How flawed is the three million apprenticeship target?

Posted on 11 May 2018 by The Manufacturer

The Apprenticeship Levy was rolled out last spring with the stated intention of attracting three million apprentices into industry by 2020. To the dismay of all concerned, it has thrown the whole process into reverse.

Employers with payrolls in excess of £3m have paid their 0.5% levy, but the take-up and provision of apprenticeships has plummeted. John Beattie, apprenticeship advisor at The IET, discusses the problems, and offers some possible solutions.

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Engineering apprenticeships are costly to deliver, often far exceeding the maximum levy funding.

Apprenticeships to support the next generation of engineering and technology talent are a vital part of tackling the skills deficit across the industry.

By forcing large companies to pay into a fund that can only be used against the delivery of apprenticeships, the Apprenticeship Levy was supposed to incentivise employers to run apprenticeships or increase the number of apprentices they employ.

It works by enabling the large levy-paying companies to draw back their levy contributions to pay for apprenticeships, and the small non-levy paying companies to have 90% of their apprenticeship costs paid out of the levy surplus.

And yet, one year on, the number of apprenticeship starts is falling. Research by the Open University shows that only £108m of the £1.39bn collected has been withdrawn by employers.

Engineering apprenticeships are costly to deliver, often far exceeding the maximum levy funding; therefore, many large companies find it cheaper to pay the levy ‘tax’ than to deliver an apprenticeship.

According to the IET’s own 2017 survey into skills and demand in industry, only a quarter of engineering businesses (27%) said the levy will increase the number of apprentices they take on, in contrast to more than half (53%) saying it won’t.

One fifth of employers (20%) are still unsure of the impact the levy has on their apprenticeship provision.

This article first appeared in the May issue of The Manufacturer magazine. To subscribe, please click here.

The government’s ambition to hit three million overall apprenticeship starts by 2020 looks increasingly shaky; the latest provisional figures provided by the Department for Education indicate that it is a significant 18% below the target trajectory.

Possible steps

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Research by the Open University shows that only £108m of the £1.39bn collected has been withdrawn by employers.

There is no requirement for the apprenticeship standards to define the structure or content of an apprenticeship, which means that they are extremely flexible – that is a good thing.

However, apprenticeships are primarily work-based learning programmes.

Levy funding is available for 20% off the job training, but if some ‘on-the-job’ training could also be funded from the levy, companies could then use more of it and introduce more structure into their apprenticeship delivery to show how on-the-job training is delivered.

The IET agrees with employers who are asking for the levy funding rules to be simplified, more flexible and less ambiguous.

Support for emerging talent

The IET is committed to encouraging more young people into engineering apprenticeships through its annual awards programme, which each year provides more than £1m in awards, prizes and scholarships to celebrate excellence and research in the sector, and encourage the next generation of engineers and technicians.

Our Engineering Horizons Bursary scheme is designed to support talented individuals facing personal obstacles or financial hardship to complete their training as an apprentice with a package of financial support and membership of the IET.

Separately, our Apprentice of the Year Award identifies individuals who have made an impact on their organisation and on the engineering profession. Each year, by celebrating their hard work and acknowledging organisations that have supported them, we spread the word about the benefits of apprenticeships.

Awards and bursaries

The IET Apprentice of the Year Awards 2018 are now open for entries. Click here for details on how to enter.

To find out more information about the Horizons Bursary scheme, visit the IET Horizons Bursary website.