Apprenticeship starts are down…… Don’t Panic Captain Milton!

The social media feeds are ‘tweeting’ away again! This time there is much debate regarding the latest apprenticeship start numbers, and what they might mean for policy in the short-term. The latest figures tell us that starts are 61% down year on year, with a significant decline in lower level apprenticeships, and a very large increase in higher value, higher level apprenticeships.

No-one should really be surprised at this, given the way that the levy system has been designed. However, it is also not a time for panic.

DfE really do need to hold their nerve, as I believe this is just a short-term blip, and that this time next year the picture will look very different.

Why do I think this? Well let’s look at why the numbers are down:

Firstly, as I have said before, the ‘two-year to spend your levy money’ rule means that employers can take their time in planning what they are going to do….and they are! I speak to employers regularly, and I am still hearing many say that there is no rush. Many intend to accrue a substantial fund in their levy accounts before embarking on the actual delivery of their programme. I spoke to one employer very recently who said, “providing that I track no worse than 23 months in arrears then I am fine!” Whilst this is perhaps an extreme view, there is no doubt that many employers are taking their time. Arguably, this will bring its own benefits in the longer -term.

Secondly, the uncertainty around the funding for SMEs, together with the introduction of the 10% contribution requirement has impacted too. Providers worried about the level of future allocations are hardly likely to go to the SME market with ‘all guns blazing’, until at least they know how much money they have. In terms of the 10%, it is a fact that the concept of paying anything for apprenticeship training is something that some SMEs are finding ‘new’. Both these factors have depressed the market.

Thirdly, the much-criticised blunt concept of 20% off-job training (OJT) has discouraged some employers. How many, I’m not sure, but I know that it has been a factor in putting off some employers from entering the apprenticeship arena at all.

All of these factors (and no doubt some others) along with the massive changes in apprenticeship funding, product and systems have led to a significant decline in starts.

It is really important however, that the Minister, and her Officials at the DfE do not panic, and do not introduce short-term measures just to try and increase the numbers. They must hold their nerve.

I am convinced that in a year’s time we will see a very different picture. Apart from, hopefully an end to the some-times very chaotic activities of the ESFA, we will have had eighteen months of the levy, and employers will be beginning to come to terms with it. Those new to apprenticeships will have a much greater understanding of how the Levy fits with their recruitment and talent management strategies. What was new, will by then, be much more familiar.

Those levy payers who started their programmes early will be beginning to look at phase two of their programmes, as the first cohorts of learners come to the end of their apprenticeships. Whilst this may be a challenge for some in terms of having to find other apprenticeship opportunities beyond the ‘low-hanging’ fruit’ in their organisations, I can see scenarios, where they begin to look beyond internal staff, and management courses, and focus on newer recruits. The drive to spend the levy will still be there, and subject to broader economic factors (not to mention Brexit!) they might begin to tackle the harder challenges around new recruits.

Fourthly, there should be stability, in the short-term at least, in respect of SME funding. I know that the planned move to ‘no-allocations’ due in April 2019 will be a spectre on the horizon, but the debacles of the last few months will hopefully be behind us. This should lead to greater provider confidence.

Finally, SMEs will be becoming more familiar with the concept of paying 10% for their apprenticeship training. If they recruit a 16-18 year old, then the £1,000 bounty effectively means that for most standards and frameworks, there will be no nett cost.

So, I am optimistic. Hold your nerve Minister!!

(PS…If there was one little tweak, and you couldn’t resist the urge to do something…an incentive payment for new recruits might just help !)

Tony Allen, CEO, AAS Ltd.