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How does the next Government fund their apprenticeship pledge?

22 April 2015

Over the last few months, all political parties have been telling us what a great success apprenticeships are and how they must be substantially increased during the next Parliament. Civil servants, meanwhile, are preparing for new Ministers, giving them options for achieving their manifesto promises, including how the new Government can grow apprenticeship numbers. So, what might the options be? Firstly, we will need more young people, who are employment ready, to choose the apprenticeship route. Much better careers education, planned work experience and high-quality vocational options from age 14 will be essential if more are to be persuaded that the work-based apprenticeship route is right for them. A comprehensive pre-apprenticeship programme for 16 to 24-year-olds, building on traineeships, will also be required, as outlined in our manifesto. Secondly, we need more employers to offer apprenticeship opportunities if we are to meet the politicians’ targets. The National Insurance exemption for apprentices aged under 25, included in the Chancellor's December 2014 Autumn Statement, was a good start in incentivising employers, but more is needed. Here’s the question though - if we manage to achieve all of this, and create lots more apprenticeships, where is the money going to come from to fund them? Next year's budget of £770 million is already largely committed to existing and planned numbers with the current providers, so who will fund the ambitious growth? In recent years, governments have sought to encourage employers to train through apprenticeship funding or subsidies, which have worked well, and employer-owned government funded capital and revenue programmes. It is difficult to find out how successful these have been, but we know that apprenticeships, when designed to meet the right quality thresholds, are very successful. In the construction industry, an Industry Training Board and a levy system have been retained ever since the 1960s, and systematic sector-wide training, including national qualifications, is embedded in the structure. For the past 25 years or so it has been unfashionable to argue that the training levy system should be re-introduced in this country, particularly when governments could afford to fund apprenticeships, train to gain and other schemes. But, with a new Government facing strict public expenditure controls and cuts, has the time now arrived to ask employers to contribute financially to the costs of rapidly expanding apprenticeships? Richard Atkins is the President of the Association of Colleges. This issue will be discussed at AoC's Future Apprenticeships Conference on 2 July 2015.