It’s easy to criticise the apprenticeship levy – but we need to give it a chance

The start of 2018 has seen renewed criticism of the apprenticeship levy, with last year’s fall in apprenticeship starts being widely cited as evidence that it has become another business tax.

In fact, the levy represents a milestone in transforming the way employers access talent and how the post-18 education system operates for young people.

Larger organizations have argued that the £27,000 training allowance per apprentice falls short of covering the costs of higher level technical apprenticeship programmes. Others point to a lag in the certification of new training standards, coupled with the sheer size of the financial contribution required of the very largest companies, as barriers to any effective use of the 0.5 percent levy pot.

As always, there are two sides to this story. For one, the decline in the number of apprenticeship starts follows a marked spike in apprentice hires at the same time the year before, as employers readied themselves for the levy’s introduction in April 2017.

Two additional factors have fuelled initial falls in apprenticeship numbers, alongside a natural teething period as companies assess which apprenticeships will be most effective given their long-term plans.

First, employers are now far more discerning around which providers they work with, and what programmes they introduce, given they are spending their own money, rather than the government’s, on apprenticeships.

Second, smaller, non-levy paying companies, who used to benefit from fully government-funded apprenticeship training and do not pay the levy, are now obligated to cover 10 percent of the training costs.

Neither of these factors on their own is necessarily a bad thing. Employers taking time to plan and actively seek value for money around their apprenticeships will drive better quality programmes. And, by forcing smaller employers to co-invest in the qualification costs, competition for quality and innovation in a historically underwhelming training industry is stimulated. Further, it will help to stop the spread of apprentice roles that essentially amount to cheap labor, thinly veiled as qualifications.

True, the speed with which the legislation was introduced last April left providers playing catch-up to secure certification of new assessment standards in some areas. But there is real scope for innovation in the apprenticeship landscape, and a dose of creativity in the application of ring-fenced funds is resulting in genuinely life-changing opportunities for young people who want a viable alternative to university education.

Google is using the levy to recruit their next cohort of software engineers, with a real emphasis on their hiring process on promoting diversity and inclusion. Selecting entry-level talent based on potential, rather than experience, opens the door to candidates who might never otherwise have been considered.

Elsewhere, companies are using the levy to support personal development outside of their usual business functions and existing graduate schemes. Top law firm Mishcon de Reya, for example, has taken on accounting apprentices in their finance department, providing a new pipeline of fresh talent into the firm. This use of the levy to fund an apprenticeship scheme in the operational side of the business evidences the scope of implementation for all levy-paying employers.

The apprenticeship levy was introduced with precisely the objective of empowering employers to play a valuable role in addressing the growing UK skills gap. It is easy to criticise the realisation of a new policy, and there are certainly issues still to be resolved.

But the levy provides employers with a golden opportunity to diversify their entry-level talent and mould the kind of leaders they want driving their business in the future. It’s time that this positive potential was given equal recognition alongside the inevitable challenges faced in the levy’s application.

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MP calls for answers in police apprenticeship levy dispute

Despite paying into the apprenticeship levy, so far Welsh police forces have yet to benefit from their contribution.

The apprenticeship levy has exposed a “potentially devastating funding dispute” between the Welsh and UK governments over police training.

Plaid Cymru MP Ben Lake said it was unfair that the four Welsh police forces have to “pay millions into the levy” but cannot use it to train new police officers.

Mr Lake added: “Welsh police forces are already under significant financial pressure. Whether this impasse is a product of incompetence or error, or a consequence of some political gamesmanship, it will mean fewer police officers on Welsh streets.”

Police degree apprenticeships

He raised the issue in a debate on the police grant for England and Wales after fellow Plaid MP Liz Saville Roberts asked the UK Treasury in October if levy funds could be allocated to the College of Policing to train officers.

In June the College of Policing launched a degree apprenticeship programme to train police constables.

Chief secretary to the Treasury Liz Truss said that, as skills policy is a devolved matter, it was up to the Welsh government to decide how to spend the levy.

No digital accounts

In the debate on Wednesday, Mr Lake said: “The government at this end of the M4 claim that as training is devolved, the Welsh government are responsible for the funding of training and apprenticeships. The Welsh government, on the other hand, claim that the funding of officers’ training and apprenticeships is a matter for Westminster because policing is a reserved matter.”

