Apprenticeships…what does the future hold…..Is it time for a rethink to the apprenticeship levy?

As the clocks change and colours of the leaves have that wonderful orange glow with the autumn statement approaching, much attention turns towards apprenticeships and what the future of the apprenticeship levy may bring.

It is nearly 25 years since I completed my apprenticeship and there has been a lot of change in the world and the economy. However, there are also a number of things that have remained constant. I completed my college course and then began my first full time job role at 18 years old with an apprenticeship.

Back in 1997, my employer identified the training provider (a local college) where I attended class based sessions (either 2 evenings a week, or a half afternoon/evening release class). I was allocated a work based assessor who came to visit me and my employer in the workplace to discuss my progress on the apprenticeship. I had a colleague who was my workplace mentor and I also had access to the owners (partners) of the firm on a regular basis who checked in on my progress.

In those days the funding for the training was provided through the provider and/or Chamber of Commerce or Business Link. I progressed from an apprenticeship at level 2, then to level 3 and onto level 4, each lasting twelve months.

Most, if not all, of the above remains in place today with the current apprenticeship system. However, there are some differences:

• Apprenticeship standards have replaced frameworks, so over a three year period I would probably account for 1 start under the current arrangements, as opposed to 3 in the older world;
• The funding for the training was through the provider whereas today, I am sure they would be a levy paying employer or through apprenticeship funding as an SME.
• There were small financial incentives in place for employers where apprenticeship training was provided to new recruits. This is an area we know has changed over time, but for the most part incentives have been in place.

Does the apprenticeship levy need to be reformed or repurposed?

Since the introduction of the levy, there have been continued requests for transparency and for a broader review of the role of the levy. Whether through discussions at the Education Select Committee or sector FOI requests, it is helpful to increase the awareness of how much of the levy is being utilised and how the levy is being spent and distributed within the sector.

A number of organisational and representative bodies are requesting the levy be broadened, with references to a “skills and growth levy”. ?

I am a firm believer that apprenticeships play a really important role and also that they are not one of the only ways to support the development of skills, whether existing employees or new recruits. There are a range of publicly funded programmes available, plus training that has historically been funded by employers and will continue to be so.

What were the real aims of the apprenticeship levy in the first place? Was it to address wider economic issues? Subsidise Treasury budgets? Encouraging employers to reinvest in skills? Fill the void left by Train to Gain funding?

I remember one quote being “we introduced the apprenticeship levy to create long term sustainable funding for apprenticeships and to give employers more control to provide their staff with a range of training opportunities”.

Any changes to the remit for the levy should be considered with caution. First of all, I think we need to be clear about gaining an understanding as to the question we are trying to answer.

At the time the levy was considered and then implemented, not only was our economy in a very different place, we have been through a significant period of educational reform, not just in apprenticeships but in the wider education ecosystem. In recent times there have been changes to educational programmes through the introductions of study programmes, traineeships and internships. Access to funding has also changed with increased competitive tendering, changes in eligibility criteria, adult education budget, ESF monies, skills projects, devolution etc.

So, six years on, it probably is appropriate to evaluate and consider the role of apprenticeships, the levy and its place in the system.

There is a range of public data available and much more information that we cannot see. Due to changes such as minimum duration of apprenticeships, the lack of progression opportunities, the economy climate impacting upon employer confidence, rising costs limiting investment opportunities and Brexit etc, the data raises a series of questions, but not necessarily the answers.

As mentioned above, apprenticeship starts is often quoted as the metric, but for me this isn’t necessarily the best one for focus on. We should look more broadly at the series of questions that need to be considered:

• Back in 2017, the proportion of 16-18 year olds not in employment education or training represented 5.8% with this steadily increasing to 8.4% in 2022. How can apprenticeships be used to support 16-18 year olds? With changes to study programmes and apprenticeships being closer aligned, could funding be allocated through centralised allocations to providers?
• Since 2014/15, based on the length of employment (first day of Learning with the current employer) on average 40% of all apprentices had worked with the employer for 12 months or more. This picture remains consistent, so we need to embrace and celebrate where apprenticeships are developing the workforce.
• Employer investment in training whether monetary or in resources is difficult to compare like for like, with the changes in technology, on the job training, apprenticeship levy and wider commercial training. What more can be done to incentivise employers’ investment in skills?
• The proportion of apprentices that successfully achieve continues to be lower than other shorter programmes. In many cases this is largely as expected and I remember the high times, where apprenticeship achievement was measured in overall and timely success, I still rarely remember a national average over 70% for either overall or timely success. Could wider metrics and impact measures (over and above achievement) be introduced?

I support the need for improving the quality of apprenticeships, but achievement rates are only one measure and wider metrics need to be introduced as well. An apprentice could complete circa 80% of the programme, change employer for a higher role and complete the final aspect of the apprenticeship commercially, but this would result in a fail to the apprenticeship and the provider, yet the apprenticeship has supported the individual in progressing and the new employer gaining the skills they need in the workforce. Considering labour shortages and social mobility, the achievement rate metric seems a little narrow.

There are more questions to be asked and I understand why there are increasing calls to widen the usage of the levy, but it needs to be considered as part of the wider picture. Levy paying employers see monies being unspent and returned to HM Treasury, and with pressures on every budget line think this as a missed opportunity at a time where they need skills and in some cases are paying training costs commercially even though there is this unspent money.

There are also employers doing some tremendous things with apprenticeships and the levy, both internally but also supporting local communities through levy transfers.

For me, it is key to understand where the money comes from to fund all of the different “asks” as it will not be possible to do everything and many of these require additional investment from either the public purse or employers themselves.

Data informs the questions….and doesn’t provide the answers.

There is absolutely a need to use data, but also to remember, that data is often the vehicle to ask questions as opposed to providing information. The system and funding need to satisfy all.

Is the initial objective of the levy still valid and does this need to be refocused?

I am in the camp that any changes to expanding the parameters of the apprenticeship levy needs to be considered with caution. I feel that monies collected should be focused and spent on funding apprenticeship training and/or spent on removing any barriers which impact upon new apprenticeships. Any costs associated to systems, infrastructure, processes etc are kept to an absolute minimum.

There are a number of great examples where funding has been made available to support the increasing volume of apprenticeships, with local regional schemes in Norfolk and the West Midlands ones to note, plus industry sector schemes, such as construction where incentives are in place.

Then there is the levy pledge scheme, where in addition to employer specific and regional arrangements, there are currently over 200 opportunities available on the public government site.

In terms of the focus of the levy, I would like to see:

• How apprenticeships contribute to the wider skills ecosystem.
• Apprenticeship funding to be ringfenced and spent on apprenticeship training.
• Incentives introduced for new hires and new apprentices with possible further incentives to encourage recruitment in skills shortage sectors and/or hard to reach areas.
• Commitment to review the appropriateness of the funding rates and bands.
• Research and development monies to be set aside to support the creation of new apprenticeship standards, resources and facilities.
• Wider metrics be introduced to monitor success, with items such as job role promotion, progressions etc considered.#apprenticeshiplevy?#workforceplanning #Apprenticeships?