The Highs and Lows of England’s Apprenticeship Program: Lessons for policymakers and practitioners in the USA and Britain
Urban Institute Seminar: The Highs and Lows of England’s Apprenticeship Program
- Tuesday, July 5, 2022
- 2-3 p.m. EST
Presented by: Prof. Tom Bewick, Chief Executive of the UK’s Federation of Awarding Bodies and Visiting Professor of Skills & Workforce Policy, Staffordshire University, England
Abstract
Apprenticeship numbers have expanded dramatically in England since 2003, rising from about 377,000 in the late 1990s to nearly 869,000 in 2013.
Were the US to generate the same rate of apprentices as a share of the US workforce England has achieved, US apprenticeships would reach nearly 5 million or about 9 times current levels. England’s success in making apprenticeships a viable ‘learn and earn’ route for thousands of workers has inspired US analysts. Similarly, since 2017, England has significantly grown the number of under 30-year-olds taking Degree Apprenticeships, making the country a leading system in the world for combining all age and all level qualifications within a legally regulated (national) framework of Occupational Standards: spanning the equivalent of both community colleges, independent training providers and traditional universities, within a centrally organized scheme. Elements of England’s system that have attracted particular attention include incentives for intermediaries to grow the market for apprentices, end point assessments to improve quality, and even National Apprenticeship Week, to help celebrate and showcase apprentices and employers.
But how has the system evolved since the high watermark of commencements in 2013? What growing pains has England experienced as it engaged on a major round of reforms? What have the respective roles of government and the private sector been? Why are critics of England’s apprenticeship system saying that changes related to funding and assessment pedagogy in 2017, has resulted in plummeting commencement and achievement rates? And what therefore are the lessons for scaling apprenticeships in the US?
Thank you for the opportunity to talk to you today.
As ever, I’m grateful to Dr. Robert Lerman for maintaining our long friendship; including our shared passion for apprenticeship.
Bob said something to me the other day that I thought absolutely summed up his life’s work in this space; and why he is such an inspiration to me and many others in the field.
He said:
“Apprenticeships are something people should aspire to, not resort to.”
I think that simple sentence tells a thousand different stories about the state of post-compulsory education and skills in both the US and UK today – and other advanced countries.
For decades, our societies have ‘schooled’ individuals to believe that 4-year-college was the only route to intellectual enlightenment and career success. And for a large part of the post-war period, that observation was entirely correct.
At least in the sense of average lifetime earnings for degree holders.[1]
The good news is that social attitudes towards apprenticeship and work-based learning are really changing for the better. And the really smart higher education institutions, of course, are now rising to the challenge.
In Britain, for example, every aspiring undergraduate applying to university has to open an account with the University College Admissions Service (UCAS). It’s a clearing house that was set up in the 1960s when less than 1 in 10 of the population went to college. Today, more than half of Brits under the age of 30 go to university,
Interestingly, of the 750,000 people that set up UCAS accounts in the last six months of 2021, ready for college admissions this academic year, 342,000 of them said they were interested in apprenticeship. Internet searches for the term apprenticeship on UCAS.com reached 2 million in 2022, up 45% on the previous year.[2]
Degree level apprenticeships (that’s learning and earning without the student debt + leaving with a graduate degree level certificate in hand) now accounts for nearly a third of all new English apprenticeship starts in 2021. (i.e. 98,800-degree level starts in 2021)[3]
In my talk today, I’d like to build on Bob’s mantra of aspiration and set out how I think our two countries can genuinely aspire to create both skills and apprenticeship nations.
The title of my presentation references the highs and lows of England’s apprenticeship system. It’s a work-based model of learning I know well. But like any kind of complex policymaking process, success never runs in a straight line.[4]
For over a quarter of a century, I’ve watched a string of skills ministers and senior policy advisers at the Department for Education come and go: all wanting to make their own mark on apprenticeship expansion and quality. Inevitably, we’ve seen some high-points and low-points along the way…
In this presentation, however, I want to avoid the trap of focusing solely on all the different criticisms of England’s apprenticeship model. Tempting as though that may be!
Not least, I’ve written on and debated this subject on many different occasions. But if a critique is what you were looking for, then I would encourage you to read my article in November 2020, attached to this seminar invite. You can also head over to my award-winning podcast channel at www.skillsworldlive.com where I’ve debated this topic with many other experts and practitioners.
