The Apprenticeship Levy: Why the government needs to get it right

As part of National Apprenticeship Week, AELP chief executive Mark Dawe tells us everything we need to know about the Apprenticeship Levy and the knock-on effects for businesses large and small. 

The timing of the Skills Summit 2017 just before National Apprenticeship Week couldn’t have been better. 

I had the pleasure of chairing an excellent line-up of speakers who were able to offer a forensic analysis of the government’s apprenticeship reforms less than a month before the start of the new levy for large employers, and we listened to a mix of optimism about some aspects but some real trepidation about others.

By 2020 we will see an apprenticeship programme that has a budget a billion pounds larger than the current £1.5bn. This can only be regarded as a positive when a post-Brexit Britain needs to improves the skills of its workforce at all ages and across all sectors. 

The levy is also going to bring into the programme employers who have never previously offered apprenticeships including some major household names. Many of these businesses have largely relied on graduate programmes for their recruitment of future managers but we are now seeing a complete change in mindset towards apprenticeships providing skills solutions at higher levels. 

It would not be surprising if at least half of the levy proceeds are spent on high level and degree apprenticeships within three years. Some employers are already saying that they will switch the bulk of their traditional graduate intake over to high level apprentices.

When we are seeing new annual newspaper supplements appear with names like the ‘Elite Guide to Apprenticeships’, there is a transformation in attitude going on towards the programme. But we are not there yet and there is a danger that the sheer scale of the reforms – all happening at once – will undo some of the positive gains that have been made. 

Three areas of the reforms especially need attention if the reforms are to be successfully implemented and these cover the programme’s branding, the new system for protecting quality and the operational readiness of the training providers and others involved in the delivery of apprenticeships.  

Protecting the brand

The biggest threats to the much improved apprenticeship brand are ignorance about what apprenticeships can offer and perhaps unrealised expectations about them being universally available.

When talking to successful young apprentices, a common refrain is that they never heard about apprenticeships at school. Instead it was either their own online research or recommendations from their peer group that alerted them to the career opportunities which the programme offers. 

Many teachers and parents still have a completely outdated ‘oily rag’ image of apprenticeships, not realising that they are available across all sectors including offering routes to the top of professions such as law and accountancy. 

It would not be surprising if at least half of the levy proceeds are spent on high level and degree apprenticeships within three years.

With the help of new legislation, poor careers advice in schools is at last being tackled and hopefully this will fade away as a major issue as more apprenticeship training providers are allowed into schools to promote the programme’s debt-free benefits.

An even larger challenge is ensuring that every young person who wants an apprenticeship can have one – something that was promised by David Cameron when he was prime minister.  The new reforms have presented two barriers to achieving this: first, the way apprenticeships will now be funded for 16 to 18 year olds and second, the possibility that thousands of small businesses will no longer be able to access funding at all to offer young people places on the programme. 

At the Skills Summit, a senior government official acknowledged that the new funding regime for young apprentices was still not fully rectified after an initial disastrous set of proposals last August and that the government was now undertaking a review of how they could support young people from disadvantaged backgrounds in the future. 

Social mobility is the key driver behind all of the Education department’s policies under Theresa May and if they can’t respond to it in a programme like apprenticeships, ministers are in trouble and so is the programme’s brand.

The same government official said that the government would also continue to support SMEs who offer well over half of the apprenticeship opportunities in England. It is currently ministers’ intention to fund the programme entirely by the levy, but the indications are that the levy payers between them will claim back all of the funding by the end of the levy’s second year, leaving no money to support the apprenticeships of smaller businesses. 

Bearing in mind that there are many towns and rural areas without large levy paying employers, we could be left with ‘apprenticeship deserts’ in many areas, which would again be highly damaging to the brand. AELP has therefore called for a minimum government budget of £1bn for non levy payers to guarantee this delivery, no matter what happens with the levy.

Protecting quality

At the same time that major funding reforms are being introduced, the government is replacing the apprenticeship frameworks for each business sector with new standards and a new testing regime called end point assessment. 

Rather bizarrely, it will now be possible for an apprentice under some standards to pass the end test and complete the apprenticeship without receiving a nationally recognised qualification. In the interests of the apprentice’s prospects to advance their career, this must be put right. 

Skills and competency need to be assessed throughout an apprenticeship, not just at the end. Again this requires some adjustment to the current approach.

There are significant issues around standards and assessment which the new Institute for Apprenticeships (IfA) needs to address; otherwise delivery of poor quality apprenticeships, which are relatively little among the current 900,000, could persist. 

Refereeing the quality of apprenticeships looks as crowded as the oversight of a Champions League match since officials were positioned behind each goal. We have several quality assurance bodies and inspectorates as well as the Institute and the Skills Funding Agency all having a say and when it comes to issues such as deciding who can be or stay an approved apprenticeship training provider, some urgent clarity is required. Ofsted should have an overarching role with the IfA for the quality of all apprenticeships.

Ensuring operational readiness

From April, there will be levy paying employers who will just pay the tax and wait to see how the reforms pan out before committing themselves to an apprenticeship programme. As businesses themselves, training providers can’t afford to wait and they need guidance very quickly on issues such as when a small employer’s cash contribution is required, a practical definition of off-the-job training and meeting the costs of assessment. Without it, providers are taking on considerable risk in helping the government meet its 3m starts target. 

Let’s celebrate National Apprenticeship Week and all our successful apprentices. Apprenticeships have been given visibility and priority like never before. What we all need to do now is recognise that the road ahead will inevitably have some bumps and work together to make this a success. With such demand for skills, we can’t afford to fail.


Mark Dawe is chief executive of the Association of Employment and Learning Providers (Twitter: @AELPUK)


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