02How have apprenticeships been approached through policy?
How does the current system work?
Apprenticeships are a devolved function and operate separately in England, Scotland, Northern Ireland and Wales. Frameworks are developed and funding allocated by the relevant national coordinating body (the Skills Funding Agency in England; Skills Development Scotland; the Welsh Government and the Department for Education and Learning in Northern Ireland).
Across the UK, apprentices sign a contract with their employer and in-work training is usually supported by training providers and colleges. The requirements of an apprenticeship are set out in an apprenticeship framework (in England there are nearly 300) and lead towards a recognised NVQ qualification, a technical certificate and additional skills including English, Maths and IT.
Apprenticeships are offered at three levels – Intermediate (equivalent to five GCSE passes), Advanced (equivalent to two A level passes) and Higher (which can lead to NVQ Level 4 and above, or a foundation degree). The frameworks designate both the level and the subject of the apprenticeship undertaken.
The employer is responsible for paying the apprentice’s wages, although in Wales, additional government wage subsidies are available for 16-24 year olds. In England, The Skills Funding Agency meet 100% of training costs for apprentices aged 16-18, and 50% of costs for those aged 19-24, while a contribution is made for those over 25. In Scotland, training costs are fully covered for 16-19 year olds, and a proportion is paid for those over 20.8 In Wales, training costs are fully covered for all apprentices, while in Northern Ireland, most training costs are covered, with terms and conditions applying for over 25s.
The funding for training is paid to employers by the national coordinating body via the training provider. In England, additional funding support is available for the employer in the form of the Apprenticeship Grant for Employers.
Support and recruitment websites are available through the National Apprenticeship Service in England and the Apprenticeship matching Service in Wales.9
How has apprenticeship policy changed over the last two decades?
Over the last two decades, policies have been invented and reinvented, with reforms barely completed before the system is changed again, increasing risk and confusion for employers, training providers, schools and young people.
What will the big changes to policy be, and what does it mean?
As Figure 2 illustrates, a series of changes to the national apprenticeship system have been announced over the past two years, and are set to roll out from spring 2016 with the apprenticeship levy coming into force in April 2017.10 But what do these changes mean for apprenticeships, and for the local partners involved in delivering them?
- Employers will be required to contribute towards the cost of apprenticeships through a new levy on apprenticeships (see Box 1).
- This is likely to increase the level of involvement in apprenticeships for larger employers, but could also mean that employers choose apprenticeships over other forms of in-work training.11 More generally is it unclear how the levy will change employers’ behaviour overall towards training and recruitment.11
- Employers with wage bills under £3 million will be exempt from the levy, but they will still need to contribute one third of the cost of apprenticeship training upfront. This is likely to increase the barriers that SMEs face in creating apprenticeships.
Box 1: The apprenticeship levy
The Apprenticeship Levy was announced in the 2015 summer budget following the recommendations of the Wolf Review which called for a levy on employers to fund the apprenticeship system.13
The levy, which is a hypothecated tax on employers, will come into force in April 2017 and will amount to 0.5 per cent of the wage bill for any employer with a paybill of over £3 million (2 per cent of UK employers). It is set to raise over £3 billion a year by 2019-20.
Employers will have 24 months to spend their contributions on training and assessment, which will be managed in the form of online vouchers through the new Digital Apprenticeship Service. For every £1 spent on training, £2 will be contributed by the Government. For employers who contribute to the levy, their digital accounts will be topped up by a further 10 per cent, meaning that they receive more than they put in, as long as it is spent on training. For smaller employers who have not paid the levy, the employer contribution will need to be made upfront.
- Employers will take responsibility for drawing down funding and managing apprenticeships, rather than training providers
- This puts more power in the hands of employers in determining which apprenticeships are right for them. But it will also likely increase the administration required from the employer and make recruiting apprentices more time consuming.
- Current apprenticeship frameworks will be replaced by employer-developed ‘trailblazer’ standards
- The shift to standards is likely to improve the relevance of apprenticeship training to the needs of employers, but could also mean that standards will apply more to the specific businesses involved in trailblazers, and not the sector as a whole.11
- A proliferation of new standards risks further confusing the picture for employers in choosing the right qualification.15
- In the short term at least, an increase in requirements for English and Maths qualifications and the introduction of digital skills requirements compared to frameworks is likely to have a negative effect on success rates.
- The English, Maths and IT requirements are also likely to demand more off-the-job training, which may increase costs and administration for employers.
- Stricter assessment criteria involving written tests are likely to lead to the raising of entry requirements into apprenticeships.16
- A new Digital Apprenticeship Service will be set up for employers to advertise vacancies, choose a training provider and pay for training and assessment
- The Digital Apprenticeship Service should improve the levels of awareness amongst employers and give them more leverage over the recruitment process and the training available.
- Creation of the Institute for Apprenticeships, an independent body led by employers to regulate quality of standards and assessment plans for apprenticeships
- The creation of a body with the remit of maintaining apprenticeship quality could be beneficial in monitoring standards, but its effectiveness will depend on the resources that it is supplied with as well as whether it is able to adequately represent the needs of the full range of employers who are involved in apprenticeships16
- The protection of the term ‘apprenticeship’ in law
- Protecting the term ‘apprenticeship’ should prevent types of training and employment which do not meet the statutory requirements from being presented as an apprenticeship, helping to clarify the meaning of ‘apprenticeship’ for the public.
While the changes outlined in the previous section will address many of the weaknesses of the current system, some will remain and risk undermining the impact of changes to apprenticeship policy if they are not addressed. These include:
- A focus on ‘start’ targets ignores the importance of ensuring quality outcomes. While the apprenticeship system has changed substantially, the overall aim still remains the same: to achieve a target of apprenticeship starts. The priority given to ‘starts’ as the measure of success fails to take into account the quality of apprenticeships, the appropriateness of apprenticeships, or success rates (the number of apprentices who successfully complete their training). 18
- ‘Start’ targets incentivise perverse behaviours by prioritising quantity over quality. A focus on starts without any additional requirements or incentives associated with quality has led to the relabelling of government training as apprenticeships and the branding of existing employer training schemes as apprenticeships, as well as the conversion of jobs, all of which ultimately leads to deadweight.19 20
- The measures used to determine the success of the apprenticeship system do not capture quality. While there is data available on apprenticeship starts, including success rates, length of apprenticeships, levels, sector subjects and wages, these do not provide a clear picture of the quality of the outcomes. In part this is because there is little understanding of how these factors interrelate, but also because even those elements of ‘quality’ which tend to be agreed on are not routinely measured.21 These include progression into higher levels, retention within a business, the applicability of skills across businesses and cities, levels of mentoring and support, and the range of soft and transferable skills learned within an apprenticeship.
For cities and their partners, the government’s focus on quantity, often at the expense of quality, increases the challenges associated with trying to design and deliver an effective apprenticeships programme that meets the needs of the local economy, employers and apprentices.
Part 2 explores some of these day-to-day challenges in delivery faced locally and draws out a number of lessons from these initiatives which can help cities to support the creation of apprenticeships that work for their place.