These other published outlets will also give you a broader sense of the metrics; and how well England’s apprenticeship model has been performing over the past decade – both domestically and internationally; particularly since the high watermark of English apprenticeship starts in 2013 that was referenced by Bob in his introduction.
My focus today will be to place the ‘highs and lows’, if you like, in the context of one key overriding question:
How does a dynamic market economy expand apprenticeship slots offered by employers?
Let’s be honest: it’s our biggest perennial challenge.
That’s because skills in our economy are derived from economic demand. They do not exist in a vacuum.
Employers first need to want to hire an apprentice in a productive job role before we can safely say an apprenticeable occupation exists.
But like the world of talent search, this observation is less straightforward than it would appear on the surface.
What if the majority of employers at the firm level don’t need an apprentice?
What if, instead, they behave like rational economic actors – and many do (!) – taking the view that there is little point in hiring novices to train up when the labour market has those who have mastered a skill already in abundance?
It’s why I have always said that apprenticeships are sold to employers, not bought by them, in the traditional sense of how most modern recruitment markets operate.
Apprenticeships can absolutely work in practice. But that does not mean to say they work in theory – particularly if you apply the dismal science of economics to them.
As Bob knows, I’m a keen observer of the Swiss model of apprenticeship, not least because the Swiss mother of my two wonderful daughters once completed one of these genuinely world-class apprenticeships.
But when you look closely at these Germanic models, they only really work for three key reasons:
- The entrenched corporatist culture of social partnership overrides many of our more liberal sensibilities of free and flexible labour markets;
- Germanic systems are embedded in quite socially segregated traditions about the role of upper-secondary education, by tracking students, for example, into academic and vocational pathways from age 12;
- Novice wages are very low in comparison to UK and US apprentices, mainly because Germanic systems are geared towards high-school leavers and those who still live in parental households; (i.e. free board and lodgings!)
I can’t imagine politicians, on either side of the pond, standing on an electoral platform of bringing about an apprenticeship nation in our respective countries by calling for these kinds of reforms.
Indeed, it may sound counter intuitive, I know; and even a heresy in some circles, but most British and US employers – as the data shows – simply don’t see the point of developing a talent pipeline.
Policymakers need to wake up to this brutal fact.
Because as we know, pipelines take a lot of up-front investment. They can take time to yield a solid return on any investment. In the short-run, the firm may decide it is more efficient to pay a little more in wage compensation, than invest in an individual’s future via structured workplace learning.
It’s why apprentices, or novices, are not the same kind of proposition as hiring a fully qualified staffer on the open market.
Someone may have the raw talent when they join your organisation; or a certain aptitude that can be nurtured, but that is not the same as saying they are competent to do the job from day one.
Think about your own employer or recruitment journey. How many times in your career, when hiring, have you said to HR: “just find me someone who can hit the ground running”?
It’s rare to find an employer, although some do exist, who will say: “find me a complete novice and I will spend the time and money required to instil mastery in them.”
The only reason why this probably happened at scale in the Middle Ages was because apprentices were indentured. They were literally enslaved to the master’s household with few other options than to complete the journey in order to be accepted by the Guild. (They also didn’t have the option of state-backed four-year college!)
In the modern day, we know from all the surveys on this subject that most firms value employability skills almost as much as formal credentials.
The big challenge for market economies is how to overcome these short-term demand and supply-side constraints; including overcoming the considerable ‘friction’ for firms of individuals not being fully proficient.
It is this lack of what I call workplace role proficiency, of course, which is the whole point of apprenticeship. You start with a novice and they eventually journey to mastery of the required skillset. But it still begs the question:
If this is so self-evident then how do we better sell the benefits of apprenticeship to more employers?
The answer and perhaps the most critical lesson from the experience of England during its biggest expansion phase, is the role of intermediaries – or independent training providers (ITPs).
Guided by the profit motive, ITPs sprung up in the late 90s and 2000s as they responded to the British government implementing off-the-job training subsidies (circa, equivalent USD$3 billion per annum), attached to centrally prescribed apprenticeship training programmes. These programmes at the time were called Apprenticeship Frameworks, underpinned by statutory regulations.
Today, more than 1600 apprenticeship training providers (colleges and ITPs) are registered with the government. It forms part of a whole skills ecosystem that underpins our broader workforce development model.
In summary, government subsidizes the providers – or the supply-side – to provide the apprentice training. This means that ITPs have a real financial incentive to drum up business with employers; who are then required to create the employment contracts for the apprentices to slot into.
