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Labour Party calls for apprentice wage subsidy

From FE Week:

The Labour Party has called for the wages of 85,000 young apprentices to be subsidised this year, by using the £330 million apprenticeship budget underspend handed to the Treasury in 2019.

The opposition party has put forward the policy in order to boost apprenticeship starts, following a drop of a quarter over the past decade, and the rise of competing skills initiatives.

It is hoped paying the wages of apprentices will “incentivise employers to create new opportunities despite the impacts of the pandemic”.

Under the proposal, subsidy would operate on a sliding scale, so employers would receive a full wage grant for employing a new apprentice aged 16 to 24 for the first three months.

The subsidy would then drop to 50 per cent for the next six months, then 25 per cent for the final three months.

Money would be dealt out on a first come, first served basis, and Labour estimates it would save each employer around £3,500 per apprentice hired.

The scheme would be funded through the underspend of the Department for Education’s apprenticeship budget in 2019-20, which, as FE Week revealed last July, totalled £330 million and was quietly handed back to the Treasury.

Toby Perkins, Labour’s shadow apprenticeships and lifelong learning minister, told FE Week the 85,000 figure is based on the number of starts by 16- to 24-year-olds in 2018-19, of which there were around 210,000, according to official government statistics. It takes into account a decrease in starts owing to the pandemic, then taking half of the annual number as the proposal will cover recruitment over six months.

“Our initial proposal is based on a six-month incentive, which would need to be reviewed based on the developing health situation and its impact on employment numbers.”

He said the wage subsidy should be in addition to the long-standing £1,000 incentive that employers receive when they take on a new 16-to-18 apprentice, but not in addition to the other bonus incentives announced in chancellor Rishi Sunak’s Plan For Jobs which end in March so as not to blow the underspend pot.

Perkins added that the wage subsidy would also mean employers look more in favour of hiring apprentices, rather than using the new Kickstart incentive, by which businesses can receive grants of around £6,500 but which do not lead to a qualification.

“Apprenticeships offer longer term employment, have a far greater learning input than the alternatives, last longer, offer a recognised qualification at the end of it and have more established delivery networks,” Perkins argued.

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