FE and Skills sectors reflect on chancellor’s ‘political’ Budget

The Further Education and Skills sectors have been coming to terms with Alistair Darling’s Budget announcement yesterday.

Described by many in the media as a “political Budget”, severe economic pressures meant there were few giveaways for those in education or training.

The government did however pledge an extra £450m so its popular Young Person’s Guarantee, ensuring employment or training for 18-24 year olds who have been out of work for six months, can run until 2012.

The Association of Learning Providers (ALP) welcomes the extension, but urges for greater access to similar schemes for 16-17 year olds to help reduce numbers of those not in employment, education or training (NEET).

An ALP representative says: “The Association of Learning Providers warmly welcomes the announcement that the Young Person’s Guarantee is being extended to March 2012.  It is important however that 16 and 17 year olds unemployed youngsters, the youngest members of the NEET group, have continued access to a well-funded Entry to Employment programme, which has proved to be very effective and is delivered by many voluntary sector training organisations.”

Mr Darling also made wide-ranging changes to the pay structure of young workers and apprentices.

His speech to the House of Commons yesterday made no mention of changes to the minimum wage rate (NMW). However, a 288-page Treasury document reveals a 2.2 per cent increase from £5.80 per hour to £5.93 per hour.

The NMW development rate, for workers aged 18-20, will rise 1.8 per cent from £4.83 per hour to £4.92 per hour. The NMW youth rate, for workers aged 16-17, will rise from £3.57 per hour to £3.64 per hour – an increase of 1.9 per cent. All changes will take effect from 1 October 2010.

The government is also introducing an apprentice NMW of £2.50 per hour. This will be in line with a report from the Low Pay Commission, which recommends the rate be “applied as a single rate to those apprentices currently exempt from the NMW”.

The report adds: “That is all those under the age of 19 and those aged 19 and over in the first 12 months of their Apprenticeship. The wage should cover both those employed on traditional contracts of apprenticeship and employed apprentices on government-supported Level 2 and 3 schemes.”

However, Charles Cotton, at the Chartered Institute of Personnel and Development (CIPD), Europe’s largest HR and development professional body, warns the NMW changes are being introduced when the UK’s economy is still facing high levels of uncertainty.

“It is difficult to see how this increase will help create jobs or offer a boost in training places for unemployed young people,” says Mr Cotton.

“In particular, combining a higher minimum wage with the impending hike in employers’ national insurance contributions really would represent a hefty ‘tax on jobs’. Pricing young people out of work, while also using taxpayers’ money to subsidise a youth jobs guarantee, doesn’t make sense. We’d have hoped for a more joined up approach.

“In our most recent quarterly Labour Market Outlook survey, a high proportion of our members lacked the certainty on economic prospects for the rest of the year to make decisions about their next pay award.  It isn’t clear to us what information the LPC have that gives them greater certainty and confidence.  As such we fear they’re jeopardising the jobs recovery with these increases, which will also create upwards pressure on wages above the minimum wage – further exacerbating the impact on jobs.”

Overall, the Budget has more implications for Higher Education, culminating in a government commitment to create 20,000 new university places to cope with a surge in demand.

Martin Doel, chief executive of the Association of Colleges, believes the chancellor’s spending focus should have been widened to cover education as a whole.

Mr Doel says: “Actions speak louder than words – the government is very vocal about the importance of skills and adult education but the chancellor’s budget does not correspond with those fine sentiments.

“We are therefore disappointed that the relatively small amount of money that the chancellor has been able to spend in the Budget was primarily directed towards university provision. We should take some cheer, however, from the funding of additional university and college higher education places; these will help the 39 per cent of HE entrants who are studying at college this year.”

Jason Rainbow