Government must change apprentice funding to meet supply chain needs

21 July 2014 | Paul Brooks

Paul Brooks is managing director of the BiS Henderson Academy and chairman of Skills for LogisticsFollowing the recommendations of the Richard Review, the UK government is in the midst of delivering a restructured, ‘employer-focused’ plan for apprenticeships.

However, while it is encouraging to hear employer needs are to be taken on-board, the government’s approach to logistics apprenticeships remains misaligned with the specific requirements of employers in the sector and fails to tackle the most prominent and critical skills shortage affecting the industry.

The logistics sector’s greatest and most urgent need is for new drivers, more than 149,000 of them by 2020. As a generation of older drivers approach retirement and Driver Certificate of Professional Competence regulations come into effect in the autumn, an alarming shortage of proficient HGV drivers is set to be exacerbated, leading to even greater pressures on logistics costs.

Employers fully understand what is required - a new generation must be encouraged to join driver apprenticeships. But as things stand there are important barriers to overcome.

With some 900,000 young people under the age of 24 seeking employment, the focus of government funding for logistics apprenticeships must be adjusted upwards from 16-19 year-olds to 21-24 year-olds to reflect the practical requirements of driver training and insurance. Although the legal age for driving a 3.5 to 7.5 tonnes vehicle was lowered from 21 to 18 years of age, the industry is unable, in any practical sense, to take 16-17 year-olds into driving apprenticeships and firms are struggling to get insurance for drivers under the age of 21. Over 70 per cent of employers would only consider starting with apprentices that were older than 19, and the majority of those were looking for candidates over 21.

The government’s ‘trailblazer’ programme, aimed at engaging with employers to establish new more relevant ‘standards’ for apprenticeships, is an important step to communicating the specific needs of an industry to government and collaboratively setting the standards of that industry’s apprenticeship schemes. But in the logistics sector this process is moving far too slowly.

One of the most critical barriers for logistics apprenticeships relates to funding. Under the present structure an employer would receive around £5,000 a year from the National Apprenticeship Service (Skills Funding Agency) for a 17-year-old apprentice on a driving apprenticeship, but securing insurance is an obstacle that renders the employer’s investment at this young age impracticable. Then if a driving apprenticeship is embarked upon at the age of 19 the government’s funding to the employer is halved to £2,500 per annum – and large employers are further penalised by an extra 25 per cent reduction to that figure. If large companies are to be encouraged to support the industry through setting up schemes to take on driver apprenticeships, then these punitive caps should be removed.

The problem appears to be the government has set it’s sights on allocating the largest levels of funding to 16-18 year-olds, which may satisfy political objectives and be in tune with the requirements of other industries, but does not address the key issue facing the logistics sector.

There are wider issues too. Currently just 4.3 per cent of employers in the logistics sector use apprentices, which is half the all-sector average of 8.8 per cent. Clearly there is a need for employers in the logistics industry to actively engage in initiatives to bring young people into the sector through apprenticeships and traineeships that lead to apprenticeships.

Opportunities to encourage young people into the sector, and to develop the appropriate skills, will be lost if the industry fails to communicate clearly with government on the critical issue of aligning funding with a practical age for driver apprenticeships. As an industry central to the UK economy, it is imperative that we bring this message home to the government through the trailblazer programme, before the shortfall in drivers has an impact on our economic performance.

☛ Paul Brooks is managing director of the BiS Henderson Academy and chairman of Skills for Logistics

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