‘The great training robbery’ – one year on, is the apprenticeship levy having the desired effect?

It’s now been a full year in operation, but will the apprenticeship levy “incentivise more employers to provide quality apprenticeships” and “transform the lives of young people who secure them”, as the government hopes?

A new report from Reform, which has reviewed the available evidence, suggests that “significant reforms are needed”.

Purpose of the levy

Unveiled in 2015 as part of the government’s commitment to deliver three million apprenticeship starts by 2020, the apprenticeship levy aims to encourage employers to invest in apprenticeship programmes and raise additional funds to improve the quality and quantity of apprenticeships.

The levy mandates that employers in England with annual wage bills of over £3 million pay a tax of 0.5%, which can then be spent on apprenticeship training. Employers pay their levy contributions via the PAYE system into a digital account held by HM Revenue and Customs (HMRC). Smaller employers can also access the funds generated through the levy, but they must pay a ‘co-investment’ of 10% towards the cost of the training.

According to the 2015 Spending review and Autumn statement, the levy was expected to raise £3 billion per annum by 2019/20. However, the evidence reviewed by Reform suggests the levy is instead leading to unintended consequences.

Lower quality apprenticeships and bureaucratic burden?

The number of apprenticeship starts following the introduction of the levy has continued to fall. Reform highlights that the number of people starting an apprenticeship in the six months after it was introduced was over 40% lower than the same period the previous year. The most recent figures are little improved – in December 2017 there were 16,700 apprenticeship starts compared to 21,600 in December 2016.

Reform also found that younger and less experienced people have been particularly badly affected with the focus now being towards Higher and Degree level apprenticeships. And many apprenticeships are now for low-skilled, low-wage jobs or for re-labelled management programmes and do not meet the original definition of an apprenticeship, thus diminishing the quality.

The OCED recently highlighted the importance of maintaining skilled roles in apprenticeships, noting that:

“In the long run, even just a small proportion of low-quality apprenticeships can damage the overall reputation and “brand” of apprenticeships.”

Skills, Knowledge, Abilities

The use of the levy to re-badge existing training courses as a way to shift the costs onto government is a particular concern. A CIPD survey of more than 1000 organisations in January 2018 found that:

  • 46% of levy-paying employers think the it will encourage their organisation to rebadge current training in order to claim back their allowance
  • 40% of levy-paying employers said it will make little or no difference to the amount of training they offer
  • 35% of employers will be more likely to offer apprenticeships to existing employees instead of new recruits

Commenting on the findings, skills adviser at the CIPD, Lizzie Crowley, said “this is not adding any additional value and is creating a lot of additional bureaucracy and cost.

Reform argues that the impact on the public finances of allowing employers to re-label courses in this way should not be underestimated. It is estimated that inappropriately labelled ‘apprenticeships’ represent 37% of the people training towards any apprenticeship standard – a figure that could become even higher if employers are allowed to continue to rebadge training as they see fit.

If current trends continue, the government could be spending almost £600 million per annum by 2019-20 on training courses that have been incorrectly labelled ‘apprenticeships’.

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Concerns have also consistently been raised over the complexity of the levy for employers. It has been claimed that the slump in apprenticeship starts could be blamed on “a combination of confusion surrounding the Apprenticeship Levy and the ‘increased administrative burden’ it placed on employers”. The Reform report highlights that the substantial increase in bureaucracy, among other issues, has led business groups to brand the levy ‘disastrous’, ‘confusing’ and ‘broken’.

Despite this, however, there is still support for the levy. A recent survey by the Chartered Management Institute (CMI) of over 1,500 managers found that two-thirds (63%) agree that it is needed to increase employer investment in skills. It has been suggested that employers have ‘fundamentally failed’ to prepare for the levy as the scale of the challenge was not recognised. And a lack of clarity from the government has also been attributed some blame.

Way forward

The evidence would suggest there is potential for the levy but not in its current form.

The Reform report recommends six significant changes if the objectives for funding apprenticeships are to be realised:

  • there should be a renewed focus on quality over quantity
  • a new internationally-benchmarked definition of an ‘apprenticeship’ should be introduced
  • the 10% employer co-investment requirement should be removed
  • a simpler ‘apprenticeship voucher’ model should replace the existing HMRC digital payment system
  • all apprenticeship standards and end-point assessments should be assigned a fixed cost
  • Ofqual should be made the only option for quality assuring the end-point assessments to maintain standards

If the necessary changes are made, the Reform report concludes that “apprentices, taxpayers and employers across the country stand to benefit for many years to come.”


