Redefine apprenticeships and fund them with tax credits, review says

Posted on 27 Nov 2012

The Richard Review of Apprenticeships says that an apprenticeship should last a minimum of one year, it must require doing a real job, and should be funded through tax credits.

An apprenticeship should be redefined, last a minimum of one year, it must involve doing a real job, and should be broad enough to equip someone with genuinely transferable skills, the review recommends.

Commissioned by government in June and published today, the Richards Review recommends that the requirements of an apprenticeship be employer-led and funding should still come from government but routed via the employer to ensure relevance.

Authored by businessman and ex-Dragon’s Den investor Doug Richard, the 140-page report criticises the current apprenticeship system for including too many qualifications and says it is often too expensive for colleges to deploy via awarding bodies.

Many things today are called an apprenticeship when they are, in fact, not, says Mr Richards. “Today we bundle a number of different activities into the apprenticeship programme, unnecessarily complicating the system, diluting the brand and reducing value for money,” he says in the review.

He adds that the duration and amount of training involved in apprenticeships is also declining.

One of the key recommendations concerns the degree of skill that an apprenticeship should cover. In the past, training for a range of semi-skilled jobs which can be learned in several months were often bundled under the label ‘apprenticeship’.

An apprenticeship job must require sustained and substantial skills, the report says, and must be broad enough to equip someone with transferable skills. “Skills which they will need and use in any job, and skills which enable them to be competent and confident beyond the confines of their current job, both in their sector as a whole, and beyond it.”

But while it requires a job, Richard says an apprenticeship is still a form of education. And all apprentices should reach a good level in English and maths before they can complete their apprenticeship.

The current programme is diverse but increasingly dominated by older workers, many of which are existing members of the workforce. The minimum level of qualification that an apprenticeship achieves should not necessarily be raised – currently awards at Level 2 are the most common in the UK and several people have suggested the bar be set at Level 3.

The review says that the Level 2 qualification is acceptable but only if it reflects a real job, which requires a substantial level of training, and is not solely a stepping stone to a Level 3.

The review seeks to draw a line between an apprenticeship, which it suggests is an abused term that many types of training fall into, and a traineeship. Apprenticeships should be clearly
targeted at those who are new to a job or role that requires sustained and substantial training.

Training and accreditation of existing workers that are already fully competent in their jobs should be delivered separately within a traineeship.

The review was popular with industry bodies. Steve Radley, Director of Policy at manufacturers’ organisation EEF, said “[Richard] rightly recommends that any future apprenticeships strategy must be based on three key elements – raising our level of ambition, giving employers the power to set standards and creating a dynamic market in apprenticeship training where the funding follows the employer that is making the investment.

“Government must now respond positively and implement its recommendations quickly,” he added.

Other core recommendations in the review are:

• The focus of apprenticeships should be on the outcome, where with recognised industry standards for every apprenticeship. These should clearly set out what apprentices should know, and be able to do, at the end of their apprenticeship, at a high level which is meaningful and relevant for employers.

• The Government should set up a contest for the best qualification, where individual employers, employer partnerships or other organisations with the relevant expertise should be invited to design and develop apprenticeship qualifications for their sectors.

• The testing and validation process should be independent and genuinely respected by industry. The test should be holistic, at the end, and assess whether the individual is fully competent and employable, within their job and their sector.

• All apprentices should have achieved Level 2 in English and maths before they can complete their apprenticeship.

On funding, Mr Richard said his strong preference recommends is for government to fund apprenticeships through a tax credit. “Employers would record how much they spent on eligible training for apprentices, and claim the Government contribution through their tax return.” He points out that businesses make these calculations already – eligible expenses, including investment in skills, are recorded and are deducted from their pre-tax profits.

“To make sure that all firms can access the training they need, it’s rightly recognised that we need a simple, accessible funding system, and businesses will welcome the idea of a skills tax credit.”said Neil Carberry, CBI director for employment and skills policy.

The review also says the purchasing power for investing in apprenticeship training should lie with the employer. “Government contributes to the cost, but this is routed via the employer to ensure relevance and drive up quality. The price for apprenticeship training should be free to respond to and reflect employer demand.”

Recommending that an apprenticeship lasts a minimum of one year is odd, perhaps, given that the National Apprenticeship Service made this mandatory in August.