Apprenticeship funding needed to drive UK growth

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Employer-run apprenticeship systems are the key to breaching the skills gaps faced by important sectors in the UK, according to new research from the AAT, the UK’s leading qualification and membership body for accounting staff.

In the Centre for Economics and Business Research (CEBR)’s Apprenticeships for the Future report, AAT argued that future plans to provide employers with funding for apprenticeships directly will lead to the development of the type of jobs that the UK economy demands.

Following the fallout of the economic crash in 2008 and the substantial increases in university tuition fees, many young people view apprenticeships as the most desirable avenue for starting a successful career.

CEBR forecasts a large growth in the number of jobs available to people with vocational qualifications.

By 2020, for example, the organisation expects to see demand for over half million new associate professional and technical jobs, from pharmaceuticals to digital technology.

However, geographical coverage is still uneven and employer incentives continue to operate on an inefficient one-size-fits-all basis.

In particular the construction and ICT industries have shown a decline in apprenticeship numbers, despite suffering from acute skills shortages. Between 2010/11 and 2012/13, ICT apprenticeship fell by 28%, while construction places reached a ten-year low.

Geographically, London, the South East and Scotland are underrepresented for apprenticeship starts relative to their working-age population. The capital accounted for 13% of employment in the UK in the three months to May 2014, but just 8% of apprenticeship starts were recorded in 2012/13.

AAT believes the introduction of the employer-run system will be an important juncture for businesses and trainers to resolve these issues and further evolve the process to fit the demands of the future.

By targeting funding at priority sectors, emerging skills gaps, and addressing geographical imbalances, apprentices can provide the skills that the UK economy will need to continue to grow, the research argues.

Mark Farrar, Chief Executive of AAT, says: “We need to build on the success of apprenticeships – and this is the time to do so. As we move to employer payments and contributions, incentives should be targeted. A one-size-fits-all system won’t do enough to boost particular skills, particularly where those skills cost more to deliver.

“There has been a huge increase in the number of apprentices in recent years, which has helped businesses and transformed lives. Now we can look to ensure that all areas of the country benefit fully, with the apprenticeships for the future that the UK needs to drive growth.”

In Apprenticeships for the Future, AAT makes five formal recommendations to the Government on developing apprenticeships policy:

1. Independent and comprehensive careers advice on apprenticeships must be provided to all school pupils to enable them to make a more informed choice on the opportunities available.

2. Funding policy should reflect the changing needs of the economy. As the system moves towards employer contributions, it should differentiate between types of apprenticeship, offering greater funding incentives for places that address identified skills shortages.

3. Regional disparities in apprenticeship numbers should be addressed through the greater focus on the local ownership of skills education and funding. Local Enterprise Partnerships (LEPs) have a major role to play, but there is currently too much regional variation in their capacity and capability to ensure effective delivery.

4. Government departments and agencies should find better ways to store data to provide a more comprehensive picture of what skill gaps need to be addressed. For example, organisation should be more willing to use business surveys, and other techniques, to map skills shortages at a local level.

5. Discourse between the Government, employers and education providers should continue regarding the new employer-led funding mechanism, before it is started. A new system provides a crucial opportunity to target incentives at priority sectors and locations where additional places would provide the greatest economic benefit.

For further information on CEBR’s Apprenticeships for the Future report please continue reading here.


Jermaine Haughton is a journalist and digital media professional.

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