If you enjoyed reading this, you may be interested in our other posts on diversity in apprenticeships and higher apprenticeships.

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Technical education – reformed for whose benefit?

by Stacey Dingwall

The expansion of grammar schools may not have made it into this year’s delayed and reduced Queen’s Speech but another education policy did – the government’s planned ‘major’ reform of technical education.

As Her Majesty set out, the government’s plan is to ensure that people “have the skills they need” for high-skilled, well-paid jobs, facilitated through “a major reform of technical education”.

A reformed system

The Chancellor detailed plans for a new ‘T levels’ system in March’s Budget, which is being created with the aim of equalising technical and higher education in order to improve the country’s productivity levels. The Budget announcement promised an increase of 50% in the number of hours students train, as well as £500m of funding per year to deliver the new system. The reforms will also simplify the system, reducing the currently available 13,000 qualifications to a mere 15.

The Budget announcement followed the April 2016 publication of the findings from Lord Sainsbury’s review of technical education. The review found “serious” problems with the existing system, noting that British productivity levels lag behind countries including Germany and France by up to 36 percentage points. It also highlighted that the country is forecast to fall to 28th out of 33 OECD countries in terms of developing intermediate skills by 2020.

The Sainsbury Review made a series of recommendations, including the introduction of a framework of 15 qualifications, which the government accepted in full (where possible within existing budget commitments) in its July 2016 Post-16 skills plan. The plan details how the government plans to deliver its reformed technical education system, by working closely with employers and providers, and ensuring that the system is an inclusive one, accessible no matter someone’s social background, disability, race or sexual identity.

Investing and cutting

Also included in the planned reforms is the construction of new ‘Institutes of Technology’, which are intended to “enable more young people to take advanced technical qualifications and become key institutions for the development of the skills required by local, national and regional industry”. At a time when schools and colleges are facing continued cuts and pressures on resources, this is one part of the reformed system that’s come in for criticism.

Speaking to The Guardian, Marcus Fagent from design and consultancy firm Arcadis stated that capital investment is essential to the new technical education system, in terms of space to teach the new curriculum. He also highlighted how addressing the issue of space for teaching has enabled countries like the Netherlands to deliver successful technical education provision.

The fact that our continental neighbours do it better with regards to technical and vocational education is something that keeps coming up. Even the new system has come in for criticism for its continued focus on leaving it so ‘late’ to try and promote technical education as a potential path for pupils. While Britain sticks with starting at 16, countries like Germany offer vocational routes to pupils from as young as 10.

Decentralisation and young people

This week, the Local Government Association will publish a new report that argues that previous reforms within the skills system have failed due to a lack of progress in the devolution of powers to the local level. Written by the Learning and Work Institute, the report will also recommend the creation of “one-stop” services covering apprenticeships, technical education reform, local adult skills planning, the successor to the European Social Fund and oversight of employment services.

In amongst all the arguments over reforms and provision, it’s telling and worrying that the voice of those who will be most affected by the new system is rarely heard – that of the young people trying to navigate a complex and ever-changing education system. With more reforms to GCSE grading also announced in the last week, they have every right to be anxious about navigating an education system that’s supposed to support them to deliver the productivity gains the country needs.

Follow us on Twitter to see what developments in public and social policy are interesting our research team. If you found this article interesting, you may also like to read our other education articles. 

Apprenticeships – inclusive and accessible to all?

AZUBI und Ausbildner

By Heather Cameron

The government is “committed to making apprenticeships inclusive and accessible to all”. But, unfortunately, this is not currently the case. Just 10.6% of the starting apprenticeships in England in 2014/15 came from Black, Asian and Minority Ethnic (BAME) backgrounds, compared to 14.6% of the general population. And while women are well represented overall, there are significant disparities across sectors.

In response to a recent Ask a Researcher enquiry, we looked into the topic of diversity in apprenticeships and, in particular, the barriers that face some groups such as women and ethnic minorities.

Occupational gender segregation

Occupational gender segregation in apprenticeships was found to be a particular issue. Research has shown that, despite women apprentices having outnumbered men since 2010, young women miss out on certain opportunities as a result of this issue. For example, women comprise 94% of childcare apprentices but under 4% of engineering apprentices. And these figures have hardly changed in the last decade.

