Real choice for the squeezed middle

Today’s report from Alan Milburn’s Social Mobility and Child Poverty Commission suggests a welcome focus on the squeezed middle. His stark finding that today’s middle-class children are on track to be the first in more than a century to be materially less well off in adulthood than their parents will resonate with many.

Today’s Boston Consulting Group report for the Sutton Trust on Real Apprenticeships offers a potential solution to what Milburn sees as a gathering “perfect storm” of graduate debt, lack of finance to buy homes and job insecurity that threatens middle-class children as they emerge from full-time education.

Last month, I blogged about my recent visits to Germany and Switzerland to see apprenticeships in action. There, three year advanced apprenticeships to A level standard – or level 3 – are the norm, whereas here there are far too few such apprenticeships, particularly for young people. Most recent new apprenticeships have been low level and for adults.

To be fair, both the Coalition Government and the Labour Opposition recognise the need to move to longer and higher level apprenticeships. The Government is implementing the recommendations of the Richard Review, and Labour has said it wants more advanced apprenticeships. But the danger is that their level of ambition is not enough to match the huge demand that already exists among young people and that our economy requires. That’s why we are arguing that we need up to 300,000 new advanced apprenticeships each year.

This would give real choice to young people. With those going to university facing debts of £50,000 – with an interest rate of up to 3% over inflation – young people find themselves caught between a rock and a hard place. The lucky few can get an apprenticeship at Rolls Royce or British Aerospace, but this year there were 11 young people chasing every apprenticeship rising to 33 per place in some areas like plumbing.

So, we need to do something radical, rather than just seeing more piecemeal change. It cannot be right that at present fewer than 200,000 of the 520,000 apprenticeships starting each year in England are at level 3 (A level standard) or higher. In Germany, every year there are 570,000 apprenticeship starts for young people, 90 per cent of which are at level 3 or above.

Switzerland has 43 apprentices at level 3 for every 1000 employees, compared with 40 in Germany, 39 in Australia and 33 in Austria. The UK has just six per 1000.

This requires a sea change in the attitude towards apprenticeships, by employers, parents and schools. That means better careers advice, so that young people know all their options. But it also means a major shift by many employers towards long-term development rather than short-term fixes.

This will not happen overnight. As apprenticeships are jobs, it means that every new apprenticeship will either need to be sponsored by an employer or a consortium of small employers. Instead of college-based courses with work experience, we need more work-based training with college day release.

To make that change happen, the report argues for a system of wage subsidies, initially heavily supported by the government, but gradually reducing as employers engage with the new system. BCG calculates that a move to three year apprenticeships on a German scale could boost the economy by £8 billion a year, after the initial cost of apprentice wage subsidies, which would amount to £2.5 billion over four years.

The simple fact is that having excellent provision for those who do not go to university is as important for social mobility as good university degrees.  And if we are to achieve that we need a step change in the provision of real apprenticeships for all occupations from bankers to bakers and a revolution in how they are regarded in society.

But the prize is a great one. We can transform apprenticeships from being a minority pursuit to being a genuine alternative to university for young people at all levels, for the squeezed middle as much as the working classes. We can drastically reduce youth unemployment, which with a million NEETs (young people not in education, employment or training) is a disaster. OECD research, presented to the Sutton Trust at a seminar in June, shows that if a young person doesn’t get a job or stay in education, their skill level declines so rapidly that within a few years they are unemployable.

Through real apprenticeships, we can develop within young people skills and attitudes that will stand them in good stead through their working lives, including punctuality, teamworking and communication. We can improve our economic competitiveness, increase productivity and save taxpayers’ money. We can give consumers greater confidence in the small business people they employ. Above all, we can transform social mobility.

This would be a transformation in vocational, technical and professional education in Britain. Yet it is a revolution that we need to see embraced by policymakers and by politicians of all parties.