A new £1 billion UK Government youth employment drive could help the automotive industry to meet its future skills needs, it has been said.
The Government has announced a new Youth Jobs Grant, through which businesses will receive £3,000 for every young person they hire aged 18-24 who has been on Universal Credit and looking for work for six months.
In addition, the Government has announced an Apprenticeship Incentive of £2,000 for each new employee aged 16-24 taken on by an SME.
Ensure you always get AM insight. Make us a preferred source of news on Google.
In what the Government is describing as the biggest reforms to apprenticeships in a decade, seven new apprenticeship units are being created – including ones on electric vehicle charging point installation and maintenance and mechanical fitting and assembly – and foundation apprenticeships are being expanded.
Pat McFadden, the work and pensions secretary, said: “These reforms will give young people a vital first step on the career ladder and help business leaders recruit the talent that will grow their companies.”
Move to help ‘critical’ SMEs praised
Reacting to the announcement, Nick Connor, CEO of the Institute of the Motor Industry (IMI), said that the Apprenticeship Incentive was particularly welcome.
He said: “Supporting more young people into skilled careers is vital for the future of the automotive sector. The focus on helping SMEs recruit younger workers is particularly encouraging, as around 90% of automotive businesses are SMEs, and they play a critical role in developing the next generation of technicians and specialists.”
Connor said analysis by the IMI showed that the £2,000 incentive could make a meaningful difference to employers considering taking on an apprentice.
He said: “For example, for a Level 2 Autocare Technician, the overall cost to an employer would fall from around £14,391 before the recent Budget to approximately £12,560 following the new announcement, a saving of £1,831.
“Similar savings can be made for a Level 3 Motor Vehicle Service and Maintenance Technician. The employer cost would fall from around £14,541 to £12,560, which is a saving of £1,981. For many SMEs, this reduction could help make the difference when deciding whether they are able to invest in an apprentice.
“With the automotive workforce ageing and apprenticeship numbers declining in recent years, strengthening the talent pipeline is essential if the industry is to meet the skills demands of the future.”
Government told to remove apprenticeship ‘barriers’
Although Connor said the financial incentives were a positive step, he cautioned that they should be accompanied by actions to remove other barriers to apprentice recruitment facing SMEs.
He said: “Rising employment costs and the complexity of the apprenticeship system continue to make it difficult for automotive businesses to invest in training the next generation.
“Additionally, to deliver on its ambitions for apprenticeships and tackling youth unemployment, the government must go further by removing additional barriers facing all businesses, regardless of size. For example, the seven short courses funded through the growth and skills levy, which align to the government’s industrial strategy, includes electric vehicle point instillation, however, it’s imperative that key automotive skills are represented in the future.
“Automotive apprenticeships must remain the gold standard for developing highly skilled, safety-critical roles, and the IMI looks forward to working with government and industry partners to ensure the system enables more young people to enter the sector and build long-term careers.”