IPPR calls for ‘radical rethink’ of apprenticeship levy to combat over-qualification crisis

2 Aug 2017 By Emily Burt

Underuse of employees’ skills ‘reflects poorly’ on employers, say experts

A think tank has called on the government to redefine the apprenticeship levy, after research revealed 5.1 million workers in the UK are overeducated for their job.

The number of overeducated workers has increased by almost a third in a decade, rising from 3.9 million in 2006, according to the research by the Institute of Public Policy Research (IPPR).

While the biggest increases in overqualification were seen among those aged between 25 and 49, the phenomenon is not limited to graduates; many of those who were overeducated had undertaken apprenticeships, National Vocational Qualifications (NVQs) or specialist training. The UK could face another ‘lost decade’ of stalled productivity and falling wages if the government and employers did not take action, warned the researchers.

“There are now more people in the UK who are overeducated for their jobs than undereducated,” said Clare McNeil, the IPPR’s associate director for work and the welfare state. “While rising qualification levels are good news, this reflects poorly on UK employers who are not making use of their employees’ skills.”

The report added that a rethink of the apprenticeship levy could be key to improving the country’s future skill prospects, and the IPPR called on the government to abandon its ambitious target of reaching three million apprenticeships by 2020, out of concern that the quantity of apprenticeships will undermine the quality of the provisions.

“The levy appears to be the main tool to deliver this increase by boosting employer demand for and investment in apprenticeships,” the report said. “Yet at the same time, the system is being deregulated, with apprenticeships no longer required to include a recognised qualification, and employers being put in charge. In such circumstances, there is a risk that the quality of apprenticeships will be undermined.”

To replace the apprenticeship levy, the IPPR suggested a broader-reaching ‘productivity and skills levy’ that would apply to all employers with 50 or more workers, and be redeemable not just for apprenticeship training, but basic skills training, high-quality vocational education and training, and business support.

However, some experts argued the levy should be given more time to prove its effectiveness before further tinkering.

“It’s good to see a report on apprenticeships making an explicit link to their role in improving productivity and there are some really interesting recommendations,” Mark Dawe, chief executive of the Association of Employment and Learning Providers (AELP), told People Management. “However, with the levy only just started, we think that it is far too soon to consider using its proceeds for other forms of training, especially when it is designed to fund evidently strong demand for apprenticeships from both levy payers and non-levy paying SMEs.”

Politicians faced criticism in May for missing the opportunity to refine the often-misunderstood apprenticeship levy during the general election campaign. Meanwhile, research from the Open University, published in July, revealed a fifth of apprenticeship levy-paying employers still didn’t understand how the scheme works.

The IPPR also warned that improving the adult skills system would be crucial if the UK economy is to undergo profound changes in the coming years, and called on the government to create a skills system that works for everyone.

The Department for Education has been contacted for comment.

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