Welsh economy faces £400m hit from apprenticeship cuts

A “devastating” near-25% cut in apprenticeship funding could cost the Welsh economy more than £400m over the long term, the Senedd heard.

Luke Fletcher said the proposed cuts to apprenticeships are the biggest since devolution began, warning that it risks undermining the Welsh Government’s economic strategy.

Plaid Cymru’s shadow economy minister told MSs that 10,000 fewer apprenticeship starts are expected in 2024-25 – a 50% reduction.

Mr Fletcher said Cardiff and Vale College group estimated the total lifetime economic loss from the proposed cuts at between £296m and £406m.

“These cuts, of course, couldn’t be proposed at a worse time,” he said. “A time when we know that 80% of small firms in Wales cite a skills shortage as a barrier to recruitment.

“That should be an indication that demand is only going to increase for starters.”

‘Out of kilter’

Paul Davies highlighted an open letter to the first minister from the sector warning that the cuts will undermine the new economic mission and cut the talent pipeline for employers.

The Conservatives’ shadow minister backed calls for an independent review of the long-term plan for apprenticeships.

He urged ministers to rethink cuts, saying: “The decision to cut funding for apprenticeships is completely out of kilter with the Welsh Government’s own policy objectives.

“The budget process is far from over and there is time for changes to be made, so I urge the Welsh Government to listen to the sector, listen to businesses and listen to learners.”

Huw Irranca-Davies, a Labour backbencher who represents Ogmore, pointed out that the Welsh Government has invested more than £400m in apprenticeships since 2021.

He raised concerns about the loss of EU funding and described the UK Government’s apprenticeship levy as a travesty. 

‘Curtailed’

Mr Irranca-Davies told the Senedd: “We know that we can deliver these apprenticeships well in Wales, we have a track record of doing it, but we’ve been curtailed by a desire of the UK Government to say, ‘No, we have control of that’.”

Cefin Campbell, a Plaid Cymru MS for Mid and West Wales, focused on the impact of the cuts on the health sector which make up about 43% of all apprenticeships offered.

He said: “Apprenticeships in the health and care sector provide specialist training for essential roles in social care, home care, clinical healthcare and many other areas.

“In a sector that is already crying out for support in the face of years of cuts, cuts to apprenticeship funding is going to have a detrimental impact on workforce planning, recruitment and training for the future.”

‘Perilous’

Laura Anne Jones, the Conservatives’ shadow education minister, told the chamber that the apprenticeship sector is in a perilous state.

“Whether it be normal apprenticeships or degree apprenticeships, we are so far behind our neighbours in England and Scotland that it’s almost, quite frankly, embarrassing,” she said.

Jack Sargeant, a former engineering apprentice, raised the importance of apprenticeships in his Alyn and Deeside constituency.

The Labour MS said Airbus alone trained 4,000 apprentices in the past decade and 70% of its UK senior managers started their careers as apprentices.

Mr Sargeant backed a focus on the green apprenticeships required by the race to net zero – a call that was echoed by Jane Dodds, the leader of the Lib Dems in Wales.

Plaid Cymru’s Sioned Williams raised concerns about the impact of proposed cuts on women, who make up 59% of all apprenticeship starts.

‘Inequality’

The South Wales West MS said: “It’s going to hit women who are already facing barriers to employment and gender pay gaps, thereby exacerbating gender inequality.”

Vaughan Gething stressed that UK Government choices and high inflation mean that the Welsh budget is worth £1.3bn less than when it was set in 2021.

Wales’ economy minister put the figure in the context of Cwm Taf Morgannwg health board’s £1.2bn spend last year on running all its services.

He said: “In addition to that, the loss of EU replacement funds means that we are £375m a year worse off, or to put it another way, the entire revenue budget of Caerphilly Council.

“That is the gap that we have to make up.”

Mr Gething said painful decisions have had to be made as a result but the apprenticeship programme remains the biggest part of his budget, with £138m earmarked for next year.

The Plaid Cymru motion was defeated after the debate on Wednesday January 17. Amendments proposed by the Conservatives and the Welsh Government also fell.

By Chris Haines, ICNN Senedd reporter