Making apprenticeships work for young people
A strategy for reversing the decline in youth apprenticeships is one of the vital ingredients missing from UK skills policy
Education and skills are important drivers of productivity, and employers can ill afford escalating skills gaps in their workforce and growing challenges in finding suitably skilled staff when recruiting1. But research by NFER for The Skills Imperative 2035:
Essential skills for tomorrow’s workforce suggests this is a likely consequence of anticipated changes in the structure of the labour market, unless urgent action is taken.2 In response, we need to increase the flow of suitably skilled young people into priority sectors, overcoming the challenge of rising youth unemployment and economic inactivity.3 We must also mitigate the risk that withdrawing funding from Applied General Qualifications which ‘overlap’ with T-Levels will leave many disadvantaged young people stranded without suitable post-16 qualification options.
Apprenticeships form a key pillar in the government’s reformed technical offer to young people, which is becoming, primarily, apprenticeships, T-Levels and the T-Level Foundation Year. However, gone are the days when apprenticeships provided stable and secure routes into employment for over a third of teenage boys, and a sizeable proportion of girls. Apprenticeships in the UK are now largely taken by workers already in the labour market, rather than young people transitioning into work4. Less than 1 in 20 16-18-year-olds are now apprentices5 and starts have dropped dramatically in recent years, particularly among young people from deprived areas. In 2015/16 over 130,000 under 19 yearolds started apprenticeships, but this figure has dropped to around 78,000, despite the returns to apprenticeships being considerably higher among young people6 and apprentices with Level 2 or 3 qualifications earning more, at the age of 28, than people who leave education with vocational or academic qualifications at the same level.7 Apprenticeships pay off for young people. We need a strategy for reversing their decline.
On the demand-side, the government has increased the apprenticeship minimum wage, but this needs to be followed up. Research by NFER suggests one way is by extending the 16-19 bursary fund so that it can be used to fund travel costs for apprentices from disadvantaged backgrounds. A further way is to change the rules that prevent the families of young apprentices from claiming child benefit, given this does not apply to the families of young people taking classroom-based courses.
On the supply-side, employers need to be incentivised to take on apprentices under 19. OBR forecasts predict that apprenticeship levy receipts will reach £4 billion in 2024/25 – £800m more than the DfE has budgeted to spend on apprenticeships. Inspiration about what could be achieved with this cash can be found abroad, for example in Australia, where the government offered employers in priority sectors generous wage subsidies between October 2020 and June 2022 and saw apprenticeship starts double during this period . More radical thinking is needed about how to increase apprenticeship supply for young people. But, in the meantime, there are clear steps that would remove barriers for young people on the demand-side: extending the 16-19 bursary fund and changing the rules around claiming child benefit for young people on apprenticeships.
1 https://assets.publishing.service.gov.uk/media/6572fcb933b7f2000db720b3/
Employer_skills_survey_2022_research_report.pdf 2 https://www.nfer.ac.uk/publications/the-skills-imperative-2035-an-analysisof-the-demand-for-skills-in-the-labour-market-in-2035/ 3 https://commonslibrary.parliament.uk/research-briefings/sn05871/ 4 https://cver.lse.ac.uk/textonly/cver/pubs/cverbrf008.pdf 5 https://ifs.org.uk/articles/what-happened-youth-apprenticeships 6 https://cver.lse.ac.uk/textonly/cver/pubs/cverdp016.pdf
7 Cavaglia, McNally & Ventura, 2017