What exactly is an apprenticeship guarantee? That’s the major question to come out of Wednesday night's Covid press conference after Boris Johnson committed to offering an apprenticeship to all young people:
“I think it is going to be vital that we guarantee apprenticeships for young people. We will have to look after people across the board, but young people in particular, I think, should be guaranteed an apprenticeship.
While the commitment was there, the detail was not. Is this really a guarantee for all young people? In the first quarter of this year, over 350,000 people aged 16 to 24 were unemployed (excluding those in full-time education); another 1.5 million aged 18 to 24-year-olds were registered as economically inactive. Taking into account the disproportionate effect Covid-19 is projected to have on young people’s livelihoods, the government may have just committed itself to providing hundreds of thousands of apprenticeships – if not more – if you consider those looking for work, soon to be out of work, and people who weren’t looking for work but find the idea of a work 'guarantee’ rather appealing.
Who provides these apprenticeships – and who pays for them – remains up in the air but it’s near impossible to offer a guarantee that isn’t backed by taxpayer money (especially when private businesses are in such a financially unstable situation). This does not inspire much confidence, as government intervention in the jobs sector over recent years has had a devastating impact on the availability of apprenticeships. The introduction of the Apprenticeship Levy in 2017 was brought in with the promise of three million new apprenticeships in England by 2020. Instead, the crude payroll tax resulted in a huge drop in placements, down 26 per cent two years after its introduction.
While recent history should make us question the feasibility of Boris Johnson’s latest commitment, there is another question that lingers: even if the government could execute an apprenticeship guarantee, is that a role it should play in Britain's economy? Government intervention these past few months, under normal circumstances, would be considered a total overhaul of the market economy. The furlough scheme was deliberately designed to change people’s behaviour – that is, to stop working and stay at home. This had the desired effect of totally distorting a healthy economy – a necessary tactic to put the UK into hibernation while we tackled the peak of the virus. But the government knows that paying people's wages is not remotely sustainable. Yet despite the Chancellor announcing the timeline to start rolling back the scheme just last week, the Prime Minister has announced a new kind of wage guarantee today.
It's clear that this is not a fully formed idea and the policy detail is likely to follow the pledge. But those details will matter greatly. The role for government in our lockdown exit is to remove barriers to growth, not create new ones for businesses to navigate. Johnson’s pledge on Wednesday to be an ‘activist and interventionist' coming out of the lockdown sound like supportive rhetoric. But if government tries to revive the jobs sector with a similar hands-on approach, it will be much more likely to suppress recovery than boost it.