The government has announced a new initiative to provide up to £4,500 a year to parents on benefits, aimed at encouraging their children to pursue apprenticeships. This program is designed to offer a bursary that replaces Universal Credit payments, which households often lose when a young person enters paid employment. Because these apprenticeships are classed as paid employment, benefit payments are reduced to households where young people take on such roles. It is estimated that a few thousand households, currently facing weekly benefit losses of between £17 and £330 when their children begin apprenticeships, will benefit from the scheme.
The funding for these bursaries will come from a £30 million pot, generated through the growth and skills levy, which is a tax on employers with annual wage bills exceeding £3 million. This policy follows the publication of a Social Security Advisory Committee report, which warned of the "perverse effects" the current benefits system has on the employment choices of young people. The committee noted that, for instance, single parents with a disabled child could face a weekly benefit reduction of up to £340 if their child starts an apprenticeship, a sum that exceeds the expected apprenticeship salary of £258 per week. The committee stated that the system was hampering government efforts to reduce the number of young people not in education, employment, or training (Neet).
Official figures indicate that more than one million people aged 16 to 24 are currently classified as Neet. In a recent report, former Health Secretary Alan Milburn warned that one in six young people could be Neet in the next five years unless urgent action is taken. Prime Minister Andy Burnham has said he is "on a mission" to reduce the number of Neets, noting, "The trend is rising at the moment, so the first thing I've got to do is to stop that rise." As he continues a flurry of early policy announcements, Burnham on Tuesday set out plans to strike a balance in the education system between prioritising academic and technical skills.
Work and Pensions Secretary Pat McFadden stated that the bursary is intended to remove barriers, ensuring that cost is not the reason someone misses out on training. The measure is part of a broader support package, which includes funding for apprenticeship training for those under 25 and additional support for employers taking on apprentices. While Shadow Work and Pensions Secretary Helen Whately acknowledged that apprenticeships are a good thing and that more are needed, she criticized the plan as "uncosted." She argued that the plan is spending money already committed elsewhere, suggesting it is either another unfunded announcement or that the Prime Minister is not being straight about his plans.
