Making the Apprenticeship #Levy More Palatable – A Way Forward for the Secretary of State @GavinWilliamson

Near the top of the new Secretary of State’s in tray will be the options for making the Apprenticeship levy more palatable for employers and managing the forecast overspend of the Apprenticeship levy pot – estimated to be 0.5bn this year rising to 1.5bn by 2021.

As far as the overspend is concerned, a range of options have been floated:

• An age cap
• A starting salary eligibility cap
• Restricting the use of Apprenticeship for existing staff, or
• Restricting the ability of employers use of their levy payments on level 6 and 7 Apprenticeships.

Any of these proposals, if implemented, would make the levy less palatable to employers and all would stop employers from maximising the use of the levy to raise UK productivity. Some are, however, more bizarre than others.

How anyone could campaign for a proposal that stopped the NHS, the biggest levy payer by far, from spending its levy on registered nurses (a level 6 Degree Apprenticeship), arguably the biggest skills crisis in the UK, is astounding.

Similarly, the argument that private sector employers should be prevented from spending on the high level and high skill Apprenticeship programmes they need to compete with our OECD and BRIC competitors is beyond me.

Tuition fees for level 6 and 7 Apprenticeships

Can I also knock on the head the rather odd notion, advanced by some in the skills sector, that tuition fees should be used to pay for level 6 and 7 Apprenticeships.

Let’s look at what this would mean. The NHS couldn’t use its levy payments to develop a new route to pay for the training of registered nurses and help tackle the crisis in nursing recruitment and police forces couldn’t use their levy to train new police constables. But, in contrast, pubs and restaurants could use the Apprenticeship levy, whether or not they paid the levy, to train chefs and customer service staff.

So, to become a nurse through an Apprenticeship an individual would have to get a student loan, but to become a chef through an Apprenticeship in a small private business Government would provide a 95% subsidy for your training costs.

Perhaps it’s useful to clarify that the NHS levy payments account for 12% of all levy payments.

Please don’t get me wrong I am not against training chefs, but shouldn’t we also train nurses with Apprenticeship funding. Should NHS levy payments be used to fund the former or latter?

Forecasted Levy overspend

When reflecting on the forecast overspend, some in the skills sector have argued that employers are misusing the Apprenticeship levy or spending on types of Apprenticeship that aren’t really Apprenticeships or at least not a priority.

Management Apprenticeships are particularly targeted for criticism. I’d point out that firstly the Chartered Manager and Senior Leaders’ Degree Apprenticeships have been developed by employers through the Trailblazer process and approved by the IfATE as Apprenticeships.

Management skills were also identified as the skills priority in the Government’s Industrial Strategy.

Preventing employers from using management Apprenticeships would entirely undermine the productivity focus of Apprenticeship.

Higher level, higher value Apprenticeships

There are occupational areas where use of Apprenticeship is, however, questionable. Any objective review of Apprenticeship provision in the past with the dominance of level 2 Apprenticeships in questionable occupational areas and very limited provision at levels 4 – 7, for a productivity programme, would raise questions.

The movement away from level 2 Apprenticeships to higher-level Apprenticeships simply reflects that employers are focusing on the higher level, higher value Apprenticeships their businesses need.

Certainly, many level 2 Apprenticeships in craft occupations are highly valuable, but the IfATE is entirely right to question the appropriateness of, for example, a level 2 Business Administration Apprenticeship. 

Social Justice

At this point I’m sure some observers will be crying out about social justice and be concerned about the have-nots?

Well firstly I don’t think social justice will be advanced by stopping local authorities spend their levy payments on training social workers (a professional level occupation) or the NHS spend on registered nurses or police forces on police constables.

I’d also add that in both the public and private sector level 6 and 7 Apprenticeships are opening up new progression routes to the professions and higher paid job roles – a big plus for the social mobility agenda.

I do, however, acknowledge there is a need for some level 2 work-based provision, particularly for young people without a full level 2 qualification.

But on this point, I’d argue it is entirely inappropriate for a hypothecated productivity tax paid for by employers to:

• Support the 16 – 18 NEET (not in education, employment or training) Cohort or providing support for young people who don’t achieve a full level 2: Employers shouldn’t have to pay for the failure of the schools’ system and Ofsted, where a third of young people leave compulsory education, after eleven years, without a full level 2 qualification.
• Fund a third route for 16 to 18 year-olds who don’t follow A levels, Applied Generals and in future T levels: No one would disagree that Government through general taxation should fund A level provision or college-based provision for 16-18 year olds. So why are employers expected through the Apprenticeship levy to pay for training provision for 16-18 year-olds?

Perhaps those across the skills sector would argue that Government through general taxation should pick up the bill for the above?

Using the Apprenticeship Levy pot for its intended purpose

If Government adopted this approach, then the Apprenticeship Levy pot could be used for its intended purpose – to fund the Apprenticeships employers needed to train new and existing employees to raise productivity.

Of course, removing 16-18 Apprenticeship provision from the levy pot wouldn’t entirely resolve the forecast over-spend and there would still be a need for prioritisation or, more emotively, rationing.

Here UVAC has proposed that levy payments made by the public sector should be ring fenced and used as public sector employers see fit to raise productivity and the delivery of public sector services. 

In the private sector Apprenticeship funding should be prioritised in accordance with the Government’s industrial strategy.

All Apprenticeships would be supported, but where employers chose to use Apprenticeships in occupations that weren’t Industrial Strategy priorities, they would be required to pay a higher co-investment rate. A way forward perhaps?

Mandy Crawford-Lee, Director of Policy and Operations, University Vocational Awards Council