THE ASSOCIATION OF EMPLOYMENT AND LEARNING PROVIDERS (AELP) – WRITTEN EVIDENCE (YUN0005)
Youth Unemployment Committee Inquiry
Executive Summary
The House of Lords Committee on Youth Unemployment has issued a call for evidence to devise recommendations to address the issue of unemployment among young people across the country.
The outbreak of the Covid-19 pandemic and the introduction of new immigration rules following the end of the post-Brexit transition arrangement between the UK and the EU has brought additional pressures on shortages of skilled workers across key sectors of the economy, as well as hindering employment prospects for young people.
The Association of Employment and Learning Providers (AELP) believes that technical and vocational qualifications are the cornerstone to effectively tackling the issue of youth unemployment across the country.
Often underestimated by policymakers, technical qualifications such as apprenticeships and traineeships can be the first rung in the ladder of opportunity for many young people from disadvantaged backgrounds and economically deprived areas to lift themselves up and aspire to a better future.
In particular, Level 2 apprenticeships are central to successfully restarting the UK economy in the aftermath of the pandemic because they:
AELP believes that the Government has both a moral duty and an economic interest in taking direct actions to address the issue of youth unemployment. With crippling labour shortages affecting large chunks of the economy and employers no longer able to rely on the free flow of skilled workers from neighbouring countries, we have a golden opportunity to tackle youth unemployment by encouraging young people to learn a new profession while earning a living and – at the same time – giving the economy a significant boost.
In that spirit, AELP makes the following suggestions to the House of Lords Committee on Youth Unemployment:
Recommendation (1): To help young people climb the ladder of opportunity, the Government should fund all apprenticeship training for 16-19 learners out of its 16-19 Department for Education (DfE) budget.
Currently the apprenticeship programme is the standout further education programme where the cost of training for 16-19 years olds is not fully funded by the public purse and employers are required to fully-fund (levy) or pay a cash co-investment (non-levy with more than 50 employees) for their training.
AELP strongly believes there should be a guaranteed government-funded legal entitlement for fully funded apprenticeship training for 16 to 19-year-olds wanting to undertake an apprenticeship, regardless of where they work, the vocational area of the level or programme they choose to undertake.
This entitlement should be directly funded out of the Department for Education’s 16-19 budget and we believe would cost c. £450m per annum and help young people by correcting market failures and providing a basic social mobility entitlement.
AELP Submission 91 – Spending Review 2020 – A Plan for Skills
AELP Submission 93 – AELP Budget Representations
Recommendation (2): The 98% of non-levy paying employers should have access to high-quality apprenticeships to drive productivity through a standalone annual budget of £1.5bn.
In giving levy-paying employers full access to the levy they pay, the Government needs to support non-levy paying employers through a separate standalone guaranteed minimum budget for non-levy employers of at least £1.5bn per annum funded though general taxation.
The apprenticeship levy system was built on the government’s original hypothecated assumption that around 50% of the levy would go unspent each year, thus offsetting the need to directly fund the non-levy paying marketplace, with the unspent levy being ported across. Prior to the apprenticeship levy being introduced the government previously funded over £1bn per annum into the apprenticeship market through general taxation.
Continuous growth in demand from levy-paying employers increasingly constricts the funding available to the 98% of employers that do not pay the levy. Non-levy paying employers have been the backbone of the apprenticeships system and they both need and deserve more certainty about the availability of funding to support the training of high-quality apprenticeships. They have also traditionally offered a key entry point to young apprentices into the jobs market for the first time and help fill vital skills gaps. Smaller employers have been the access point for the majority of young people entering the labour market and it is vital to rebalance the apprenticeship space.
AELP Submission 91 – Spending Review 2020 – A Plan for Skills
AELP Submission 93 – AELP Budget Representations
Recommendation (3): Stimulate stronger employment demand for apprenticeships through a more targeted, equitable and coherent approach.
The current apprenticeship employer incentive programme announced by Chancellor in July was due to conclude at the end of January 2021, but has been extended and enhanced until September 2021. The consensus from large levy-employers has been that the incentives have little if any impact on their current recruitment plans. The enhanced incentives have help drive more interest from non-levy paying employers, but the incentive scheme rewards the employer with the same financial incentive for taking a young person with no experience with an older worker with more experience and knowledge.
The lack of coherence between Kickstart and apprenticeships is a massively frustrating and missed opportunity. Allowing a kickstarter to transfer from their fully subsided work placement into full employment on an apprenticeship whilst enabling the employer to access the remainder of the outstanding 6-month wage subsidy and aligned with an apprenticeship employer grant would be a “game-changing” move and something AELP called for back in the summer and we call for this again. This move would support the positioning of young people aged 16-24 firmly in the line of sight with employers.
Aside from the opportunity to connect the Kickstart programme and apprenticeship progression, AELP proposes the need for a much more substantial and equivalent employer incentive to help drive employer decision-making behaviours and believe an incentive package equivalent to circa half the apprentice’s wage is the tipping point to gain the traction required.
AELP proposed an extension to the apprentice employer incentive scheme – but being more targeted and more generous at an individual level. The programme should continue to focus on "new hire" or "placed" apprentices but tweaked to be targeted specifically based on age and level: New hire 16-24-year-olds on Level 2 or Level 3 apprenticeships. Being targeted on age and level allows the government to target the areas which have seen the biggest downturn during the lockdown period and support the significant NEET challenge, whilst also reflecting the productivity impact for employers from employing and investing in young people at these levels.
In terms of the more generous employer incentive scheme, AELP believes that the apprenticeship incentive scheme needs to be at least 50% of an apprentice's salary and the equivalent and equality to an average Kickstart subsidy – this could be in the form of an incentive grant or a wage subsidy or a hybrid rolled together and AELP believes that an incentive package equating to £6,000 per 16-24 new hire apprentice is required.
Driving apprenticeship jobs offer a significantly better return on investment for the government then a fully-state funded 6-month temporary work placement with no training attached, the business case here should be indisputable.
AELP Submission 91 – Spending Review 2020 – A Plan for Skills
AELP Submission 93 – AELP Budget Representations
Recommendation (4): To ensure parity of esteem between general and technical education, the Government should fund the learning of functional skills for English and Maths at the same level.
While technical education has the potential to improve social mobility for young people from economically deprived contexts, low-level qualifications tend to be inadequately funded. For instance, the learning of functional skills for English and Maths – necessary to complete an apprenticeship – is funded at half the level (£471) of its equivalent in classroom-based provision (£724).
AELP renews its long-standing call for equal funding for the learning of functioning skills qualifications in the workplace to ensure true parity of esteem between general education and technical education. In addition, disadvantaged young apprentices would benefit significantly from having the time spent on attaining functional skills in English and Maths counted as part of their off-the-job allocation to ensure that they are not viewed as being less productive, due to needing more time to train compared to their peers.
Training providers need adequate incentives through proper funding for English and Maths to make sure that they are not spending too much time on apprentices who have already attained functional skills.
AELP Submission 55 – Making the Functional Skills Reform a Success
About AELP
Members of the Association of Employment and Learning Providers (AELP) support employers in the delivery of 70% of apprenticeships in England and they deliver other publicly funded skills and employment programmes through engagement with 350,000 employers. The majority of AELP’s 800+ members are independent private, not-for-profit and voluntary sector training and employment services organisations with employers, universities, FE colleges, schools and end-point assessment organisations joining AELP in increasing numbers.
6th May 2021