The number of people starting an apprenticeship in England fell by 58,000 over the past two years, according to the Office of National Statistics. That is a drop of 19 per cent.
And in the North, between August 2020 and April 2021, there were just 36,500 new apprentices in the region compared with 45,700 in the same period between 2018 and 2019, before the pandemic hit.
Many companies have been unhappy for some time with the Government’s Apprenticeship Levy system, introduced by former Chancellor George Osborne in 2015.
They say more flexibility is needed in the levy, paid by all companies with an annual salary bill of over £3m, which is topped up by a 10 per cent contribution from Government each month.
One business group, the Northern Coalition on Skills, led by Northern Powerhouse Partnership, said firms missed out on more than £300m for apprenticeships they had contributed through their levy because of stringent rules about how the fund can be used.
And small firms are calling for the apprenticeship incentive to be extended as the number of new starters continues to tumble.
The Northern Coalition on Skills, which features a group of leading businesses, including the likes of Electricity North West and Co-op, has said reform of the levy to allow the money to be used in firm’s supply chains, was vital.
That would let Northern businesses access a highly skilled, highly trained workforce in order to increase productivity and rebalance the UK economy.
Steve Murrells, Co-op chief executive and Northern Powerhouse Partnership Board member, said: “If we genuinely want to build back Britain different and better, then this must be a decade of collective action when it comes to apprenticeships, that benefits all communities right across the country.
“These apprenticeship figures suggest a staggering North-South divide when it comes to the futures of our young people and, in turn, the skills that will avoid putting our wellbeing and economy at risk in the North.
“Reform of the apprenticeship levy is a vital building block to ensure this happens.”
In response to the statistics on apprenticeships and traineeships, the Lancashire-headquartered Federation of Small Businesses’ national chairman Mike Cherry said: “While the pandemic has understandably had a dampening effect on training efforts, the annual fall in apprenticeship starts is nevertheless very concerning against a backdrop of chronic skills shortages.
“It is, however, good to see that the rate of reduction in starting apprenticeships has slowed somewhat.
“The numbers lay bare the North-South divide, with a disproportionate fall in apprenticeship starts in the North and the Midlands.
“The £3,000 apprenticeship incentive – set to be withdrawn at the end of September – should be extended as a matter of urgency, to forestall another dip in numbers.
“Equally we have to get the apprenticeship levy system right, to ensure that the funds contributed are shared with firms of all sizes, giving young people the opportunity to gain the hands-on experience and access to leadership that is unique to smaller firms.
“Chronic skills shortages that existed before the pandemic hit have been exacerbated by lockdowns disrupting development, a new immigration system, and a reduction in economic mobility for some workers.
“In sectors which were particularly hard-hit by lockdowns, many have moved to new areas of employment, leaving a vacuum as those sectors have reopened.
“Close to four in ten small firms now cite skills shortages as a major barrier to growth. As we look to recovery, up-skilling young people, who face an incredibly challenging climate, must be a priority for this Government.
“Over the longer term, getting skills development right will require a holistic approach.”
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