Apprenticeships are a really important tool for developing a skilled workforce, and taking on young apprentices can bring significant benefits to businesses and to individuals. Recruiting young people through an apprenticeship has been found to be good for staff retention, reducing recruitment costs. And moreover, quality apprenticeships can be hugely beneficial to a young person’s labour market prospects, leading to improved future earnings and employment prospects. However, the current system has a number of weaknesses, many of which we have covered in previous policy reports, which the new apprenticeship levy is likely to exacerbate.
As expected, apprenticeships featured in a big way in the election manifestos of the two main political parties. So what was there to celebrate, and what should we be concerned about?
Unsurprisingly, much of this amounted to renouncements of existing plans. Disappointingly, they did not use this as an opportunity to step back from the target to “create 3 million for young people by 2020” which will be both highly difficult to deliver, and risks undermining efforts to improve the quality of apprenticeships.
On a positive note, it was encouraging to see transport barriers being addressed via a new announcement to “introduce significantly discounted bus and train travel for apprentices to ensure that no young person is deterred from an apprenticeship due to travel costs.” The cost of transport represents a significant barrier to accessing apprenticeship opportunities for many individuals, particularly for those from rural areas. However, the next government has to also consider barriers around the availability of transport options – such as available routes, length of journeys, and frequency and timing of services – which is often as big a barrier to accessing opportunities as cost.
And on to the ‘just plain confusing’: Up until now the Conservative party has been very clear that the apprenticeship levy must only be used for training and assessment. However, announcements in the manifesto look set to muddy these waters if they get re-elected with proposals to allow businesses to use the levy for wage costs as part of a new “national retraining scheme”. This is likely to cause confusion; a much better way to address the decline in investment in employer training effort would be to broaden the levy out into a wider training levy.
On the other hand, we would be more supportive of the Liberal Democrats’ proposals that all receipts from the apprenticeship levy in England “would be spent on training, aiming to fund a wider range of types of training”. The IFS recently pointed out that most of the revenue raised via the levy will not be used to fund apprenticeships; the levy is expected to raise £2.6 billion in 2017–18 and £2.8 billion in 2019–202, but apprenticeship funding in England is only set to increase by £640 million in cash terms between 2016–17 and 2019–20.
The Labour Party manifesto set out a number of key measures around apprenticeships, including: increasing the number of advanced apprenticeships (NVQ level 3); introducing reporting requirements for the new Institute for Apprenticeships; and allowing the use of the levy for pre-apprenticeship programmes.
The majority of apprenticeships currently undertaken are at intermediate level (NVQ Level 2), which account for 60% of apprenticeship in England. We know from government evidence that there are few economic returns associated with apprenticeships at this level, and in most other European countries provision at Level 3 and above is the norm. There is a clear need to shift the balance in the UK, however, it is difficult to see how expansion of Level 3 provision would be successfully achieved without first tackling the underlying weaknesses in the apprenticeship system itself.
The Public Accounts Committee has been highly critical of a number of aspects of apprenticeship reform. In particular, that no clear measures of success have been identified – beyond the 3 million target – and no clarity on how the programme will be monitored to ensure that it is “meeting employers’ needs and improving the opportunities for under-represented groups”. Labour’s policy measure that the Institute for Apprenticeships would be required to report that annually on the quality of outcomes would therefore help address this weakness.
The Labour Party has also put forward the idea of allowing employers to use levy monies to support pre-apprenticeship programmes. Whilst we are supportive of the principle of broadening out the scope of the levy this would still mean that it was narrowly focusing on apprenticeships – and as such would remain a rather blunt tool for addressing the UK’s underinvestment in training. Whilst apprenticeships have a number of benefits there are many other equally valuable forms of workplace learning that need to be supported.
Final thoughts – celebration or concern?
A number of the policy measures put forward by the two main political parties on apprenticeships are certainly welcome. Tackling transport barriers so that more people are able to access apprenticeships is a good idea, so long as issues around availability are also addressed (Conservative). Ensuring that any underspend of levy monies is used to fund training has been something that we have also called for in our own manifesto (Lib Dems). Whilst ensuring that Institute for Apprenticeships reports annually on quality of outcomes would help ensure that there is a strong focus on raising quality and ensuring equality of access (Labour).
Yet, what we have ideally liked to have seen was sadly absent from either of the manifestos. We have previously argued that in its current form the levy could exacerbate many of the weaknesses in the apprenticeship system, leading many employers to engage in extensive rebadging of existing training into apprenticeships or reducing investment in other forms of training. We will be lobbying the next government to widen out the apprenticeship levy to be a broader training levy to make it more flexible for employers’ skills development requirements.
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