The apprenticeship levy debate: Flexibility is essential, but definition is key

In this piece, Daisy outlines why in recent months there have been increasing calls for flexibility to the levy to better meet employer needs, and seeks to bring clarity to the lack of a clear and shared definition of what flexibility means in this context. 

The English apprenticeship levy has been a very live discussion since its launch in 2017. The levy was introduced to help fund high quality applied learning – through apprenticeship programs – with the aim of addressing long term skills shortages and fostering a skilled workforce.

In recent months there have been increasing calls for flexibility to the levy to better meet employer needs. However, the lack of a clear and shared definition of what flexibility means in this context is increasingly problematic.

When people talk about ‘flexing the levy’, they are often referring to different things. Some are talking about the need to increase flexibility in delivery of how apprenticeship programs are structured and implemented. Others are talking about amending rules and regulations. Still others are talking about making the levy open to a wider range of courses.

There are trade offs associated with all of these choices which have yet to be fully explored.

For example, giving employers more autonomy to design programmes of training, including their length and structure, could help them meet their specific needs. However, it also risks undermining the goal of securing long-term investment in skills development.

Widening the levy to include more courses could help younger people and disadvantaged groups. But this carries the very real risk of  “deadweight” – subsidising courses that employers would have funded anyway.

It is important to note that there is already some flexibility in the apprenticeship system. For example, employers can choose which apprenticeship provider they want to work with, and they can design their own apprenticeship programmes, provided that they meet clear quality standards.

But many employers still feel that the system is too rigid and does not allow them enough flexibility to meet their specific needs. For example, some employers would like to be able to offer shorter apprenticeships, or apprenticeships that are more focused on specific skills.

The government is currently considering how to make the apprenticeship system more flexible including possibly offering more autonomy over programme design to employers, or widening the levy to include more courses.

But every change comes with trade-offs – and protecting the quality of apprenticeships has to remain paramount and cannot be lost in the name of flexibility.

The importance of flexibility

Different industries and sectors have very different needs – the skills required in the tech sector may be very different from those required in the construction sector, for example.

And the labour market is not static, with new technologies  emerging and new jobs are being created. The apprenticeship system needs to be able to adapt to these changes in order to face into the speed of change.

Employers need to be able to invest in their workforce in a way that makes sense for their business. This may mean offering shorter apprenticeships, or apprenticeships that are more focused on specific skills.

The risks of flexibility

The primary risk of flexibility is that it could lead to a dilution of the quality of apprenticeships. Employer autonomy over programme design can leave some tempted to cut corners in order to save money, most notably when facing economic headwinds.

Another risk is that flexibility could exacerbate existing inequalities and leave smaller employers – the backbone of the UK economy – at a disadvantage. For example, if the levy is widened to include more courses, this could benefit larger employers who have the resources to develop their own apprenticeships

Conclusion

The debate over the flexibility of the UK apprenticeship levy needs to take place and the best starting point for a constructive discussion is agreement on a clear, shared definition of flexibility. Without that, we risk hampering both productive discourse and effective policy implementation.

That discussion needs to deliver more good than harm and all involved need to be clear-eyed when it comes to possible trade-offs, especially if they risk limiting the skilled, adaptable workforce that UK employers need – not just for today, but for future generations.

By Daisy Hooper, Head of Policy & Innovation at CMI (Chartered Management Institute)

Daisy is Head of Policy and Innovation at the Chartered Management Institute. 

Daisy leads CMI’s policy and impact work, which covers a wide range of topics – from skills and productivity, to green transition, to public service transformation. She has authored numerous reports including CMI’s flagship research, The Everyone Economy, looking at how to maximise talent in the UK, and Management Transformed, looking at the skills managers and leaders will need in a world transformed by technological change and societal disruption.

She has a background in higher education, teaching and learning and social mobility policy.

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