Warwick research confirms government needs to act fast on sharply falling apprenticeship numbers

Conference delegates look forward to new minister’s response on Monday

Training providers gathering for the AELP conference in London on Monday will be eager to hear reassurance from the new skills minister that the government is ready to tackle a sharp fall in apprenticeship start numbers since its levy reforms were introduced.

The Conservative election manifesto reaffirmed the government’s goal to achieve 3 million apprenticeship starts by 2020 and so ministers cannot afford to let the decline in starts persist. Training leaders are equally concerned about the impact on meeting the skills challenges of Brexit and the programme’s contribution to improving productivity and social mobility.

AELP is hoping that new DfE minister Anne Milton will tell conference delegates that the government will urgently reconsider the funding allocations made in April for funding the apprenticeship starts of non-levy paying smaller employers. These allocations, combined with the large levy paying employers holding back on starts, have reportedly seen starts fall to less than a quarter of the level of a year ago.

Warwick IER research findings

The need to act quickly has been underlined by new research by the Warwick Institute for Employment Research at the University of Warwick commissioned by AELP. Telephone interviews with 200 employers of all sizes already engaged with apprenticeships found:

• 50% of employers expect the number of their apprenticeship starts to fall until October 2017
• Apprenticeship starts in these employers are expected to decline by 17% overall
• Opportunities for 16-18 year olds and in level 2 apprenticeships are likely to decrease after October 2017, although overall numbers are expected to rise.

The worst affected sectors are Business Administration; Childcare and Education; Social Care; and Engineering and Manufacturing – all vital to the economy and social cohesion.

Reasons given for reducing starts include funding issues and costs; no need for more apprentices; and lack of growth in the business.

AELP CEO Mark Dawe commented:

‘The Warwick findings confirm what our member providers have been telling us, namely that apprenticeship start figures have plummeted since the levy started. Non-levy paying employers in some sectors are refusing to pay the 10% co-investment contribution and in other sectors there is definitely a shift to high value management training rather than level 2 and 3 sector specific apprenticeships. We hope that the government will want to use our expertise and experience to help determine what action needs to be taken.’

Mark Dawe also warns that some good quality smaller training providers, who offer specialist niche provision, could go out of business unless non-levy funding allocations are increased soon, denying employers a proper choice in outsourcing their training.

Last autumn, MPs on the Public Accounts Committee also expressed concerns to the Department for Education that some of their constituencies had few or no levy paying large employers and therefore local young people would be denied apprenticeship opportunities because of the lack of funding for SMEs. In AELP’s view, their fears are proving to be well grounded.

One key and perhaps surprising finding of the Warwick IER research is that 71% of employers say that the levy which can only be used to fund apprenticeships will not make any difference to investment in their other training programmes. It was a major claim of the levy’s critics that the levy would cause displacement when George Osborne announced it in his summer 2015 budget.

It’s not just apprenticeships that are important

AELP’s chairman Martin Dunford OBE will say to delegates at the 2-day AELP national conference, sponsored by NCFE, that all skills and employment programmes have an important part to play in meeting the ‘five giant challenges’ in the government’s manifesto.

These include Traineeships, if supported to grow, and a successfully implemented framework for Technical and Professional Education for 16 to 18 year olds.

AELP is also keen to lend its expertise to help design an effective new National Retraining Scheme, another government manifesto pledge. In the meantime, it says that the Adult Education Budget could avoid a serious underspend and deliver better value if the whole £1.5bn budget was put out to tender to all providers and colleges.

The conference will also hear from Gordon Marsden, the shadow skills minister, on the first day.