Youth Unemployment and the Youth Contract - Work and Pensions Committee Contents

6  The Youth Contract: Apprenticeship Grant for Employers

156. Apprenticeships are paid jobs which include on- and off-the-job training and lead to nationally recognised qualifications. While there have been well-publicised concerns about the value of some vocational education for young people (see chapter 7), apprenticeships are recognised as an effective way for young people to gain practical work experience at the same time as working towards a directly relevant qualification. This chapter examines the Youth Contract's offer of an extra 20,000 Apprenticeship Grants for Employers and considers its potential impact as a measure to tackle youth unemployment. The Apprenticeship Grant for Employers applies in England only.


157. Growing concern about the effectiveness of apprenticeships led to a decline in numbers from around 240,000 in the mid-1960s to just 54,000 in 1990. Apprenticeships were widely considered to be focussed on too narrow a range of occupations, male-dominated and offering a poor quality of training.[136]

158. Apprenticeships were "revived" in the 1990s and are now offered in a much broader range of occupations. These include information and communications technology, leisure, tourism and travel, retail, arts and media, and publishing, as well as the more traditional trades typically associated with apprenticeships such as manufacturing and construction. Modern apprenticeships cover around 1,200 job roles delivered via 250 separate "frameworks"—documents that set out the statutory requirements for apprenticeship programmes offered by employers in conjunction with colleges and other training providers. Frameworks are intended to ensure that programmes are delivered consistently and to nationally recognised standards. [137]

159. Apprenticeships are offered at three qualification levels:

·  Intermediate level—level 2 (equivalent to GCSEs at grades A*-C);

·  Advanced level—level 3 (equivalent to A levels); and

·  Higher level—level 4 (equivalent to a Certificate of Higher Education or the first year of a university degree).[138]

160. The previous Government expanded apprenticeship provision through the economic downturn and the current Government has continued to increase apprenticeship provision.[139] There were 457,000 apprenticeship starts in the 2010/11 academic year, 131,700 of which were by those under 19. BIS has described apprenticeships as "the cornerstone of our skills system."[140] BIS referred to a recent Government survey which found that, of all people who had completed an apprenticeship in the last year, some 85% remained in employment: 64% with the employer with whom they completed the apprenticeship.[141]

161. Witnesses were generally supportive of apprenticeships as a way for young people to gain practical workplace experience whilst studying for a competency qualification in a relevant subject. Some felt that apprenticeships could make a considerable impact in tackling youth unemployment. Working Links, a welfare-to-work provider, urged the Government to focus its policy on delivering a sufficient supply of quality apprenticeships for young, long-term unemployed people. Its view was that the key to reducing youth unemployment was to equip young people with "skills, support and practical opportunities" and that apprenticeships offer the "perfect opportunity" to do this.[142]

Apprenticeships for young unemployed people

The Wolf Report

162. In 2011 Alison Wolf, Professor of Public Sector Management at King's College London and specialist in the relationship between education and the labour market, published her independent review for the Government of vocational education in England (see also chapter 7).

163. The Wolf Report identified apprenticeships as a key route into skilled employment and higher returns in terms of career progression and future earnings. However, it also highlighted that it has proved much more difficult to increase young people's participation in apprenticeships than that of older people. It noted that, while the commonly held perception of apprentices remains the "traditional" one of 16-18 year-olds, the trend in England has for some time been for older apprentices. Since 2008 a large proportion of new apprenticeships have gone to people over 25. Furthermore, many older apprentices are not new employees but existing ones who have "converted" to an apprenticeship. Wolf concluded that "The trend towards adult apprenticeships is very problematic at a time of high youth unemployment and when the statutory participation age is about to rise."[143]

164. Several witnesses highlighted the Wolf Report's analysis of the under-utilisation of apprenticeships by under 25 year-olds. The Local Government Association reported that, while the number of apprenticeships for over 25 year-olds has doubled, those for young people under 19 has increased by less than 10%.[144]

The Apprenticeship Grant for Employers (AGE 16-24)

165. The AGE 16-24 is designed to incentivise smaller employers to take on new young apprentices. It is available to employers through the National Apprenticeship Service (NAS). Employers of fewer than 250 employees can claim up to three £1,500 grants for taking on new apprentices aged 16-24. Only those employers who have not taken on an apprentice in the last three years are eligible for the grant. In order to qualify, employers must give the following commitments:

·  Confirmation that they would not have taken on the apprentice/s in the absence of the incentive payment/s;

·  A commitment to employ the apprentice/s for a minimum of 12 months or the time it takes to complete the apprenticeship framework, whichever is greater; and

·  An agreement to pay at least the minimum apprenticeship wage of £2.60 per hour.[145]

The AGE 16-24 predates the Youth Contract, but the Youth Contract doubles the number of grants available from 20,000 to 40,000.