Unlike in England, where employers can access a digital account which lets them fund apprenticeship training to the value of their levy payment, in Wales levy funds go straight to the devolved administration and training is delivered through the Welsh apprenticeship provider network.

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Half of managers do not plan to use apprenticeship levy fund

Almost half (49%) of managers have said they would not use their training fund available through apprenticeship levy, with many claiming there were no apprenticeships available in their industry.

A survey by training course provider DPG found that 43% of managers did not believe there were any apprenticeships that were useful for their businesses, despite programmes being offered in many areas including HR, IT and finance.

Communication by the Government might be at the heart of the issue, DPG said, as 63% of the 1,000 managers polled claimed they had never heard of the apprenticeship levy.

The apprenticeship levy was introduced last April and sees employers with an annual pay bill of £3m contribute 0.5% of their payroll towards a levy, which can be claimed back to fund training for new or existing employees.

Paul Drew, managing director at DPG, said: “These findings certainly highlight the need for a more focused approach to communicating the levy and its benefits.

“Gone are the days where apprenticeships were largely for school leavers and manual jobs, but sadly it appears that business perceptions haven’t quite caught up.

“The great range of business skills that can be developed through apprenticeships is a really positive thing and they can bring positive change for all sorts of businesses. The problem is that the Government needs to make this more obvious and needs to make it more about the skills and benefits than about the money itself.”

More than a quarter (27%) of managers said they did not see the benefit in offering apprenticeships for their businesses, while 17% “didn’t see the point” in apprenticeships at all.

According to the Department for Education, there was a 26.5% drop in the number of apprenticeships started in the first quarter of the academic year. The Government said would take some time for take-up of apprenticeships under the new system to bed in.

Drew reminded employers that apprenticeships are not just for new starters, but also for existing staff. “They can be incredibly enriching not just when it comes to increasing in-house skills, but also on a personal fulfillment level for employees,” he added.

The CIPD recently found that almost half of the organizations planned to repackage their existing training schemes as apprenticeships in order to access their £15,000 training fund, rather than creating an apprenticeship programme from scratch.

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Apprentices will get a place at Cambridge University

Cambridge University is to offer apprenticeships for the first time in a sign that vocational training is becoming a genuine alternative to conventional degrees and £27,000 tuition fees.

The university has been registered as an official apprenticeship trainer alongside companies such as Lloyds Bank, Greggs bakery, and British Airways. Other universities including Bath Spa and the University of Brighton, which are already renowned for their vocational courses, have also been registered.

A spokesman for Cambridge said that the type of courses and employers involved were in “active development”. “The university will be focusing its initial apprenticeship offer at the postgraduate level in a selected range of professional fields,” the spokesman said. “Working with employers and apprentices, Cambridge is intending to deliver research-informed, apprenticeship training through its Institute of Continuing Education and academic departments.”

Given the skills shortage in digital technology and Cambridge’s proximity to the cluster of businesses known as Silicon Fen, it is likely that computing will feature high on the list.

Elite apprenticeships, which combine working with the study, are fast becoming an alternative to conventional university. The civil service is the biggest provider of higher and degree apprenticeships, followed by BAE Systems, the aerospace company, and PWC, the accountancy firm. Some employers predict that they will eventually overtake graduate recruitment programmes.

Leading employers have complained that graduates have very little experience of work and need extensive training before they can become useful employees. By recruiting school leavers on to higher or degree apprenticeship programmes they can provide training and work experience at the same time. In turn, young people can obtain a degree or other recognized qualifications while being paid and without racking up student debts of, on average, £50,000.

About 1,000 students will start higher and degree apprenticeship courses this September at the National College for Nuclear, which is officially established today. The growing nuclear sector will need 6,000 trained staff each year for new technical and professional jobs to cope with the development of twelve new reactors across five sites. The National College will have hubs in Cumbria, near Sellafield, and Somerset, near Hinckley Point, where the first new nuclear power station for a generation is due to open in the mid-2020s.

A nuclear waste dump for all Britain’s waste has been proposed, with Cumbria the most likely site. There are also plans for another new nuclear power station near Sellafield. One of the courses on offer at the college is a degree in decommission and waste management.