The employment status of the apprentice can be a new hire. But in most cases, existing employees have increasingly been selected by employers for formal apprenticeship opportunities. It means the median age of an apprentice in England these days is circa. 28-years-old.[5]
This is because the ITP is only really selling the training component of the subsidy. There is no requirement in England’s so-called “all age, all levels”[6] apprenticeship model to secure a new hire.
So, the economic theory underpinning intermediaries like ITPs is actually quite straightforward.
The ITPs and further education colleges are keen to access government subsidy, which they can make a profit/ surplus on. Estimates vary, but ITPs make gross margins of between 20 and 40 per cent per apprentice placement, depending on the subsidy rate[7], by applying a competitive business model as to how they deliver the training to the apprentice and the employer.
Today, intermediaries like ITPs account for generating approximately 75 per cent of programme starts in England’s Apprenticeship model – which currently has over 700 (centrally prescribed) apprenticeable roles (or Apprenticeship Standards, as they are now called).[8]
Interestingly, further education colleges (what you would call community colleges) account for the remaining 25 per cent of starts – mainly in skilled trade areas that require large physical training facilities like sheet metal fabrication, construction workshops and body motor vehicle repair garages.
It means, in practice, FE colleges make far less ‘profit’ from apprenticeship subsidies, compared to ITPs, because of the fact they have to maintain the high capital costs of the training. It also means that ITPs can be more agile as they have less fixed overhead costs associated with providing work-based learning. In other words, training a CNC operator is a lot more expensive than training a digital marketing assistant.
I’m quite convinced that if the President and Congress were to invest circa. $3 – 5 billion per annum in the incentive structure of training intermediaries, with them playing a leading role in securing more apprentice slots from employers, there would be a significant increase in registered apprenticeships here in the United States.
The lessons, as with the design of any public subsidy system, is borne out by some of the low-points in England’s apprenticeship model over the past 20 years.
Let me briefly summarise the key challenges for you:
- The apprenticeship term in England was not (initially) legally protected. An apprenticeship programme was what an individual firm said it was. Because of lax regulations attached to things like minimum program duration, employers could also get away with badging existing training schemes as ‘apprenticeship’ that took only a few weeks to complete. In one infamous example, this resulted in ITPs recruiting large supermarkets to access the training subsidy, by offering 16-week shelf-stacking apprenticeships! A subsequent investigation found that the employers would have paid for this training anyway, so the public subsidy part, which the ITPs profited from quite handsomely, was literally wasted from a taxpayer point of view. It’s what economists in our respective treasury departments would call the ‘deadweight’ effects of public subsidy.
- The other low points relate to the quality of the off-job-training component. In England, the regulation states that an apprentice must receive a minimum 20 per cent of their employment contract as structured learning away from the workplace. In practice, often driven by competitive pressures of the ITPs themselves wanting to maximise profits, the required level of training did not taken place or it was delivered in a poor-quality way. This has raised concerns amongst government regulators about some ITPs driving a ‘race to the bottom’.
- Finally, drop-out rates of apprentices have been a significant issue throughout the past two decades in England. The so-called ‘achievement rate’ of apprentices, in some occupational areas (e.g. hospitality), has slumped to as low as 26 per cent. Of course, the reasons for these high drop-out rates (as with traditional college study programmes) can be complex. For example, when someone does not fully complete an apprenticeship programme, it maybe because the apprentice moves to another higher paying job; or they decide on a change of career. That said, there is also significant evidence, perhaps in as much as a quarter of all the drop-outs experienced, that poor quality training offered by the intermediaries is the main problem.[9]
What lessons can US policymakers draw from the experience in England with the role of apprentice intermediaries receiving public funds?
My observations are this:
- In the US, the National Apprenticeship Act defines what a registered apprenticeship is. It makes sense, perhaps, to only allow intermediaries to access public or federal subsidy for training that is linked to these kinds of legal (federal or state) definitions of apprenticeship.
- Like any public subsidy system, it will need to be designed very carefully so that it is clearly targeted on what behaviour it is trying to induce. If the aim is to create more demand for registered apprenticeship slots among employers, then that is more likely to happen if the intermediaries are vetted as part of a national/ or state level register. The experience in England suggests that some basic due diligence can go a long way to reduce provider fraud and, in general, limit sharp practices. The most obvious fraud in a subsidy system of this kind is the intermediaries/ITPs fabricating employers/ apprentices that they’ve signed up; or by them taking short cuts with the prescribed training. A register or licensing system can assist in weeding out nefarious practices.
