A route-map to Labour’s revolution in apprenticeships

Britain faces a stark choice: a race to the bottom in skills and wages or a race for the top in the demanding 21st century economy.

Fifty years ago, only 20% of young people left school with any qualifications at all.  Now the figure is 90%. Forty years ago, less than 8% of young people went on to university. Now the figure is nearer 50%. These are great, progressive achievements. But the success we have won for some young people should not blind us to the continuing challenges of others.

A year ago the Labour leader Ed Miliband highlighted the plight of the "forgotten 50%" of young people who do not go to university. He set up a Skills Taskforce, of which I am the independent chair, to suggest practical, deliverable solutions for these young people. Last month, in the first of three final reports, the Taskforce called on Labour to embark on a national mission to double the number of high quality apprenticeships.

Less than one in 10 employers offer apprenticeships in England, compared to three or four times that number in our main European competitors. And while the UK has are some exceptional apprenticeships – such as those at Rolls Royce, Siemens, Heathrow Airport and Transport for London – much of the recent increase has been in apprenticeships that would not be recognised in these countries. Apprenticeships should be a high quality training route into work for young people, but a shocking 70% of apprentices are existing employees, up from 48% in 2007, and 94% of these apprentices are over 25 years old. A fifth of apprenticeships last for less than six months and 20% of all apprentices report receiving no training at all.

This is bad for business and for the economy. Many employers say they cannot get the skills they need to succeed and in some sectors the lack of training has led to severe skills shortages. Most importantly, the lack of good training and work opportunities caps aspiration and prevents young people from fulfilling their potential.

The Skills Taskforce makes a simple proposition: it offers employers a 'something-for-something' deal.  Employers should be given more control over skills funding and standards, and in return should be asked to create more high quality apprenticeships in their sectors and supply chains.

Nearly half of employers say that the prospect of trained staff being poached by rival firms deters them from training employees. So the Taskforce also recommends asking business what powers they need to ensure they can deliver the expansion in apprenticeships we need to rebuild the economy, such as the power to introduce levies or training requirements. It should then be up to employers, working with other stakeholders at sector level, which of these powers they will use. The public sector can and should take a lead, through both its own provision – the current provision of apprenticeships in the public sector is unacceptable – and driving behaviour through procurement.

If this sounds ambitious, it should. If it sounds impossible: it is not. Continental systems, including the German and Austrian education and training systems, already do it. The challenges are not ones of principle, but of will, and the prize is considerable.

At the Labour Party conference, Ed Miliband took on the challenge to double the number of high quality apprenticeships and said he would give employers the power to call time on free-riding by competitors who do not train. Labour also committed to our recommendations to ensure that apprenticeships are gold standard qualifications that employers and young people can trust: Level 3 or above and lasting at least two years. 

This is a good start to a major transformational task. Britain faces a stark choice: a race to the bottom in skills and wages or a race for the top in the demanding 21st century economy. Britain must not join the race to the bottom. Our goal is to transform the opportunities available to young people through efforts to develop a high skill, high productivity economy.

Chris Husbands is the director of the Institute for Education and chair of Labour’s Skills Taskforce.

Ed Miliband speaks at the Labour conference in Brighton last month. Photograph: Getty Images.
Photo: Getty
Show Hide image

George Osborne's mistakes are coming back to haunt him

George Osborne's next budget may be a zombie one, warns Chris Leslie.

Spending Reviews are supposed to set a strategic, stable course for at least a three year period. But just three months since the Chancellor claimed he no longer needed to cut as far or as fast this Parliament, his over-optimistic reliance on bullish forecasts looks misplaced.

There is a real risk that the Budget on March 16 will be a ‘zombie’ Budget, with the spectre of cuts everyone thought had been avoided rearing their ugly head again, unwelcome for both the public and for the Chancellor’s own ambitions.

In November George Osborne relied heavily on a surprise £27billion windfall from statistical reclassifications and forecasting optimism to bury expected police cuts and politically disastrous cuts to tax credits. We were assured these issues had been laid to rest.

But the Chancellor’s swagger may have been premature. Those higher income tax receipts he was banking on? It turns out wage growth may not be so buoyant, according to last week’s Bank of England Inflation Report. The Institute for Fiscal Studies suggest the outlook for earnings growth will be revised down taking £5billion from revenues.

Improved capital gains tax receipts? Falling equity markets and sluggish housing sales may depress CGT and stamp duties. And the oil price shock could hit revenues from North Sea production.

Back in November, the OBR revised up revenues by an astonishing £50billion+ over this Parliament. This now looks a little over-optimistic.

But never let it be said that George Osborne misses an opportunity to scramble out of political danger. He immediately cashed in those higher projected receipts, but in doing so he’s landed himself with very little wriggle room for the forthcoming Budget.

Borrowing is just not falling as fast as forecast. The £78billion deficit should have been cut by £20billion by now but it’s down by just £11billion. So what? Well this is a Chancellor who has given a cast iron guarantee to deliver a surplus by 2019-20. So he cannot afford to turn a blind eye.

All this points towards a Chancellor forced to revisit cuts he thought he wouldn’t need to make. A zombie Budget where unpopular reductions to public services are still very much alive, even though they were supposed to be history. More aggressive cuts, stealthy tax rises, pension changes designed to benefit the Treasury more than the public – all of these are on the cards. 

Is this the Chancellor’s misfortune or was he chancing his luck? As the IFS pointed out at the time, there was only really a 50/50 chance these revenue windfalls were built on solid ground. With growth and productivity still lagging, gloomier market expectations, exports sluggish and both construction and manufacturing barely contributing to additional expansion, it looks as though the Chancellor was just too optimistic, or perhaps too desperate for a short-term political solution. It wouldn’t be the first time that George Osborne has prioritised his own political interests.

There’s no short cut here. Productivity-enhancing public services and infrastructure could and should have been front and centre in that Spending Review. Rebalancing the economy should also have been a feature of new policy in that Autumn Statement, but instead the Chancellor banked on forecast revisions and growth too reliant on the service sector alone. Infrastructure decisions are delayed for short-term politicking. Uncertainty about our EU membership holds back business investment. And while we ought to have a consensus about eradicating the deficit, the excessive rigidity of the Chancellor’s fiscal charter bears down on much-needed capital investment.

So for those who thought that extreme cuts to services, a harsh approach to in-work benefits or punitive tax rises might be a thing of the past, beware the Chancellor whose hubris may force him to revive them after all. 

Chris Leslie is chair of Labour's backbench Treasury committee.