We are currently witnessing a massive change in the apprenticeship landscape. After a period of decline from the early 1990s to the mid-2000s, apprenticeships are now enjoying a period of resurgence. Public awareness of apprenticeships is slowly improving, and they have been supported by significant policy reforms to make them more aligned to the skills needs of the economy.
The apprenticeship levy is the most visible of these reforms. The levy is a payroll tax on large employers. Employers with a pay bill of over £3m are taxed at a rate of 0.5 per cent of their total payroll costs. Funds are then deposited into a digital account through which employers can purchase apprenticeship training.
The apprenticeship levy is a really good idea. It promised to make employers more accountable for investing in training, it promised the development of provision that was more applicable to the real skills needs of the economy, and it promised to deliver a step change in the prestige and profile of apprenticeships. However, despite these good intentions, the new system has some serious flaws.
Since the introduction of the levy, starts have dropped considerably: 24 per cent fewer apprenticeship starts have been reported in the 17/18 academic year when compared to the same period last year. A policy intended to increase apprenticeship starts to three million by 2020 has had the opposite effect.
But that is not to say that all is lost. There are small changes that can be made to the current system that would improve the situation considerably.
After all, the value of apprenticeships as a basic social good is not debatable – especially considering the challenges that UK plc is facing. Our productivity is at the bottom of the G7 and we continue to face profound skills shortages in key industries. It’s difficult to predict what Brexit will do to the skills base and while a robot won’t be taking your job quite yet, we do need to consider the impacts of automation and artificial intelligence on the workforce.
We are in a time of significant change and disruption. Industries and economies are changing at the blink of an eye. So, a highly skilled and adaptable workforce with technical capacity will play a pivotal role in increasing UK competitiveness.
Collab Group colleges are thinking about how we improve the apprenticeship system and we have produced a new publication called “Making Apprenticeships Work for All”. In it, we focus on three key areas that need to be improved to ensure that the apprenticeship system can deliver better outcomes for employers, learners and providers.
Firstly, we discuss the cultural notions of who does apprenticeships and who should be enticed to undertake them. Currently, there is still a negative presumption about apprenticeships and technical education more generally, the Student Room 2017 Options report found that 68 per cent of respondents thought there was a stigma attached to apprenticeships. This is one of the many reasons why only 30 per cent of school leavers in the UK chose to peruse a technical pathway, whereas the OECD average stands at 50 per cent.
Apprenticeships should be an option available to everyone, but we are let down by a careers and guidance system that does not inform learners of the apprenticeship route. To encourage more people to undertake apprenticeships, we need a compelling story to tell about how apprenticeships can improve careers and life prospects.
Secondly, we propose sensible adjustments to the apprenticeship system to make it work better for employers and the wider economy. The Chancellor recently announced extra support for small businesses to purchase apprenticeship training and the Treasury is planning to increase the cap on funds that can be transferred by levy-paying employers to other organisations. These are welcome developments, but more can be done to increase flexibility within the system.
Employers only get a 24-month period to spend the levy, but some employers are in a position where they will not be able to allocate their levy to a relevant standard. Where the Institute for Apprentices has not approved a relevant standard in time for funding to be utilised, there could be a case to allow employers to claw back some of this funding.
Finally, we assess how we can embed quality at every level in our system and ensure that we are focussing on outcomes, not inputs. We think that the government’s three million target is wrong because it focusses on the wrong indicators. By focussing only on starts it doesn’t give a complete picture by ignoring success, progression or dropouts.
Beyond the quality of measuring success, we advocate for the adoption of a regulatory framework that ensures quality at all levels and promotes good behaviour among providers and employers. We need to ensure that apprenticeships are of the highest quality in order to improve their perception.
We have the building blocks of a great apprenticeship system, but it is not working as it should. We have set out some of the key areas that need further reform.
In order to make apprenticeships work for all, we need to work together, collaborate and press for the small changes that would make so much difference in the apprenticeship system. Apprenticeships will play a crucial role in delivering a credible and respected system of technical education, and Collab Group colleges want to help lead the transformation.
You can read the full report here.
Ian Pretty is chief executive of Collab Group.