From education to employment

Can we have our cake and eat it? Reflecting on the one year anniversary of the Apprenticeship Levy

The Apprenticeship Levy is a year old. Are you celebrating?

It has been a year since the Apprenticeship Levy was launched on 6th April 2017.

This time last year I was expecting a hugely successful year and huge growth in Apprenticeship numbers.

It was the chance for the sector to ‘shine’… to take Work Based Learning to a new level, to promote social mobility and increase productivity.

Brexit was on the horizon, but no problem we will develop our own expertise thanks very much, we are not importing talent any longer!

The reality has been pretty disappointing, with monthly Apprenticeship starts down by 22% from the year before and research launched today from the Open University today showing that only 8% of the Apprenticeship Levy funding pot to date has been used by organisations.

According to the OU research, £1.28 Billion of the £1.39 Billion paid by businesses is currently sitting unused in Apprenticeship Levy accounts. Putting this into context, organisations in England have withdrawn just £108 million so far of the £1.39 billion they’ve paid into the Apprenticeship Levy!

As there is a two year ‘use it, or lose it’ on the Apprenticeship Levy pot, unless the Levy spending starts to pick up, this would mean employers could then be returning £139 million a month back to the HMRC after April 2019. This is over £1 Billion going to HMRC, instead of being utilised to develop staff and upskill learners. What a potential tragedy! How can we as a sector sort this out?   

Is next year going to see a bumper growth in Apprenticeship numbers, especially now that Levy pot transfers are enabled… or could this be a massive missed opportunity?

I personally have been really excited to see the growth in Degree and now Master level Apprenticeships.

I have long been a fan of the Meister Apprenticeship route from the German, Swiss and Austrian Apprenticeship models… but for us in the UK, the growth of the Higher level Degree and Master’s level Apprenticeships appears to be at the detriment of the entry level Apprenticeship starts.

What do we need to do to have our cake and eat it?

How can we have a fully inclusive entry level Apprenticeship programme with a clear route through to Degree and Master’s level programmes, which surely fulfils so many positive aims in promoting social mobility, and increasing productivity?

Prior to the Apprenticeship Levy, home to the majority of Apprentices were the SME’s. Will the Apprenticeship Levy transfer of funds now filter down the SME’s over the next year? How can we promote more SME’s to take on Apprentices?

The Apprenticeship Levy awareness campaign prior to the launch was handled pretty poorly in my opinion. In the run-up to the Apprenticeship Levy launch, there was a massive Work Place Pension advertising campaign on TV, radio, billboards, newspapers… but the Apprenticeship Levy had nothing like this.

I have heard the following story more times than I can count.  The majority of potential Levy payers who previously hadn’t engaged in Apprenticeships, heard about the upcoming Apprenticeship Levy from a cold call from a provider. 

I bet many a large employer fell off their chair when they first heard that they had to pay an additional 0.5% of their wage bill. It must have felt more like a stealth tax, rather than a Skills Investment fund. If we look at the high street and restaurant chains, this year has been pretty hard for them. There has been more news about closure than growth!

The sector is now being asked to be a strategic learning and development partner for employers. An outsourced strategic training division. Which I think is great. ..but if we have an honest look, this has meant massive change for providers.

No longer are teams asked to sell ‘free training’ that doesn’t really fit employers needs. We are now ‘solution selling’, having strategic chats to develop programmes that fulfil the long-term strategic goals of the employer. Massive change takes time to develop… but we are running out of time!

Gavin O’Meara, Head of Digital and Chief Executive, FE Careers and FE News

Enough from me, what do experts across the sector think about how to move forward after reflecting on the 1 year anniversary of the Apprenticeship Levy:

Simon Ashworth 100x100Association of Employment and Learning Providers (AELP) Chief Policy Officer Simon Ashworth said:

“AELP is an unequivocal supporter of the levy and believes that for the foreseeable future the levy’s proceeds should remain ringfenced to fund only apprenticeships rather than other forms of training. In yielding a billion pounds more for the programme’s budget, the apprenticeship levy is potentially a game-changer in the efforts to boost Britain’s productivity, as a vehicle for improving social mobility and for ‘growing our own people’ to fill post-Brexit skills shortages. It cements the principle of employer choice in the funding system and the new standards will help to drive up quality further.