The universities of Cumbria and Bristol are also involved in the college’s teaching. Anne Milton, the apprenticeships and skills minister, said: “This college will provide our nuclear industry with the highly skilled engineers, scientists and technicians it needs to grow, as well as giving more people opportunities in the competitive job market.”

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Why are we still waiting for apprenticeship levy standards?

Construction has been working with government to develop new apprenticeship standards since 2014. So why have only 27 of the 75 standards submitted been approved for delivery?

In March 2014 the government announced that construction would be among the second batch of sectors, alongside 28 others, to be brought into the new apprenticeship system.

By mid-2015, trade bodies, the CITB and employers from main contractors and architects through to SMEs and consultants had come together to form trailblazer groups, each of which consisted of at least 12 employers. These groups were encouraged to work with as wide a pool of employers as possible, and were handed the task of creating new standards for apprenticeships.

The idea was simple. Each trailblazer group would develop one occupational standard for an apprenticeship, ensuring that each trade had one definitive apprenticeship. These were handed out on a first come, first serve basis, but stakeholders could ask to join a trailblazer group that was developing a standard for a trade in which they had an interest.

As new apprenticeship standards were approved for delivery in a given occupation (bricklaying, for example) employers could begin using them and would phase out any bricklaying apprenticeships they provided under the previous framework. The aim was to ensure all apprentices had a universal competency level within their trade, based on every employer using the same apprenticeship standards.

In April last year the government rolled out its apprenticeship levy, obliging companies with PAYE bills above £3m to pay 0.5 per cent into a government levy fund. This money is used to fund digital accounts for employers to spend on approved apprenticeship programmes. Yet to date, only 27 of the 75 standards submitted have been approved for use. So what’s happened?

Trial and error takes time

The system was a simple and forward-thinking idea. But the problem with a massive overhaul that brings together such a wide variety of stakeholders, and asks them to do something that hasn’t been done before, is the amount of trial and error it involves.

“The interesting thing about the trailblazer initiative is that the goalposts have moved every now and then,” says FMB director of external affairs Sarah McMonagle.

“The government has learned as it goes, in terms of what works well and what doesn’t. The trailblazer guidance that is published alongside this piece of work is constantly being updated, so what might be permissible this month was then changing sometimes, and that I think is one of the reasons why the process has been long.”

The time it has taken to get the new apprenticeship standards approved has led many in the industry to see them as failing to deliver on their promise. The standards are late even by the government’s expectations, which said in a guidance document to trailblazers back in March 2014: “Our aim is that from 2017/18 all new apprenticeship starts will be on the new standards.”

But changing guidance from government is only one of numerous snags the new standards have hit.

“When we first started developing these trailblazers, the Institute of Apprenticeships didn’t exist,” Ms McMonagle explains. “So it was all coming through the Department for Business, Innovation and Skills, which has since changed to the Department for Business, Energy and Industrial Strategy.

“And also since that time, skills has been taken out of the Department for Business and put into the Department for Education because the government felt that education, academic and technical should be working more closely together.”

As a result, oversight of the programme has changed hands three times since the second cohort of sectors began developing their new standards in 2014, with the scheme finally finding a purpose-built home in the shape of the Institute for Apprenticeships (IfA), created in April 2017.

One of the reasons for establishing the IfA was to take responsibility for approving standards away from civil servants who “didn’t really have knowledge of the industry”, Ms McMonagle suggests, and place it in more informed hands. The IfA’s route panel now fulfils this responsibility and is made up of experts from each industry. The construction group within the route panel comprises seven leading industry lights and is chaired by Gradon Architecture’s technical director Tanja Smith.

Untangling a legacy of knots

Despite this step forward, the ever-changing guidance policies from previous departments created a legacy of standards now considered unfit for purpose by the IfA.

This is partly due to a more robust application of the quality criteria; in other instances, it is down to the IfA’s inability to fulfil promises made by previous departments that exemptions would be granted to get standards approved.

“When the institute came into being, there was effectively a change in terms of the ability of the government to make exemptions to policy rules that govern apprenticeships,” says IfA deputy director for standards Jonathan Mitchell.

