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In this policy briefing we look at the Budget 2014 and its impact on the employment and skills landscape moving forward.

Industry broadly welcomed the Budget announcement, especially with regards to funding of Apprenticeships.

  • The Universities and Colleges Union cautioned plans for higher-level apprenticeships would need to be properly resourced.
  • Colleges are firefighting reduced budgets and still working through the implications of the Autumn Statement.
  • NIACE expressed concern that opportunities to address skills shortages had been missed.
  • Inclusion’s analysis of the Office for Budget Responsibility forecast suggests a “very slow recovery”.
  • Locally, tax incentives in Cornwall were welcomed while improvements to transport, which, it is hoped, will drive suitable jobs growth for the Heart of the South West LEP.

Cheers

Kevin Aggett                                                                Dr Andrew Dean

Assistant Editor                                                          Editor

INTRODUCTION

The Chartered Institute for Professional Development (CIPD) called for three fundamental changes in the lead up to the 2014 Budget Announcement:

  • a fundamental review of UK skills policy, together with a new focus for the workplace, the nature of jobs, and how skills are utilised
  • to help young people make the transition between education and work by allocating an extra £50 million to the National Careers Service (NCS) to boost their work with schools
  • to ensure Universal Credit works to the benefit of employers, employees and jobseekers by producing targeted communications to increase their understanding of the new system, and to review whether an increase in the National Insurance Contributions (NICs) threshold to £220 a week or more could encourage employers to increase the existing hours of some staff.

Instead, the Budget promised tax cuts, aimed at creating and saving hundreds of jobs and revitalising Industry, which welcomed the tax cuts and plans for the future.

Quotes:

“Cutting budget deficits can never be just an exercise in economics” – George Osborne

The Budget will “put wind in the sails of business investment, especially for manufacturers” adding “Apprenticeships are a crucial tool in fighting skills shortages and youth unemployment, so this additional support is very welcome – especially for smaller firms wanting to do more”Confederation of British Industry (CBI)

“As the economy picks up and despite some mention of skills, we were disappointed the Chancellor didn’t take more opportunities to boost ways for adults to increase their skills”David Hughes, NIACE

“it is only four months since the Autumn Statement and colleges are still working through the implications of the autumn 2013 announcements while also working out how to manage reduced budgets”Martin Doel, Chief Executive of the Association of Colleges

“Making transport improvements will enable us to create the right jobs for the future knowledge economy”Steve Hindley, Chair of the Heart of the South West LEP

APPRENTICESHIPS

National Apprenticeship Week saw 20,000 new roles created by companies from Starbucks to EE and ITV. But behind the positive headlines were familiar gripes about the bureaucratic difficulties faced by the 44 per cent of organisations who expect to take on apprentices in the next five years. The most common causes of anguish surround funding and ownership of schemes, says Katerina Rüdiger, head of skills and policy campaigns at the Chartered Institute for Professional Development (CIPD) and author of the Apprenticeships that Work report.

Skills Minister Matthew Hancock subsequently announced the appointment of David Meller as Chair of the National Apprenticeship Ambassadors Network.

Apprenticeship Grant for Employers (AGE)

In the Budget statement the Chancellor, George Osborne, announced new funding packages to boost the Apprenticeship Grant for Employers (AGE) scheme to take on more apprenticeships and to support degree level and postgraduate apprenticeships.

Funding for Apprenticeships Helps Small Business and Postgraduates

Extra funding will support demand for AGE in 2014 to 2015 and the scheme will focus entirely on small businesses (i.e. those with fewer than 50 employees) from January 2015.

£170 million of additional finance will be made available, made up of £85 million in 2014 to 2015 and £85 million in 2015 to 2016, split across the Department for Business, Innovation and Skills and the Department for Education, as the initiative covers the 16 to 24 age bracket.

£20 million of new finance is also being committed to further support degree level and postgraduate apprenticeships. This is being allocated as £10 million in 2014 to 2015 and £10 million in 2015 to 2016.

These investments will part-fund the training of degree level or postgraduate apprentices, with the rest of the cost of the training met by the employer.

Crucial Tool in Fighting Skills Shortages

The Confederation of British Industry (CBI) responded, suggesting the Budget will “put wind in the sails of business investment, especially for manufacturers”. Apprenticeships, they said, are a crucial tool in fighting skills shortages and youth unemployment, so this additional support is very welcome – especially for smaller firms wanting to do more”, however; the CBI also cautioned that there is still a need to better demonstrate the benefits of apprenticeships to young people.

Adequate Resources

The Universities and Colleges Union (UCU) responded, welcoming plans for extra apprenticeship grants and the development of graduate-level apprenticeships, but cautioned that these reforms would need to be properly resourced in order to work.

Missed Opportunities to Address Skills Shortages

David Hughes of NIACE also responded suggesting that the Budget missed opportunities to address skills shortages. “As the economy picks up and despite some mention of skills, we were disappointed the Chancellor didn’t take more opportunities to boost ways for adults to increase their skills” adding The investment, £20million over 2 years, is modest given the enormous economic impact postgraduate-level Apprenticeships could have as the economy starts to grow again“.

AUTUMN STATEMENT

Martin Doel, Chief Executive of the Association of Colleges, pointed out that: “it is only four months since the Autumn Statement and colleges are still working through the implications of the autumn 2013 announcements while also working out how to manage reduced budgets”.

VERY SLOW RECOVERY

The Office for Budget Responsibility (OBR) forecast continuing falls in unemployment and the claimant count, and rises in employment. However, improvements are expected in unemployment and employment at a slower pace than over the last year. Employment has risen over the last year by 459,000, and the OBR expect this year’s and next year’s rises to be around 200,000 – so the total rise over the next two years will be less than in the last year alone. Similarly, the JSA claimant count has fallen by 363,000 in the last year, while the OBR expect a fall of 100,000 this year and 70,000 next year. This will still leave a claimant count of over 1 million in early 2017, the same time that ILO unemployment will go below the 2 million mark. Therefore, this still looks like a very slow recovery.

TAX INCENTIVES

Locally, businesses locating to the Aerohub Enterprise Zone at Newquay Cornwall Airport will benefit from tax incentives for a further three years, under measures announced by the Chancellor. Local Growth Minister Kris Hopkins said: The Aerohub at Newquay Cornwall Airport has quickly established itself as one of the world’s most advanced facilities for unmanned aerial vehicles. Today’s announcement means it can now build on this success, and fulfil its ambition of
creating 5,000 jobs.

TRANSPORT IMPROVEMENTS

Steve Hindley, Chair of the Heart of the South West LEP, said: “Making transport improvements will enable us to create the right jobs for the future knowledge economy”.

SLIM COMMENTS

The predicted economic and employment growth continues to be good news and the forecasts remain realistic rather than optimistic. Nonetheless the slow recovery in employment hides some major uncertainties. Flexible employment, falling wage rates, zero-hour contracts and the still-awaited public sector job cuts could all act as a major drag on economic growth, with employers boosting employee hours, rather than recruiting new staff.

The underperformance of the Work Program in its activities with those furthest from the labour market indicates a likely growth in longer-term unemployment.

Locally, LEPs are awaiting responses from Government to their Strategic Economic Plans, and as we approach a general election, it seems sensible / cynical (you choose) to expect some significant investments to be announced this spring and to be underway by polling day…

LINKS

Document

SLIM-Comment on the Budget 2014 – Implications for Skills and Employment (PDF)

Websites etc

BBC News – Key points of Budget 2014: At-a-glance

Budget 2014: documents – Publications – GOV.UK

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