Rethinking mandatory employer cash contributions to 19-21 Apprenticeships

 

by Mark Corney


We are now less than a year before the next general election, and a consensus seems to have emerged between the main political parties over 'earn or learn' for 18-21 year olds.

The pool of 18-21 year olds who are unemployed and not in full time education can be reduced by increasing the number in jobs, expanding the number in full-time education and insisting that the rest participate in full-time training in return for a youth allowance.

Increasing the number of 18-21 year olds in employment includes expanding jobs with apprenticeships, the example par excellence of combining 'earning and learning'.

A conflict is arising, however, between 18-21 earn or learn policy and 19-21 apprenticeship funding policy.


There has been considerable concern that the introduction of mandatory employer cash contributions (MECCs) of 30%  for 16-17 year olds, and indeed 18 year olds, could decimate the number of places offered by employers, and bring the total well below the present 100,000.

After prolonged lobbying, the Coalition has devised a system of MECCs that in practice means most 16-18 year old apprenticeships will remain fully funded.

The offer of a specific payment for 16-18 year old apprentices, a completion payment and a small business payment paid to employers has taken the sting out of mandatory cash contributions for employers. At worst, employers might have to pay a few hundred pounds at most after receiving the incentive payments. 

By contrast, the Coalition Government is expecting significant 'net' mandatory cash contributions from employers for apprentices aged 19 and over, ranging from £500 to £5,000, even after taking into account incentives for small businesses and completion.

The policy of mandatory employer cash contributions has been devised to bite in the 19+ apprenticeship market rather than the 16-18 apprenticeship market.

From the perspective of 18-21 'earn or learn' policy, however, it would be counterproductive if mandatory employer cash contributions reduce the number of apprenticeships for 19-21 year olds below the present level of 100,000 or so.

Clearly, there is a case for the Coalition to extend the age incentive from 16-18 to 21 so that most 16-21 apprenticeships become fully funded.

In this way 18-21 'earn or learn' policy would could be squared with mandatory employer cash contributions for post-16 apprenticeships.

Mark Corney is director of MC Consultancy and policy adviser to CfL