The Stratford-on-Avon MP – who has formidable business experience and is the government’s apprenticeship champion – talks about getting young people into work with Reward’s editor, Helen Swire
How does the apprenticeship levy work?
The levy will affect around 2% of businesses: those whose payroll is more than £3m a year. The rate will be set at 0.5% of payroll amount above that £3m. The government has brought this policy in so that every large company must get involved and provide more of these opportunities to apprentices.
The levy will essentially double the funding for apprenticeships: in 2010 we spent £1.5bn, and by 2020 we’ll be spending £3bn – I can’t think of any other government project that is doubling its funding at a time of austerity.
It is vital to increase the skills in the workforce and give young people the start in their career – and that in turn will cause growth. Crucially, it will boost productivity.
What will the impact be on businesses?
The top 2% that will pay the levy will have ring-fenced the amount of money that they can spend on training apprentices, so then they can think strategically and holistically about their whole businesses and how they can use that money.
And if they don’t use the money, it can be put to really good use to fund other businesses’ apprenticeships. Small businesses won’t be paying the levy, and won’t experience any change in the system: they will carry on having funding provided by the government as before.
Is this the way forward in encouraging young people into the workforce and providing an alternative for those who can’t afford university?
Absolutely – if I had my life over again, I’d volunteer to do an apprenticeship. When I worked at YouGov I didn’t look at people’s degrees – I looked at their skills and experience and how they could work with and enhance my business.
Apprenticeships are a fantastic way of helping young people into the workforce – they don’t just give people a job, they give them a chance to build their skills and earn at the same time. Not only are they not accumulating debt, they’re actually earning. It gives people a start to their career – not just a job. That is so important, and it shows the progression you can achieve through apprenticeships. I think we’ll begin to see a real cultural shift where people will see this as equally aspirational as a degree.
Do schools need to do more to encourage pupils to look into apprenticeships?
British schools are doing a lot – but if you look at the German model, the real difference is that businesses are embedded in the education system: they systematically go into schools and explain to young people the opportunities of both apprenticeships and traditional degrees.
Apprenticeships are a viable alternative to a degree, but it’s not about saying one is better than the other. If you want to get stuck in straight away, get a job, earn a wage and still learn at the same time, then apprenticeships are for you. But this is not an either-or: you can get apprenticeship degrees in an increasing numbers of areas, and some companies are changing their graduate programmes accordingly.
What is the business case for companies to take on apprentices?
Each sector is different. One example is Princess Yachts, who had an ageing population and were struggling to bring skills into the workforce, so they have been rebuilding on the back of apprenticeships and they are now flourishing, attracting investment and growing.
Nine out of ten companies who have taken on apprentices say that it is really good for their business.
What are the government’s next steps to get young people into work?
This is an ambitious plan, so the main focus will be on delivering it and delivering the levy platform, making sure that all works and ensuring that we’ve hit the target of 3 million apprentices by 2020.
We’ll continue to work with schools and make sure that high-quality advice is open to every pupil about their future options.
It’s got a massive role to play in terms of getting people into work and I’m proud of the holistic approach the government is taking in giving young people the skills they need to get a great job.