Youth apprenticeships: is the government pulling its weight?

"With youth unemployment at the 1 million mark, one would have thought that Ministers would do all they could to get young people into training and jobs, so why have the Government overseen a 12% reduction in young apprenticeships in the past six months alone, alongside a £165 million departmental underspend?" Tristram Hunt MP, House of Commons, 24 June 2013

As youth unemployment continues to be a thorn in the side of the economy, apprenticeship take-up has become an increasingly important part of the Government's response.

But just how successful the Government has been at promoting apprenticeships to young people was questioned yesterday when Labour MP Tristram Hunt asked Education Secretary Michael Gove why both take-up and investment in the scheme was falling.

Are a million young people out of work?

Yes, almost.

We know from the latest Labour Force Survey estimates and from a June 2013 House of Commons Library standard Note on youth unemployment that there are 2.6 million economically inactive 16 to 24 year olds. However, 74% of them are in full-time education, and If we only consider those out of full time education, we can count 659,000 unemployed people aged 16 to 24.

However government statisticians also take into account individuals in this age group who are in full time education but are also searching for a job. This brings us to 950,000 unemployed individuals, with a corresponding unemployment rate of 20.5%.

Though the figure mentioned by Tristram Hunt in Parliament checks out, it's important to bear in mind that the Department of Education - whom he was addressing at the House of Commons - is only responsible for young people up to age 18, whereas the group of unemployed people identified by Mr Hunt ranges up to 24-year-olds.

A 'departmental underspend'?

We contacted Tristram Hunt's office to ask for the evidence behind his claim that the Education Department had £165 million in its coffers that could have funded extra apprenticeship places.

His office sent us the Department for Education's Supplementary Estimate. Every year Parliament is asked to approve the Government's spending arrangements via documents known as supply estimates. A supplementary estimate covers the extra resources sought by government departments for schemes outside of their initial yearly plans put forward in its 'Main Estimate'.

In this financial revision, the DfE announces "changes to deparmental expenditure limit".

Here's what it says about its "apprentices budget" (Section C, point 14):

"This budget has [...] been reduced by £165.5m since Main Estimate."

However this isn't a cut. The Department is simply announcing it's going to spend less then the allocated amount, and it explains what led it to take this decision:

"As apprenticeships are a demand-led programme, provision depends on employers making places available. The reduction relates to both the number of Apprenticeships starts and a shift in the make-up of these starts."

Fewer 16- to 18-year-olds are starting apprenticeships, meaning that the Department is having to stump up less cash than it initially anticipated.

The Department also advances a few theories on why this is happening. Number 1: there's been an "increased competition for vacancies from the 19 plus age group" (i.e. apprenticeships among older age groups for whom the DfE is not responsible); Number 2: poor quality places were rooted out; Number 3: the job market isn't currently amenable given the "wider economic conditions facing businesses in some regions and sectors."

A 12% drop in young apprentices?

The DfE acknowledges that this year has seen fewer young people beginning apprenticeships, but has there been a 12% fall, as Tristram Hunt claimed in Parliament? Yes, but these are provisional figures.

According to a March 2012 Statistical First Release from the Department for Business Innovation and Skills, in the first six months of the 2011/12 academic year, 79,100 "learners" (how BIS refers to apprentices) aged under 19 started apprenticeships. The March 2013 release shows that during that time frame the following year, apprentices in the same age group started 69,600 apprenticeships - a 12% drop on the previous year's figure.

In 2009/10 under 19s accounted for 40% of starts, in 2011/12 that proportion had dropped to 25%.

To find out whether this year's figures are signalling a further drop, we'll have to wait until the Department for Business, Innovation and Skills releases its latest update on the apprenticeship figures, which is expected shortly.

However as the Institute of Directors (IoD) graph below shows, under 19s have been falling as a proportion of the total beginning apprenticeships for several years, so this does seem to be a longer-term trend.

According to the IoD, apprenticeships have "progressively become an adult skills programme, oriented ever farther away from those aged under 19." They also advised the Government to consider a restructuring in favour of young apprentices, given that their "labour market opportunities have become so tightly squeezed."

Tristram Hunt was right to claim that spending on young apprentices has fallen by £165 million pounds, while apprenticeship starts have also dropped. However the extent to which the Deprtment for Education is at fault is contentious, as the DfE claims that the underspend is the result of lower than expected take up of apprenticeships among young people.

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Flickr image courtesy of the Department for Communities and Local Government