Government warned over cost of apprenticeships

The Institute for Fiscal Studies has warned the government that plans to rapidly increase the number of apprenticeships risks being "poor value for money".

The  Institute for Fiscal Studies (IFS) has warned that turning apprenticeships into “just another term for training” could devalue the “brand” of being an apprentice.

The apprenticeship levy comes into force in April aiming to help fund the government’s target of creating 3 million new places for people to gain vocational qualifications. The government would like apprenticeships to tackle youth unemployment and raise skills.

Neil Amin-Smith, co-author of the report says there is a “desperate need” for better vocational training and the government’s industrial strategy has identified the need to improve technical education.

The report warns that government has “failed to make a convincing case for such a large and rapid expansion in apprenticeships” and goes on to caution “wildly optimistic” claims of how much money can by generated by investing in apprentices.

The analysis by IFS has called into question the use of public money in the attempt to create more apprentices by introducing the apprenticeship levy, which is forecast to raise £2.8bn by 2019-2020.

The think tank has warned that most of the revenue could be spent elsewhere, with spending on apprenticeships only expected to increase by £640m.

The targets that the government have set require the training of an extra 600,000 apprentices per year, but the report argues that the incentives to hire apprentices could deter employers from training their own staff and lead to “considerable risks to the efficient use of public money”.

The study also goes on to warn that re-branding other types of training as apprenticeships could dilute the quality of what an apprenticeship means. There is also a suggestion that the cost of the levy could force down wages for other workers.

The IFS has also warned that not all beneficiaries will be school leavers and that nearly half of the new apprenticeships will go to people over the age of 25.

The report said there is a “perfectly sensible case for a gradual expansion of apprenticeships” but that the current policy plans have been developed with a “cavalier use of statistics”.

Labour’s shadow skills minister Gordon Marsden said: “Rushing to hit a three million target without sorting out the quality or increasing the proportion of apprenticeships under the age of 25 means they risk failing to deliver the long-term skills strategy we need.”