House of Lords lambasts apprenticeship levy

Ahead of National Apprenticeship Week, members of the House of Lords demanded an explanation for the alarming drop in apprenticeship starts following the introduction of the levy.

Members of the House of Lords discussed the alarming drop in apprenticeship starts at a select committee on 27 February, concluding that the first year of the apprenticeship levy has been “woefully inadequate.”

The number of people embarking on apprenticeships fell by 35% in November 2017; and has plunged 60% since the levy was introduced.

Lord Forsyth of Drumlean was keen to know why a significant portion of levy money was spent on existing employees, rather than attracting new recruits. “Only 43% of employees on a level two or three apprenticeship were aware they were doing an apprenticeship!” he said. “Was the levy really designed to send senior people on MBA courses? Perhaps I’m being naive, but I didn’t think that was its purpose!”

Dr Hilary Steedman, Senior Research Fellow, Centre for Economic Performance, London School of Economics, explained, “It’s easier for providers who are struggling to recruit apprentices to offer apprenticeships to employees already in place.”

Many businesses are also stepping back until the dust settles around the confusion the new standards have created.

Professor Alison Fuller, Pro-Director (Research and Development), Institute of Education, said, “The levy has played a role in destabilising the system. That isn’t to say it’s a bad thing to try and do, however to make the employers an active partner will take time.

“There has been a view from a number of stakeholders to stand back and wait until everything calms down. We have seen this result in a drop in young people starting apprenticeships.”

“We are in a crisis of significant transition from frameworks to standards,” Anthony Jenkins said. “There are 200 standards, and another 300 in the pipeline. It will take another two to three years to complete.”

“Is this transitional, or have we got something badly wrong?” Lord Kerr asked. “A number of bigger companies have decided to treat the levy as a tax. They will carry on with the apprenticeship schemes but don’t expect to get anything back.

“A number of colleges have said that the job of setting standards is an extraordinarily bureaucratic job. If you’re saying finalising standards will take two-three years, this transition period will last quite a long time. Should we be worried that it has increased the cost to businesses but produced a lower number of apprentices?”

Not necessarily, according to some members of the committee who believe that the emphasis should be on raising the standard of apprenticeships, rather than the number of them on offer. The majority of apprenticeships in the UK are level two – just above GCSE level. The skills crisis in the UK stems from a shortage of workers at level three or four.

Antony Jenkins, Chair, Institute for Apprenticeships, said, “We’re seeing a higher level of apprenticeships. It’s too early to see it definitively, but I think this is transitional and we are seeing some positives, such as higher quality apprentices.”

The assumption had always been that a significant amount of levy funding would be consumed by non-levy paying businesses, i.e. those too small to reach the payment threshold. Smaller businesses typically offer more apprenticeships, however a myriad of red tape has prevented them accessing the funds they are entitled to.

Steedman said, “I am concerned that the emphasis in helping employers cope with these changes has been on levy-paying employers. These are tremendously important, but it has meant that the vast bulk of small companies who provide the majority of apprenticeships were just given a website and a number to call. It’s been made too complicated. It needs to be simplified.”

Lord Kerr of Kinlochard asked when we could expect to see the 3 million new apprentices that the government promised by 2020.

“We shouldn’t have the target and we shouldn’t be driven by it,” said Steedman. “I would like to see fewer apprenticeships and more apprenticeships going to young people. There are too many low quality apprenticeships. Some young people on apprenticeships are not well served and they deserve better.

Jenkins said that the target is still achievable, however it is the institute’s priority is to ensure high quality apprenticeships over quantity.

“I had thought that was your job to deliver 3 million apprentices, Mr. Jenkins,” Lord Kerr quipped in response.

“The architecture of the whole system seems to be woefully inadequate,” Lord Darling of Roulanish concluded. “Everyone has a finger in the pie but no one is in charge, and if you look at it from the viewpoint of the apprentice, who feels they are being given an inadequate training service, they have nowhere to go.”

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