This morning new figures from the Department for Education reveal that the number of apprenticeship starts have fallen significantly, once again, which brings the effectiveness of the new apprenticeship levy into question, highlighting the need for organisations to make the most of their levy funding - another successive quarter of decline since the government's introduction of the Apprenticeship Levy in April 2017. This is bad news as the government has a target of creating 3m new apprentices by 2020.
There have been 261,200 apprenticeship starts reported to date between August 2017 and March 2018 for the 2017/18 academic year. This compares to 362,400 and 346,300 starts reported in the equivalent period in 2016/17 and 2015/16 respectively. This is a drop of 27.92% from last year's figures.
DfE today (14 June) published their statistics covering latest monthly apprenticeship starts, apprenticeship service registrations and commitments, and apprenticeship levy information. Many business support the apprenticeships programme but are calling on government to implement urgent reforms.
Ann Francke, chief executive of the Chartered Management Institute, said:
“The drop in the number of apprenticeship starts shows that government needs to make apprenticeships a lot more flexible and a lot less bureaucratic. This is a transformation - not a tweak - and needs to be much more clearly communicated and managed."
Angela Middleton, Chairman and Founder of MiddletonMurray, said:
“Today’s Apprenticeship Levy figures track the new starts since the initiative was introduced in May 2017. There is no doubt that the figures are lower than hoped but it is important to note it only measures starts, rather than completion.
"The data doesn’t consider the changing face of apprenticeships, or account for the businesses that use the Levy funding to support upskilling or training of existing employees. Month-on-month, SME uptake is increasing using unused levy funds and these figures aren’t officially tracked.
"The Levy is much-maligned but I encourage businesses and decision-makers to consider the Levy’s manifold benefits – whether they’re a Levy payer or an SME. There is a pot of money out there to support training, skills and on-the-job learning for apprentices and workers alike.
"I have conversations day in, day out, that show me that businesses of all sizes are interested in the funding and its possibilities. For MiddletonMurray, the strategy to continue focus on both SMEs and Levy payers was the right one.
"There are still some teething problems, but my main concern is an education around how it can help businesses, young people and the UK economy.”
Ben Rowland, Co-Founder of the UK’s leader in digital, IT and HR apprenticeships, Arch Apprentices said:
“We firmly believe employers need to look beyond the apprenticeship levy and embrace apprenticeships as an integral part of developing the UK talent pool, keeping us a competitive nation. Whilst the statistics show a downturn, this is because the apprenticeship levy will take time to bed in.
"We anticipate that there will be a plateau in apprenticeship starts over the summer and then a positive surge over the Autumn which is traditionally the time for people to begin these sorts of programmes. We know that employers and providers have been cautious about embarking on these programmes, partly because of the negative publicity around concerns about the apprenticeship levy and its efficacy.
"We also know from our own experience – where we engaged with the levy and employers very early, from 2016 onwards – that significant growth is possible.
"As the rest of the sector embraces the reality and opportunity of the levy, numbers across the board will catch up with the growth we’ve seen across digital and professional apprenticeships.
"The employers we’re working with, as varied as Estée Lauder, Omnicom Media Group and Worldpay, have confidently embraced it and are already reaping the rewards.”
Alan Woods OBE, Chief Executive of VTCT reacts to Department of Education Apprenticeship Levy Statistics:
“The latest set of apprenticeship starts demonstrates there is a clear onus on the UK business community to promote opportunities and develop the next generation of talent across all sectors.
“There have undoubtedly been issues around the implementation of such a complicated financial arrangement with the private sector. The Government is a key part of the solution and now needs to make troubleshooting a priority to ensure private firms of the required size are paying into the levy and are using their levy contributions.
“There should be multiple points of entry into the job market, from GCSE-equivalent level apprenticeships through to higher level apprenticeships, depending on the needs of the employers within each sector. The critical point is that the course quality is paramount and that the apprenticeship results in a well-paid job at the end of the scheme.
