The UK economy faces significant challenges in a rapidly changing global landscape. To maintain competitiveness and foster sustainable growth, the government has implemented various initiatives, with a recent focus on the Oxford-Cambridge Growth Corridor championed by Chancellor Rachel Reeves. This report examines these initiatives, analyses the current state of apprenticeships in the UK, and explores how apprenticeships can contribute to UK growth, particularly through the reskilling of existing staff and the integration of young people into new job sectors.
Chancellor Rachel Reeves recently announced a plan to stimulate economic growth by focusing on the Oxford-Cambridge Growth Corridor. This initiative aims to leverage the region's strengths in science, technology, and innovation to create a UK equivalent to Silicon Valley 1. Reeves emphasised that stability and reform are cornerstones of her growth plan. She highlighted Labour's commitment to fiscal responsibility while advocating for reforms to cut red tape, modernise immigration policy, and accelerate planning decisions 2. Reeves also stressed the need to streamline regulations that hinder infrastructure development, particularly those related to housing and public transport 3.
The plan includes significant investments in infrastructure, with the goal of attracting businesses and fostering job creation in the region:
Transport: Improving East-West Rail connections between Oxford and Cambridge, aiming to reduce travel time and facilitate commutes 3. A new East Coast Main Line station in Tempsford will also be built, further enhancing connectivity 4 .
Housing: Addressing housing shortages by supporting the construction of 4,500 new homes and community spaces around Cambridge 3 .
Water Infrastructure: Investing £7.9 billion in water infrastructure improvements, including nine new reservoirs to ensure sufficient water supply for the growing region 1 .
Innovation Hubs: Supporting Cambridge University's proposal for a large-scale innovation hub in the city centre and establishing a Growth Commission for Oxford, inspired by the successful Cambridge model 1 .
These initiatives are projected to contribute £78 billion to the UK economy by 2035 1. However, the plan has also faced criticism, particularly regarding the proposed expansion of Heathrow Airport, which has raised environmental concerns 5.
To successfully implement these growth initiatives and achieve their economic goals, a skilled and adaptable workforce is essential. This is where apprenticeships come into play.
Apprenticeships in the UK have undergone significant changes in recent years. The introduction of the apprenticeship levy in 2017 led to a shift in focus towards higher-level apprenticeships and an increase in participation by individuals aged 25 and over 6. This reflects a growing trend towards upskilling the existing workforce, equipping them with advanced knowledge and qualifications to meet the demands of a changing economy.
Key trends in apprenticeships include:
Decline in Starts: Despite a slight increase in 2023/24, apprenticeship starts in 2022/23 fell by 3% compared to the previous year, largely due to a decrease in starts among small and medium-sized enterprises (SMEs) 7. The COVID-19 pandemic also had a significant impact on apprenticeship participation, leading to a decline in starts and a shift towards online learning 8 .
Shift in Age Profile: The proportion of apprenticeship starts by individuals aged 25 and over has been steadily increasing, reaching 48% in 2022/23 6. This reflects a growing recognition of apprenticeships as a valuable pathway for career changers and those seeking to upskill or reskill.
Focus on Higher Levels: There has been a significant shift towards higher-level apprenticeships (Levels 4-7), which now account for over a third of starts 9 . This trend is driven by the increasing demand for advanced skills in sectors like technology and engineering.
Despite these trends, challenges remain in ensuring sufficient apprenticeship opportunities to meet demand, particularly for young people and those from disadvantaged backgrounds 10.
Apprenticeships have the potential to play a crucial role in supporting UK growth. They provide a valuable pathway for individuals to gain industry-relevant skills and contribute to the economy while earning a wage. Apprenticeships have already demonstrated their positive impact on the UK economy. In 2011/12, over 500,000 people started an apprenticeship, contributing to business efficiency and supporting young people's employment prospects 11.
Specifically, apprenticeships can support UK growth by:
Addressing Skills Gaps: Apprenticeships can help to address skills shortages in key sectors, providing businesses with a pipeline of qualified workers 12. This is particularly important in sectors experiencing rapid technological advancements, such as technology and engineering.
Boosting Productivity: Research suggests that apprenticeships can lead to significant productivity gains for businesses 9. By equipping employees with the skills and knowledge they need to excel in their roles, apprenticeships can improve efficiency, reduce errors, and enhance overall output.
Increasing Earning Potential: Apprenticeships can lead to higher wages for individuals, contributing to increased consumer spending and economic growth 13.
