Scotland needs a skills boost - are more apprenticeships the answer?

If Scotland’s parties agree on one thing, it’s that apprenticeships have a key role in solving the country’s skills shortages.

All major parties made commitments to boost apprenticeships before Scotland went to the polls. As the machinery of government resumes, the public and industry should be able to expect serious focus on making some of those commitments into action. 

But if the last five years of the Scottish Parliament has taught us anything, it’s that consensus can be hard to come by, even when parties are broadly aligned.

And there’s a case for action to help fill gaps in expertise. According to the latest UK Employer Skills Survey, 14 per cent of employers have deficiencies within their current workforce. The research was published late last year and the picture it paints is little changed since 2022, when the level was 15 per cent.

Manufacturing had the largest gap at 19 per cent, with education on 17 per cent. 

And projections for the labour market suggest 1.3 million workers will be needed over the next decade as the existing workforce ages and around £230bn of planned investment creates additional need.

This sort of pivot will require cultural change

But business costs are rising and weaker economic confidence means many employers are reducing recruitment, especially for younger people. There’s evidence of that in the number of Modern Apprenticeships beginning at the end of the third quarter of the last financial year. The 18,245 total was down four per cent on the previous year, and while the drop affected all age groups, the biggest hit was in the 16-19 category, which saw a 5.7 per cent fall. 

Which means that if an apprenticeship boost is going to happen, it will need to take place with the right support.

And, equally important, the apprenticeship route will have to be seen by potential candidates and their families as an attractive alternative to other forms of training and skill-building, including entry to non-vocational college and university courses. 

For Dr Tom Montgomery of the University of Stirling, that’s a tall order.

Montgomery, who specialises in work and organisations, appreciates the commitment to skill-building. But that’s not without caveats. “This sort of pivot will require cultural change as much as policy change,” he says, pointing to the difficult economic climate.

“There’s a level of uncertainty. It feels very difficult to forecast what’s going to happen. What we do know is that when it comes to putting in place some sort of support mechanisms, there’s a question about public finances. Are we talking about more investment, more resources? There’s a lot of language around skills plans and graduate opportunities, I think, but I’m conscious that a lot of this is resource dependent.

“You need strategy. You can’t have a couple of wee interventions here or there; you need to be able to dig in and look beyond an election cycle. That’s very difficult to ask politicians to do.”

The conversation is taking place as England prepares to introduce its new V-level qualifications. It already offers academic A-levels and the technical, occupational T-levels, which include an industry placement, and the new third level is aimed at providing a vocational pathway. From September next year, pupils will be able to enroll in V-levels in digital, education and early years, and finance and accounting, with more subjects set to follow. 

That’s not currently planned for Scotland, but the parties would argue that their plans have the potential to set learners on a pathway towards skilled work, transforming Scotland’s economy for the better and setting it up for growth.

In its manifesto, the SNP promised to increase the number of apprenticeships to more than 150,000 over the course of the parliament. More than 8,000 of these would be graduate apprenticeships and the increase would be backed by a new Apprenticeship Accelerator Grant for business, backed by the Apprenticeship Levy. A bespoke scheme for disabled young people is also promised, along with a new national skills plan.

Reform UK said that in power it would take cash from the “bloated” welfare budget to fund a “joined-up Scottish Skills Strategy” that would involve a First Job Passport ensuring ‘seamless’ transitions from school to apprenticeships or other destinations and a “reboot” of the Apprenticeship Levy funding model.

That model currently sees funds collected through the UK Government employment tax – set at 0.5 per cent of an employer’s annual wage bill – contribute to the Scottish block grant, and reallocated to Skills Development Scotland to support apprenticeships.

It’s not clear what a ‘reboot’ would look like, but Reform also pledged to set up a Scottish Energy Workforce Plan linked to colleges and apprenticeships, which would help young people to train for “high-value careers” in the energy sector.

I’ve been around long enough to remember when people said learning to code was the solution

Labour said it would ringfence Scotland’s share of Apprenticeship Levy money for skills development, with 9,000 new apprenticeships created and a guarantee that all qualified applicants would get a place.

The vow included the establishment of Apprenticeship Centres of Excellence to give “key industries” the pipeline of skilled workers needed for growth, and measures allowing individuals to tailor their apprenticeships so that the roles suit the needs of trainees and employers.