“At the same time, the Government must make the whole system simpler for employers to grasp. Non-levy paying SMEs currently have to contribute 10% of the cost of training an apprentice, which is a particular barrier for certain industries, such as the hair and beauty sector, in addition to creating significant bureaucracy. The Government should consider practical steps that can be taken to support SMEs, and potentially removing the 10% contribution.”
AELP chief executive Mark Dawe said:
"AELP strongly supports the levy and we understand why the skills minister sent out a joint letter with employer supporters to the press this week in defence of it. But we hope that when she addresses the AELP conference in a few days’ time, she will signal a suspension of charging SMEs for apprenticeships for 16-24 year olds at levels 2 and 3.
"With the government showing no intention of abandoning its 3 million target, start numbers are now so far behind the curve, action has to be take now to reverse the falls. They are damaging to productivity, social mobility and the labour market response to Brexit."
Teresa Frith, Senior Policy Manager at the Association of Colleges, said:
“Today’s figures, reiterate what we’ve said before. Apprenticeships need to be both valuable to the apprentice and the employer; giving people the experience and transferable skills to help them launch a career.
“There should be a review of the rules that grant levy paying employers control of 110% of their funds. This gives larger employers the first call on training funds and squeezes smaller employers into second place. The policy also needs to mature and recognise the needs of individuals looking to undertake an apprenticeship, particularly those from socially disadvantaged backgrounds.
“We hope that following the release of these figures, the Government takes the opportunity to work with employers, colleges, training providers and others to build the programme in terms of quality, access and outcomes.”
Stephen Evans, CEO of Learning and Work Institute commented:
"It's Groundhog Day for apprenticeships with numbers still well down, some 28% lower than by this time last year, greater falls in Level 2 Apprenticeships and rising numbers of higher apprentices. The Government's target of 3 million apprenticeship starts by 2020 looks increasingly out of sight. The Government will claim quality is rising, but we think it's far too early to say that. Critics will say the Levy isn't working, but we're clear it was the right move. McVitie’s, our Festival of Learning award winner, shows the difference the Levy can make when employers use it to support people development and improved productivity.
"Changes are needed to make apprenticeships work better. But this should be about reforming the current system, not ripping it up. We must improve quality, including beefing up the Institute for Apprenticeships approvals process, so all apprenticeships match the best in the world. We must also focus more on making sure anyone - and particularly young people - who could benefit can get an apprenticeship. We should be planning now to reinvest any underspent Levy funding in widening access, boosting quality, and other ways of improving workforce skills."
Shadow Apprenticeships Minister Gordon Marsden MP said”
“Today’s apprenticeship start figures for March, down 52% on last year, are simply further damning evidence of the deep concerns from Labour and across the sector. The Government are continuing to ignore the widespread concerns about apprenticeships following the introduction of the levy.
“Labour and sector voices have called for an urgent reassessment of the process. The Government have their head in the sand and their failure to review is now causing major damage to the apprenticeship brand.
“Government must get a grip on the starts fiasco and the concerns about the Levy rapidly. Otherwise they will jeopardise the huge life chances apprenticeships offer young people and also the long term prosperity of our economy.”
CMI have issued a 10-point plan of action - 5 recommendations for government and 5 for employers - to get more people into apprenticeships and for government and business to heed and reform the Levy, as below:
- Transform the Skills Landscape
Ensure that everyone benefits from the apprenticeship reforms, and help private, public and third sector employers get the transformational change in the quality and quantity of technical and business skills they need in the workplace. Better technical, management, digital and data skills are vital to both our manufacturing and services sectors. Re-skilling and up-skilling existing employees must be a key part of the solution.
- Listen to business and reform the Levy
Help businesses train more people by relaxing the complex and restrictive Apprenticeship Levy rules that make it feel more like a tax than an incentive to invest in skills. For access to quality training, funding bands must reflect the true cost of provision. For many employers, the Levy has displaced budgets for other essential forms of skills development, risking future growth and productivity, so let’s include other accredited quality training in the scope of the funds. Focus for employers must be placed on return on investment. Reforming the Levy now will re-engage employers and help boost skills development across sectors and local communities.
