Monday, 24 March 2014

The employment half of 18-24 ‘earn or learn’

 by Mark Corney

Three hours before the Chancellor delivered Budget 2014, official figures showed that 1,137,000 young people aged 18-24 were unemployed or inactive and not in full-time education. This is group of 18-24 year olds policy makers should be most acutely worried about.

Some 578,000 young people aged 18-24 are unemployed - having looked for work in the past four weeks – but are not in full time education, down 26,000 on the previous quarterly average.

Meanwhile, 559,000 young people aged 18-24 were inactive – having not looked for work in the past four weeks – but are not in full-time education, down 4,000 on the previous quarterly average.

There are two main strategies to reduce the 1.1 million or so 18-24 year olds who are unemployed or inactive but not in full time education.

The first strategy is to increase the number in full-time education.

The Coalition is primarily seeking to do this by removing the cap on the number of students in full-time higher education, with most of the extra 60,000 students expected to be 18-24 year olds. There is, however, no specific policy to expand participation in full-time further education by this age group.

The second strategy is to increase the number of 18-24 year olds in employment with or without apprenticeships and part-time further and higher education.

Essentially, the 18-24 employment strategy has two parts - measures to reduce the cost of employing young people and measures to reduce to cost of employing and training young people.

In the last Autumn Statement, the Coalition announced the abolition of employers’ national insurance contributions for young people under 21 earning below the higher rate of income tax. This measure comes into effect from April 2015.

And in the run up to Budget 2014, the government confirmed increases of between 2-3% in minimum wage rates, with the rate for 18-20 year olds increasing to £5.12 per hour and the main rate for 21 year olds and over increasing to £6.50 per hour from October this year.

In terms of bearing down on the cost of employing and training 18-24 year olds, however, the Coalition has maintained lower wage rates for apprentices and protected funding for apprenticeship training.

The minimum pay rate for apprentices in the first year of training will rise by 2% to £2.68 per hour from October.

Spending on the cost of training for 19+ apprenticeships was protected for inflation in Budget 2013. The Skills Funding Agency has stated that the priority for spending on adult apprenticeships should be 19-24 year olds and depending upon employer demand, the entire £2bn grant-funded adult skills budget could therefore in principle be allocated to adult apprenticeships.

Budget 2014 specifically announced £20m over two years for the development of degree and master’s degree level apprenticeships.

The Apprenticeship Grant scheme for new employers becoming involved in the programme will also be extended to 2015/16 at a cost of £100m per year.

Indeed, neither a budget nor an autumn statement now goes by without additional small pots of funding for apprenticeships.

Missing from Budget 2014, however, was a comprehensive ‘earn or learn’ strategy for 18-24 year olds.

Perhaps, however, this should not be a surprise.

The number of 18-24 year olds who are unemployed or inactive but not in full-time education is worrying large, but in fact falling.

The improving labour market is creating jobs for 18-24 year olds.

Measures to expand employment and full-time education opportunities are in the pipeline.

With more positive news on the young generation, the Coalition judged it could craft a ’silver’ budget rather than a ‘youth’ budget.

But from a policy making point of view, Autumn Statements in December rather than Budgets in March have been the hook for new policies for 18-24 year olds.

The Autumn Statement 2014 this December is therefore the time when we can expect further measures on ‘earn or learn’ for 18-24 year olds.

Mark Corney is a policy consultant and adviser to CfL.

Tuesday, 4 March 2014

The learning half of 18-24 ‘Earn or Learn’

by Mark Corney

Around 500,000 young people aged 18-24 in England are unemployed - having looked for work in the past four weeks - but not in full-time education. A further 500,000 are economically inactive - they have not looked for work in the past four weeks - and are not in full time education.

There are two main ways to reduce the million 18-24 year olds who are unemployed or inactive but not in full time education. The first is to increase the number of young adults in employment with or without apprenticeships and in part-time education. The second is to increase the number in full-time education.

Thursday, 30 January 2014

Big State, Little State: The future of FE

by Mark Corney

Both the Coalition parties and Labour are committed to running a budget surplus by the end of the decade.

With expenditure on benefits planned to rise despite welfare cuts, spending on services which are not protected will be squeezed even more.

Festering underneath this 'fiscal consensus', however, is the hotly contested question over the size of the state and whether England at least should have a big or little state.

Monday, 6 January 2014

The end of 16-18

by Mark Corney

The combination of fiscal austerity and Raising the Participation Age (RPA) is bringing to an end 16-18 as a distinct system of further education and training.

2014 is the year when schools, colleges and independent providers will need to think in terms of 16-17 year olds on the one hand and 18 year olds on the other.

But it is the treatment of 18 year olds in full-time further education and on apprenticeships by the Coalition Government which will test its belief in fairness and its competence.

Friday, 8 November 2013

Segmenting all age apprenticeships

 by Mark Corney

The key lesson to emerge from the consultation on the funding reform of apprenticeships in England which closed on October 1st is the need to segment them by age.*

Use of the catch-all term ‘apprenticeships’ clouds rather than clarifies the decisions to be taken in the build-up to the Autumn Statement on Wednesday, December 4th.

The funding consultation asked the apprenticeship sector to consider the introduction of mandatory employer cash contributions of 30%, as well three options for distributing public funding, namely direct employer contracting, reimbursement through PAYE and retention of the provider system. But a considered assessment of these propositions really requires a segmenting of apprenticeships by age.

Tuesday, 8 October 2013

Earn or learn: choices for 18-24 year olds

by Mark Corney

Way back in December 2011, the Coalition Government published a report entitled Building Engagement, Building Futures: Our Strategy to Maximise the Participation of 16-24 Year Olds in Education, Training and Work. A mouthful, perhaps, but the report analyses the participation question in an extremely helpful way.

The starting point is participation up to age 16. Then the focus is on full participation by 16 and 17 year olds, taking into account the increase in the participation age to the 18th birthday from September 2015. And then participation by 18-24 year olds is discussed quite separately.

Monday, 23 September 2013

Apprenticeship Funding Fever

by Mark Corney

The debate on apprenticeship funding is reaching fever pitch. The Coalition consultation* closes in less than two weeks, the Liberal Democrats** and Labour*** have set out their stalls and the Conservatives will do the same at the end of the month.

In recent days, the debate on the Coalition consultation has shifted away from adult apprenticeships to 16-18 apprenticeships. Mandatory employer cash contributions to adult apprenticeships seem to be a done-deal and PAYE looks the favoured model for distributing public funding.

Less clear, however, is whether 16-18 apprenticeships will be partially funded with mandatory cash contributions, partially funded with voluntary cash contributions or fully funded as now. There is then the issue about whether the public subsidy – at whatever level – is distributed through the PAYE system.

The Liberal Democrats, as distinct from the Coalition, support distributing the public subsidy for adult apprenticeships to employers through the PAYE system, though they make no mention of mandatory cash contributions. But the party seems content with the present system of fully funded 16-18 apprenticeships allocated to providers.

Labour, on the other hand, has rejected devolving apprenticeship funding to each employer, use of the PAYE system and mandatory cash contributions. Instead, the party proposes to devolve the £1.5bn youth and adult apprenticeship budget to employers on a collective basis to Industrial Partnerships and reformed Sector Skills Councils.