Apprenticeship boom a poor use of public funds, says IFS
It really is time we invested imaginatively in vocational skills training. Stories like this point out just how far we have to go to tackle the lack of parity of esteem in the development of vocational skills compared to degrees. Well I for one applaud the push for more apprenticeship training even if it is struggling to overcome some of the challenges set out here. This story tells us:
Improving the skills and training available to young people through a sharp increase in the number of apprenticeships is one of the Government’s better ideas in principle.
So is taxing big businesses to pay for it. Given the way in which that the Treasury has been steadily decreasing their corporation tax burden, they ought to be able to afford it.
Unfortunately, as is so often the case, it is the way ministers propose to achieve their aims that is flawed.
For a start, the sheer scale of the plan is problematic. As the Institute for Fiscal Studies has noted in a new report, the creation of 3 million new apprenticeships in just five years was always going to create problems, not least with ensuring that they are all worthwhile to the people who take them up.
It also raises questions about the method of funding. The Apprenticeship Levy is a payroll tax which affects employers with wage bills of above £3m. It therefore only applies to 2 per cent of employers.
Unfortunately, no less than the Government’s own Office for Budgetary Responsibility estimates that it will hit wages, to the tune of 0.3 per cent, and at a time when the Brexit induced weakness in sterling is stimulating inflation.
The OBR has also raised concerns that most of the £2.6bn raised won’t actually go towards funding apprenticeships – the budget for the plan is considerably lower.