This latest announcement will take the potential number able to be funded in England up to 400,000, which was the target set by Lord Leitch (remember him?) in his review in 2006. So at least in this respect, there is a strong element of policy continuity between the past Labour Government and the current Coalition.
The number of apprentices in England has been growing, from around 170,000 new starts in 2002/03 to 280,000 in 20009/10. However, to reach the 400,000 target and to have the desired effect of supporting economic growth and reducing unemployment, at least four key difficulties will have to be overcome.
First, far more employers need to be encouraged to take on an apprentice. Apprenticeships only really have value to employees if they are workplace-based. Research conducted by the Institute for Employment Studies (IES) has found that employers are critical of college-only apprenticeships. However, demand for work-based apprenticeship places exceeds supply and to have a real impact on youth unemployment, many more employers need to step forward to take on apprentices. One of the measures in the Budget was to provide specific support for small businesses to come together in consortia to provide higher-level apprenticeships. This could be an important innovation, as helping small employers to share the costs and risks of training can be an important way of stimulating employer investment.
Second, young people aged under 18 also compete with older adults for apprenticeship places. Despite the fact that Government subsidies favour those aged under 18, more than half the apprenticeships started in the past year involved adults over 18, with 18% aged 25 or over. This is further evidence of the problems young people face in the modern labour market, as employers favour older people's experience and perceived reliability.
Third, the number of apprentices starting on this route does not equal the number of people who become qualified apprentices. Although success rates have been rising in recent years, only about three-quarters of apprentices complete their course. Recent changes to apprentice pay rates, allowing employers to pay apprentices as little as £2.50 a hour, may mean that even more leave to take on higher paid jobs once they have learned some skills, but have not completed their full qualification.
Finally, apprenticeships need to be at the right level and in the right subjects to provide real value to both the apprentice and their employer.
As many employers know, there are three levels of apprenticeships:
Intermediate Level Apprenticeships - where apprentices work towards work-based learning qualifications such as an NVQ Level 2, Key Skills and, in most cases, a relevant knowledge-based qualification, such as a BTEC
Advanced Level Apprenticeships - with apprentices working towards an NVQ Level 3-equivalent qualification, and also Key Skills and technical certificate
Higher Apprenticeships - these work towards Level 4 work-based qualification and, in some cases, a knowledge-based qualification such as a Foundation degree.
At the moment, only a third of apprenticeship starts are at Level 3 or above. This is where research suggests the nation's medium-term skill deficits lie and where it is most important that the supply of skills is improved.
To have an impact on growth and to fill employment opportunities, the learning system needs to respond rapidly to changing skill needs. For example, some 'growth sectors' such as computer gaming may not yet be able to find apprenticeship frameworks to cover occupations in their sector.
Apprenticeships have been demonstrated to be good value for employers as well as for the apprentice themselves, however currently too fewer employers are willing to make the investment. The Government ambitions for growth and employment rely in part on changing that mindset.
Jim Hillage (pictured), is director of research at the Institute for Employment Studies
