From education to employment

To level up, apprenticeships must support those who need it the most

Anna Ambrose

Despite growing recognition by politicians, businesses and young people that universities aren’t the only pathway into a good quality career, analysis by the London Progression Collaboration shows there has been a 72 per cent decline in entry-level apprenticeships starts since 2014. This decline was accelerated by the introduction of the apprenticeship levy in 2017, which saw overall apprenticeship starts fall by almost a quarter in the following year. Numbers were further hit by the impact of the pandemic, and it is only the most recent quarterly figures of 2021/22 that show any signs of apprenticeship starts recovering. It is too early to tell whether that recovery will be sustained.

These startling findings reinforce the picture we at the London Progression Collaboration see on the ground, and which has become clear over recent years – that the fall in apprenticeship starts has disproportionately hit young people, those with low levels of prior qualification, and those from disadvantaged or minority backgrounds.

Why has this decline happened?

It would seem reasonable to suggest that apprenticeship starts at level 2 have fallen partly by design on the part of government, with popular entry-level apprenticeships removed in the transition from apprenticeship frameworks to employer-led standards. Ignoring the powerful representations made to government from businesses and organisations representing young people, this seems to have undermined the vital role level 2 apprenticeships should play as a stepping-stone into work and towards further career progression.

The fall is also the result of the predictable, but seemingly unforeseen, consequences of the apprenticeship levy. Whilst the policy has had some undoubted successes – building the level of apprenticeships expertise within many large businesses and growing their apprenticeship offer – it has also prompted a shift towards large businesses offering more costly apprenticeships at level 4 and above to older, higher-qualified employees in order to make maximum use of their levy funds.

The final part of this jigsaw, and the one which is regrettably overlooked in many discussions

The final part of this jigsaw, and the one which is regrettably overlooked in many discussions, is what has happened to apprenticeships in small and medium sized non-levy paying businesses. There is a strong correlation between the fall in entry-level apprenticeship starts, and those in SMEs which fell by over 36% over a similar period. We know SMEs traditionally offer apprenticeships weighted towards those at lower levels and are a vital employer of young people in local entry-level roles.

Whilst it’s difficult to discern who the government most wants to benefit from apprenticeships, with this decline in apprenticeships for younger people with fewer qualifications, they are certainly not reaching those with the most to gain.

What we do know is that apprenticeships, relative to other skills interventions, make a significant positive impact on learners as well as on their employers. They deliver the greatest benefits for the most disadvantaged learners, yet when lower-level opportunities fall it is precisely these young people who are losing out.

The government’s Levelling Up White Paper features a skills mission to ensure that by 2030, 200,000 more people successfully complete “high-quality skills training annually”, with a specific target for the lowest-skilled areas. If this is to be realised, reversing the decline in level 2 apprenticeship starts has a vital role to play, alongside supporting greater progression opportunities on completion.

The role of SMEs cannot be overstated

If we’re to do this, the role of SMEs cannot be overstated. There are funding challenges created by the levy system which need addressing, such as removing the cap on numbers which disadvantages fast-growing SMEs with ambitions apprenticeship plans. Reversing the fall in starts requires wider support for businesses to navigate the system successfully, such as the national network of apprenticeship ‘one-stop shops’ recommended by the All Party Parliamentary Group on Apprenticeships in their annual report last year.

The white paper commitment to an enhanced apprentice recruitment service for SMEs is a welcome sign that government recognises that their skills mission will not be achieved without small and medium sized businesses. We need to be ambitious for our young people, and despite its failure the previous commitment to create 3 million apprenticeships by 2020 at least provided a greater sense of the scale of ambition that government, businesses leaders and the further and higher education sector could work toward. Addressing the precipitous decline in level 2 apprenticeships must be central to the government’s plans, and the importance of supporting SMEs to access apprenticeships and other skills programmes given the priority and investment it deserves.

Anna Ambrose is the Director of the London Progression Collaboration (LPC). The LPC is a not-for-profit initiative supporting London’s SMEs to increase the number of apprenticeships available to low-paid Londoners. Since launching in 2020, the LPC has created over 750 new apprenticeships, and leveraged over £9 million in levy transfer funds from large employers. The LPC is incubated by think tank the Institute for Public Policy Research.

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