Is there a Solution to the Forecast Overspend of the #Apprenticeship Levy Pot?

Government needs to face facts – the £2.45bn raised through the Apprenticeship levy was never going to fund the delivery of the Apprenticeships everyone wants.

The levy pot can’t at the same time:

• Tackle the nursing recruitment crisis in the NHS,
• Support police forces change a police constable into a degree level occupation,
• Solve England’s deficit in management skills, and
• Provide a ‘guaranteed’ third route for 16 – 18 year-olds in addition to A levels and T levels.

…I could go on.

So what should Government do?

UVAC’s position has been clear. Government must prioritise Apprenticeships that deliver pound for pound the greatest impact on productivity and social mobility.

The Augar Review recommends that Apprenticeship funding should be prioritised on the basis of the Government’s Industrial Strategy. This is certainly part of the answer.

Bizarrely, however, Augar went on to criticise employer spend on management apprenticeships, when the deficit in UK management skills was identified by the Industrial Strategy as a key factor explaining the UK’s productivity gap. So, no seemingly sensible solutions here.

The Augar Review also failed to consider the role of Apprenticeship in ensuring the delivery of high quality public services. The NHS, Police Forces and local authorities are major levy papers and will want to use Apprenticeship to train new registered nurses, police constables and social workers – all level 6 Degree Apprenticeships.

I can’t see any Minister agreeing to prioritise Apprenticeship funding, raised in large part from public sector employers, for business administration, customer service apprenticeships etc. in SMEs at the expense of training nurses, police constables or social workers.

• But then what of Apprenticeships for SMEs – if levy payers spend the majority of ‘their’ funds on their own provision?
• And what about prioritising Apprenticeships for young people who benefit more from a practical rather than academic learning programme?
• What of the third of young people who leave compulsory education without a full level 2?

We need an informed debate

Personally I think the Treasury and BEIS should lead the debate and not DfE and its FE and school focused arm, the ESFA.

After all, the levy debate is far bigger than further education and bigger then DfE. Apprenticeship is at its core a productivity programme and it seems odd that it’s DfE and not BEIS where policy responsibility resides.

Guarantee Level 2 training for school leavers

The first point I’d make is it seems very unfair that employers are expected to pay to support individuals who leave compulsory education without a full level 2 undertake an Apprenticeship.

Such provision whether in the form of Apprenticeships or Traineeships should be funded and guaranteed by the state.

Increase the non-levy pot

We then come to how other non-levy provision should be funded. Here there needs to be some give and take. To ensure SMEs have access to Apprenticeship the size of the non-levy pot needs to be increased. 

To do so, the threshold for paying the levy could be reduced from a payroll bill of £3m to say £2m and the co-investment rate increased from 5%. I’m sure such a proposal wouldn’t be welcomed by some, but if it enables more SMEs to benefit from Apprenticeship?

It could also be used as an argument to persuade Government to invest through general taxation in the non-levy pot.

If rationing were needed then, from a productivity perspective, the only way to do this would be on the basis of skills priorities identified in the Government’s Industrial Strategy and the need for high quality public services.

Maximise productivity

I’d suggest other arguments on prioritising the Apprenticeship funding pot are less compelling. Prioritising lower levels goes against the productivity focus of Apprenticeship, as well as employer choice.

The same goes for a focus on new recruits – the existing workforce is, where in many cases, the best productivity returns could be secured. And would Ministers really tell the NHS they couldn’t use ‘their’ levy payments to train existing healthcare staff to become registered nurses? I also can’t see local authorities, again big levy payers, many with a recruitment freeze, accepting such a policy.

Augar’s recommendation to exclude those who already have a degree from participating in Apprenticeships is simply wrong-headed too. It is also incoherent for Augar to note that the Apprenticeship reforms are designed to be employer-led when employer choice to use Apprenticeships in particular sectors is positioned in the report as sub-optimal in terms of raising productivity.

Demands to use the HE ‘budget’ to fund higher level Apprenticeships, demonstrate a lack of understanding of HE student funding which is based on loans to individuals.

Are those making such proposals really saying probationary police constables should be forced to take out a loan to cover the cost of their Apprenticeship, because Apprenticeships at lower levels in small private businesses are the priority?

I can’t see many police and crime commissioners or the public buying such an argument.

So, no easy answers! But certainly there’s a need for a debate.

Adrian Anderson, Chief Executive, University Vocational Awards Council (UVAC)