“Before the institute came into being, ministers had a degree of discretion to be able to say, ‘In this particular case for this particular standard, we’re going to make an exemption to this particular policy rule’. That might have been about mandatory qualifications or something about the endpoint assessment being independent or not, for example. Ministers could do that.”

Mr Mitchell adds: “That meant people who started developing a standard before the institute came into being and then tried to get it approved once the institute [was in place] found themselves in an unenviable position, because they had hoped to get exemptions which we were unable to grant. That posed problems and required quite a lot of reworking on the part of some trailblazers and that took time. I’d be the first to concede that that’s the case.”

Another legacy issue the IfA is trying to untangle revolves around terminology. Since the Richard Review in 2012 (the genesis for the new apprenticeships), the idea has always been to create one apprenticeship standard per trade. There would be no entry, intermediate or advanced-level apprenticeships – only one definitive apprenticeship standard that would be given a single level.

Construction is, unfortunately, an industry that has sometimes differentiated between similar occupations by assigning them different levels, when in fact giving them different names might have been more appropriate.

“Previously we may have said a carpenter level two and a carpenter level three when in truth, they probably should have been called a carpenter, a carpentry specialist, or carpentry supervision,” says CITB policy director Steve Radley. “Somebody operating at what was previously level three, which we call advanced, will be doing very different things on site to somebody who is operating at the previous level 2.”

As a result, there are now two apprenticeships standards currently in development for carpentry and joinery (an advanced level three and a level two), which are both waiting to have their funding band assigned, after which they will be approved.

Putting aside the confusion this creates in a system that was only ever intended to have one level per trade, the misunderstanding in terminology between levels and occupations led to multiple trailblazers developing almost identical standards. The amount of time lost on these was compounded by a lack of joined-up thinking at the initial stages of development, meaning duplicates were only discovered at a later stage.

“At the beginning there was a lack of co-ordination and bigger picture thinking,” Mr Radley reflects. “It was almost like treating every single trailblazer standard in isolation, when really it needs to be from a sectoral view.”

Mr Mitchell adds: “One of the rules the institute is obliged to implement is around overlap. We were obliged not to approve apprenticeship standards where there was substantial overlap.”

Meanwhile, some of the trailblazer groups that had not fallen foul of the terminology confusion were wrangling about the most appropriate level for their apprenticeship standards. The FMB has been part of the trailblazer group working on the bricklaying and plastering standards since the summer of 2015 (both are yet to have their assessment plan approved and funding band assigned nearly three years later).

The FMB went into the process wanting to “raise the bar and ideally we would have had a level three, three-year apprenticeship in both bricklaying and plastering”, Ms McMonagle says.

“But because that wasn’t the vision of the larger housebuilders, we compromised on a so-called level 2.5 which doesn’t exist, but [we] developed a two-and-a-half-year apprenticeship at level two [in bricklaying], so six months longer than what’s currently out there, and making sure that the bare minimum of bricklaying apprentices is now better than it would have been previously.”

She adds: “It was quite eye-opening in that sense. The FMB went into it with a lot of optimism; we thought it was going to be a straightforward process and we were going to be able to get the industry behind us. But it did transpire that some quarters of the industry had different views to the FMB and its members.”

Where are we now?

At the time of writing, there are 75 apprenticeship standards in development for construction, only 27 of which have been approved and are ready for delivery. To the IfA’s credit, of the 27 approved standards, 12 were approved after it was established in April 2017.

It’s little consolation for those businesses that have been paying a levy towards the new apprenticeships since April 2017, yet are unable to use their levy pot as intended because the standard they need hasn’t yet been approved.

“The simple fact is they have got two years from starting to pay their levy until money in their levy account expires,” the IfA’s Mr Mitchell says. “It is absolutely my ambition to make sure they have standards that they can spend that money on long before that levy expires.”

He adds: “I’m not downplaying the importance of having those construction-focused standards ready to be used. But there are plenty of other standards out there that construction companies also need to use. So just because you’re a construction company it doesn’t mean you don’t also need some of those back-office roles where you can spend your levy and all sorts of other things as well.”

But construction is an industry with a technical skills gap, not a back-office skills gap – something not lost on Mott MacDonald senior early careers adviser Holly Savage. “The development of the standards has been relatively slow in comparison to what our skills shortages are as an industry,” she says.

