ISSUE 03 | EXPERT COMMENTARY

Must try harder

How could the Government’s new apprenticeship levy be better? Mark Dawe, chief executive of the Association of Employment and Learning Providers, suggests some improvements.

Expert commentary by Mark Dawe

Mark Dawe

Service sectors make up 80% of the UK economy, but apprenticeships are still vital to improving workforce skills and productivity across all sectors. They are also rightly available for people of all ages and at all levels.

Many manufacturing employers have enthusiastically embraced recent Government reforms of the programme, and degree apprenticeships have really taken off, with at least 100 universities registered to offer them. An apprenticeship without £50,000 of debt attached to it is a really attractive option for a young person. I hear lots of engineering employers are considering taking on degree apprentices instead of graduates, because the apprentices learn on the job with the most up-to-date technologies and techniques. 

A major reason for the growth in apprenticeships at higher levels is the apprenticeship levy, which was introduced in April 2017. Big employers with a total payroll of at least £3m must pay it, and about 12,000 of them are claiming the money back to fund their own apprenticeships. Many of them are engaging in the programme for the first time. This is a major advance, and the higher level apprenticeships offered by household name companies are adding to the prestige of the programme. 

But there is no hiding from the fact that apprenticeship starts (the number of people taking up apprenticeships) has fallen dramatically since the levy came into effect. I’m particularly concerned that starts for 16 to 18 year olds have fallen by 38% in the last 12 months. In this sense, the programme reforms are acting as a force for social immobility, which is in direct contradiction to the Education Secretary’s priorities. 

Ministers hope that the numbers will pick up in September, when the universities roll out a new set of degree apprenticeship programmes. But within Government circles, concerns are evident. Employer groups such as the EEF and the CBI say that the levy needs reform, and they are calling for urgent action. I’m an unequivocal supporter of the levy, but I agree that action is needed. 

In manufacturing, it is vital that SMEs have access to apprenticeships, but our members who provide training tell us that two elements of the reforms are adversely affecting the number of new starts. Firstly, the rule that requires 20% of apprenticeship training to be ‘off the job’ is inflexible. Training providers must work hard to persuade employers that the rule in practice does not mean a day release for the apprentice every single week. Secondly, employers who don’t pay the levy have to chip in 10% of the cost of the training and assessment, with the Government paying for the rest. While 10% doesn’t sound much, when wages and supporting staff commitment are added on to the other costs that businesses now face, the attractions of taking on more than one apprentice are suddenly reduced. 

One way round these problems is for manufacturing and engineering employers to pool their training resources through Group Training Associations and Apprenticeship Training Agencies. But this support is not available across the UK. So the AELP is proposing to ministers that until April 2019, SME employers outside the levy’s scope shouldn’t have to contribute to the cost of training new 16-24-year-old apprentices. The waiver should also apply to levy-paying employers who hire additional apprentices beyond their levy entitlement. 

Despite the mishaps in the levy’s first 12 months, our view is that apprenticeships are a fantastic opportunity for employers to improve workforce productivity, fill vacancies that might arise from the impact of Brexit, and contribute to social mobility in a local area. What’s not to like?!      

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