Is the Apprenticeship Levy resulting in a sinking (apprentice)ship?

Posted on 15 May 2018 by The Manufacturer

Twelve months on from the introduction of the Apprenticeship Levy and unfortunately the figures don’t make for a positive reading experience. Mike Rigby, head of Manufacturing, Transport and Logistics at Barclays, explains.

The mounting evidence suggests that the current Apprenticeship Levy simply isn’t working
The mounting evidence suggests that the current Apprenticeship Levy simply isn’t working.

According to year-on-year figures from the Department of Education, there was an almost 60% drop in the number of people starting an apprenticeship in the three months immediately following the introduction of the Apprenticeship Levy in April 2017.

That news was swiftly followed by a further 27% drop during August, September and October – even more worrying, as this is the time when the majority of apprenticeships traditionally commence.

According to provisional figures, the decline has continued in the months since.

More recently, a study published this month by centre-right think tank, Reform, suggests that many businesses have rebranded existing low-skilled job roles as ‘apprenticeships’ in order to gain subsidies for training.

The report states that, “As part of the government’s wider package of reforms to apprenticeships, groups of employers came together to write the new ‘apprenticeship standards’.

“Some used this opportunity to generate high-quality standards, but others appear to be simply rebadging low-quality, low-skill and often low-ways roles as ‘apprenticeships’ instead.”

Maybe we can take solace in the fact that the word ‘manufacturing’ only appears five times in the 45-page report, ‘engineering’ seven times, and ‘logistics’ but once (in a footnote source). Most examples cited came from the retail, hospitality and service sectors.

However, the widespread coverage this and other negative reports have received by the mainstream media alongside numerous headlines putting the words ‘low-skilled’ and ‘poor quality’ next to ‘apprenticeships’ will have done nothing to better persuade parents and teachers that they should be promoting them overall as a viable, rewarding career path.

Good intention, bad execution

Skills Training Apprentice Apprenticeships Apprenticeship Levy
The EEF has recently highlighted three key challenges businesses still face 12 months on.

The mounting evidence suggests that the current Apprenticeship Levy simply isn’t working, and that’s a real pity as the intention behind it is sound:

To enable British businesses to access the skilled and knowledgeable workforce they need to grow and take advantage of the great opportunities that lie before them, while simultaneously enabling people of all ages to undertake the vocational training necessary to secure well-paid jobs now and in the future.

The EEF has recently highlighted three key challenges businesses still face 12 months on, each of which chimes with the conversations I’ve had with business owners across the country:

  • The amount employers can spend from the Levy is too low and bears little resemblance to the actual cost of training an apprentice
  • Employers who don’t spend their Levy funds quick enough are being penalised
  • The root and branch apprenticeship reform programme was rushed through, meaning that employers were paying the tax, but new standards weren’t in place and a responsive training market has yet to prevail

Other trade bodies, institutions and business groups have called for the government to scrap its somewhat arbitrary target of getting 3 million people in apprenticeships by 2020, for the reason that its focus on quantity has diverted their attention from the quality of these qualifications.

Now would be the ideal place to offer an alternative perspective, a case study of a business who has had a positive experience of the Apprenticeship Levy and is seeing genuine, tangible benefits as a result. That I don’t have one to hand probably speaks volumes.

Further thought-leadership courtesy of Mike Rigby:

Q1 2018: Is UK manufacturing on a stable footing or slippery slope? – the past three months have seen manufacturing businesses continue to face national and international challenges, yet there are some very clear signs for a positive future.

UK has the drive to succeed as an industrial nation, whatever the future may bring – an overview of some of the key findings from the Annual Manufacturing Report 2018 and what they reveal about the nation’s manufacturing businesses.

UK manufacturers must seize the opportunities of 4IR – 87% of UK manufacturing businesses express confidence for the future; but, why isn’t that confidence translating into greater capital investment?

What role is the UK playing in Connected & Autonomous Vehicles? – lifting the lid on how the UK is driving the future of mobility.