Promoting Social Mobility: By promoting social mobility, apprenticeships can tap into a wider talent pool and create a more inclusive and dynamic workforce, ultimately contributing to stronger economic growth 14 . Apprenticeships can provide opportunities for individuals from disadvantaged backgrounds to gain valuable skills and qualifications, improving their career prospects and contributing to a more inclusive economy.
Supporting Lifelong Learning: The World Economic Forum has highlighted the importance of lifelong learning and the need for both individuals and companies to commit to reskilling and upskilling for long-term success in a rapidly changing world 15.
Several examples demonstrate the successful implementation of apprenticeships for reskilling existing staff and integrating young people into new jobs:
Upskilling Teaching Staff: Educational and Sporting Futures, a training provider, offers apprenticeship programmes to upskill existing teaching staff in various roles, including Early Years Practitioners, Teaching Assistants, and those specialising in Special Educational Needs and Disabilities (SEND) 16. This helps schools and educational institutions address skills gaps and develop a highly skilled workforce tailored to their specific needs.
Youth Apprenticeships in Local Government: The City of Frederick, Maryland, has launched a youth apprenticeship programme in partnership with the Maryland Department of Labor and Frederick County Public Schools 17 . This programme provides high school students with academic and on-the-job training in professional work environments within the city government, equipping them with valuable skills and experience.
In addition to these case studies, several government initiatives and policies support the use of apprenticeships for reskilling and upskilling:
The Apprenticeship Levy: Introduced in 2017, this levy requires large employers to contribute to a fund that can be used to support apprenticeship training 6. This has incentivised businesses to invest in apprenticeships and has contributed to the growth of higher-level apprenticeships.
The Plan for Change: This government plan, mentioned by Chancellor Reeves, emphasises the importance of economic growth and highlights the role of apprenticeships in achieving this goal 1.
Growth and Skills Levy: This new initiative aims to further support skills development and training, including apprenticeships, to meet the evolving needs of the UK workforce 10.
ILO Research and Recommendations: The International Labour Organisation (ILO) has conducted research on adapting apprenticeships for adult reskilling and upskilling 18 . Their recommendations include ensuring that quality frameworks and standards for apprenticeships explicitly refer to adult learning and disadvantaged learners, encouraging national governments to include apprenticeships in their national lifelong learning strategies, and fostering measures to overcome gender inequality in apprenticeships.
These initiatives and research findings demonstrate the government's commitment to promoting apprenticeships as a key driver of economic growth and skills development.
Despite the potential benefits of apprenticeships, several challenges and limitations need to be addressed:
Financial Barriers: Low wages for apprentices and the potential loss of family benefits can create financial difficulties for young people and those from low-income households considering apprenticeships 19. For example, families could lose around £80 a week in child benefit and Universal Credit if a young person over 16 starts an apprenticeship instead of staying in full-time education.
Employer Engagement: SMEs, in particular, face challenges in engaging with apprenticeships due to limited resources and administrative burdens 10.
Awareness and Perception: There is a need to raise awareness of the benefits of apprenticeships among young people, parents, and employers, and to address misconceptions about apprenticeships being limited to traditional trades 20. Many young people and parents still view apprenticeships as less prestigious than traditional university degrees.
Quality and Relevance: Ensuring the quality and relevance of apprenticeship programmes is crucial to their success. This includes providing adequate training, mentorship, and support for apprentices, and ensuring that programmes align with industry needs 21 . The ILO highlights the need for quality frameworks and standards for apprenticeships that explicitly address the needs of adult and disadvantaged learners, adhering to the principles of lifelong learning 22.
Apprenticeships offer a valuable pathway to address skills gaps, boost productivity, and promote economic growth in the UK. By investing in apprenticeships, the government and businesses can create a more skilled and competitive workforce, while also providing opportunities for individuals to gain valuable qualifications and build rewarding careers. However, addressing the challenges and limitations outlined above is crucial to maximising the impact of apprenticeships on UK growth. This includes providing financial support for apprentices, increasing employer engagement, raising awareness of the benefits of apprenticeships, and ensuring the quality and relevance of apprenticeship programmes.
Reeves' focus on innovation and technology within the Oxford-Cambridge Growth Corridor necessitates a skilled workforce. Apprenticeships, with their ability to provide industry-relevant training and address skills gaps, are strategically aligned with this vision and can be a key driver of its success. Apprenticeships can contribute to the success of this initiative by providing a skilled workforce in technology and innovation, facilitating reskilling for existing workers to adapt to new technologies, and offering pathways for young people to enter these emerging fields. By working together, the government, businesses, and educational institutions can unlock the full potential of apprenticeships to drive economic growth and create a more prosperous future for the UK.
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