Unlocking potential: tackling unemployment among disadvantaged young people

Executive summary

Many employers would like to hire more disadvantaged young people, to help them to unlock their potential. In order to do so, some businesses will require financial assistance to cover the costs of on-going support and care for these young people, to ensure that they successfully transition into work. The value of traineeships also needs to be successfully promoted to employers, since they are an effective route into further training and work for disadvantaged young people.

The fact that so few employers currently offer opportunities to disadvantaged young people highlights that these problems inhibit them from hiring more young people. Collectively, we need to work to remove these barriers for employers, if we are to reduce the level of youth unemployment and unlock the potential of disadvantaged young people.

At the same time, the young people interviewed expressed a real desire to earn or learn. To enable young people to earn or learn, the quality of the apprenticeships on offer needs to be improved, so that young people have access to schemes which offer genuine off-the-job training. Young people also require better careers guidance, at an earlier stage of their education, so that they can make informed decisions between vocational and academic learning. Finally, the benefits system should not act as a disincentive to young people taking up an apprenticeship because of the impact on their or their family’s income.

The upcoming Youth Obligation and the apprenticeship commitment offer real opportunities for Government to tackle some of these problems. Making the changes suggested in this report will help disadvantaged young people into training and employment, and offer them a genuine choice between earning and learning.

Key findings and recommendations

Findings

• Young people want to earn and learn. However, young people’s experiences of homelessness often meant that they felt that apprenticeships or vocational training were not appropriate for them.
  
  A significant proportion of young people interviewed had a ‘work first’ mentality and were solely focused on having a regular income so that they could afford to live independently.
• Employers want to hire. Many employers are willing to offer further opportunities to disadvantaged young people. Despite currently having limited provision for disadvantaged young people, a significant minority of businesses (42 per cent) agreed that they would like to increase the number of positions that they offer.
• A lack of funding was cited by employers as the most common barrier preventing them from providing more opportunities to disadvantaged young people. Small companies with less than fifty employees were significantly more likely to cite financial costs as a barrier. This suggests that targeting financial incentives or grant funding at SMEs would be an effective way of increasing opportunities for disadvantaged young people.
• There is a risk that the extra support and training needs of disadvantaged young mean that it is not financially viable for employers to offer work opportunities to them, even when they wish to do so
• Traineeships are effective at helping young people to remain in education, training or employment. In a recent evaluation for the Department of BIS, 50 per cent of trainees who had left or completed a course in the previous year were either on an apprenticeship or in work. A further 17 per cent were in training or education
• When discussing the Youth Obligation, many interviewees felt that the policy would be ineffective at supporting the most disadvantaged young people, unless it was designed in a way which supported and encouraged the young person back into employment or training.
• Many interviewees felt that support under the Youth Obligation needs to be tailored to the needs of disadvantaged young people so that they can build self[1]confidence in their own abilities. They also observed that the most disadvantaged young people will require mentoring and emotional support in order to make progress, and that employability support can therefore not be delivered in isolation.
• Another key barrier for disadvantaged young people is that the benefit system does not incentivise them to take an apprenticeship.
• The restructuring of careers guidance within secondary school education is negatively affecting vulnerable young people’s ability to make informed decisions about their careers.

Recommendations

The Department for Education should:

• Extend careers guidance in schools to include earlier promotion of apprenticeships, as well as pathways into them. This must also apply to services supporting young people who are not in formal education or training
• Introduce compulsory work experience for all 14 to 19 year olds and ensure that training providers and employers receive appropriate support to help deliver quality assured schemes

The Department for Business, Innovation and Skills should:

• Ensure that funds raised via the Apprenticeship Levy are available to SMEs as well as the large organisations paying into it
• Incentivise all employers to provide apprenticeships for disadvantaged young people aged 16 to 24, by including them as a group who would attract an additional incentive payment in the new funding model
• Allocate a proportion of the Apprenticeship Levy to create a support fund for disadvantaged young people, allowing employers to provide access to specialist support where required
• Make additional funds available through the Skills Funding Agency to finance traineeships
• Ensure that the Institute of Apprenticeships, Ofsted, Ofqual and the Quality Assurance Agency have the power to maintain and improve the quality of apprenticeships and are able to close apprenticeship programmes which do not meet minimum standards

The Department for Work & Pensions should:

• Include early assessment of a claimant’s circumstances under the Youth Obligation and match claimants to employment and training opportunities that are consistent with their career aspirations
• Allow an extension of the six month period under the Youth Obligation if vulnerable young people are not yet work ready, but are showing acceptable progress towards work
• Ensure that the benefits system is not a disincentive to young people taking up an apprenticeship because of the impact on their or their family’s income

Employers should:

• Play a greater role in careers guidance services for young people to improve their knowledge of different job roles and pathways into employment
• Coordinate with a young person’s support provider throughout a placement to ensure the employer has a full understanding of their support needs