166. Centrepoint welcomed the Government's attempt to address the under-representation of young people on apprenticeship programmes through the AGE 16-24 and the Youth Contract. However, it considered the 20,000 extra grants on offer "limited" and "unlikely to overcome the generally poor record of the present Government's apprenticeship programme at targeting funding for apprenticeships where it is most needed."[146]

167. The other key concern amongst witnesses was that apprenticeships were often not suitable for those furthest from the labour market. Tony Wilson of Inclusion noted the trend towards apprenticeships at higher qualification levels. His view was that this trend should not go so far as to make apprenticeships unattainable for young unemployed people, many of whom have low qualifications.[147]

168. We made similar points in our 2010 Report on Youth Unemployment and the Future Jobs Fund. We were concerned then that apprenticeships may not be the most appropriate route into employment for young people at the highest risk of long-term unemployment due to their lack of qualifications and work experience and sometimes "difficult family circumstances". We urged the Government to ensure that alternative provision was available for those not ready to undertake apprenticeships.[148]

Pre-apprenticeship provision

169. The then Minister for Further Education, Skills and Learning told us he agreed with the Committee's previous findings and was working on ways to improve the "bridge to apprenticeships" for those furthest from the labour market, particularly those with low levels of educational attainment.[149] BIS later supplied us with information on pre-apprenticeship provision, including the Access to Apprenticeship programme which was launched in August 2011. Through a programme of unpaid work experience and training, including courses in English and Maths, Access to Apprenticeship aims to raise young people's employability to a level sufficient to secure a paid apprenticeship placement. Some 4,400 young people entered the programme between August 2011 and April 2012, of whom 1,000 (22%) have converted to a "paid, employed apprenticeship". Originally limited to young people who had had a period being NEET, the programme has been opened up to young people through other routes in order to "maximise take-up and effectiveness".

170. BIS also listed a number of other pre-apprenticeship options for young unemployed people who are less "job-ready". These include foundation learning, offering vocational courses below Level 2; work pairing pilots, which include work experience in small businesses focused on progression to an apprenticeship; and "other provision" delivered through the EFA, including "ESF-funded [European Social Fund] activity". It also notes that one of the aims of the Youth Contract NEETs scheme (see chapter 3) is to prepare young people for apprenticeships and that JCP-run Sector-based Work Academies encourage employers to take participants on as apprentices. BIS also told us of its plans to pilot "traineeships"—a mix of work experience, basic vocational and employability skills and help to overcome barriers to employment and engagement—designed to give unemployed 18-24 year-olds with no qualifications or experience the skills required to gain work, including apprenticeships.[150]

171. Apprenticeships form a small part of the Youth Contract offer. We welcome the attempt by the Government, through the Apprenticeship Grant for Employers, to increase the number of young people taken on as apprentices. However, we remain concerned that apprenticeships may not offer the right support for young people furthest from the labour market, who may have no qualifications or experience and come from difficult backgrounds. We therefore welcome the steps the Government has taken to date to increase pre-apprenticeship provision; this is a useful starting-point on which it needs to build.

136   See  Back

137   See  Back

138   See  Back

139   Inclusion, Youth unemployment: A million reasons to act?, 2011, para 5.3 Back

140   Ev 127; Department for Business, Innovation and Skills ' submission to the BIS Committee's Apprenticeships inquiry: see Back

141   Ev 127 Back

142   Ev w65 Back

143   Alison Wolf, Review of Vocational Education, March 2011, Appendix VII: Apprenticeships figures and trends [The Wolf Report] Back

144   Ev 145, para 5.2.4. See also Inclusion, Ev 104 Back

145   National Apprenticeship Service, AGE 16 to 24: Employer Fact Sheet, March 2012 Back

146   Ev w18 Back

147   Q 15 Back

148   First Report of Session 2010-12, Youth Unemployment and the Future Jobs Fund, HC 472, paras 121 and 125 Back

149   Q 365 Back

150   Ev 128 Back

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Prepared 19 September 2012