Chancellor of the Exchequer Philip Hammond has missed a vital issue by failing to allocate enough money to support skills in the construction industry, according to the Building Engineering Services Association (BESA).

Mr Hammond has been praised for his pledge to build 300,000 new homes a year in the Autumn Budget, supported by £44 billion of capital funding, loans and guarantees.

However, as BESA has highlighted, just £34 million of this was allocated to supporting skills.

When this discrepancy was pointed out, the government reiterated its ambition to create three million new apprenticeships by 2020, but Department for Education (DoE) figures revealed a 61% collapse in apprentice starts to 43,600 between May and July down from 113,000 in the same period last year.

In response, the department said its apprenticeship reforms had “put control back into the hands of employers so they will gain the skilled workforce they need to compete globally”.

The Chancellor did promise that the government would keep “under review” the arrangements for how employers access funds from the new Apprenticeship Levy, but it is “urgent action” that is needed, according to BESA.

The DoE said this year had been a “period of huge change for employers, but it is right that they are taking their time to plan ahead and maximise the opportunities the apprenticeship levy can bring”.

“The department is either being naïve or deliberately misleading,” said BESA Training Director Tony Howard. “The dramatic drop in apprentice starts coincided with the introduction of a mandatory contribution from employers despite there being a pot of £650 million sitting in the Treasury waiting to be spent on apprenticeships.

“We have thousands of willing employers; tens of thousands of young people keen to take up vocational training opportunities; and a raft of new training providers, but no money being released to make it all happen.

“The Chancellor made delivering new housing and infrastructure a top priority, but doesn’t seem to understand the link between these economic targets and a skilled workforce. Holding back this funding is making our skills deficit worse and the government’s apprenticeship target is increasingly distant.”

BESA is campaigning for changes that will restore incentives for employers to recruit apprentices – of all ages – and a guaranteed minimum budget for non-levy payers’ apprenticeships, which will ensure that there are opportunities right across the country and for employers of all sizes.

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