Is there any problem that can’t be made worse by the big state slamming down its clunking fist? In the 2015 Budget, George Osborne, then the Chancellor of the Exchequer, announced that we were to have an apprenticeship levy – a new tax on businesses to fund apprenticeship schemes which was implemented in 2017.
Osborne declared that while ‘many firms do a brilliant job training their workforces; there are too many large companies who leave the training to others’. The temptation to meddle being irresistible, he had decided to take this ‘bold step we need to take if Britain is going to raise its game’.
It has proved an expensive, bureaucratic failure. The cost is nearly £4 billion a year – firms pay the money out and then seek to reclaim it by spending on training in a way that ticks the officialdom’s boxes. The Treasury is rewarded for complexity by being able to keep the money left over when firms give up and don’t claim it all.
Naturally, the new Government seeks to continue with an interventionist approach – though it has changed the name to the ‘growth and skills levy’ and promises more ‘flexibility’ by not requiring the spending to go on apprenticeships.
The Times reports that the scheme is ‘increasingly used by employers to train experienced and well-paid executives, whom they would have paid for anyway, rather than taking on and training new employees at the start of their career’. Senior executives are sent on courses such as MBAs.
Neil Carberry, Chief Executive of the Recruitment and Employment Confederation, said:
It has become a system of investing in the skills of experienced workers over the age of 25 rather than what it should be, which is investing in the skill of young people who will be the experienced workers of tomorrow.
According to the Department of Education’s own figures, we had 276,000 ‘apprenticeship achievements’ in 2017. In comes the levy and what happens? For 2023, the latest year for which data is available, it had fallen to 178,220. Billions spent to make a bad situation worse.
The Chartered Institute of Personnel and Development has crunched some other numbers and in a report last year concluded that ‘the Apprenticeship Levy has so far failed to achieve its aims. Employer investment in training has continued to fall and the overall number of apprenticeships has fallen, especially for young people’. There is ‘widespread rebadging of training for existing staff as apprenticeships’. The ‘dead weight’ cost ‘of the government subsidising training that would have occurred regardless’ and the distortion where ‘displacement occurs when employers reduce spending on other types of workplace training’.
Government funding and control also reduce the incentive and ability of firms to ensure the schemes are good quality – one reason apprentices often drop out before completing the course.
The report adds:
In 2022/23 there were a total of around 337,000 apprenticeship starts, considerably below the pre-Apprenticeship Levy figures of 509,000 in 2015/16.
The fall among the young was particularly dire.
The notion that the state knows better than business what sort of training and apprenticeship schemes should be offered has been discredited. This blundering arrogance will not be improved simply by switching from a Conservative to a Labour government bossing businessmen around. It will just be done with an even more sanctimonious tone.
That is not to deny that the skills shortage is a dire problem. Consider housing. It is often pointed out that immigration adds to the pressure. It is often retorted that we rely on immigrants to provide the skilled labour needed to build new homes.
But the state is the cause of, not the solution for such woes. We should start by ending the cruel scam of subsidising young people to go off to university to undertake worthless ‘Mickey Mouse’ courses. Despite the subsidy, they still graduate saddled with debt and discover that a degree in the sociology of deviance or the sociology of leisure is of limited value in the jobs market.
If those precious years were not wasted, they could be finding their way in work of practical value.
Another great displacement activity is welfare. It should not be possible to go straight from school to signing on. Nobody should be entitled to any welfare benefits below the age of 20. This would give a chance for the work ethic to be inculcated. There would be some friction between a workshy teenager who has left school – demanding pocket money as well as continued free board and lodging – and his parents. That friction would be welcome.
To help ensure the availability of work, the minimum wage should be abolished for teenagers. The employer and employee should be left to work out for themselves who is exploiting whom and to mix and match accordingly. Suppose an 18-year-old was offered £50 a week to be a plumber’s mate? Gradually, they would be trusted to go off on their own to deal with the simpler jobs. I suspect the apprenticeship is more relevant than getting a plumbing diploma. In a couple of years, they could be earning £50 an hour rather than £50 a week.
We should also increase choice by lowering the school leaving age back down to 16. Those who are not academically-minded already have the option of vocational qualifications – often at a sixth-form college or further education college. But why not allow them to go and start a proper job if they so wish?
The young are invariably full of ambition, enterprise and enthusiasm for a career. But when they try to pursue it, they often get ground down by the system. The biggest favour the government could do for them is to stop trying to help and just get out of the way.
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