How can we deliver a simplified, high-quality apprenticeship system?

In the third of five articles for FE News themed around their Skills Means Growth vision for a sustainable skills system, AELP outlines how we can deliver a simplified, high-quality apprenticeship system in this exclusive column by their Director of Policy, Simon Ashworth.

National Apprenticeship Week (NAW) is a great time to celebrate apprenticeships and the transformational impact they have on learners’ lives. It is also a time to reflect on how the system can be improved to enable more of that transformational change. In our Skills Means Growth vision for a sustainable skills system, we called for a simplified, high-quality apprenticeship system. The feedback we have received from stakeholders on our recent AELP CEO Roadshow has solidified this ask as one of the main pillars needed for a world-class skills system.

What’s so good about apprenticeships?

We know the power of high-quality apprenticeships in delivering skills training. The unique nature of apprenticeships means they combine work-based learning, with a guaranteed level of off-the-job training while also being available for all ages and at all levels. They are a symbol of quality that employers trust, which means they open opportunities in all sorts of industries, from health and social care to engineering, and beyond. The chance to earn while you learn opens career opportunities to a wide range of people and has a real ability to drive higher levels of social mobility.

The reforms to the apprenticeship system which resulted in the introduction of the Apprenticeship Levy, have been crucial in delivering over a quarter of a million high-quality apprenticeship starts each year and boosting the apprenticeship brand. The levy must continue to fund an employer-led all-age, all-level, apprenticeship system as originally intended. It is also important that the apprenticeship brand continues to be enhanced by having routes right through to level 7. A strong apprenticeship brand is part of the reason why there is such buoyant demand for apprenticeships and we should celebrate that, on average, 98% of the DfE’s apprenticeship programme budget has been used over the last two years.

The apprenticeship levy and apprenticeship budget

That said, the amount raised by the Apprenticeship Levy has accelerated in recent years, stoked mainly by rising inflation, with receipts up 8% this year to date, and according to OBR forecasts are expected to reach close to £4bn during 2024/5. Meanwhile, the apprenticeship budget has increased at a much slower pace, with the Treasury taking a massive cut – now as much as £500m a year! This is an astonishing amount of money by which employers are being short-changed. We’re calling on the government to close this gap and give businesses access to the skills provision they are paying for. Any limiting, rebalancing of priorities or rationing based on affordability would be a huge backward step and dent employer confidence.

Improvements to the system are still needed, but we mustn’t throw the baby out with the bathwater

During NAW 2024, we should celebrate the role of Independent Training Providers (ITPs) who deliver nearly two-thirds of apprenticeships each year and have been pivotal to the growth in apprenticeships – but we should also ask where next for apprenticeships. How can we ensure even more people right across the country can benefit from such a brilliant programme? In short, there are significant improvements that could be made – but we must be careful we don’t throw the baby out with the bathwater and lose the significant amount of progress that we’ve made in recent years.

A clear starting point would be to make further progress in ensuring the system is as simple and as accessible as possible for providers, employers and learners. This means clear progression routes, simple and clear funding rules for providers, and good career guidance – as well as the continued promotion of apprenticeship opportunities at all stages of life. Recognising that not everyone travels in the same direction at the same speed.

Levy Reform

We also continue to see demands for reform of the levy system. While it’s understandable that employers would like to see more flexibility, there is not a huge amount of room in the existing DfE apprenticeship programme budget for that to happen without having an impact on the overall number of apprenticeship starts in the future. There may be scope to think creatively here about what flexibility means. We would argue that we should start by looking at flexibility within the apprenticeship model, before opening the budget up for other programmes. Now is the time to explore how to make the apprenticeship programme more flexible by properly considering some current policy red lines which employers tell us are arbitrary and inflexible. Examples include programme duration, how off-the-job training operates in practice, a lighter touch form of independent end-point assessment, modularisation and whether we can introduce true portability.

Crucially, without the introduction of a ringfenced budget for SMEs, more flexibility on how funding can be used would see levy payers using more of the limited apprenticeship budget remaining, effectively freezing SMEs out of apprenticeships. Something that needs to be avoided at all costs. We know SMEs hire more young apprentices than levy payers, so flexibility not carried out in a considered manner could have a disastrous impact on social mobility. Removing barriers to support for SMEs should be a priority. The current co-investment model is costly to administer for not only providers but employers too and should be scrapped.

It is also particularly unfair to providers who are penalised for being unable to access the 20% completion payment if at any point the employer stops paying their co-investment commitment. Alongside this, given apprenticeship provision remains the only part of the education sector where 16-18 young people are not fully funded by the state, we would urge the Chancellor to use the DfE’s 16-19 core budget to fund this, alongside introducing targeted incentives for apprentices aged 16-24. This would introduce some much-needed headroom into the apprenticeship programme budget.

Apprenticeship Improvements

Improvements to the apprenticeship system must also prioritise looking at funding rates and how they’re set. We believe they need to be updated more regularly to keep in line with the rise in the cost of delivery. We have seen some action from the government through IfATE’s exceptional funding review which resulted in limited increases in certain standards and more increases through “standard” funding rate reviews, which is certainly to be welcomed. However, the overall speed at which standards are reviewed is still far sluggish, even if it has improved recently. AELP has suggested an annual inflationary increase to plug this gap.

Functional Skills Reform

Reform of functional skills qualifications within apprenticeships also needs to be a priority. Our recent report, “Spelling It Out, Making It Count”, showed there’s still a funding gap between how much it costs providers to deliver FSQs and the amount they receive from the government, despite the recent welcome increase. English and maths as an exit requirement for apprenticeships actively hampers our shared goal of reaching a 67% achievement rate and drains the confidence of some learners, so needs urgent review to bring apprenticeships in line with T-Levels and A-Levels where there is no such exit requirement. There is no reason it remains an outlier. Yes, these skills are critical for life and wider society, but there is no need to have them as an arbitrary exit requirement.

Amongst these proposed changes, we must also consider how to make sure the apprenticeship system doesn’t become more complicated or place more bureaucratic burdens on its users. We should be pushing for even more simplification. Whether that’s having fewer funding rules or having a more refined and less burdensome approach to endpoint assessment, that’s something AELP has been pressing DfE on over the last 18 months, and we will continue to push for more simplification in the future.

AELP’s recommendations for a simplified, high-quality apprenticeship system:

• Be bold, and take a step back to consider what flexibilities within the apprenticeship programme would build on, rather than hinder, the apprenticeship system.
• Apprenticeships and the apprenticeship levy should not be the answer to all our skills problems.
• A protected, ring-fenced and guaranteed apprenticeship budget for SMEs.
• Improved simplicity and accessibility within the system.
• A more balanced approach to accountability that recognises the role of employers as well as other measures of success.
• A system that supports learners of all ages and all levels, while prioritising young people, but doesn’t disincentive delivering provision to adults who need reskilling and upskilling.
• An apprenticeship programme budget that reflects the amount raised through the apprenticeship levy.
• Fair, transparent funding rates for all programmes which reflect the real cost of delivery and are reviewed timely.

By Simon Ashworth, AELP’s Director of Policy

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