- Provide Efficient, Single Point Accountability
Keep the system simple and transparent, with a single accountable agency. The Institute for Apprenticeships should be resourced to bring forward apprenticeship standards more quickly and take on end-to-end responsibility for the successful funding, execution and monitoring of apprenticeships policy. Employers - not civil servants – should set and approve standards. Have a single body responsible for external quality assurance, to build trust and reduce cost and complexity for employers.
- Measure the Impact, Not the Target
Business wants people with the right skills to fill job vacancies, and this means getting access to quality training, at the right time and in the right location. Businesses must commit to investing more in the training and development of our people, and education providers must work with employers to find effective ways to measure return on investment, but we need the information, the flexibility, the funding and the training provision in place at a local level. Support our drive for quality over an arbitrary numerical target – this is the way to improve social mobility and productivity and close the skills gap that threatens the UK economy.
- Keep It Joined Up, Stable and Consistent
Constant tinkering and changes in policy and funding is bad for businesses and learners. Work with employers to get the apprenticeship reforms fit for purpose, and then keep the system stable, consistent and joined-up across the Industrial Strategy. To boost competitiveness and productivity, business needs apprenticeships and other quality forms of in-work training at all levels in the workforce. Higher level degree apprenticeships should be encouraged to improve participation, social mobility and narrow the gender pay gap.
- Get Involved, Informed and Tackle Your Skills Needs
New Apprenticeships, designed by business for business, are a great way to bring young people into the workforce and to re-skill and up-skill existing employees at all levels in the organisation – including leadership and management. Find out about the new apprenticeship standards for your sector, how to recruit apprentices and how to access funding and high-quality training for your team.
- Find Flexible Ways To Manage Training
Apprenticeships combine work and learning, helping your staff to do their job better. For some firms, off-the-job training can be difficult to manage, but it does not mean your employee has to have one day a week off work. The best work-based training not only helps the trainee, but if well planned can also add immediate benefit to the employer. Work with your training provider to identify sensible, flexible and creative training opportunities - including online workplace training, work-based assessments and other time that you invest in developing your apprentice.
- Commit to Investing Long-Term In The Skills Of Your Workforce
We in business have to acknowledge that the majority of firms have been underinvesting in skills for decades, leaving the UK far behind our international competitors. Employers across most regions and sectors are finding it increasingly difficult to recruit skilled people. All businesses can play a part in fixing the skills crisis. Ensure you have access to the skills you need now and in the future by investing long-term in the training and development of your workforce. Skill development is strategic - ensure it is part of your strategy.
- Embrace Wider Workforce Planning
Apprenticeships are open to everyone in the workforce, helping you train existing employees, returners, older workers and young people starting their careers. Management and leadership, digital and data, and a broad range of technical standards are being developed for firms of all sizes and sectors. And you have a choice to work with private providers, universities or FE colleges – there’s more than one route to success.
- Measure the Benefits
Better skills, productivity, staff retention and employee engagement are just some of the benefits of investing in apprenticeships. Whether you are a Levy payer with training money to spend, or an SME seeking government funding to support your people development, apprenticeships can deliver significant benefits for your business. Ensure you get the maximum gain from your investment in skills by working with government, training providers, and professional bodies like CMI and Chambers of Commerce.
Additionally, monthly apprenticeship starts information for the first eight months of the 2017 to 2018 academic year are also presented (reported to March 2018).
We may adjust the content and timing of these statistics, depending on user feedback and data reporting.
Further education statistical dissemination team
Department for Education
Great Smith St
Apprenticeship and levy statistics: May 2018
DfE today (17 May) published their statistics covering latest monthly apprenticeship starts, apprenticeship service registrations and commitments, and apprenticeship levy information.
Between August 2017 and February 2018 there were 232,700 apprenticeship starts (reported to date) compared to 309,000 apprenticeship starts between August 2016 and February 2017 reported at the same point last year.
In February 2018 there were 21,800 apprenticeship starts, compared to 36,400 starts in February 2017 reported at this point last year.