“Because of the way the reforms have been implemented, however, the start numbers have been very disappointing for young people and the non-levy SME employers. The botched procurement exercises mean that many areas of the country and particular sectors are about to experience a shortage of specialist provision which will impact negatively on employers and the young people wanting to do an apprenticeship. Our solution is that until April 2019, SME employers outside the levy’s scope should not be required to make a financial contribution towards the cost of training new apprentices aged between 16 and 24. The waiver should also apply to levy paying employers who exceed their levy allocation and are looking to start additional apprentices. We would also like to see a new incentive to encourage more progression from intermediate to advanced levels, again involving the waiving of the financial contribution when an apprentice moves on from level 2 to a level 3 programme.”

David Willett100x100David Willett, Corporate Director at The Open University, said: 

“With such a huge amount being paid into the apprenticeship levy, it’s essential that employers in England get return on investment by embracing apprenticeships. As an industry, we appreciate there have been some teething issues, but we’re here to help business leaders work through it and develop programmes that best fit their needs, allowing them to fill skills gaps and future-proof their organisations against the changing world around them.

“While it’s encouraging that the majority of business leaders agree with the levy in principle, it’s clear that adjustments are needed to make the levy work harder for employers. The lack of flexibility needs to be urgently addressed to ensure that organisations get value for money, and we think that modular apprenticeships, which allow organisations to develop tailor-made programmes that fit their specific needs, could be an attractive solution for both employers and the UK government.”

Stephen Evans LW 100x100Stephen Evans, Chief Executive and Learning and Work Institute comments:

“The Apprenticeship Levy was a bold move and one I welcome. We need greater investment in learning and skills in this country, and that includes from employers. However, there are clearly big challenges in its design and implementation. In particular, more needs to be done to underpin apprenticeship quality and make sure overall training is rising rather than existing training rebadged as apprenticeships. Both of these are more important than whether we hit the 3 million starts target and they are about making a success of the Levy.

“There are two other areas where I am keen to see radical action. The first is on access, making sure everyone who can benefit from an apprenticeship can access one. Our research shows, for example, that apprenticeship applications from BAME applicants are far less likely to succeed, as well as significant gender segregation. We need to do more to tackle this, including looking at our proposal for an Apprentice Premium and a push for more flexible and part-time apprenticeships. The second is on apprenticeships as part of a wider system – how do apprenticeships fit with reforms of technical education and other forms of learning? We really need a lifelong learning strategy to set this out.”

Teresa Frith 100x100Teresa Frith, Senior Policy Manager at the Association of Colleges (AoC), said:

“One year is hardly a long time and we really need to allow things to bed in before introducing further wholesale changes. Positively, the Government and the IfA are now listening more to the stakeholders who are involved in making apprenticeships work within the new policy and the levy. They are recognising the problems and working together to create viable solutions. There is more balance in this than ever before.

“It feels as though there is now some recognition that the idea of employers in the driving seat has been taken a bit too far. That perhaps some employers would prefer to be chauffeur-driven – this does not mean they don’t decide where they want to go or what time they want to arrive, it just means that they are prepared to trust partners they know understand more about route planning and engine maintenance than they do to get them to the right place at the right time.”

Petra Wilton 100x100Petra Wilton, Director of Strategy for the Chartered Management Institute, said:

“Small businesses are a big piece in the puzzle of how to boost the number of apprentices, and how to make the Apprenticeship Levy work for all. A year on since its launch, there have been many positive signs of how the Levy is transforming the way in which employers develop young people starting out in their careers, and upskill existing employees.

