point out that they have been surprised because they have focused on the wrong variable.
The delay is not to do with the budget for delivering 18-24 traineeships paid to providers and funded by BIS but the cost of benefits trainees will receive paid by DWP. The failure of the framework document* to have ‘DWP’ on the front cover gives the game away.
The design framework clearly states traineeships are intended for non-employed young people. On reaching 18 young adults are entitled to Jobseekers Allowance worth £56.80 per week. In addition, traineeships are for 18-24 year olds without Level 3 qualifications.
Over 200,000 young people aged 18-24 with qualifications below Level 3 in England. But the critical point is that 60% stop claiming JSA after 12 weeks and 80% after 26 weeks.
The critical question is whether enrolment is available at day 1 of claiming JSA. The concern of DWP and labour economists is that thousands of short-term unemployed 18-24 year olds who would normally cease claiming JSA before 26 weeks unemployment would park themselves on ‘traineeships’ and claim JSA for a full 26 weeks.
Rather than reduce the £1bn JSA bill for 18-24 year olds, traineeships will increase it. Just at the time the Chancellor wants to bear down on the welfare benefits.
A deal based on BIS paying the cost of delivering 18-24 traineeships in return for DWP paying the cost of JSA was easy to see through.
It would cost BIS nothing as the cost of delivering traineeships could be funded within the £1.6bn adult FE budget (excluding adult apprenticeships). But it would incur extra expenditure by DWP in the form of higher benefit spending.
From a benefit reduction point of view the earliest DWP would want traineeships to be available to 18-24 JSA claimants is after 26 weeks of initial unemployment.
Maybe the forthcoming spending review on the 26th June will indicate how long 18-24 year olds must claim JSA – or the new Universal Credit – before they can enrol on non-employed traineeships.
Confusion over 16-18 benefits
The blind-spot over benefits has also resulted in the education and skills community missing a key problem of family support paid to parents supporting 16-18 year olds on traineeships.
Parents with 16-19 year olds in full-time non-advanced education and unwaged ‘approved’ training are entitled to claim means-tested child benefit (worth £20.30 per week for the first child) and child tax credit (£52.31 per week per child).
As things stand, 16-18 traineeships have not yet been classified as ‘approved’ training. This is an amazing oversight when the programme is to go live from this September.
Traineeships are likely to be taken up by 16-18 year olds from some of the poorest families.
If these parents support their 16-18 sons and daughters to stay-on at school and college they will receive £72.61 per week but could get nothing if they participate on traineeships.
16-18 traineeships will only succeed if there is a level playing field for family support with full-time education and currently approved training.
Mark Corney is policy adviser to CfL and writes in a personal capacity.
*Traineeships - Framework for Delivery: supporting young people to develop the skills for apprenticeships and sustainable employment. DfE/BIS, May 2013