Education is the name of the game

Redundancy offers the opportunity to go into business or start a new career, but it’s important to realise that the appropriate training can be key to your success, reports Trevor Johnson

Made redundant by a national kitchen and bathroom retailer, Jerry Hallam was thrown a lifeline by his brother Keith, who offered him a partnership in his busy Plymouth plumbing and central heating business.

“It was a wonderful chance to start a new career in something I knew I could do well,” Jerry remembers. “It nearly broke my heart when I found I couldn’t accept it.”

The job Keith was offering needed a trade qualification, and with a wife and two children to support Jerry simply couldn’t afford the cost of travel to college and the cost of books and materials. But the story has a happy ending. A chance phone call to a local redundancy help service led to Jerry getting a £30-a-week adult learning grant, which enabled him to get a professional qualification and join his brother’s firm the following year. Today, as sales director, Jerry is organising the opening of a new branch in Cornwall.

There are now more than £100,000 full and part-time courses available to redundancy victims and many more online, but studies have found that many people still prefer to go it alone when trying to start a new career. For instance, there were over half a million start-ups in Britain last year, but less than 20 per cent of people went on adult business-related courses.

“There’s no doubt that if people changing careers after redundancy had better training, far fewer would fail,” says John Davis, marketing director for local business at Barclays. “Only a small percentage get training of any sort.”

And according to a recent study at the London School of Economics, at least half the 3,000 workers currently being made redundant every day in the UK dismiss the possibility of training for a new career because of cost.

“The government’s reaction is to offer some financial help for what’s called ‘lifelong learning’ and participation in the ‘knowledge economy’,” says management consultant Dr Clive Adams, author of a recent study on adult retraining. “The fact is that nowadays few of us have the luxury of going through life following only one career path. With the present level of redundancy, retraining in order to acquire new skills has become almost inevitable.”

So here are the main ways of getting help to fund retraining. Would any of them apply to you?

Adult learning grants

For a start, your course must lead to a level two or three qualification and you must attend regularly for at least 12 hours a week. You must be working for a new level of qualification - which means you can’t get funding for equivalent level qualifications.

As Dr Adams explains: “For example, if you had, say, two good A-Levels in English and French and wanted to retrain for a career in IT by doing A-Levels in maths and computing, you wouldn’t be eligible for an ALG - the new qualification must represent progress of some sort.”

You can still work part-time if you get an ALG, but you need to have earned less than £19,000 before tax in the previous year if you’re single or have a combined income of less than £30,000 if you’re with a partner. You won’t get an ALG if you’re claiming out-of-work benefits, but most other types of financial help won’t make any difference to your chances.

Dr Adams says that redundancy victims who go back to learning later in life are usually more determined and focused than they were the first time around and have a clearer idea of what they want from a career change. He explains: “Subjects being studied by mature students on an ALG range from business to construction, childcare to hairdressing and science to publishing. For instance, a former IT consultant made redundant now has a science degree and is teaching in a sixth form college.”

Higher education grants

If you’re planning on going into higher education, government support can come in the form of maintenance grants that help with living expenses, and student loans that can pay for living expenses and tuition fees. Remember that grants don’t have to be paid back, but loans do.

Career development loans

This allows you to borrow between £500-£10,000. The government pays the interest on the loan while you are studying for a new career, but once you have you new qualification you have to pay the money back. You can use the loan to pay for any qualification or course that helps further your career prospects. Courses can last up to three years if they include practical experience.

The loan should cover no more than 80 per cent of your course fees unless you’ve been unemployed for more than three months, in which case it can cover the cost of the entire course. Although career development loans are supported by the government they are actually administered by banks so pop into your local branch if you want to know more.

A word of warning: you must repay the loan if you don’t complete the course for whatever reason. Repayment begins within a month of the end of the course. Banks say it’s important to speak to them early on if you think you may have difficulty repaying the loan. Depending on the circumstances, they may let you postpone repayments, but you’ll need to agree this with your bank before repayments are due to start.

If you can’t get a loan

That doesn’t mean there’s no chance of retraining for a new career - there are lots of free or reduced cost courses available to redundancy victims. For example, a quick search on hotcourses.com will produce results ranging from a 10-week law and business studies course to an intensive course on marketing and sales strategy.

If classroom study is not your thing, there are plenty of other options, including Learn Direct, which now has over 2,000 learning centres across the UK providing e-learning opportunities and advice services.

Sadly, not everyone is successful when it comes to getting finance for a change of career after redundancy. When Tom Corby decided to retrain as an electrician after being made redundant by an IT company, he took a job-based course costing £5,400 that he hoped would result in a job starting at £14,000 a year.

But when Bristol-based Corby applied for grants and low-cost loans to help with the cost of his course, he was disappointed: “I was told I didn’t qualify for a higher education loan and was unable to negotiate a loan with the bank because it was not completely certain that I would get a job at the end of the course.

“I didn’t have access to other grants because I didn’t plan to start my own business. I am now financing the course with a part-time job and a loan from my family. Sadly I just didn’t seem to tick enough boxes to get a grant.”