According to recent research, occupational gender segregation contributes to women losing out at every level with apprenticeships:

  • Women tend to work in fewer sectors
  • Women receive lower pay than men
  • Women are less likely to receive training as part of their apprenticeship
  • Women are more likely to be out of work at the end of their apprenticeship

In terms of the barriers facing women specifically, a lack of awareness of the careers advice and information services available, or of the funding available for training; formal entry qualifications; and child care and other caring responsibilities have all been cited.

Under-representation

The other significant issue highlighted by the research is the under-representation of BAME groups. The overwhelming majority (88.5%) of apprenticeship starters in 2014/15 were White and the provisional figures for 2015/16 are similar at 88.1%. This compares to just 10.6% of apprenticeship starts from BAME groups in 2014/15, with provisional figures for 2015/16 down slightly at 10.4%.

Similarly to women, BAME apprentices are also under-represented in specific sectors. Fewer than 3% of apprentices in construction, land based industries, science, engineering and manufacturing, building services engineering, and hair and beauty came from a BAME background.

Barriers facing ethnic minorities include a lack of awareness around the benefits of apprenticeships and parental influence. A study from the Joseph Rowntree Foundation has therefore called for action to increase the awareness of apprenticeships among ethnic minority young people and their parents.

Progress

Despite the issues of occupational gender segregation and ethnic minority under-representation, it should be noted that progress has been made.

The most recent statistics on apprenticeships in England show that: there were 12% more apprenticeship starts in 2015 than in the previous year and that achievements increased by 1% over the same period; overall, between 2013/14 and 2014/15 the number of apprenticeship starts increased across all age groups except for people aged under 16 and those aged 18 to 24; the number of apprenticeship starts for learners with learning disabilities and/or difficulties was up by 12%; and although an overwhelming number of apprenticeship starters were White, the number of non-White apprenticeship starters increased by 17%.

Way forward

The government ambitiously aims to deliver 3 million quality apprenticeships by 2020, to reflect the widest spectrum of society. And it has pledged to increase the proportion of apprentices from black and minority ethnic backgrounds by 20% from 10% to 11.9%. However, no specific targets have been set for gender diversity.

The research suggests that formal entry criteria should be removed where not necessary to encourage better uptake of different apprenticeships by women, and awareness of apprenticeships should be increased with initiatives targeting ethnic minority young people and their parents. Other recommendations include introducing diversity targets within organisations, providing more part-time and flexible apprenticeships and providing better advice and support to apprentices at all stages.

Perhaps if such additional actions are taken, the government will move closer to its commitment of making apprenticeships truly inclusive and accessible to all.


If you enjoyed this post, you may also be interested in our previous blog on higher apprenticeships.

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Higher apprenticeships – the way forward?

apprentices in workshopBy Heather Cameron

With the mounting costs associated with higher education study, it isn’t any wonder that young people are looking for alternative routes to their chosen career.

A recent survey has found that 4 in 10 of the first students to pay the higher tuition fees of up to £9,000 per year, say university is not good value.

Opinion varied between students doing different types of courses however. Two-thirds of those studying science, technology, maths and engineering – where a lot of practical teaching and staff time is required – said their courses had been good value.

It would seem that employers are also looking for more than just academic qualifications. It has always been something of a catch-22 situation for graduates who can’t get a job because they don’t have the required work experience, despite having relevant qualifications.

A recent study by the Institute for Public Policy and Research revealed that graduates and A-level students are three times more likely to be jobless a year after finishing their courses than apprentices. It also found that unemployment rates have risen at all levels of education, except within apprenticeships.

Higher apprenticeships

According to a study by ICM Research in 2013, those with a higher, degree-level, apprenticeship were rated by employers as the most employable, ahead of those who had university degrees. The top six qualifications rated the most valuable were:

  • Higher Apprenticeship
  • University degree
  • Advanced Apprenticeship
  • Intermediate Apprenticeship
  • Level 3 vocational qualification
  • A-Levels

Indeed, the many benefits to businesses of higher apprenticeships have been recently highlighted. They enable employers to gain links with universities and colleges which can help them to develop learning programmes based on the skills they need. The National Apprenticeship Service says that higher apprenticeships are critical to the economy as they:

  • respond to employers’ higher level skill needs;
  • support business growth;
  • meet individuals’ career aspirations;
  • and enhance opportunities for social mobility.

