What’s changing for apprenticeships?

Verity Buckingham analyses the likely effect of new proposals to improve the UK’s beleaguered apprenticeship system

Delivered correctly, apprenticeships can only be a good thing. However, successive governments have attracted criticism over their handling of them and never seem to quite get it right to reverse the general low take-up. The issue remains in the headlines.

There has already been a fair amount of coverage of the chancellor's announcement on 1 October of a review of the apprenticeship levy rules, while at the Conservative Party Conference, Philip Hammond promised to “engage with business on our plans for the long-term operation of the levy, working hand-in-hand with employers to ensure that every young person can fulfil their potential and achieve their dreams”. 

In his budget on 29 October, the chancellor announced a concession for small employers to access funds generated by the levy. Previously, they had to pay 10 per cent towards the cost of the training. In the future, the government will halve this to 5 per cent. 

There is clearly some momentum to addressing the issues that apprenticeships face. A new report published by the House of Commons Education Select Committee on 8 October will fuel this. The Apprenticeships Ladder of Opportunity: Quality not Quantity is a report that doesn't cut any corners. It makes 27 conclusions and recommendations.

Here are some key findings from the report:
  • The maximum funding band of £27,000 per standard is said to be insufficient to deliver quality higher-level and degree-level apprenticeships in STEM subjects. Levy-paying employers are unlikely to pay the excess, which deters providers from offering such courses. This leaves employers without access to provisions they need. The report recommended the government increase the top funding band to better match the full cost of delivery for some apprenticeships.
  • The current 24-month period in which employers can spend levy funds is considered too short. This does not work for organisations that train intermittently in the engineering and manufacturing sectors. The report recommended the government double the time employers have to spend their funds to 48 months.
  • Currently, only 10 per cent of levy funds can be transferred. Contributors to the report argued this should be increased for levy-paying employers, so levy funds can be transferred to other employers in their supply chain. The report recommended the government permit more levy transfers.
  • Contributors to the report said the 20 per cent off-the-job training requirement was inflexible because low-margin employers are unlikely to be able to afford to lose staff for this amount of time. For other employers it doesn't consider irregular working schedules. The report recommended the government run pilot schemes in limited sectors and regions to survey the effects of introducing more flexibility.
  • The report recognised the advantages of having a reduced apprenticeship minimum wage rate, and that most apprentices are paid more than the reduced rate. However, it made a finding that the current rate does not reflect a true living wage. The report recommended the government raise the minimum rate at a rate significantly above inflation and move towards abolishing the apprentice rate. 

While Brexit understandably is a priority for the government right now, it will have to focus on addressing these issues. It must make good a broken apprenticeship system which does not currently deliver high-quality training and much-needed support for those it's designed to help climb the ladder of opportunity.

Verity Buckingham is a senior associate at Dentons