Government apprenticeship levy proposals are step in the right direction, but not the end of the journey

It’s been one of those ‘it never rains but it pours’ or ‘all the buses arriving at the same time’ kind of weeks. We have had the proposals for the apprenticeship levy as well as a funding bands tool and a list of apprenticeships due for delivery. Guidance on what an employer needs to do to become an apprenticeship training provider has also been published, along with details of the new register of apprenticeship training providers and data on how much the Government expects each sector to pay to the apprenticeship levy.

So, whilst there is still much uncertainty about the future of the UK economy, one thing that is becoming clearer is the opportunities available to young people through apprenticeships. Apprenticeships have never enjoyed a higher profile and rightly so. They can deliver productivity gains for businesses, reduce skills shortages and contribute towards cutting youth unemployment. Therefore, the Government’s latest announcements are encouraging and much welcomed with regard to the continued commitment and momentum behind the initiative – the focus now needs to be on ensuring we have more clarity around the operational detail and transparency of costing to ensure all apprenticeships are high-quality and accessible to both employers and providers.

However, there are still lots of details to understand and I have concerns about the very short amount of time available for consultation – with the main holiday period in the middle it might leave companies less than a month in reality to consider the proposals and respond.

Whatever you might think about the levy – and it has been divisive – it’s still in plan to launch next year. So, in this crucial stage for apprenticeships, the announcement provided much-needed clarity about the commitment to timescales although there is still room for improvement about how it is likely to work in practice, from SMEs and large businesses to graduates wishing to develop technical skills.  Creating the right incentives and processes will be crucial to ensuring employers and providers can support efficient and effective apprenticeships that deliver on the UK productivity agenda.

Last week, research from the Federation of Small Businesses revealed that currently a quarter of small businesses have one or more apprentices working in their organisation which appears to show that SMEs employ 9% more than average. And at the start of 2015, 99% of private sector businesses in the UK were SMEs so implementing an SME-friendly, cost-effective apprenticeship framework is essential, which is why we called upon the Government to make the system more accessible to these smaller organisations in our research Making Apprenticeships Work last year. Encouragingly, the Government has responded. Last week’s proposals mean the contribution for SMEs has been removed meaning smaller businesses can train 16-18 year old apprentices for free if the starting point is a fully costed framework or standard, otherwise this will not be not be free at all.

Non-levy payers (those that have a pay bill of less than £3m per year) will only have to contribute 10% of the cost and the Government will pay the remaining 90%. Again, this is really encouraging as it means that Government will in fact pay 90% of the costs for 98% of employers. This is a stark difference to the current 33/66% split.

It is great news that the Government highlighted plans of additional payments for employers that hire 16-18 year old apprentices and others who might need more support, such as care leavers and those with a Local Authority Education, Health and Care plan up until the age of 24. Apprenticeships must be open to all members of society to help more people make that important first step into the world of work, and this will go some way to achieving that and giving every young person the, no matter what their background, the opportunity to achieve their potential.

The proposal is also promising for graduates. The relaxation on equivalent or lower level apprenticeships is a major step. Currently, if an employer takes on a graduate they are not eligible for any apprenticeship funding. The proposal means that employers can place graduate entrants onto Level 3 or 4 apprenticeships programmes and give them the technical training their degrees did not provide.

Another concern we often hear from employers and training providers alike is the complexities to the system, which make it harder for people to engage with it. However, under new proposals the system itself is simplified to help during this period of transition. The levy sets to pay all existing frameworks as well as standards within the new set of funding bands. With each individual framework pathway allocated to a single funding band, regardless of the age of the learner, or geographic location. This will bring frameworks into line with the funding system for apprenticeship standards and dramatically simplify the experience of employers.

However, although lots of standards have had their band reduced, few have been increased and we just don’t know yet what the rationale is for this. And it’s concerning given the original band allocations were based on firm costing’s by employer groups. It is critically important that the funding bands allocated continue to be based on transparent analysis of costs and are not based on the price of existing apprenticeship frameworks which are very different.

There are still a number of key questions to be answered, including around funding and monitoring for Independent End Assessment to ensure both training and assessment can be scrutinised for quality and achieve the contribution they deserve. It is good to see the new Government maintain the commitment to the apprenticeship levy, and hope this will pave the way for high-quality apprenticeships that meet UK industry’s future skills needs – a step in the right direction but not the end of the journey.

Kirstie Donnelly MBE, Managing Director – City & Guilds