Here’s why you should fix the apprenticeship levy, Chancellor

With more government U-turns these days than can be seen at a driving test centre, it is tempting to see ‘thinking again’ as a sign of weakness. Not all U-turns are bad, however, which is why Unite won’t be abandoning the fight to get the Chancellor to think again and embrace positive interventionist action to support UK manufacturing and rebuild our economy out of this crisis.

One positive change of direction that could be quickly executed and widely welcomed, certainly by the manufacturing employers I deal with daily, is on the apprenticeship levy. It isn’t working, certainly not for young workers, so fix it. Vast sums of cash are standing idle in the Treasury, with employers seeing it as a tax, unable to access it to fund recognised apprenticeships for either their workforces or those of their supply chain partners.

Around one in 10 people work in manufacturing in this country, in every region and nation. It’s a highly skilled workforce that we need to grow – but one that requires a steady stream of young people entering the sector to be sustainable. These workers enter on recognised apprenticeship programmes, but never in high enough numbers to address the long-term skills crisis we face.

Enthusiastic, visionary young people needed

We desperately need enthusiastic, visionary young people not just to replace those leaving in alarming numbers but to bring new ideas, develop vital new expertise and build the power house behind our new economy, addressing the challenges posed to the sector and our country by climate change and automation.

When education secretary Gavin Williamson was recently parading his commitment to apprenticeships, further education and in-work placements, it ought to have been good news for our industries, with a world-class offer to the generation losing out most in this crisis. But let’s compare the rhetoric to what’s happening on the ground.

Earlier this week, a steward at a luxury car maker told our Manufacturing Matters event that his company had “given up on the apprenticeship scheme a long time ago”, saying, “They paid into the apprenticeship levy but gave up recruiting apprentices as soon as the industry started to experience difficulties. It’s so short-sighted, they’ve just thrown the money away.” Another rep, working in nuclear power, revealed they’d had no apprentices for over three years, and that all those in year four of theirs are furloughed.

When we were fighting for the future of the Merseyside shipbuilder Cammell Laird, we looked to place some of the workers threatened with redundancy into a training college in Birkenhead, to upskill them so that they could be put back into the workplace with the skills needed when orders increased. Not a radical idea – a perfectly reasonable one. However, to do so we’d need funds from the apprenticeship levy. The funds that the government had previously pledged would create three million high-quality apprenticeships by 2020.

Brick wall

That’s when we hit a brick wall. Neither the minister at the time, Richard Harrington, nor his civil servants, knew how to access – let alone release – any of the close to £3bn of levy money sitting in the Treasury’s coffers. And that’s the problem with what both the Chancellor Rishi Sunak and Gavin Williamson have said about the “opportunity guarantee” giving every young person the chance of an apprenticeship (or in-work placement) with additional payments to businesses for every apprentice hired between August 1 and January 31 next year.

For all this fanfare about kick-starting the economy with jobs for the young, so much more could be achieved by simply putting the billions of pounds currently sitting there doing nothing to good use. Use it to create ‘down time’, upskilling the current workforce while bringing tens of thousands of new apprenticeships forward. The trouble is, of course, that business sees the apprenticeship levy as a tax on employers. The government treats it like one, too, rather than as an opportunity to develop the highly skilled workforce that this country desperately needs to build back better and meet the challenges of the future.

Take Rolls-Royce. Why can’t a world-beating aerospace firm reskill its workforce and apprentices to repurpose production to produce tomorrow’s greener, cleaner technologies instead of panic-sacking 3,000-plus skilled workers? Until there is joined-up thinking in Westminster, along with a clear, immediate political signal that the government is interested in partnering business and employers along the road to recovery, employers will defer to those short-term survival instincts. And our young makers of tomorrow will never emerge.

Terrified for future

The workers and young apprentices I deal with every day are terrified for their futures – and the tragedy is that they have so much to give to recover our vital industries and transition our nation to a greener, fairer economy.

Yet there was no commitment in Sunak’s statement last week to making the green buses, the heat pumps, the electric vehicles, the glass, the turbines or batteries that we so desperately need to ‘build back better’ than before. It’s with these technologies that we will create the opportunities to grow our economy while supporting our kids to make the things we need here, rather than simply importing from overseas, acquiring the skills we desperately need to thrive.

Time and again, when asked to be ambitious for the people of the country, this government ducks it. Take the £3bn in energy-efficient measures announced last week: measly when compared to the £36bn and £13.5bn Germany and France are investing respectively.

While the question is asked about who will pay for the pandemic (answer: absolutely not working people), it is bewildering that the government refuses to see the incredible possibilities it could reap from a thriving manufacturing sector.

Manufacturing is not a relic, nor our yesterday as a nation. In fact, it very much ought to be our future – and central to that of our younger people who have had their lives put on hold and their dreams shattered by the cruelty of this crisis. Chancellor, find the key to that apprenticeship levy pot. Get that cash working and give our young people and planet proper hope of a brighter tomorrow.

By Steve Turner, Unite assistant general secretary @SteveT_Unite

This comment originally appeared in Labour List, July 16, 2020