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Chancellor gets sums wrong on skills

The Chancellor might be in the builders’ good books following the Budget, but according to BESA, he has missed an open goal on skills.

Philip Hammond has been widely praised for his pledge to build 300,000 new homes a year supported by £44 billion of capital funding, loans and guarantees. The Chancellor’s support for SMEs with a £1.5 billion boost for the Home Building Fund was particularly helpful, but the big unanswered question was: Who is going to do all this work to the necessary high standard – now and in the future?

Just £34 million of the multi-billion pledge to construction was allocated to supporting skills. When this discrepancy was pointed out, the Government reiterated its ambition to create three million new apprenticeships by 2020, but the fact is that apprentice numbers are going backwards. Indeed, Department for Education (DfE) figures revealed a 61 percent collapse in apprentice starts to 43,600 between May and July, down from 113,000 in the same period last year.

In response, the department said its apprenticeship reforms had “put control back into the hands of employers so they will gain the skilled workforce they need to compete globally”.

The Chancellor did promise that the Government would keep “under review” the arrangements for how employers access funds from the new Apprenticeship Levy, but it is “urgent action” that is needed, according to BESA.

The Levy has raised valuable funding that could unlock thousands of badly needed opportunities across UK industries, but the money is not being allocated properly and BESA pointed out that the Chancellor’s review only applies to large employers who pay into the Levy.

The DfE said this year had been a “period of huge change for employers, but it is right that they are taking their time to plan ahead and maximise the opportunities the apprenticeship levy can bring,” it added.

BESA’s training director, Tony Howard, stated: “The department is either being naïve or deliberately misleading. The dramatic drop in apprentice starts coincided with the introduction of a mandatory contribution from employers despite there being a pot of £650 million sitting in the Treasury waiting to be spent on apprenticeships.

“We have thousands of willing employers, tens of thousands of young people keen to take up vocational training opportunities, and a raft of new training providers, but no money being released to make it all happen.

“The Chancellor made delivering new housing and infrastructure a top priority, but doesn’t seem to understand the link between these economic targets and a skilled workforce. Holding back this funding is making our skills deficit worse and the Government’s apprenticeship target is increasingly distant.”

BESA is campaigning for changes that will restore incentives for employers to recruit apprentices of all ages, and a guaranteed minimum budget for non-levy payers’ apprenticeships, which will ensure that there are opportunities right across the country and for employers of all sizes.

It has highlighted major gaps in targeted training provision that could be tackled if more providers were given access to the funds, particularly in crucial building engineering related professions suffering from acute shortages.

BESA’s comments echo the views of many business leaders, including the CBI’s Neil Carberry, who said the poor apprentice numbers came as “no surprise to companies, who have repeatedly made clear that the current design of the apprenticeship levy system is not effective”.

“Businesses believe in apprenticeships, but there can be no argument now – reform of the levy system is needed urgently to ensure its success,” added Mr Carberry.

BESA believes there is a lack of understanding in the Treasury about the role of vocational training. Not only can it help to deliver the Government’s often repeated ambition to improve the UK’s housing stock and infrastructure, but it is central to driving social mobility by putting thousands of people into careers with good prospects and improved pay.

Mr Howard concluded: “The Government needs to stop funding the same old same old basic plumbing and heating courses and start getting behind the new generation of ‘Trailblazer’ apprenticeships, which it asked industries to create to deliver the skills employers actually need.”

29 November 2017


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