Are Apprenticeships Under Threat?

As usual skip to the end for your TL;DR synopsis.

Right, let's dive straight in...

Over the next 12 months, we could see a new government come to power. If the last few years are anything to go by, you get the sense that change is coming, and if the newspapers are to be believed, then even the Conservatives strategists are resigned to defeat.

Firstly, I want to make clear, this isn’t sponsored by either party, this isn’t sponsored. In fact, I hope it leads to conversation about how we can adapt the proposals to benefit the nation. (If anyone wants to sponsor me, I am thinking brands such as British Airways, Bentley, Virgin Holidays etc then message me)

This is actually a look forward at the proposed plans set out by the shadow skills minister and Keith Starmer on behalf of the Labour government.

The Growth & Skills Levy

That is the name that encompasses their proposed skills & apprenticeships plan. This will essentially be evolution of the current levy system and not a replacement.

The key message is that levy-paying employers will be able to use up to 50% of their levy pot to fund other qualifications. These qualifications will be set out by a new governing body they will introduce called Skills England. The eligible qualifications haven’t yet been released.

The other 50% of their levy contributions are still reserved for apprenticeships and SME’s will still have access to the government contributions to apprenticeship funding.

So that is the plan, does this mean apprenticeships are under threat?

What I can say is that I understand why Labour are proposing this initiative.

In the year 2022-23 it was estimated that over ￡400m of levy funds was left unspent by employers.

This means it is returned to the Treasury. These are funds dedicated to funding apprenticeships. Some reports are that 56% of levy funds are unspent, so you can see where the Labour party have done their calculations.

Everyone in the industry has been calling for reforms to the levy, and Labour are planning to deliver on that promise. However, as with every change, there has been shouts of concern coming from apprenticeship providers.

Robert Halfon, former Skills Minister, stated that this would lead to a limit of 144,000 starts under the new levy which is just under half the starts for the previous 12 months.

Further concerns have been raised about it the governments ability to support the 95% contribution to SME apprenticeship funding. This has previously been funded using the unspent levy funds from large employers.

Halfon estimates the additional cost of Growth & Skills Levy to be ￡1.5billion

One of the areas most under threat would be HE universities, as the courses that would qualify for the 50% are said to be aimed more at employability and functional skills which would suit FE environments more.

After all the work Universities have put in to implement degree apprenticeship programmes, might we see these be the first to hold less value to employers.

In my experience, employers generally take the easiest route, especially when it comes to spending a pre-determined pot of money. Given the option to put their employees through short courses as opposed to training the next generation, there will only be one winner.

So that is where I see apprenticeships suffer under this scheme. A classic case of short term vs long term thinking will be the issue.

I think the Growth & Skills Levy is a great idea , but not in this format.

We should definitely look to allow organisations to spend their levy on courses other than apprenticeships. As this will only fuel the economy and produce a vastly more skilled workforce.

However a flat 50% rule is far too big a number to cut into the apprenticeship levy. Neither system works for every business, so we need to look for a system where an individual business can be means tested for their needs. In industries with large employment gaps and ageing workforces, perhaps we should have a focus on apprenticeships, and in industries with a skills shortage we should be looking to the skills levy.

What do you think is the route forward?

TL;DR Labour plans to allow levy paying businesses to spend 50% of their levy on other skills courses yet to be determined. This could impact the value and funding behind apprenticeships.

Sources

Labour Strategy: Breaking Down the Barriers To Opportunity

Think UK: Labour Skills & Growth Levy

FE Week: Labours Levy Plan

FE Week: Skills Levy won’t devalue Apprenticeships, Malhotra claims