Where Are Apprenticeships Going Under The DWP?

The month of January, named after the two-faced Roman god Janus, is a fitting time to reflect on the way England’s apprenticeship system has evolved in recent history: apprenticeships have become two-faced. One face is young; the other is much older.

There is a strong argument that apprenticeships should provide a vital ladder of opportunity for young people. They should be a positive alternative for those 16-year-olds who don’t thrive on a diet of classroom learning and also for those– often from low-income households – who need to earn while they learn. Increasingly, they’re becoming an attractive option for those who have completed A-levels or another type of level 3 qualification, and those already in work.

The Demographic Transformation

The last 20 years have seen a surge in working adults, typically older and already on the first rung of the career ladder, becoming apprentices. In 2006/7 less than 1% of apprentices were 25 or over; by 2011/12 this had reached 45%, and the figure for 2024/25 is 51.3%. The introduction of Degree Apprenticeships and of the Apprenticeship Levy in 2017 has only reinforced this trend, whilst at the same time accelerating the steep decline in the proportion of intermediate level starts.

For the last two decades, apprenticeships have in effect become the key element of the government’s workforce training strategy, as the only publicly subsidised training regularly available to employers. But they provide only a very partial solution to the nation’s urgent need for reskilling and upskilling to raise economic productivity and drive growth. To begin with, they offer limited options for sectors that rely on lower-skilled workers – retail, hospitality, food production, adult social care and many other vital occupational areas. In addition, their inflexibility and length make them ill-suited to many dynamic growth sectors – Creative Industries, Digital Technology, Clean Energy – where firms are often micro-businesses and rigid training frameworks can’t keep pace with rapidly changing skills needs.

In the run-up to the 2024 general election, employers clamoured loudly for reform. More flexibility. Shorter, more focused courses. More agile design and approval processes. Less cumbersome bureaucracy. Labour appeared to agree, and their manifesto included a commitment to turn the Apprenticeship Levy into a “Growth & Skills Levy“, with more scope to fund flexible training options.

The Barriers to Reform

Fast forward 18 months, and we’re still waiting. It’s now promised, we’re told, by April this year. The surprise move of responsibility from the DfE to the DWP last September is no doubt part of the explanation, but there are other, deeper problems involved.

To begin with, the surge in the number of economically inactive young people, the so-called NEETs, has understandably prompted the DWP to prioritise apprenticeship reform for the under-25s. All the measures so far announced –  foundation apprenticeships,  funding of the full cost at SMEs, a new pilot giving devolved authorities extra money to expand apprenticeships for NEETs – are targeted exclusively on 16-24 year olds. It’s too early to say whether these initiatives will halt or reverse the downward trend in starts for young people, which is being worsened by the current slowdown in the labour market. Lack of business confidence is leading many employers to cut back on hiring new staff of any kind, including apprentices, and the latest figures show a continuing year-on-year decline in level 2 starts, down another 5,000 in 2024/25.

Meanwhile, neither the reforms to the school curriculum announced following the Francis Review or the decision to introduce V levels are likely to improve the take-up of apprenticeships. Most schools remain ill-equipped to provide the right advice and guidance to their pupils, and school accountability measures remain firmly fixated on attendance and qualification results, not on progression. Much more radical reform will be needed to break the logjam and incentivise schools to actively promote apprenticeships.

Finally, the continuing increase in Higher and Degree apprenticeships – up another 15% last year – means there’s less and less budget available to fund anything else. The announcement last year of the defunding of Level 7 apprenticeships should, in time, release more money for lower-level starts, but the predictable surge in Level 7 enrolments before the January deadline means that there is very likely to be less budget available for the next couple of years. Where is the DWP going to find the money to introduce new “apprenticeship units” – or anything else – by April? More restrictions on Higher and Degree apprenticeships are a definite possibility, unless some new source of funding is miraculously discovered.

A Way Forward

There is a way forward. Given the importance of apprenticeships to school and college leavers, it would make a lot of sense to directly fund all 16-19 apprenticeships, taking them out of the levy system altogether. Given the current public spending constraints, this could be done in stages, starting with level 2 and moving on to level 3 later. It would also be a good idea to incentivise schools to focus much more on pupils moving on to apprenticeships by making this part of the accountability system. The HE sector mechanism of measuring student outcomes after graduation provides a ready-made template for this, and it could be reinforced by becoming an explicit part of the Ofsted school inspection framework.  Apart from having the benefit of shoring up an apprenticeship system that isn’t working well enough for young learners, this approach would free up resources for the Growth & Skills levy to fund the flexible workforce development training that employers are calling for.

By Andy Forbes, Executive Director of the Lifelong Education Institute