The chancellor has the futures of thousands of 16- and 17-year-olds in his hands on Wednesday when he delivers the Summer Economic Update.

Let’s look at the statistics. 

Before the pandemic, 27,000 of 16- to 17-year-olds were unemployed and 120,000 were in jobs outside of full-time education.

Fewer than 55,000 16- to 17-year-olds were on apprenticeships at the end of 2019. This level of activity is unlikely this year.

A further 60,000 16- to 17-year-olds are in non-apprenticeship jobs. Many are in retail and hospitality, working less than 30 hours a week. They are not jobs that can be turned into apprenticeships. 

We do not know how many 16- to 17-year-olds will be unable to find apprenticeships and non-apprenticeship jobs in September. If two-thirds fail to do so, unemployment would rise to 100,000, equivalent to 8 per cent of all 16- to 17-year-olds. 

News: Traineeships to get £111m boost from Treasury

More: Ofsted to 'visit' colleges and providers from September

Background: Apprenticeship starts almost halve during lockdown

The chancellor must do everything in his power to avoid a situation where young people turn their backs on further education and await their first jobseekers’ allowance (JSA) or universal credit payment on reaching 18.

If employers do not offer a similar level of job opportunities in September, unemployment will rocket among the very group who are not entitled to jobseekers’ allowance or universal credit but have a duty to participate in education and training until age 18.

A five-point plan for 16- to 17-year-olds

On Wednesday, the chancellor should announce a five-point plan for September specifically targeted to 16- to 17-year-olds. 

Apprentice wage subsidies

Employer recruitment of 16- and 17-year-olds apprentices was declining from a low base before the pandemic in March 2019 and indeed the introduction of the levy in May 2017. The current wage subsidy of £1,000 paid to both levy and non-levy paying employers has not stemmed the fall. At the end of 2016, there were 69,000 on apprenticeships compared to 55,000 in 2019, a drop of 20 per cent.

The chancellor is expected to offer employers a wage subsidy of £3,000 to recruit young apprentices. This is three times the existing subsidy for 16-18 apprentices. It would also be about 35 per cent of total basic pay of £8,300, assuming 30 hours paid at mean hourly earnings of £5.34 of 16-18 apprentices for 52 weeks.

Although essential to underpin apprenticeship starts, wage subsidies even at three times existing rates will not guarantee them. Some employers will no longer be in business by September. Others will be firing, not hiring.

Expand full-time further education and training

And so, on Wednesday the chancellor must do everything possible to encourage 16- and 17-year-olds to shield themselves from unemployment through enrolling on full-time further education courses and traineeships.

To avoid unemployment hitting 100,000, an extra 75,000 places for 16- and 17-year-olds will be needed in the post-16 state education sector. But more places in the state system could be required. This is because parents of some of the 80,000 16- and 17-year-olds in private education who can longer afford fees will have to turn to the state sector.

Around 50 per cent of 16- and 17-year-olds in jobs with apprenticeships and 70 per cent in jobs without apprenticeship do not have a grade 4 in GCSEs maths and English. If they choose to enrol of full-time study programmes, funding will be required to deliver a greater volume of resits this autumn. 

To induce employers to offer a 45-day work placement linked to the first wave of T levels, employers will receive £750. A similar amount will be needed to incentivise employers to offer work placements to 16- and 17-year-olds on traineeships even though the duration will be shorter. As well as having little or no work experience, many will not have a grade 4 in maths or English.

Increased benefits to parents

By September, more parents of 16- and 17-year-olds will be furloughed or unemployed. More families will simultaneously be under financial pressure and supporting 16- and 17-year-olds in full-time education, traineeships and the apprenticeships that exist. 

Poverty and financial stress are not conducive to effective learning for children of any age. Some young people might be forced to abandon their post-16 education in favour of searching for a job that might not exist, entering the informal economy or something much worse.

Parents with 16- to 18-year-olds in full-time further education and traineeships are eligible to claim means-tested child benefit of £21.05 for the first child and £13.95 for the second. On Wednesday, the chancellor should double them and extend payments to parents with 16- to 18-year-olds on apprenticeships.

The chancellor has rightly increased child allowances by £1,040 per year within universal credit. But parents only receive them if they have a family income of less than £16,385. The threshold should be increased substantially to help more families with children who will struggle to make ends meet from September. 

Certainly, the DfE should plan for a substantial increase in the eligibility for free meals for 16- to 17-year-olds delivered by FE colleges. After all, this is where most disadvantaged 16- to 17-year-olds study. And the chancellor must find the resources to extend free travel across England to help 16- and 17-year-olds in full-time education, traineeships and apprenticeships including attending work placements.

From bursaries to education maintenance allowances

Before the pandemic, 16- and 17-year-olds opted for jobs instead of full-time education in part because they received a wage. In addition, 250,000 of the one million 16- and 17-year-olds in full-time education have student jobs, many of which could disappear. And so, to boost the incomes of students, the chancellor should extend eligibility to 16 to 19 bursary grants from September but promise to reintroduce means-tested education maintenance allowances next year.

Meeting the duty to participate

On Wednesday, the chancellor also has an opportunity to make effective the duty on young people to participate in recognised education and training until their 18th birthday. He should empower local authorities to develop participation strategies so that no 16- and 17-year-old is left behind because of this coronavirus-induced recession.

John Widdowson is the principal at New College Durham and Mark Corney is a policy consultant