Billions raised for apprenticeships gone UNSPENT sparking demands for reform

A hard-hitting report endorsed by three former education secretaries claims that billions raised by the Apprenticeship Levy has gone unspent.

Leading think tank Policy Exchange says that £4.3billion raised by the levy since 2018 has not been spent on apprenticeships.

It is calling for action to help employers invest in training in areas where there are shortages of skills so the nation does not have to rely on imported labour.

Just 349,190 people started an apprenticeship in 2021-22 – down from a high point of more than half a million a year in the pre-pandemic era.

Ex-education secretaries David Blunkett, Nadhim Zahawi and Sir Gavin Williamson have backed the report, which shows how medium-sized businesses are struggling with the bureaucracy of the training system.

There is also concern that many people cannot afford to start an apprenticeship because pay rates for the first year are often far below the minimum wage.

A 21-year-old in work would be entitled to a minimum wage of £10.18 an hour. But in the first year of an apprenticeship he or she would be paid just £5.28 an hour.

Researchers found the number of 19 to 24 year-olds starting an apprenticeship has fallen by 31 percent since 2015-16. Policy Exchange wants “all apprenticeships to be paid the National Minimum Wage for their age, to enable those from lower-income households to take up apprenticeship opportunities”.

The report calls for levy payers to be able to support shorter and more flexible training opportunities, such as HGV courses or “coding bootcamps”. The think tank also calls for an end to the “grave injustice where child benefit is stripped from the parents of 16-19 year-old apprentices – when they would continue receiving it if the child was studying A-Levels at school or college”.

Cobra beer founder Lord Bilimoria said businesses were “crying out” for the Government to reform a system which had failed to deliver the apprenticeships needed to boost Britain’s productivity.

Conservative MP Mr Zahawi backed the push for reform, saying that “employers should be able to use the levy to train up home-grown talent – including on shorter and more flexible courses – instead of being forced to rely on immigration to fill these vacancies”.

Tina McKenzie of the Federation of Small Businesses described the “sharp decline” in apprenticeship starts as “alarming,” warning: “We should not jeopardise the future of our economy by neglecting the skills and experiences of our youth.”

David Hughes, chief executive of the Association of Colleges, added: “The apprenticeship levy has had a positive impact in many ways, but it is not working how it should. A reformed levy system is vital as soon as possible.”

Lord Austin, a former Labour communities minister, said: “A fairer minimum wage, free transport for young apprentices and ending the travesty whereby child benefit is removed from the parents of apprentices under 18 would make a real difference to those from poorer backgrounds.”

Setting out what is at stake for the country, Lord Blunkett said: “It is self-evident that we cannot achieve the goals of increased growth, sustainable economic development in all parts of the country and reverse the decline in productivity without the skills and training required to meet these challenges.”

A department for education spokesman said: “Thousands of employers are making good use of their levy funds, helping to grow the economy by creating hundreds of apprenticeships opportunities for people of all ages and backgrounds, with under-25s accounting for more than 50 percent of all apprenticeships starts.

“The apprenticeship levy has helped grow the apprenticeship budget to £2.7billion a year by 2024-25 – supporting employers of all sizes and in all sectors to benefit from the high-quality training that apprenticeships offer. In the 2021-22 financial year, 99.6 percent of the apprenticeship budget was spent.”

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