What's wrong with the apprenticeship levy and how to fix it

Nearly six years ago, the government introduced the apprenticeship levy to encourage employers to offer structured, high quality, work-based training. A quick reminder of how it works: employers with a pay bill of more than ￡3m were to pay 0.5% of the pay bill over this amount into an online apprenticeship pot, which is topped up by government. They must spend it within 2 years on apprenticeships for their employees. Apprenticeships are defined as being for people of any age, any level and any job type. They last a minimum of a year, and the employee has to be employed and spend 20% of their time doing “off the job” training. There are various incentives in the system for employers to take on young people and those leaving care.

I was a massive apprenticeship levy fan. I had hopes that the levy would encourage proper on-the-job training across the country, that its use for all ages and all levels would begin the long-overdue shift towards parity of esteem between “academic” study and vocational training, and that it’d contribute to more employees having more relevant skills for today and tomorrow. I also thought it was a great offer to employees, who would “learn as they earn” and get a qualification specifically designed by industry experts for a practical job.?

I’ve advised many organisations on their apprenticeship strategy in the last six years, including transforming the way we recruit and train police officers using policing degrees (totally transformational!), grad / school leaver schemes, upskilling/reskilling programmes and organisations with ambitions to build their own universities.?

But the levy and the associated reforms haven’t worked out how we’d hoped.?

·??????First - there are fewer people starting apprenticeships each year now than before the levy, in fact, last year, it was the lowest since 2010.

·??????Second - the completion rate is woeful - a quarter of apprentices do not complete their qualification.

·??????Third, CIPD research shows that less than 20% of employers support the levy.

·??????Last, ￡600m is returned to the Treasury each year, enough to fund 60,000 apprenticeships.

The then Chancellor quietly announced a review of it last year, and it has gone even quieter since. (OK, he’s had a lot on!) Here is what I’d recommend we change.?

1.??????Make the levy more flexible

The levy works well for big employers with the infrastructure to take on lots of apprentices and deal with the paperwork to become an employer provider. But here’s a list of employers it doesn’t work for:

·??????Industries in which trainees are not employed direct, or not employed for long. For example, in the media industry, film companies are created and then disabanded, without enough time to have people on apprenticeships. Many people are self-employed. And yet, the film industry is one of our greatest exports and has a skills crisis. Over in the public sector, trainee teachers are not employed at all - they’re students, so schools must pay the levy but can’t use it for the bulk of their workforce.

·??????Industries in which training needs to be short and sharp. Training programmes for one to three years are fine, but that’s not the only training we need to encourage. There are employers wanting to provide short sharp training to re skill their workforces say re-skilling engineers in green technologies, or upskilling people in digital skills, or running a boot camp for employees looking to move towards digital. All of these are laudable aims, with the investment in training benefitting the individual, the organisation and the wider economy. But the apprenticeship levy cannot help.?

·??????Industries in which the technical requirements change faster than the standards can keep up. Creation of the standards (“what good looks like” for each role) is a lengthy and bureaucratic process, which doesn’t work for industries like cyber, where the threat and technologies are changing constantly.?

·??????Companies with an international workforce. Global employers want globally consistent training. But the apprenticeship levy is so bureaucratic that it’s tricky to use it for UK participants on a global training programme. So many big employers treat it as a tax in the UK, and ignore it. That’s a shame, not just for the loss of apprenticeships, but for the loss of big brands promoting them.

These examples simply show that the levy does not work for much of the training that we want to encourage. The redesign needs to enable employers to spend their levy on more types of training and more types of learner, with less bureaucracy.

2.??????Improve the quality

A quarter of apprentices do not finish their qualification. This low completion rate has remained stubbornly low for the last 15 years. If a quarter or university students or A level students dropped out, it would be a national scandal, on the front pages of every newspaper. If we believe that apprenticeships are of value (which I do), we need to take action. Something is going wrong, and we need to dig deeper to understand why apprenticeships aren’t working for employers or employees. Because if they’re not working for employers or employees, they’re not driving growth and productivity in our economy.?

3.??????Double down on parity of esteem… stop undermining the message

I have written elsewhere that the UK education system is seen through the vortex of the British class system, which overvalues an academic education and tells the middle classes that apprenticeships are for “other peoples’ children”. Until this changes, apprenticeships will not have the recognition they deserve, and therefore will not have the impact they promise. The numbers of apprenticeships at level 3 and 4+ (i.e. A-level and degree level) are creeping up, which suggests more people are choosing an apprenticeship at higher levels, and they’re not just for young plumbers. This is great because there are routes into professions where you can learn and earn at the same time. But the government undermines this message because (nearly) every time ministers talk about apprenticeships, they suggest they’re just for people learning basic skills, in manual trades, who are under 18.

?

We need a big, gamechanging campaign which puts upskilling, reskilling and workplace training at the centre of the economic recovery. Apprenticeships could and should be part of that. But only if we reform the apprenticeship levy.