Research calls for business tax to fund workforce of the future

Apprentice at Beccles based business M&H Plastics.
Matt Hudson. Apprentice at Beccles based business M&H Plastics. Matt Hudson.

Ben Woods Business editor ben.woods@archant.co.uk
Saturday, August 16, 2014
6:00 AM

The government should learn from its European neighbours and tax businesses to fund apprenticeships to help drive down youth unemployment, a study has found.

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Jerry White.
Photo: Bill SmithJerry White. Photo: Bill Smith

Firms should take a greater responsibility for creating the workforce of the future by paying a youth apprenticeship levy in exchange for support with workplace training, according to research by the Institute for Public Policy Research (IPPR).

The findings have been partly inspired by Germany’s much admired vocational training model, which is held in high esteem by students and employers and is seen as a key factor in keeping the country’s youth unemployment low.

Across the UK, meanwhile, there are fears that the strengthening economic picture is failing to have an impact on the number of young people out of work, which remains stubbornly high despite record low levels of unemployment.

However, there are signs that parts of the eastern region could be fairing better than elsewhere in the country, with the number 18 to 24 year olds claiming Jobseeker’s Allowance falling 45pc to 3,555 last month.

Key findings

The Institute of Public Policy Research’s remembering the young ones report made five observations:

• Employers: Business leaders are not happy with the young people leaving the education system, but part of the problem comes from employers not being involved in training to ensure they develop meaningful skills. The best way to increase engagement is make employers take a financial stake in the success of the system

• Vocational education: The system needs to be reformed so it is held in high esteem by employers and young people to make it an attractive alternative to university.

• Apprenticeships: For too long policies have been geared towards increasing numbers of apprentices, which has put their quality at risk. They need to be seen by both young people and employers as a high-quality route to work.

• Careers guidance: European countries with low youth unemployment make sure careers education plays a key role in the transition from education to work. The report recommends pushing more money towards careers advice.

• Benefits: The current system fails to identify that the needs of older job seekers are different to those of younger ones. A new system is needed that caters directly to the needs of youngsters.

Jerry White, deputy principal of City College Norwich, said there has been progress in attracting more young people to vocational training, but he believes the government should remove the ring fenced funding for schools and provide greater financial fire power to vocational courses for 16-18 year olds.

Speaking about the IPPR’s Remember the Young Ones study, he said: “One of the things we are having to deal with this year is the cut in the funding for 18-year-old students.”

“16 and 17-year-old students are funded at one rate, while the funding for 18 year olds – who are making the transition into work – has gone down by 17.5pc.

“The reason that it has gone down is because they will not remove the ring fenced money for schools. However, the government budgets are still being squeezed so they have cut the 16 to 18 year old provision instead.

“We want to support more action to reduce youth unemployment, but we are in a situation where the funding is going the other way.”

The German dual-education system underpins direct experience of the workplace with training in the classroom.

And the chancellor George Osborne has already made moves to mirror aspects of the system by encouraging companies to take charge of training and allowing them to use their tax return to claim government subsidies.

The IPPR believes that an apprenticeship tax could help expand – and improve – the quality of vocational courses across the UK because employers paying the levy would ensure the training standard was high.

“The IPPR report is talking about introducing a national levy for apprenticeships, which would be a huge cultural change to our system,” Mr White added. “There will be some employers that will be happy to contribute, but I wonder whether some of the small and medium sized enterprises (SMEs) will be able to take on this responsibility. It would be a big ask of a small family firm to provide a significant financial contribution.”

Chris Starkie, managing director at New Anglia Local Enterprise Partnership, said plans were in place to champion stronger engagement between schools, further education colleges, universities and businesses through the LEP’s Skills Manifesto, which aims to create 5000 new apprenticeships by 2020.

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