Since the emergence of COVID-19, unemployment has risen and an economic downturn, the scale of which has not been seen since World War II, is forecast. Historically, financial crises disproportionally affect young people (aged 16-25 years) and the economy left in COVID-19’s wake is set to be no different.
It is an impact already being felt with figures from the latest claimant count showing an increase of 131.2% nationally compared to the same period last year. In the West Midlands, which is likely to be one of the hardest hit areas, the statistics are mirrored with the number of claimants from June to July increasing by 96.5% compared to the same 2019 period.
For the West Midlands, the latest available apprenticeship data, which comprises the first three quarters of this academic year, shows approximately one third as many apprentices were recruited in the period of January to April than in the prior two quarters. This is further supported by a comparison of apprenticeship postings between June 2019 and June 2020 which dropped from 10,601 to 5,642. This is indicative of a sharp decline in recruitment across the region, which will likely also be felt throughout the UK.
Throughout COVID-19, pertinent discussions regarding the widening disadvantage gap across the country have rightly taken hold. At the WMCA we are committed to supporting everyone within our community, particularly those from disadvantaged backgrounds and the hardest to reach, yet this drop in apprenticeships poses another challenge to be overcome. According to The Sutton Trust, apprenticeships are likely to be more concentrated in larger firms that are better able to retain apprentices and continue to recruit. This may geographically skew opportunities, making them less available across the region, with apprenticeship numbers expected to fall by 36% in disadvantaged areas compared to 23% for more privileged apprentices.
These data points are a clear call for urgent and substantive action, not only to address unemployment, but in providing young people with skills and training that will set them up for long-term success. Apprenticeships will be the most effective route forward in helping gain valuable experience and skills which will, in turn, be a key facilitator in our national economic recovery. Championing this was the chancellor, Rishi Sunak, who recently announced a large-scale programme of financial incentives to encourage businesses to take on more apprentices as part of the road to recovery post-pandemic.
But what does this mean in real terms and how can we maximise the potential?
In 2017, the Government introduced the Apprenticeship Levy to increase both the quality and number of apprenticeships. This was with a view to support those requiring training or upskilling, as well as providing employers with appropriately skilled staff. As of 2018/19 we had seen a rise in apprenticeships by 4.7% nationally but in the West Midlands, we had surpassed the national average with 8.7 per cent.
While many factors have led to this success, our collaborative and regional skills plan has set this direction for apprenticeships; one that is dynamic to our community’s needs, is delivering ground-breaking benefits for the regional economy.
At the WMCA, and through the power of devolution, we can ensure the decisions made will be determined by the context of the local people, communities, and businesses they affect. Aligning skills delivery with the wider economic strategy for the region will ensure the West Midlands has the skills base it needs to support its community and continued economic growth. For example, through its devolved model, the Combined Authority is empowered to enable the full apprenticeship funding is strategically used by SMEs who need it most and is aligned with the identified growth sectors within the region. We do this by identifying large businesses which can donate unspent levy to SMEs through the Apprenticeship Levy Transfer Fund, set up by the WMCA, which enables us to cover 100% of apprenticeship training and assessment costs. This bespoke regional approach is effective at reaching SMEs in a way that is genuinely ground-breaking, focusing on direct expert facilitated engagement between employers and apprenticeship training providers.
Over the past two months, this Fund has had real impact for the region, thanks to the WMCA’s local knowledge and adaptability, providing training for a record 232 apprentices in June and supporting a total of 1,084 apprentices and 315 SMEs since we implemented this way of working in March 2019. This is also set to continue with CrossCountry and Chiltern Railways providing access to an additional £300,000, and Enterprise Rent a Car, St Modwen Properties and City of Wolverhampton Council an additional £200,000 to boost jobs and skills at smaller businesses.
By identifying and allocating any unspent levy funds to employers who need it most, we’ve been able to been more responsive to the needs of local businesses of all sizes, but particularly SMEs, and worked closely with employers to ensure they have access to the skilled workforce they need, both now and in the future.
This place-based approach also encourages greater flexibility in skills and training, meaning we can respond quickly and effectively to shifting regional priorities, and address new growth sectors, such as green manufacturing and digital technologies.
With significant gains made, particularly in comparison to the national average, the benefits of a regional approach to apprenticeships are clear, not only in terms of providing the training and employment for those who need it most, but also ensuring employers have workers with the specific skills needed to help their businesses thrive. Pre-COVID-19, the West Midlands had one of the largest increases in employment and the biggest decrease in economic inactivity of any region in recent years, and the employment rate was at a record high. It was this place-based approach to skills and training that delivered its competitive advantage and is already showing an upward trajectory in the early stages of our recovery, and one that we encourage the sector as a whole to embrace.
Jose Lopes is head of business engagement at the West Midlands Combined Authority