Local authorities call for extension to incentives for new apprenticeships

Experts warn the effects of extra funding coming to an end will be heightened by the furlough scheme closing at the same time

Local councils have called for a continuation of incentives for creating apprenticeships after the furlough scheme comes to an end, highlighting their importance in economic recovery from the pandemic.

The Local Government Association (LGA) today said that the government’s financial incentives used to help employers create apprenticeship programmes should be extended until at least 31 March 2022 to enable employers to use them as part of local economic recovery plans, and to ensure that no opportunities to create apprenticeships are lost.

The scheme has provided employers, including local authorities, with an additional £3,000 to take on an apprentice – but this is due to finish on 30 September, the same date as the end of the furlough scheme. 

According to the LGA, councils have received more than £4.1m in incentives since it was introduced in August 2020.

A survey by the LGA also found that local authorities have so far invested more than £200m to create 55,000 apprenticeship starts in 150 different qualifications over the last four years.

And almost half (43 per cent) of councils found an increase in interest in apprentices from schools as a result of the incentive scheme. However, the association warned that “schools have struggled to make effective use of the apprenticeship levy”.

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As a result, the LGA said in its announcement that local authorities were concerned that this increase in activity driven by the incentives may not be sustainable if they are withdrawn as planned next month. 

It also warned that, without an extension, opportunities to get residents into high-quality apprenticeships will be lost just at the time that an increase in unemployment is possible.

“It is clear that as the furlough scheme is phased out, there is the real possibility of a rise in the number of people out of work or training,” said councillor Sir Richard Leese, chair of the LGA’s City Regions Board.

He added that the scheme had already helped businesses and local authorities create tens of thousands of “life-changing” apprenticeship opportunities for people in their local communities and, in extending the scheme, “councils can work with local employers and the government to ensure that the country builds back better from the pandemic”.

To ensure people can get access to apprenticeships when they are needed the most, it is vitally important that the incentive scheme is extended, Leese said. 

Jane Hickie, chief executive at Association of Employment and Learning Providers (AELP) welcomed the LGA’s call for an extension of the scheme and has lobbied MPs for the Treasury to recognise the case.  

“We were always confident that the increases to the incentives in the [government’s budget] would have a positive impact and over 79,000 incentive claims have now been submitted by employers for new apprenticeship starts,” she stated. 

Hickie also cited the findings from the AELP’s parliamentary newsletter, which said that three-quarters (76 per cent) of parliamentary incentives were for 16 to 24 year olds, while level 2 and 3 apprentice starts accounted for 82 per cent of incentives.

“While youth unemployment remains stubbornly high, it’s vital that the incentives remain in place,” she asserted. 

Lizzie Crowley, senior skills adviser at the CIPD, added that, while the economy was rebounding from the pandemic, the benefits of this needed to be equally shared. 

“Young people have been some of the hardest hit by the economic fallout of the pandemic, and are often at the back of the queue for jobs with employers favouring experienced hires,” she said. 

Extending the incentive for new apprenticeships beyond the end of the furlough scheme for this group “makes sense”, Crowley said, and warned that firms need to consider that young people tend to benefit more, in terms of future wage returns, than older apprentices.

The CIPD is calling on the government and employers to create one million opportunities for young people through its One Million Chances campaign. To find out more about the campaign and get involved, visit the CIPD’s website.