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Budget 2011: Train to gain – can George save the NEETs?


Train to gain? We should think so! The 2011 budget, delivered by George Osborne on 23 March 2011, highlighted something familiar to all those who work in training and recruitment – a lack of skills is hampering our financial recovery, not helped by an education system many believe is lacking to teach the workers of tomorrow the real skills they will need. Can George save the NEETs?

In his speech Mr Osborne claimed he wanted the UK to become a “more educated workforce that is the most flexible in Europe”.

He then promised to help stimulate growth and curb youth unemployment by building upon the apprenticeship schemes available claiming he will fund 50,000 new places for young people struggling to find work. He also announced a £300m package to fund 100,000 extra places on a scheme run by Jobcentre Plus, under which the government pays for young people to continue receiving jobseeker's allowance during a two-month work placement and promised to meet half the cost of 40,000 new apprenticeships. It is reported that least 10,000 of these will be for the most highly skilled trades with many of them created in fast-growing small and medium-sized firms. He is also creating an additional 10 new enterprise zones.

In addition he has announced the government will fund 24 new technical colleges, building on the 12 already announced.

However, he has officially downgraded the original projections for growth in GDP. The forecast for unemployment to peak in 2011 remains awhile GDP growth has been revised down to 1.7%. However, optimistically, growth is expected to be 2.5% next year.

The pledge has been widely welcomed by the industry with Denise Keating, CEO, Employers Forum on Age, saying: “With youth unemployment is at its highest ever, it’s about time that the Government did something to help this sector of the population. If 18-24 year olds spend a significant time out of work and on benefits, they may never develop the discipline and determination necessary to seek and hold down a job. This causes permanent scars, reduces confidence and increases the chances of being unemployed in later years.”

Katerina Rudiger, CIPD skills adviser, was also largely supportive of the measures to increase skills and boost jobs. She said: “It is more important than ever for the Government to invest in the right skills to aid economic recovery. The increased workplace-based training funding, especially for 40,000 extra apprenticeships, will allow British businesses to grow and become more competitive through their people. The focus on highly skilled trades, also through the creation of 24 new technical colleges, is a welcome step in the right direction as more needs to be done to improve the quality and reputation of the vocational education on offer for young people.

“On top of this, the increased funding of work placements for young people is an efficient way to target youth unemployment, helping to break the vicious circle of no experience/no job and give young people an opportunity to develop and demonstrate the skills and commitment employers need.”

Ruth Spellman, chief executive of CMI, gave her view: “The fact that work experience schemes are being extended to 100,000 young people and that 40,000 Apprenticeships will be delivered as a result of today’s Budget is clearly a good thing, but education must be based on the needs of employers. True entrepreneurialism and genuine ‘readiness for work’ will only be created if schools and employers are able to work together to deliver qualifications that equip pupils with the tangible skills missing from today’s workplaces.”

Kirsty McHugh, Chief Executive of the Employment Related Services Association (ERSA), which represents welfare to work providers, added a cautionary note: “The OBR’s downgrading of projections for the growth in GDP is a cause for concern. The welfare to work industry is busy preparing for the launch of the Work Programme this summer which will help the unemployed overcome the barriers that are preventing them from gaining work. However whether this leads to job outcomes is contingent on the jobs being available.”

There are some geographic concerns over the delivery of the plans too, especially in the public sector. Ian Brinkley, director of socio-economic programmes at The Work Foundation, said: “Over the year to December 2010 public sector employment fell almost twice as much in Northern England than Southern England. Now these sources of job creation are being removed at a faster rate than in the South, the private sector in the North will have to generate even more jobs. It remains unclear how the government can achieve this goal.”

Charles Cotton, CIPD reward adviser agreed with this point of view and commented on the fact that Osbourne also added some measures, in typical Tory fashion, to cut red tape and reduce the burden “In our recent Employment Study, three quarters (75.9%) of respondents told us that they think the Government isn’t doing enough to help people find employment. The same survey highlighted employment related initiatives as the top issue (55.1%) people wanted to see addressed today. This was listed above welfare reform, tax incentives for business and both income and VAT rates, amongst others.

“We would like to see specific incentives for business that enable employment opportunities to be created. Cutting the red tape will help but clearly more is required.”

Mike Emmott, CIPD employee relations adviser, added: “We are concerned about the moratorium on all new employment regulation for small firms for three years. The onus should be on government to bring forward only light-touch employment regulations that do good, not harm – irrespective of company size. A moratorium for the smallest firms is a dangerous precedent that risks creating a two-tier labour market, and could even at the margins act as a perverse disincentive for growth amongst firms considering employing the extra staff member that would bring them into the ‘regulated tier’ of the labour market.”

Tim Vye, divisional director of Reed Finance was, by contrast, quite optimistic about the impact on the UK jobs market. He said: “Optimism and confidence are crucial to the jobs market, and measures that can help reduce the burdens on business are welcome.

“Employers need to have confidence in the UK economy and their business’s outlook before signing off on any hiring plans.

“Our experience has shown that so far the first quarter of 2011 has already seen a marked improvement in job opportunities compared to the same period last year.

“And while the Office for Budgetary Responsibility has cut its growth forecast for 2011 from 2.1% to 1.7%, most businesses and their finance directors were already expecting this and many have already factored it into their forecasts and plans for the year ahead.”

It remains to be seen if apprenticeships turn into real jobs for the unemployed youth of today and what effect cutting of red tape will have on employers. The enterprise zones in particular are controversial, splitting views over whether they will work. The one thing the industry can agree on is that poor skills are not helping the financial situation: and something must be done. Will this work?

Katie Ivie, HR director at Kelly Services, doesn't think so. She said: “George Osborne’s Budget does not go far enough in regard to labour supply and skill development. The UK is facing a serious skills shortage with an ageing population and a generation of people who are not equipped with the right skills to succeed in the job market. The implementation of 250,000 apprentice places is a positive step, as is the promise of new technical colleges. However, the Chancellor has today failed to fully address the issue of skills development, which is the key enabler for growth in enterprise. We would like to see a greater focus on scientific, practical and technical skills alongside an appropriate number of young people moving through the education system to higher education."

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