The Apprenticeship Guarantee

The disadvantage of a guarantee is it does not impose a hard limit on total cost of the policy (both due to the number of places being unbounded and because marginal costs may be much higher for creating the last apprenticeship place that is demanded). [...] 14 This would increase the number of under 25 level 2 and 3 starts in non-levy firms from 68,000 to 158,000 – more than double the current number. [...] The Department for Education estimates20 achieving a level 2 apprenticeship increases the probability of being in employment by 4 percentage points and the wage for those in employment by 12%. [...] Taking a level 3 apprenticeship provides an additional 3 percentage point improvement in the probability of being in employment and 13% increase in the wage when compared to those with a level 2 apprenticeship. [...] 29 This figure comes from the Department for Education based on a general review of the literature on higher-level qualifications and productivity. [...] This means we expect half of the post-guarantee total of 158,000 under 25 level 2 and 3 starts in SMEs to be eligible for subsidy42 – an additional cost to the government of £159 million. [...] This gives an estimate of the cost to the government of paying for training an additional 90,000 apprentices in SMEs of £543 million a year. [...] Improvements in the quality of class-based vocational training offered to both apprentices and non-apprentices would also be valuable53. [...] Pre- apprenticeship courses would increase both the demand for apprenticeships and the supply of firms willing to take them. [...] Clear causal evidence on the magnitude of this channel in the UK is lacking, so we opt to not account for this possibility.