“They probably should have started us paying levy funds a bit later because the number of standards available are not enough that we would actually maximise the utilisation of our levy, and I think this is across industries.”

Nevertheless, Ms Savage says that on the whole, the changes to apprenticeships are well-intentioned and positive for the industry.

“I do think the apprentice levy is a positive thing and the fact we’ve now got apprenticeship standards to degree level is a majorly positive thing. I think the philosophy behind it is great. It’s just that the timing has been off because there aren’t enough standards available.”

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Arnold Clark recruits broader range of apprentices in 2018

Arnold Clark is gearing up to recruit 300 new apprentices this summer in a broader range of roles.

The dealer group is looking apprenticeships in traditional motor trade roles such as technicians, spray painters, body repairers and parts advisors and also in roles such as IT, engineering, customer service and business administration.

All apprentices will receive training at an Arnold Clark site and some will attend a number of week-long visits at one of the Group’s GTG training centres.

After gaining their qualifications, apprentices have the opportunity to grow their skills further and develop their career within the Group.

Suzanne Sherry, apprentice recruitment manager at Arnold Clark said: “This year’s recruitment drive demonstrates our continued commitment to the apprenticeship scheme and to creating new jobs throughout the UK. It’s important for us to introduce a younger and more diverse workforce to the Arnold Clark team.

‘We know that there are still some gaps in understanding; from the age at which the apprenticeship journey can begin, to the benefits it can bring. Little by little, we hope to eradicate any misconceptions about apprenticeships, and to raise awareness of them as a viable and hugely rewarding career path.”

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Apprenticeship levy: Bureaucracy is holding us back

Within the industry we know we can be dynamic, innovative and forward-thinking. But as the recent backlash to the apprenticeship levy highlights, businesses like ours continue to face hurdles that are blocking our full growth potential.

In response to economic and political uncertainty, our sector should be focusing on boosting productivity through automation and digitisation. Instead, we are playing a recruitment waiting game fuelled by a major blocker in the apprenticeship levy process: the approval of standards.

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At United Living, we saw the apprenticeship levy as a chance to address the skills shortage and to attract people into the sector – particularly school-leavers. We still feel this way but a year on, it’s difficult to see how anything has really changed. One of the biggest issues is the delay in approving degree-level apprenticeships.

Still waiting

For school-leavers, apprenticeships provide young people with the opportunity to join a business straight from school, enabling them to gain practical experience while studying for their degree. Yet we are still waiting for four degree-apprenticeship standards to be signed off following last year’s implementation of the levy, which is preventing individuals from starting on these vital pathways.

We are not alone in our frustrations. Business schools, for example, are having to delay courses as they have been unable to sign up apprentices paid for by the levy.

The process is not helped by the fact that both the national apprenticeship standard and the assessment plan must first be approved, and then a funding band assigned from a government that continues to shift both its people and policies.

In the meantime, we can’t sit back and do nothing, so we are implementing our own internal learning opportunities to bridge the gap while we wait. National Apprenticeship Week (5-9 March) can provide the impetus to resolve the situation. We want to be able to go into schools knowing we can use the apprenticeship levy in the way we had planned to sell the proposition of a career in our industry.

Northern trailblazer

The challenges to deliver effective apprenticeships should also be considered in a regional context, playing to the strengths of our city-regions especially.

As such, the Northern Powerhouse Skills report launched last week may prove to be a trailblazer for some exciting new approaches. It calls on every northern business to mentor or reach out to at least the same number of young people as they have employees. This would see almost 900,000 given experience of work. It also recommends improving the application system for all post-16 opportunities – including apprentices – so that the best minds can be retained in the region.

These are tangible recommendations that could be replicated elsewhere in the UK, but for such ideas to gain traction and work effectively, they need the apprenticeship levy to reach its full potential.

Businesses have a 24-month window to claim back any levy. The clock is more than ticking and we desperately need more pace and less frustration.

If nothing changes, construction will continue to be stuck in a skills rut, unable to move at the pace we need to drive growth. Improving the approval process must be a priority for all those involved, otherwise we will continue to play a waiting game where the opportunities remain frustratingly out of reach.

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