The Lifelong Loan Entitlement, Apprenticeship Levy and Employer Funded Training – Policy Contradictions and Practical Implications

Completing UVAC’s response to the Lifelong Loan Entitlement Consultation, having a few weeks earlier developed a response to the Chancellor’s Spring Statement published by FE News, I am struck by a massive policy contradiction.

The Lifelong Loan Entitlement (LLE) is focused on individuals using state funded loans to “study, train, retrain and upskill throughout their lives to respond to changing skills needs and employment patterns”, LLE Consultation, p8.

In the Spring Statement the Chancellor was clear “UK employers spend just half the European average on training their employees. Furthermore, less than 10% of the spending on training by UK employers goes to high-quality formal training offered by external providers”, Spring Statement 2022, p38. The Chancellor also noted “The government will consider whether further intervention is needed to encourage employers to offer the high-quality employee training the UK needs”, Spring Statement 2022, p39.

The problem we have is that Government is not clear on the responsibilities employers, individuals and indeed Government have for paying for post 18 education and training at level 4 and above. This is leading to some rather large policy contradictions.

Read the Lifelong Loan Entitlement consultation document and you are left scratching your head as to how this relates to the Chancellor’s desire to make employers spend more on high quality training. With the Lifelong Loan Entitlement, as part of the Lifetime Skills Guarantee, individuals use Government backed loans to fund level 4 – 6 programmes. Throughout the consultation, emphasis is placed on ensuring that modules and full programmes meet the needs of employers. Though this clearly makes sense, little reference is made to in-kind support or any financial contribution from employers. The consultation gives the impression that it is the responsibility of individuals to train, retrain and upskill throughout their lives and use the Lifelong Loan (Learning?) Entitlement to fund the costs of such activities.  I suspect a majority would argue that individuals should make a financial contribution to such activities, but surely so too should employers.  With the enhanced ability of individuals to use loans to fund shorter programmes, individual modules etc., funded through the Lifelong Loan Entitlement, could we not see some employers expecting individual employees to use their entitlement for training and development activities which an employer should fund? Indeed, in the worst circumstances, could the Lifelong Loan Entitlement disincentivise employer investment in training and development, contrary to the Chancellor’s intent?

While it could be argued that employers are being given a free ride with the Lifelong Loan Entitlement, the same is not true with Apprenticeships. Here employers with a payroll over £3 million pay to fund the delivery and assessment of Apprenticeships through the Apprenticeship Levy. Despite the Apprenticeship Levy being paid for by employers, employers have been criticised for spending their levy payments on the ‘wrong type’ of Apprenticeships; that is the Apprenticeships their organisations need. Read the training press and employers have spent too much of their levy payments on Degree Apprenticeships, management apprenticeships, Apprenticeships for older workers and too little on Apprenticeships for school leavers.  Some have also criticised employers for using their levy payments to pay for training they would, prior to the levy, have funded from their training budget.  So, it would seem ‘good’ employers that have historically done the right thing and invested in the training and development of their staff are now criticised for using their levy payments to continue to invest in the training and development their employees need.

So what needs to happen? Firstly we need to recognise that we have some excellent programmes and policies. Apprenticeship is a policy success. Employers are using the Apprenticeship Levy to fund the programmes their organisations need to raise their performance and productivity and become more innovation led. Apprenticeship is fast becoming an aspirational programme and throwing off its past reputation as a good choice for other people’s children. There are, of course, lots of positives in the Lifelong Loan Entitlement, flexibility to support different learning options, support for flexible study throughout life and potentially better signposting of courses and modules individuals need to fulfil their ambitions and aspirations. The problem we have, as the Chancellor identified, is how we increase employer spending on high quality training that raises organisational performance and productivity and increases competitiveness. The question for the Department of Education is, how does the introduction of the Lifelong Loan Entitlement support the policy objective of increasing employer investment in high quality training offered by external providers of all types and sizes?

From a UVAC perspective, we would argue that we need a cultural shift in the attitude of some employers to investing in training and clearer guidance on individual, Government, and employer contributions to lifelong learning at level 4 and above. More specifically we need a debate on the employer contribution to the Lifelong Loan Entitlement. We are disappointed that employer support for their employees undertaking LLE funded courses has not been considered in the consultation on the policy design principles, so far. Employers should be encouraged and indeed expected to support individuals use their Lifelong Loan Entitlement as effectively as possible.  There are a range of possibilities here, collaborating with providers to update curricula, providing work placements, careers talks, working with the IfATE on occupational standards and occupational maps. Where an employee uses the Lifelong Loan Entitlement to reskill, more should be expected from an employer. Time off for study and supporting work-based learning come to mind, but should not an employer also be expected to make a financial contribution to the programme and share the financial burden with the individual and state? Perhaps Government should also be clearer on what the LLE should and should not be used on and where instead an employer should be expected to invest.