Proposed apprenticeship funding cuts could cost Welsh economy up to £406.8m

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The Welsh Government draft budget proposal to cut apprenticeship funding by nearly 25% could cost the Welsh economy £406.8m in the long term, hitting apprentices from deprived backgrounds the hardest. That was the message from a recent impact study by economics consultancy, The Centre for Economics and Business Research (Cebr). 

As Apprenticeship Week Wales 2024 draws to a close, it’s been fantastic to see and share so many inspirational stories showcasing the value of apprenticeships for learners, communities and employers. This report, commissioned by Cardiff and Vale College, however, concludes that the economic impact of cutting 10,000 apprenticeships could amount to around £84.1m in GVA (Gross Value Added). In the longer term, the potential loss in economic output could reach up to £406.8m

The Welsh Government’s biggest spend is on health and social services1 – and the need to bolster Wales’ health and social care workforce is well documented. Cutting apprenticeships is a gamble which Wales cannot afford to take. As the draft budget on apprenticeships is presented, the Health sector would feel the biggest impact, with a potential total of £105.1m GVA loss. 

Cebr found that Construction would suffer the most after the Health sector with 24.6% of GVA loss. The overall loss could be almost £100m if the cuts are followed by no further skills development. The research also suggests the funding cuts will disproportionately affect smaller industries and the most deprived segments of the Welsh population, with the GVA loss being lowest among the least deprived. 

“Overall, we can conclude that funding cuts would result in a disproportionate GVA loss within the most deprived deciles,”

“This underscores the heightened vulnerability of this demographic, given that affected apprentices are predominantly concentrated in the bottom 40%. Consequently, the funding cuts would unevenly diminish their employment prospects.” 

ColegauCymru Chief Executive David Hagendyk, said, 

“Whilst this is a week to celebrate the contribution of apprenticeships in Wales, this research shows the stark reality of what proposed budget cuts will mean, not only for learners but for employers and the wider Welsh economy. The reduction in starts will fall disproportionately on our young people, and those in the lowest socio-economic groups, many of whom who have already been adversely affected by the impact of Covid school years. 

As Wales continues to navigate turbulent economic times, our colleges are the skills engine needed to drive our economic recovery - by providing the skills that employers need. It’s critical that future inward investment is not damaged. We’re calling on Welsh Government to urgently reconsider their proposals.” 

Further education colleges are fundamental to a fairer, greener and stronger Wales, but they need sustainable funding to be able to support learners and to deliver for employers. The proposed funding cuts means there is a perfect storm now facing the sector. 

Further Information 

A Cber report for Cardiff and Vale College 
The Impact of Apprenticeship Funding Cuts in Wales 
January 2024 

1 Senedd Research 
Welsh Government Draft Budget 2024-25 
22 December 2023 

Rachel Cable, Director of Policy and Public Affairs 

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