Leader: Finding the way ahead for Generation Lost
Increasing the number of young people in apprenticeships is certainly high on the government agenda. We’ve just had the Jason Holt review on giving SMEs more financial assistance, and we’re awaiting the wider-ranging Doug Richard review on apprenticeships. In addition, according to Mark Farrar of CITB-ConstructionSkills, there’s a promise by further education minister John Hayes to look at diverting skills funding that currently goes to FE colleges into employer-based training.
All this is set against the backdrop of the highest ever 18-24 unemployment rate in the UK, at around 22%. That’s an awful lot of young people struggling to get their working lives started, creating a clear political imperative.
So the preferred policy option is apprenticeships: directly related to employers’ needs and therefore to economic growth; efficient in terms of skills and knowledge transfer; and cost-effective for the public purse (because costs are shared with employers). The government’s pro-apprenticeship stance has introduced new Higher Apprenticeships, a £1,500 train-to-work grant for SMEs, and a £250m increase in apprenticeship funding last November.
If construction could create more apprenticeships, it could have a disproportionate effect on youth unemployment. According to statistics compiled for the Richard Review, only 55% of construction apprentices previously worked for their employer, compared to 90% in hospitality, catering and retail. So construction is better than other sectors at creating new opportunities, while they are better at using funding to convert existing staff.
But there are two stark problems: the economy, and the industry’s structure. Major contractors are still winning large contracts and enjoying healthy order books. But according to the Cross Industry Construction Apprenticeship Task Force, only 12 out of the top 32 majors employ apprentices directly. Instead, most starts in 2011 were with their supply chain and other SMEs, companies likely to be winning work at tiny margins, and unlikely to have more training capacity. Again from the Richard Review, the net cost to employers of a three-year construction apprenticeship — subtracting productivity gains from wages and costs — is £26,000. You can argue the figure (the CCATF would) but cost is clearly an issue.
Pathways to Construction and the Shared Apprentice Scheme are practical, workable solutions that could lower the barriers for employers and create opportunities for young people. If we are going to see a government rethink on skills funding and the role of FE colleges, these schemes should free up some extra training capacity. After that, the number of apprentice places is likely to be linked to what happens to construction output… but that’s another story.
Elaine Knutt, editor