1. Economics
April 26, 2018updated 03 Aug 2023 3:05pm

The UK government should give cities and businesses more flexibility over apprenticeships

By Elena Magrini

The theme of this year’s National Apprenticeships Week (NAW) was ‘Apprenticeships work’, and employers, apprentices and providers across the country gathered to showcase the success of the system.

This anecdotal evidence is also supported by more systematic evidence collected and analysed by organisations such as the What Works Centre. The data shows that apprenticeships have a positive impact for apprentices themselves, as well as for businesses and the wider economy.

However, if there’s widespread agreement that apprenticeships work, it is then also crucial to ensure the apprenticeships system works efficiently, so that more people can benefit from it. In a bid to boost the number of apprenticeships starts to 3m by 2020, the government overhauled the apprenticeships system by introducing new standards and the ‘Apprenticeship Levy’, which came into force in April last year.

This levy is a charge on larger employers to fund apprenticeships. It’s created a central pot of funding that large employers can access to pay for the schemes. (Government partially matches these funds, by making a 10 per cent contribution.)

But this change – which was meant to put employers in the driving seat – was welcomed with little enthusiasm by those very same employers. And, interestingly, the number of apprenticeships starts has been down since.

While it will take time to adjust to the new system and understand its full impact, there are some actions that national government and local leaders can take now to improve apprenticeships delivery within the system as it stands.

Complement the existing system with measures to target potential future apprentices

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Financial incentives such as the levy are a way to improve take-up of the apprenticeship scheme by businesses, by ensuring they have a stake in the system. However, to improve the number of apprenticeships starts – especially among young people – interventions aimed at connecting them with apprenticeships opportunities are also needed.

For example, evidence from the What Works Centre toolkit suggests that mentoring has a positive impact on awareness and completion in countries such as Australia and the US. These mentoring schemes could easily be replicated across the UK at a little cost, and could help familiarise young people with apprenticeships and other opportunities they may have not heard of otherwise.

The launch of the ‘Mayor’s mentors’ project by Andy Street last May is hopefully a first – and not isolated – step in this direction. Furthermore, awareness around apprenticeships could be enhanced by giving local areas control over the levy underspend (employers have just two years to spend the levy, after which they lose control over this money). This could be used by local partners to raise awareness among students and businesses with initiatives such as Apprenticeships Hubs.

Give employers more flexibility to experiment with levy-transfer and pooling while ensuring quality and evaluation

One of the issues with the levy is that while it mandates large employers to spend money on skills training, it takes away freedom over how employers choose to deliver this training.

A way to introduce greater flexibility would be to allow businesses to pool their money together with other businesses to deliver apprenticeships. From April this year, businesses will be able to transfer 10 per cent of their levy to other businesses, if they feel they would benefit from this (e.g. to businesses in their supply chain).

This option could be explored further, by allowing employers to transfer or pool more than just 10 per cent of their levy. That would allow a number of businesses to club together to deliver a bigger programme than they could on their own, which has the potential to improve the quality of provision. A number of local authorities and businesses (such as universities) have already put forward proposals on this matter. It is now up to the government to use them as pilots to evaluate the impact of different approaches to apprenticeships provision.

Ensure the apprenticeship system is not disconnected from the wider technical education system and skills provision

A second way to introduce greater flexibility would be to allow the levy to be spent on technical education more broadly, rather than just apprenticeships.

By forcing businesses to invest in apprenticeships, there is a risk that they simply shift money previously allocated from other forms of training (which may be more appropriate for their needs) rather than increasing investment. Work by the Chartered Institute of Personne-l and Development suggests that a number of employers do intend to rebadge their spending.

Given that the aim of the levy is to increase and improve skills provision, we need to ensure businesses invest more resources into training, rather than simply switching from one form of training to another.

Apprenticeships aren’t the only successful way of delivering technical skills training. For this reason, the government should consider widening the apprenticeships levy into a skills levy, requiring employers to spend the money collected through the levy to offer apprenticeships or other forms of high-quality training.

Apprenticeships take-up varies across the country, and so do business needs. There is still much that the government can do to make the apprenticeship scheme – and the wider technical education system – work better for apprentices and businesses in cities across the country.

Putting in place measures to test and evaluate the above ideas would not only give us a better understanding of how an efficient skills system works. It would also give the government and businesses more tools to make a success out of technical education.

Elena Magrini is a researcher at the Centre for Cities, on whose website this article originally appeared.

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