Ever since its creation by David Cameron’s government, the Apprenticeship Levy has been a bone of contention for Britain’s businesses.
The policy – requiring companies to pay a fee of 0.5% of their annual pay bill, which could then be drawn down, with a 10% top-up from the Treasury, to fund apprenticeships – was intended to be a ‘shot in the arm for the country’s productivity’. It was created by a Government keen to create viable alternatives to university.
But as a business journalist for The Times when it was announced in 2015, I quickly picked up discontent – including a scathing analysis from Seb James, then CEO of Dixons Carphone, now of Boots, who described it as “very bureaucratic” and predicted it would “spawn an industry of consultants and add a lot of friction and cost”.
The retail boss has proved to be right. The levy hasn’t worked. Apprenticeship starts have fallen by a third since its introduction, albeit with a recent uptick. The system has spawned acres of paperwork and it’s remained oddly rigid in the face of calls for reform. Until now.
The new Labour Government’s announcement of a new Skills England body in the King’s Speech is a turning point. It brings an opportunity for employers, the further education sector and the Government to work together on fresh thinking.
I’ve worked for several companies employing large numbers of apprentices – in steel, manufacturing and in public transport. It’s evident that too much is being slotted in behind the word ‘apprentice’ as a result of the levy’s peculiar framework.
For large companies, outflow of money into the levy is substantial – the big supermarket chains, for example, employ hundreds of thousands of people in the UK and have payrolls in the billions. A 0.5% levy can run into tens of millions of pounds.
So there’s a strong financial temptation to shoehorn as many training courses as possible into the ‘apprenticeships’ category to claw this money back.
The rules of the levy are that apprenticeships must last at least 12 months, and that apprentices must ‘learn while they earn’. In transport, for example, this means year-long bus driver training apprentices – longer, you might think, that it truly requires to learn how to operate a bus.
These apprentice drivers have to take GCSE-level English and maths, a struggle for some, leading to a high drop-out rate. One senior executive grumbled, in exasperation, that he couldn’t see why you had to calculate the amount of water needed to fill a swimming pool in order to work in public transport. But without teaching this, there would be no levy funding.
Meanwhile, the levy is being used for a great deal of mid-career upskilling. A report by EDSK found that 46% of ‘apprentices’ have been with their employer for at least six months before starting their training. Nothing wrong with this in principle, except that it’s not really what was envisaged originally – and there’s a suspicion that a lot of courses are being unnecessarily reconfigured with hasty changes simply to meet the levy’s criteria.
It’s time to recognise, and adapt, to the reality that while apprenticeships are a terrific idea, they’re not suitable for everybody, and they’re not the only lever for employers to pull in order to upskill and train their people.
That is why it’s a good idea for the Government to turn the Apprenticeships Levy into a Growth and Skills Levy. Under the Education Secretary’s proposal, half the money in this future scheme can be drawn down for non-apprenticeship training. This surely makes sense.
It would mean, for example, that employees could be taught a language, could develop their IT knowledge, or could learn essential HR and managerial skills as their careers progress – without the need to elongate courses to take years and to shoe-horn in teaching to meet rigid criteria.
Britain needs an effective strategy towards skills more than ever before. With pressure on the Government to reduce immigration, it’s vital that employers can invest in people. And there’s really no reason why they should have to do so by describing anything and everything as an apprenticeship.
The levy has been in place for nine years. The world of work has become more flexible in every way – it’s time for a more adaptable approach to skills and training.
Andrew Clark is a freelance communications consultant. He was previously Deputy Business Editor at The Times.