“However, the current set-up certainly favours larger employers. SMEs employ nearly half of the UK’s workforce, so the government needs to get many more on-board with the apprenticeship programme if it’s to hit its 3m target by 2020.

“We welcomed the Chancellor’s £80m helping hand for small businesses to access the Apprenticeship Levy in his Spring Budget Statement, but a month on and we’re still waiting for details.

“Too many businesses are missing out, and will continue to do so until the government fills in the blanks.

“Despite a slow start, we’re aware that many businesses are rightly taking their time to ensure they get real benefits from investing in apprenticeships. They are selecting high-quality providers and aligning apprenticeship provision to the needs of the business.  As a result, many new starts are expected in the year ahead, and the government’s decision to create a two-year window for spending the levy is clearly welcome.

“However, still too many employers are not even be aware that they can use the Levy to train managers and leaders at every level. We now need more collaboration to ensure that this support from managers for apprenticeships translates into a new way of training and upskilling the workforce.

“The broad scope of these new apprenticeships means that we’ll see school leavers all the way to executives embark on apprenticeships that will advance their careers and benefit their employers. The likes of the Chartered Manager Degree Apprenticeship programme is now producing its first graduates, managers with world-class skills needed to meet the business challenges of the 21st century.”

Nick Ellins100x100Nick Ellins, Chief Executive of Energy & Utility Skills, said:

“The sector supported the concept of generating a large pipeline of new UK talent through apprenticeships right from the very start, and dedicated its efforts to making reforms work. The sector’s success and achievements speak for themselves. As one of the UK’s key STEM sectors, our employers have been in the vanguard of English Trailblazer introduction; securing the first standard and graduating the first-ever apprentices. They are a vital element of our approach to workforce resilience, as we address significant recruitment challenges.

“The introduction of the levy transfer policy, which will permit up to 10% of levy funds to be transferred for use by our sector’s vital supply chain companies, now gives us further opportunity to deliver more, and it is welcomed, but there is more to do.”

“Skills policy is currently devolved, with no central guiding mind working to meet the challenge of a continually tightening UK labour market. There is also yet to be a plan to ensure that the needs of the industries of critical strategic value to the UK are prioritised, through an efficient and targeted approach.”

“The utility sector ultimately serves 65 million citizens every day, and what they do underpins our very economy and society. With their critical role for our country, their proven commitment to trying new approaches in this area and their track record of success, why not try more holistic thinking here?”

Ellins concluded: “While we have always welcomed the strategic aim of the apprenticeship levy to stimulate more talent into the labour market, the workforce resilience needs and skills gaps faced by UK employers are much broader. Simply put, labour market challenges in a post-European environment don’t pause at the English borders. Workforce resilience and sustainability needs ‘thinking in the round’ and could never be addressed by English apprenticeships alone. Policy makers know this and can make quick gains by recognising the vital other areas of upskilling and professional development needed to make UK businesses operate efficiently and effectively. The levy can enable that success but right now is restricted purely to apprenticeships.”

Anne milton100x100Apprenticeships and Skills Minister Anne Milton said:

“We introduced the apprenticeship levy a year ago to improve both the quality of apprenticeships, and to create the long-term investment in skills training that British businesses need to grow.

“Our reforms have fundamentally changed apprenticeships for the better. Apprenticeships standards with an end point assessment are developed by employers working with the Institute of Apprenticeships. They must last a minimum of a year and now give apprentices a recognised qualification understood by future employers and are a stepping stone to a successful career.

“I’ve met lots of businesses up and down the country who have already kick-started amazing apprenticeship programmes and are using their levy funds to help change lives and get the skills they need. It has taken some business longer to get going on their apprenticeship programmes using the levy whilst many that I have met are forging ahead growing the numbers of apprentices with their businesses getting a skilled and loyal workforce.”

What do you think?

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