Mark Farrar: We urgently need to address London's apprenticeship deficit

The government must go further

By Mark Farrar, chief executive of the Association of Accounting Technicians

The UK’s apprenticeship system has gone from strength to strength. The number of apprentices in England has grown dramatically, with over half a million starting in the 2012/13 academic year alone.

Today, we have a more gender balanced and age diverse apprenticeship system than ever before – as well as one that’s increasingly service-based to reflect the changing economy.

What’s more, both young people and organisations alike are recognising and enjoying the benefits that apprenticeships can bring. They offer a viable alternative to university, and deliver a significant return for business – to the tune of £1.8 billion*. 

However, despite this clear success, our research has shown there is scope to do more and, with funding for apprenticeships set to come directly to employers, now is an opportune time to make the changes we need for future growth.

With just 45,070 apprenticeship starts in 2012/13, London recorded the second lowest number of starts of the English regions

Our research report Apprenticeships for the Future highlights how the geographical spread of apprenticeships is uneven, as well as the specific sectors reporting skills shortages – like construction and ICT – that are still underrepresented.

London is one area that is currently experiencing what can only be described as an apprenticeship deficit.

With just 45,070 apprenticeship starts in 2012/13, London recorded the second lowest number of starts of the English regions. This is despite having the second highest share of employment in the whole of the UK (in the three months to May 2014).

Perhaps even more significant is the gulf between London’s share of apprenticeship starts and its share of youth unemployment.

In the three months to May 2014, the capital accounted for 12% of total youth unemployment in the UK – notably higher than its 8% of apprenticeship starts in 2012/13.

AAT believes that the upcoming changes to the way apprenticeships are funded provide a significant opportunity to adjust the current system, and ensure that it is set up for the future.

In the 2013 Autumn Statement, George Osborne announced that changes to apprenticeship funding would “put business at the centre of the apprenticeship system by enabling employers to receive funding for the training costs of apprentices through an HMRC-led system and ensuring employers contribute”.

Another way to address regional disparities in apprenticeship numbers is by encouraging local ownership of skills education and funding

With this shift to an employer-led system, we think now is the time to address the uneven provision of apprentices across both regions and industry sectors.

This year’s Autumn Statement contained positive news for the uptake of apprenticeships – with employers no longer eligible to pay national insurance on young apprentices. 

However, more needs to be done to ensure that we not only have the right number, but also the right type of apprentices in the right places to support future growth. 

We believe that by offering greater funding incentives to employers in key areas like London, where a deficit has been identified, or in important sectors with reported skill shortages, we can begin to ensure that apprenticeships are spread evenly and match real needs. 

Another way to address regional disparities in apprenticeship numbers is by encouraging local ownership of skills education and funding.

Local Enterprise Partnerships (LEPs) – the partnerships between local authorities and business that oversee priorities for local investment – have a major role to play here.

But the lack of consistency across regions, in terms of their ability to ensure effective delivery, suggests the provision of funding needs to be varied according to actual needs. This will ensure that apprenticeship starts are provided in the regions where they can make the biggest difference.

In the past decade the UK apprenticeship system has taken enormous strides forward. At no point have we seen a more balanced system in terms of gender and age, nor one that is more aligned with the constantly evolving economy. However, for apprenticeships to continue to meet current and future needs, it is imperative that we provide enough in the right areas.

By eliminating under-representation in key sectors and economic areas such as London, through initiatives like targeted funding incentives and LEPs, apprenticeships could be the key to continued UK growth.

*Research conducted by Cebr for AAT earlier this year calculated that apprenticeships delivered a net economic benefit of £1.8m to British businesses in 2012/13.

Mark Farrar is the chief executive of the Association of Accounting Technicians, the UK’s leading qualification and membership body for accounting and finance staff

 

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