Gordon Brown’s £140m plan for 35,000 apprenticeships
Ministers are increasingly concerned that the recession is going to lock young people out of the labour market and see a return to the levels of youth unemployment that afflicted Britain in the 1980s.
They have been told there is a serious danger that as companies tighten their belts they will not be taking on new recruits, leaving younger entrants to the labour market unable to get on the jobs ladder. According to some predictions, up to 3 million will be out of work by the end of this year and at least 40% (1.25m) will be under 25.
Gordon Brown moved to counter the trend yesterday as he began what is being billed as a fact-finding regional tour ahead of a jobs summit at Downing Street next Monday.
On a visit to the Rolls Royce plant in Derby yesterday Brown and the skills secretary, John Denham, announced that the number of apprentices in the public and private sector will be increased by 35,000 at a cost of £140m.
The government is already committed to increasing spending on apprentices in the next year to just under £1bn. Nearly half of apprentices are aged 16 and 17, although many are already in work.
The government’s long-term goal is that 250,000 people start an apprenticeship. Denham said that to increase provision by 35,000 places, from last year’s total of 224,000, would be ambitious “at any time”, let alone under current economic circumstances.
The initiative is the latest piece of government activism designed to show Brown is combating the recession. It has been reported that Brown was concerned by the recent youth riots in Greece, and feared something similar could develop in Britain.
The prime minister’s three-day tour of recession-ravaged Britain today moves on to Liverpool, where a full meeting of the cabinet will be preceded by a session with an invited public audience of 200.
Other initiatives could be unveiled, but government sources said there was no plan to bring forward plans to raise the school leaving age.
The Conservatives claimed that the chancellor, Alistair Darling, has effectively admitted that the recession is going to be deeper and longer than he forecast at the time of the pre-budget report last November. The shadow chancellor, George Osborne, said on the basis of independent forecasts ministers were now likely to borrow an extra £80bn over the next two years. The pre-budget report had predicted borrowing of £118bn in the next financial year and £105bn in 2010.
Osborne based his estimates on projections from Capital Economics that Britain this year will suffer a contraction of 2.5%, as opposed to the 1% predicted by the Treasury.
Capital Economics predicts a further 1% contraction in 2010 as opposed to a pre-budget report forecast of 1.75%.
Osborne said: “Independent estimates show borrowing could be almost £70bn higher from the already terrible levels the government has owned up to - that’s £1,000 more debt for every person in the UK. The government cannot escape the truth: the recession is getting worse, national debt is out of control and Labour is bankrupting Britain again.”
The business secretary Lord Mandelson will, at a Manchester business breakfast today, defend the principle of extra borrowing, saying: “It would be easy but incredibly misguided to assume that the right response to this crisis was general retrenchment.
He will say: “Government has made that mistake again and again over the last 50 years. In previous recessions it has cost us more because short-term unemployment has been allowed to become long-term unemployment.”
He will argue that “stop-go” in public infrastructure investment and public services has blighted competitiveness. He will admit retrenchment sounded right for thrift and austerity to go with tough economic conditions.
But in a rebuttal of the economic policy advanced by David Cameron, he will say “that principle of personal economy just doesn’t translate to public economy in the current circumstances. It misses a basic reality about the role of demand in the economy and the role of investment for our future.
“When private sector demand falls this sharply the only pockets deep enough to make any difference belong to government. That applies in the UK. It’s going to apply in President Obama’s America. It is applying across Europe and around the world.”
Mandelson will insist the spending does not represent a “splurge”, saying: “The government belt will tighten with everyone else’s. Additional borrowing means public spending growth will slow to little more than 1% after 2011. The obligation to improve efficiency and productivity in the public sector is stronger and more important than ever.”
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