Deep cuts to apprenticeship programme will undermine new economic mission and cut talent pipeline for employers

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The Welsh Government has launched its new Economic Mission, with an emphasis on supporting key sectors to grow and prioritise young people. At the same time, we are expecting significant cuts to be made to the flagship apprenticeship programme, which will cut off opportunities for thousands of young people across Wales and risk new business investment. 

An initial analysis indicates: 

  • The total cut to the apprenticeship programme will be 24.5%. This is the combination of a 3.65% cut to the budget and the loss of previous European funding.
  • The impact of these proposed cuts may result in circa 10,000 fewer apprenticeship starts on the Welsh Government’s flagship apprenticeship programme in 2024/25. 
  • The reductions would fall disproportionately on young people (16-24), those in the lowest socio-economic groups and women. The analysis also indicates that it would likely mean a significant reduction in the number of Black, Asian, and Minority Ethnic apprenticeship learners. 
  • Feedback from members indicates that impacted businesses will include anchor companies who have expressed their desire to expand their number of apprenticeships, and that new inward investment was based partly on the availability of apprenticeships. 

Taken together with proposed reductions across the part-time further education (FE) allocation and Personal Learning Accounts, the cuts to the apprenticeship budget will directly impact on the support available for employers to be able to upskill their workforce and to grow their businesses. 

Given the operating context of apprenticeship providers, the proposed cuts mean they will need to prioritise their provision based on existing commitments to employers. It is likely that the areas of specialist and niche provision, which have been costly to develop and maintain, would be the first to be reduced, as providers look to protect core employers as far as possible, many of whom would be apprenticeship levy paying employers, and / or SMEs operating in local, national, and regional priorities. However, given the scale of reduction, it will be impossible for providers to continue to service existing commitments and to also offer the same levels of new starts. The impact of the cuts to both the apprenticeship budget and possible reductions to FE funding, businesses in Wales will be faced with dramatically reduced levels of support at precisely the time they need it the most. 

The proposed cuts come on top of the recent £17.5m reduction in the apprenticeships budget, which was linked to a perceived lack of demand for apprenticeships from employers. This is simply not the case. In fact, there has been no reduction in demand for new apprenticeship starts, with Welsh Government published data showing an increase in apprenticeships starts in the first half of 2022/23, compared to the same period a year earlier. The reasons for the programme underspend in 2022/23, was a legacy of the Pandemic, business decisions because of Brexit and inflationary pressures and impacts of changes in the qualifications systems – mainly construction and the built environment, and health and social care sectors, both of which draw heavily on the apprenticeship budget. In short, there is no lack of demand from employers for apprenticeships and now is not the time to reduce funding even further.

In fact, we expect a significant increase in demand from employers in 2023/24 which, if we could support, reflects well on the outlook for the Welsh economy. A 2021 Welsh Government evaluation underscored the critical role of apprenticeships in fostering economic growth and their positive impact in terms of “raising the skills levels of people who have low or no skills and increasing the number of people in the workforce who possess job-specific skills.” A recent report from the owner of Screwfix and B&Q, Kingfisher Plc, showed that the UK is set to lose out on £98billion of growth by 2030 due to a shortage of tradespeople.  

Given the launch of the Welsh Government’s new Economic Mission and the ongoing work of the Welsh Government to agree a new budget, there is a short window of opportunity to make the case for apprenticeships and to ensure that catastrophic and irreversible damage is not done to the apprenticeship programme in Wales. The apprenticeship programme is rightly seen as a jewel in the crown of the support available to employers. The Welsh Government, colleges and training providers, and employers have worked hard for more than a decade to make it the success that it is today. Cutting a quarter of the budget will undermine all that work. The proposals from Welsh Government are the wrong cuts at the wrong time. They cannot be allowed to go ahead. 

Skills and further education are not a ‘nice to have’ – they are fundamental to our economic recovery. The time to invest in our learners and workers is now. Attracting inward investment and supporting key anchor companies relies on investment in skills. 

Together with NTfW, ColegauCymru is calling for the proposed cuts to the apprenticeship programme to be addressed urgently. 

The cumulative impact of the proposed cuts to apprenticeships and the FE budget will result in a lost generation of young people which will directly affect our communities. 

Our further education institutions and their strong links with employers and industry are key to economic recovery which in turn is vital to help support the Welsh Government’s ambitious goal of a stronger, greener and fairer Wales.

Further Information 

Rachel Cable, Director of Policy and Public Affairs 

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