7. The Government should guarantee apprenticeship spending between 2017 and 2020

Recommendation 7

The Government should guarantee apprenticeship spending between 2017 and 2020 (regardless of actual levy collection) while also setting aside funds to promote access and raise quality.

The apprenticeship levy creates a new independent funding stream for apprenticeships worth an estimated £2.6 billion a year from 2017-18[1]. The official case for introducing the levy[2] noted financial benefits for both individuals[3] and employers[4]. A compulsory system is seen as a means to reverse a 20-year decline in employer spending on training, to narrow the 20% productivity gap with other G7 countries and to increase the number of apprentices. A key principle of the levy is that it is a hypothecated tax with the funds being under the control of employers. The rules allow levy paying employers to bank their funds for up to 24 months before spending them.

Every part of the apprenticeship system is being reformed in 2017 and this creates a risk that numbers in training will fall. Although the levy and public sector targets have generated new interest in apprenticeships, many large employers may wait until they have sufficient funds in their levy account and until they are confident that the new standards work. At a time when the economy may slow and unemployment may rise, it would not be helpful for employers to become more cautious. The Government could act to balance this by guaranteeing total apprenticeship spending, for example by ensuring that there are more funds for smaller employers but also by reserving funds to support quality and access.

Improving training quality needs to be a priority because the reputation of the programme unlocks other benefits. If quality is assured, numbers will follow and other benefits will accrue. Policies focused on quality imply tight controls on who can access public funds for training, transparency about how they use it, information on outcomes and effective risk-based monitoring. The quality and reputation of apprenticeships can also be improved through skills competitions which reinforce employment skills, drive curriculum innovation and provide benchmarks. The Government should continue adequate funding to ensure more apprentices benefit from local, national and international skills competitions organised by WorldSkills UK[5].

Access and participation is an issue requiring joint work from Government, employers, colleges and training providers. There are longstanding issues about segregation by gender[6] and ethnic origin[7] in access to particular careers which need to be monitored and challenged. Information advice and guidance for school pupils is still inadequate, so it is a mistake that DfE has delayed legislation on this. Some employers may want to use their own levy money to widen access and this should be encouraged.  Government should also reserve part of the apprenticeship levy and use this at national or employer level to support access to and achievement in apprenticeships - in a similar way to the widening participation funding that has been reserved for this purpose in the higher education system.

 

[1] HM Government “Apprenticeship spending and expected levy payments” August 2016 estimates that 19,000 employers will pay the levy.

[2] HM Government, English apprenticeships: Our 2020 Vision.

https://www.gov.uk/government/publications/apprenticeships-in-england-vision-for-2020, Page 3.

[3] Completing an apprenticeship brings a return of between £48,000 and  £74,000 extra over a working life for a Level 2 apprenticeship and  between £77,000 and £117,000 for Level 3.

[4] 70% of surveyed employers reported that apprenticeships had improved the quality of their product or service.

[5] The UK came seventh in the 2015 World Skills competition behind Brazil, Korea, Taiwan, Switzerland, China and Japan but ahead of many of its European peers, for example France and Germany. The 2017 World Skills competition is in Abu Dhabi.

[6] Fuller and Unwin “The challenges facing young women in apprenticeships” 2015 available via www.educationandemployers.org.

[7] Newton and Williams “Underrepresentation by gender and race in apprenticeships: A research summary” Unionlearn 2013.