Government must align apprentice funding to logistics sector's greatest need

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By Paul Brooks, Managing Director of the BiS Henderson Academy, Chairman of Skills for Logistics and President Elect of The Chartered Institute of Logistics & Transport (CILT).

Following the recommendations of the Richard Review, the government is in the midst of delivering a restructured, 'employer-focused' plan for apprenticeships in the UK. However, whilst it is encouraging to hear that employer needs are to be taken on-board, the government's approach to logistics apprenticeships remains misaligned with the highly specific and individual requirements of employers in the sector and fails to help tackle the most prominent and critical skills shortage impacting the industry.

The logistics sector's greatest and most urgent need is for new drivers - over 149,000 of them by 2020. As a generation of older drivers approach retirement and DCPC regulations come into effect, an already alarming shortage of proficient HGV drivers is set to be exacerbated, leading to even greater pressures on logistics costs.

Employers within the logistics industry fully understand what is required. A new generation must be encouraged to join driver apprenticeships. But, as things stand today, there are important barriers to overcome.

With some 900,000 young people under the age of 24 seeking employment, the focus of government funding for logistics apprenticeships must be adjusted upwards from 16 - 19 year-olds to 21 - 24 year-olds to reflect the practical requirements of driver training and insurance. Although the legal age for driving a 3.5 to 7.5 tonnes vehicle was lowered from 21 to 18 years of age, the industry is unable, in any practical sense, to take 16 – 17 year-olds into driving apprenticeships and firms are struggling to get insurance for drivers under the age of 21. Over 70% of employers who were interviewed by BHA in 2014 would only consider starting with apprentices that were older than 19 years of age and the majority of those were looking for candidates over 21 years of age.

The government's Trailblazer programme, aimed at engaging with employers to establish new more relevant 'standards' for apprenticeships, is an important step to communicating the specific needs of an industry to government and thereby collaboratively setting the standards of that industry's apprenticeship schemes. However, in the logistics sector this process is moving far too slowly.

One of the most critical barriers for logistics apprenticeships relates to funding. Under the present structure an employer would receive c£5,000 a year sum from the National Apprenticeship Service (Skills Funding Agency) for a 17-year-old apprentice on a driving apprenticeship, but securing insurance is an obstacle that renders the employer's investment at this young age impracticable. Then if a driving apprenticeship is embarked upon at the age of 19 the government's funding to the employer is halved to £2,500 per annum – and large employers are further penalised by an extra 25% reduction to that figure (£1,875 rather than £5,000 is the likely option). If large companies are to be encouraged to support the industry through setting up schemes to take on driver apprenticeships, then these punitive caps should be removed.

The problem appears to be that the government has set it's sights on allocating the largest levels of funding to 16 – 18-year-olds, which may satisfy political objectives and may also be in-tune with the requirements of other industries, but it does not address the key issue facing the logistics sector.

There are wider issues too. Currently just 4.3% of employers in the logistics sector use apprentices, which is half the all-sector average of 8.8%. Clearly there is a need for employers in the logistics industry to actively engage in initiatives to bring young people into the sector through apprenticeships and traineeships that lead to apprenticeships.

In my role as chairman of Skills for Logistics and now, more recently, as managing director of the BiS Henderson Academy, I am on a mission to change the current logistics apprenticeship framework by working with employers and government, through the Trailblazer programme, to create a workable apprenticeship structure that is fit for purpose. But to achieve this, we must pull together an industry lead partnership to ensure that we have clear sector based leadership within the next phase of the programme (Trailblazer 3).

Within the BiS Henderson Academy we are working with employers to set up apprenticeship programmes that are designed for their needs, to secure funding and to find suitable apprenticeship and traineeship candidates. Our vision is to create a gateway into the logistics and supply chain industry for young talent, to develop their skills and to present them with an opportunity for a fruitful career in logistics.

But opportunities to encourage young people into the sector, and to develop the skills that are appropriate to the needs of the industry, will be lost if the industry fails to communicate clearly with government on the critical issue of aligning funding with a practical age for driver apprenticeships. As an industry central to the efficient working of the UK economy, it is imperative that we bring this message home to the government through the Trailblazer programme - before the shortfall in drivers has an impact on our economic performance.

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