- Until 2017 in England, the ITP intermediaries could essentially decide for themselves when to sign-off the apprentice as competent in order to receive the final subsidy payment from government. The problem was known as providers: ‘marking their own homework.’ Now, all apprentices must complete a formal end-point assessment (as is also practiced in Canada) which is carried out independently from the intermediary/ITP/ college provider. These End-Point-Assessment Organisations (EPAOs) are a relatively new feature of the English apprenticeship landscape. But there is already strong anecdotal and evaluation evidence that the new Apprenticeship Standards are of a far higher quality than the Apprenticeship Frameworks that they replaced.[10]
My final comments on this topic are that you have to see apprenticeship in any market-based system as being akin to a brand. And brands, as we know, become really respected amongst consumers when they deliver great products at competitive prices.
Apprentice intermediaries have to engage in exactly the same mindset. What they are selling to employers and individuals is the brand of Apprenticeship. The training package, including the upfront support, is a ‘product’ at the end of the day. What comes with that kind of mindset is a responsibility to develop products and services that take away the ‘friction’ for employers taking on novices of the kind discussed earlier.
The best ITPs/ intermediaries that I have seen have developed outstanding customer service propositions as part of an end-to-end strategy of helping employers with talent acquisition, via the apprenticeship route.
The best intermediaries/ITPs will often recruit, motivate, vet, monitor, motivate, train and mentor the apprentice!
Crucially, they appear to relish the external scrutiny that comes with being regulated by the government in a competitive market. By placing a regulatory floor below the intermediaries/ITPs, it means that policymakers have a clearer line of sight on quality issues than perhaps would otherwise be the case.
In conclusion.
We have reached a tipping point in apprenticeships, it seems, on both sides of the Atlantic. Both the moral and economic case for the widespread use and expansion of apprenticeship is inescapable. The challenge for the rest of the century, particularly here in the US, is to come up with a sustainable delivery model to rocket boost the take-up and appeal of the registered program.
In my view, that’s where the smart use of public subsidy, redirected to registered intermediaries like Apprenticeship Service Providers, could really come into play.
The big ask of Congress I suppose, particularly if lawmakers are serious about building a skills and apprenticeship nation here in the United States, is that they will need to focus a lot more financial fire power along the lines of a bazooka, instead of the current pea shooter model; not least if you really want to supercharge the American Apprenticeship Dream.
Thank you for listening.
Prof. Tom Bewick has played a key role in formulating, critiquing, and operating aspects of England’s apprenticeship system since he was a post-16 skills adviser to the Labour Government (1997-2001). He is a keen observer of developments in the United States having regularly consulted here between 2013 and 2018; and will no doubt continue to provide important insights on developing a robust apprenticeship system in the US that can be built to last.
[1] The American economists Tyler Cowen and Daniel Gross, in their book, ‘Talent’ (2022), provide data on income inequality and education attainment in the US; and found that between 1980 and 2000, at least 75% in the variation of income levels between individuals could be explained by whether they held a college degree or not. By the time we get to looking at the same data in 2017 (pre-pandemic), they found the ‘explanatory’ effect of this causal model had fallen dramatically to 38 per cent). In other words, holding a college degree these days only gets you so far.
[2] See, John Cope (2022) ‘We’ve reached a tipping point on apprenticeships’
[3] See the official data source on starts, on programme apprentices and achievements here
[4] See, David Colander and Roland Kupers (2014) ‘Complexity and the Art of Public Policy.’ Princeton University Press.
[9] New-style apprenticeship standards only achieved 51.8 per cent achievement rate in 2020/21, a slight improvement on the achievement rate of 45.2 per cent in 2019/20. Meanwhile, old-style frameworks, which are being phased out, hit a 68.1 per cent achievement rate in 2019/20 and 68.9 per cent achievement rate in 2020/21.Only one of the 11 subject sector areas – science and mathematics – had an overall achievement rate of above 67 per cent on standards in 2020/21.
[10] For examples of EPAO practice, see here: https://awarding.org.uk/wp-content/uploads/2020/10/Quality-in-Apprenticeships-QualityEPA.pdf (2021) Federation of Awarding Bodies www.awarding.org.uk
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