The Greens committed to initiating a New Deal for Apprenticeships with “fair pay, adult entry routes and recognition of prior learning”. Under the plan, minimum standards for apprenticeships would be brought in for quality control purposes and funded childcare hours brought in to help parents – particularly mothers – return to work through this route. The living wage would be a condition of public funding for all apprentices and support given for the purchase of essential clothing and equipment. An assurance against age caps to assist older workers was also listed.

The Lib Dem manifesto included plans to strengthen work experience for school pupils to “inspire people to do apprenticeships as a route to high-wage, high-skill jobs”. The pledge also included moves to treat this pathway “on a par with college and university” and highlight the lack of student debt incurred by those on apprenticeships, and to match such roles with labour market demand and local economic priorities. The offer also extended to a reorganisation of apprenticeship funding to “address the financial cliff edges that deter training providers and employers from taking on apprentices in their early twenties and older”.

Meanwhile, the Conservatives set out a vision for “the most ambitious programme in the history of devolution to help people obtain new skills throughout their adult life”. The Jobs for Life scheme would have been modelled on Singapore’s Skills Future initiative, and all revenue raised by the Apprenticeships Levy was to be used to support a new demand-led apprenticeship model expanding the number of places available.

While change is required, Montgomery says, the form it takes must be carefully considered. “I’ve been around long enough to remember when people said learning to code was the solution – drop out of university and learn to code – and now lots of automation is starting to really disrupt coding,” he says.

“I’m going to get on my high horse a bit: we need to be really careful about just adopting a very supply-side perspective where everything’s hinged on things like skills, and are the jobs there at the end of it? Are the employers engaged? Do we have the number of high quality, long-term employment prospects in the economy to support the number of apprentices you’re looking to create? That whole focus on the demand side often gets a bit obscured. 

“The reason for it is very simple: it’s a lot easier for policymakers to say, ‘we are going to create X number of graduates or apprentices’. When you get to ‘how are you going to deliver X number of jobs?’ that’s much more difficult.”

That detail will be filled in by a government which is expecting the results of a review into publicly funded contribution rates for the delivery of modern apprenticeships. That currently ranges from £300-£10,000 for the duration of the training.

Announced just two months ahead of the election, the process follows on from parliamentary considerations of the Tertiary Education and Training Act, which was passed earlier in the year to simplify the funding system for post-16 education and skills.

Stage one, which focuses on evidence-gathering and data review, is expected to be completed in September. Stage two, looking at the costs of delivery, is scheduled to end in 2028.

At the time of the announcement, then higher and further education minister Ben Macpherson singled out small businesses as a key area for action, saying the SNP administration he was a part of would “do more to help ensure that smaller employers can recruit more apprentices, for the benefit of their businesses and those in training”.

It becomes really easy to pit one destination over another

That was welcomed by Stuart McKenna, chief executive of the Scottish Training Federation, who called the review “essential”.

In the same month, the creation of 60 apprenticeships was also announced at Prestwick Airport, where Irish budget carrier Ryanair is expanding its maintenance facility. Eddie Wilson, Ryanair’s chief executive, said the airline has a “long-term commitment to Scotland, to high-quality engineering and mechanic jobs, and to developing the next generation of aviation talent” in Ayrshire.

Montgomery says that commitment can be difficult for employers to make when operating pressures run high. And he’s concerned about whether the framing of the conversation could itself start to inhibit the development of skills through further and higher education.

“The question is the extent of that engagement with business,” he says. “That’s where you start to drill into the detail of ‘what’s the plan for that, what does it look like? What’s been the research that’s gone into the policy? How does what’s on offer now differ from what you are suggesting?

“Where I’m a bit sceptical is maybe where politicians start to see vocational training and apprenticeships as some sort of silver bullet for the labour market. 

“It becomes really easy to pit one destination over another, saying ‘graduates are not getting graduate jobs so we need to get people into more vocational training’. That tells people who have taken the higher education route that there’s not a plan for them. It’s not a very inspiring message. Young people for years have had people telling them that education and particularly higher education is the best route for getting a good job, and it still is for many. 

“If we want a thriving economy and we want to create positive pathways then we need to recognise the value in graduating, and that apprenticeships are really valuable to lots of people. What we need,” he goes on, “is a more balanced approach where we accept we need more people in universities and apprenticeships.”