Employers in the Apprenticeship driving seat still looking for the open road

Opportunities

The new Government sees boundless opportunities as the country emerges from its #Brexit pre-occupation. One of these has to be a new Apprenticeship strategy as the current 2020 policy horizon has arrived.

The signs for Apprenticeships are promising, especially if T Levels provide a clear route-way for young people into work and training.

The Government is positively disposed towards expanding quality Apprenticeships and the Prime Minister has a track record as Mayor of London of putting his personal weight and reputation behind boosting the uptake of Apprenticeships by businesses.

There is no reason to believe this commitment will change based on the Conservative manifesto and subsequent statements.

Attention will undoubtedly be drawn towards the target of three million more Apprenticeships by 2020 and the likelihood that it will be missed, but this is just a distraction.

What is more important is whether Apprenticeships are being transformed to give young people the best start to their working lives, and to meet the challenge of productivity growth and improved public services. The metrics regarding quality and outcomes are vital if the Apprenticeship programme is to grow and be sustained at higher levels.

One other consideration that plays favourably into the expansion of Apprenticeships is that they have traditionally existed in higher concentrations in the Midlands and the North.

So, they can be an important part of rebalancing the economy, especially if there is investment in big infrastructure projects that are underpinned by Apprenticeships.

Again, the Prime Minister has positive experience of this with the 400 Apprenticeships at the Olympic site in London. Sir John Armitt led this work at the time and is of course currently the Chair of the National Infrastructure Committee.

So, the signs are promising if the underpinning weaknesses in the Levy system can be addressed.

Evidence from Energy and Utilities sector employers

The Energy and Utility Skills report ‘Test and Adjust’ focuses on the impact of the employer-led reforms that have spearheaded the policy change agenda for transformational change to this point. This shows encouraging results from ‘putting employers in the driving seat’ but the process is incomplete and the Apprenticeship policy and Levy remain work in progress.

Messages from this sector are worth respecting. Apprenticeships are the dominant form of training in a sector that has a long history of high-quality technical training. The sector employs over half a million people, contributes 5% of GDP and its employers pay more than £50m in Levy each year. It was one of the leaders in introducing and delivering new Standards and setting up successful End Point Assessment arrangements.

While the introduction of the Levy has dominated discussion and headlines over recent years, the Energy and Utility Skills report showed that the introduction of employer-led standards and End Point Assessment have had the greater impact and especially on quality. Over 80% of employers saw the new Standards as a better fit for jobs in the sector and 94% considered End Point Assessment gave them confidence that individuals could do the job.

When Government set its ambition for three million more Apprenticeships by 2020, any lauding of ambition was drowned out by siren voices about the threat to quality. There should be cause for celebration then that the Energy and Utilities employers state that the reforms have improved quality.

Employers were also delighted to see the expansion of higher- level Apprenticeships that have enabled them to address critical skills and Apprenticeships are reported to be higher up the training agenda.

The Apprenticeship Levy

Employers have become familiar with the Levy systems and introduced the additional resources they need to operate them. It is possible that this year employers in the sector will eventually recover half of what they contribute.

The employers are paying over £2m a month, after recovering funds for Apprenticeships, to the Treasury with a lack of transparency of what it is used for.

There is of course no way back from the Levy. It is too ready a source of funding for Government to tap into and previous Ministerial statements have described the Levy as the key to future sustainable funding.

However, experiences around the world show that the prospect of employers really owning these arrangements and facilitating change in behaviour require a perceived sense of fairness. There is also an expectation that everything is not left to employers. Government needs to be ‘doing its bit’ and allowing funding to reach those part of the business sector where it is most needed.

Fairness needs to be underpinned by:

• Greater transparency in the use of funds
• Clear rationale for the setting of thresholds (where £3 million is completely arbitrary and without any apparent explanation or justification); and
• Funding rates that are seen to reflect costs and the importance to the country

These are areas where improvements are needed.

Those of us with some memory of Apprenticeship funding will recall the strong returns on public investment in Apprenticeships, especially in sectors such as Engineering and other sectors expected to be key to the future growth of the economy.

These statistics come from Treasury and National Audit Office reports. They should not be forgotten as Government determines how best to fund its promises for further expansion of high-quality Apprenticeships.

At the very least, Government needs to establish a rationale for the distribution of funding between employers (via the Levy) and the public purse. Not only will this help with the concept of ‘fairness’ but it will help Apprenticeships succeed in the post-austerity bun fight for public funding.

Government have already signalled that they want to reappraise the Levy. The recent Ofsted Annual Report has repeated concerns that some providers are not seeking out fresh opportunities for employers to tackle their skills needs through Apprenticeships.

This must in part be because the Levy has shifted the attention of many employers from using Apprenticeships principally as part of their recruitment package of support towards their existing staff and maximising the recouping of their Levy spending. Many employers have indicated that this will change once the requirements to up-skill many of the existing staff through Apprenticeships have been met.

There have also been suggestions of a further expansion of employer ability to use their spare Levy funds in their supply chain. This must surely help with quality, productivity and with employer ownership of any new arrangements. It should also help kick-start the much-needed growth of Apprenticeships with SMEs, though more needs to be done to support these businesses as previous reviews have made clear.

This readiness to adopt a more flexible approach to Apprenticeship spending will be welcomed by employers who are seeing Levy being paid out but some of their urgent skills training having to be funded in addition.

Nor is there any special recognition by funding bodies of those skills that will be critical to productivity improvements and international competitiveness. DfE metrics rule!

While the delegation of the responsibility for skills to devolved administrations and Combined Authorities is very important and irreversible, any review of the Levy must also take account of its unfair application in relation to businesses with operations across the UK. The current arrangements penalise such businesses and can lead to distortions for their recruitment and training.

Technical skills training

Over the past year or two, more attention has been given to T Levels than to Apprenticeships at least in policy development. There is no doubt that a deficit in much-needed technical skills needs addressing. There is much research to back this up, especially international comparisons.

Employers are keen to respond positively because they see that they, as well as young people, would be beneficiaries of T Levels.

However, Government would do well in its future communication to explain the inter-relationship between the two and to ensure that T Levels are designed with clear pathways into further Apprenticeship training.

Refresh and flex

Evidence from employers in the Energy and Utilities sector shows that the employer-led approach is moving Apprenticeships in the right direction. There is however much to reflect upon and many opportunities to refresh and flex current policies.

Employers in the Energy and Utilities sector for one are keen to work with Government to further fine-tune future arrangements so that Apprenticeships can turbo charge our economic performance and tackle critical skills shortages.

Government can be expected to bring its current positivity into Apprenticeships as it develops the substance of its new strategy. Critically it needs strong links with productivity growth, major infrastructure projects and the Industrial Strategy and not simply another starts target.

That approach seems so last year, even if we have only just entered 2020!

Professor David Way CBE, Visiting Professor, University of Winchester