Higher apprenticeships, created in 2009, offer a work-based learning programme which includes the achievement of academic and vocational qualifications and learning from level 4 up to bachelor’s and master’s degrees at levels 6 and 7 respectively. Degree apprenticeships are the latest model to be developed as part of the higher apprenticeship.

Research by the Centre for Economics and Business Research (CEBR) has estimated that the lifetime benefit of undertaking an intermediate apprenticeship is extra earnings of between £48,000 and £74,000, and an advanced apprenticeship between £77,000 and £117,000.

This figure rises to over £150,000 for a higher apprenticeship, comparable to university graduates.

Roll out and take-up

In 2011 the government announced a £25 million fund to support up to 10,000 advanced and higher apprenticeships in order to help businesses, particularly small and medium sized enterprises (SMEs), gain the high level skills they need to grow.

The Higher Apprenticeship Fund (HAF) aimed to develop a range of higher level apprenticeships, and fund 20,000 apprentices by 2015. The fund was awarded to 29 higher apprenticeship projects, in sectors including accountancy, engineering and law. The government has announced an additional £40m to fund places up until July 2015, and an extra £20m to fund the higher educational element to the end of March 2016.

Following the introduction of the fund, the number of higher apprenticeship starts rose by 68% in 2011/12. There were almost 10,000 starts during 2012/13, representing growth of 165% on the previous year.

In the last academic year over 9,000 people started a higher apprenticeship, with numbers continuing to grow.

Role of universities in providing vocational education

With the growth in higher apprenticeships, universities and other higher education institutions (HEIs) have an important role to play in this provision. The 2015/16 academic year is the first time that there will be a substantial group of HEIs in the apprenticeships delivery network.

A collection of recent think pieces have made a strong case for greater vocational education through universities and colleges. One contributor notes that governments around the world widely accept that vocational education is the way to meet growing industry needs and fill identified skills gaps. But policy makers in the UK are faced with the obstacle of an old-fashioned education system.

It is clear that the traditional form of higher education is not going to supply businesses with the higher level skills needed for economic growth. According to research by the UK Commission for Employment and Skills (UKCES), by 2022, two million more jobs will require higher level skills. More than one in five of all vacancies are ‘skills shortage’ vacancies – where employers cannot find people with the skills and qualifications needed.

The research highlights the importance of collaborations between employers and universities in the supply of highly skilled people to meet this demand. It argues that universities and employers need to be innovative, and engaged in promoting different and non-traditional routes into higher skill roles.

Good practice evidence of such collaboration already exists in the UK, as showcased by the 12 case studies, which explore the reasons for and benefits of collaboration in six industrial sectors – Advanced Manufacturing, Construction, Creative and Digital, Energy, IT and Life Sciences.

Across a wide range of collaboration with employers, universities contributed more than £3.5 billion to the UK economy in 2012/13, a 5% increase from the previous year. Significant volumes of courses and continuing professional development (CPD) are also provided by UK HEIs directly to employers, with £423 million worth of business completed in 2012/13, of which £19 million was with SMEs.

Nevertheless, there is still much room for improvement. Policy makers, HEIs and businesses all need to work together if the drive towards higher level vocational education is to succeed.


The Idox Information Service can give you access to a wealth of further information on vocational education – to find out more on how to become a member, contact us.

Further reading

Polytechnics-plus: releasing the potential of colleges, IN Graduate Market Trends, Spring 2015, pp12-13

Higher apprenticeships better than university, IN Workplace Learning and Skills Bulletin, No 120 14 Jul 2014, pp2-3

Economic impact of apprenticeships: a Cebr report for the Skills Funding Agency. Centre for Economics and Business Research (2014)

Improving employability skills, enriching our economy: case study report. National Foundation for Educational Research (2014)

Tomorrow’s growth: new routes to higher skills. Confederation of British Industry (2013)

The potential for higher apprenticeships: research report. Learning and Skills Improvement Service (2013)

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National Apprenticeship Week 2014 (England and Wales) underway

apprentices in workshop

by Stacey Dingwall

The seventh annual National Apprenticeship week in England and Wales began yesterday, following a successful run in 2013 when over 13,600 new job pledges were announced over the week. The 2014 Week was launched by Matthew Hancock, Minister for Enterprise and Skills, at the BBC’s ‘You’re Hired’ conference in London, where he emphasised the importance of apprenticeships and vocational education in making social mobility a reality. Continue reading