More apprentices would boost GDP by £4bn a year – think tank

– Warning: skill up, or lose the “global race”
– Demos report calls for up to 300,000 more apprenticeships to tackle youth unemployment and bridge productivity gap with G20 economies
– Demand outstrips supply as 54% want an apprenticeship versus 6.6% who have one
– Regional study finds Liverpool apprentice capital of the country

Increasing the number of apprentices in England to catch up with similar economies would boost Britain’s GDP by £4bn a year, according to the think tank Demos.

A new report coming ahead of National Apprenticeship Week argues that raising apprentice levels by up to 300,000 required to match other G20 countries would help bridge the productivity gap between Britain and competing nations. It would also reduce youth unemployment, currently running at 20%.

The Up to the Job report, supported by British Gas, cites CEBR figures that show, on average, that an apprenticeship typically raises an employee’s productivity by £214 per week, leading to both increased wages and company profits.

However, Demos indicates England is lagging significantly behind other western economies with just 11 apprentices for every 1,000 employees, compared with 39 in Australia, 40 in Germany and 43 in Switzerland.

Fewer than ten percent of employers in England offer apprenticeships, compared to at least a quarter of employers in other countries.

The subsequent annual increase in GDP would be in excess of the total annual contribution made by sectors such as architecture and design.

Despite current low levels, Demos also finds that demand for apprenticeships vastly outstrips supply. While just 6.6% of young people (aged 16-24) are currently in an apprenticeship, the report reveals 54% of young people in England would choose to do an apprenticeship if one were available.

Several leading companies interviewed for the study confirmed their apprenticeship programmes are heavily oversubscribed. BAE Systems have around 20 applications for every apprenticeship and KPMG have around 12, while the number of applicants rises sharply for British Gas (over 50), Lloyds Bank (60) and Live Nation (over 80).

Diverting funding

The Up to the Job report calls for Government to reroute funding presently allocated by the Youth Contract, and instead use it to fund schemes that have a track record of higher take-up rates, such as the Creative Employment Programme.

The Creative Employment Programme and others help to build ‘communities of trust’ where  employers are encouraged and supported to take on apprentices by other organisations with whom they have established working relationships, rapidly helping to increase apprenticeship numbers.

The Youth Contract has had much less impressive take-up rates and requires employers to apply to the Department for Work and Pensions – an organisation that can seem remote and bureaucratic and one with which they have little prior experience, the study says.

Analysis in the Demos report also reveals:

Encouraging female apprentices in under-represented sectors would help bridge the gender pay gap: Researchers found that in sectors with the highest rates of female apprentices the average salary for full-time members of staff is £8,400 per year lower than in sectors with the highest rates of male apprentices.

Sectors with the highest proportion of female apprentices – i.e. health & social care (83% female), children’s care (91%) and hairdressing (93%) – average a full-time salary of £21,200 according to recent ONS data.

By comparison, sectors with the highest rates of male apprentices – i.e. construction (2% female), engineering (3%) and IT & Telecoms (10%) – average an annual salary of £29,600 a year.

Liverpool is the apprentice capital of the country: Data showing the number of completed apprenticeship frameworks by city reveals Liverpool is significantly ahead of other areas.

Over the period 2012/13, figures show the city had 4.4 apprentice frameworks for every 1,000 working age employees. The second highest concentration of apprentices was Newcastle (3.8 per thousand), followed by Leeds (3.2).

Levels in leading cities were roughly double that of those with the lowest number, such as Manchester (2.5) and Inner London (1.8).

Commenting on the findings, Demos’s Chief Economist Jonathan Todd, who authored the report said:

“The UK economy is currently facing a twin crisis of severe youth unemployment and a shocking productivity gap. Both could be solved in one fell swoop by boosting apprenticeships. Britain is losing the global race and letting down its young people by not doing more to skill up.

“Policy since the early 1990s has focused on getting young people to university, but the half of young people who don’t study for a degree have been forgotten. Employers are the missing piece of this puzzle – the Government needs to make it as easy as possible for them to take a chance on an apprentice.”

HR Director at British Gas, one of Britain’s leading employers of apprentices, Anna Filipopoulos said:

“Having invested in apprenticeship schemes for more than 10 years, British Gas knows first-hand how they can change lives.

“As the Demos report has shown, apprenticeships are good for the country and good for business, and British Gas welcomes the Government’s commitment to increasing the take-up of apprentices.

“1,200 apprentices are currently in training across British Gas and we’re proud to invest millions of pounds each year in developing skills for our people and the future success of the British economy.”



– The report Up to the Job by Jonathan Todd is published by Demos on Wednesday 26 February 2014.
– The research is supported by British Gas.
– Case studies are available in every region of the UK
– The data on apprenticeships is based on original analysis of data provided by the ONS and DBIS.
– The gender pay breakdown is indicative based on data from the ONS Annual Survey of Hours and Earnings.

British Gas case study:

Name: Arfan Ghani

Age: 21

Career: Arfan is a fully-qualified Engineer

after beginning his apprenticeship with British Gas in 2010.

Lives: North West London

Arfan left school feeling concerned about his future due to the tough job market.  He explained: “I couldn’t find any job at all; you name it, I applied for it. So I decided to study a course in plumbing and got my NVQ level 2 but couldn’t get a job.  Doing an apprenticeship with a firm who can offer me a job is honestly the best thing I’ve ever done in my life.

The amount we learn, from the different types of boilers in the workrooms to the initial teaching in the classroom, it beats any college hands down. “

“I always recommend the apprenticeship to my friends. Some of them are graduating now and they can see how I’ve not only got a well-paid job but skills and a career for life.”

For further interview or comment with author or to discuss the possibility of case studies please contact Rob Macpherson.