The impact of the levy on apprenticeship quality. Part 2

This is part 2 of a daily analysis of the Reform report on the Apprenticeship Levy that FE News are running this week.

Having considered the number of people starting an apprenticeship since the levy was introduced, in the previous article “The impact of the levy on apprenticeship quantity“, it is also important to assess the quality of the apprenticeships that those same individuals have embarked on.

This article will investigate the characteristics of a high-quality apprenticeship and the extent to which these characteristics are reflected in the apprenticeships being delivered to learners.

Exploiting the weak definition of an ‘apprenticeship’

Apprenticeships are a global and established brand. The International Labour Office (ILO) defines apprenticeships as “training programmes that combine vocational education with work-based learning for an intermediate occupational skill (i.e. more than routinised job training)”.

The ILO definition also incorporates other key features of an apprenticeship such as their focus on training young people and that this training involves a long-term and ‘systematic’ (i.e. predefined) programme of learning.

The Richard Review in 2012 voiced concerns that the definition of an ‘apprenticeship’ in this country was being stretched too far, stating that “there has been a drift towards calling many things apprenticeships which, in fact, are not.”

It also insisted that “increasing the skills of people within an existing job” was not an apprenticeship. The ‘quality statement’ published in November 2017 by the Institute for Apprenticeships (IfA), a new government agency introduced alongside the levy, echoed these sentiments: Not all training is an apprenticeship.

Work experience alone, shorter duration training for a job, attending a course, or assessing and certificating an employee who is already working in the occupation, are all positive forms of learning and accreditation at work but they are not apprenticeships.

Back in 2013, the Government had sought to explain what it meant by the term ‘apprenticeship’ in the following way: 

What is an Apprenticeship?

An Apprenticeship is a job that requires substantial and sustained training, leading to the achievement of an Apprenticeship standard and the development of transferable skills.

This definition is underpinned by four principles of future Apprenticeships: 

1. an Apprenticeship is a job, in a skilled occupation
2. an Apprenticeship requires substantial and sustained training, lasting a minimum of 12 months and including off-the-job training
3. an Apprenticeship leads to full competency in an occupation, demonstrated by the achievement of an Apprenticeship standard that is defined by employers and
4. an Apprenticeship develops transferable skills, including English and maths, to progress careers.

The gap between the Government’s definition and that of the ILO was striking. For the Government to propose that any ‘job with training’ could be classed as an apprenticeship directly conflicted with the ILO’s view. A precise description of what constituted a ‘skilled occupation’ was absent, as was any mention of the need for a ‘systematic’ training plan highlighted by the ILO. The Government also decided it was up to employers “to agree what constitutes a suitable and discrete occupation.”

Having left the definition of an apprenticeship in the hands of employers, the Government claimed to only be willing to accept new apprenticeship standards that were “high quality, with sufficient content and transferability to justify public investment”. This was to be achieved through a ‘framework’ of criteria (still largely in place today) against which the proposed new apprenticeships put forward by employers would be judged.

Nevertheless, the phrase ‘skilled occupation’ did not feature in the criteria while the notion of ‘sustained training’ was removed in favour of requiring apprenticeships to last just 12 months – well below the international benchmark of three years.

The decision not to adhere to the internationally-recognised definition of an apprenticeship has therefore created two problems:

1. Employers do not have to focus on skilled occupations – they merely have to describe any job or role that they wished to be labelled as an ‘apprenticeship’.
2. The new apprenticeship standards designed by employers do not have to promote long-term or systematic training, even though this is regarded as a core feature of apprenticeships in other countries.

Low-skill roles being rebadged as ‘apprenticeships’

As part of the Government’s wider package of reforms to apprenticeships, groups of employers have come together to write the new ‘apprenticeship standards’. Some employers have used this opportunity to generate high-quality standards.

However, as will be described in this section, other employers appear to be simply rebadging low-quality, low-skill and often low-wage roles as ‘apprenticeships’ instead. The opening sentence of the ‘Retailer’ apprenticeship standard notes that “the main purpose of a retailer is to assist customers when they purchase products and services” .

The standard claims that those who complete it can work in a variety of shops and other retail establishments including supermarkets, small boutiques, funeral services, garden centres, and delicatessens. The only way that these different employment contexts could be linked is if the training on this ‘apprenticeship’ lacks depth and relates to lowlevel responsibilities restricted to basic customer interactions.

In 2015, the joint Business, Innovation and Skills and Education Select Committees described the significant difference between retail apprenticeships in Germany compared to those in England:

In Germany sales assistants are typically responsible for the whole distributive process, including ordering, merchandising and advising customers and they do not receive daily instructions from superiors. …By contrast, in UK retail firms, work for sales assistants is typically divided up into bounded tasks which are relatively easy to carry out. Sales staff have limited autonomy and tend to follow day-to-day instructions by managers.

In short, there is a serious risk that those completing a ‘retail’ apprenticeship in England end up less skilled, less knowledgeable, less autonomous and with a much narrower training scheme than their German counterparts.

The ‘Hospitality Team Member’ apprenticeship standard takes a similar approach by claiming that it encompasses training to work in different venues such as bars, restaurants, cafés and hotels across a range of ‘specialist areas’ (e.g. Barista, Housekeeping, Reception).

That said, a learner is only trained in one of these specialist areas during the 12-month course. The comparison to Germany is again illustrative as their ‘Hotel Business Specialist’ apprenticeship trains people to work in hotels, guesthouses, inns, restaurants, cafes and in catering by delivering a training package that lasts for three years rather than 12 months.

This single apprenticeship in Germany also covers all of the ‘specialist areas’ named in the English equivalent as well as training apprentices in a much wider range of skills and knowledge such as managing inventories, stock control, promotions and marketing, planning employee shifts and handling complaints.

The generic ‘Business Administrator’ standard notes that it gives apprentices “a highly transferable set of knowledge, skills and behaviours that can be applied in all sectors.”

The core ‘skills’ listed in the standard include the apprentice becoming “skilled in the use of multiple IT packages and systems relevant to the organisation” and “[understanding] the organisation’s processes, e.g. making payments or processing customer data”, indicating that this apprentice is only learning the processes, procedures and systems needed to operate in a specific workplace – not across all industry sectors.

The gap between this apprenticeship standard and its German equivalent is yet again instructive because they offer six different ‘business administrator’ apprenticeships in Germany to recognise the need for people to acquire sector-specific skills and knowledge to perform such a role effectively.

The risk with such ill-defined and low-skill roles is that the experience for the apprentices does not match the government rhetoric around the value of apprenticeships. For example, news reports of ‘Business Administrator’ apprentices being asked to do little more than filing, photocopying and answer the phones while being paid below the normal minimum wage because they are classed as an ‘apprentice’ are all too common.

The practice of labelling low-skill courses as ‘apprenticeships’ is becoming widespread but has not gone entirely unnoticed. In its report on the quality of apprenticeships in 2015 Ofsted was vocal in its criticism, stating that “employers and providers involved in poor quality, low-level apprenticeships are wasting public funds and abusing the trust placed in them by government and the apprentices.”

The proliferation of low-level and low-skill roles being labelled as ‘apprenticeships’ poses a further problem. England is one of only a handful of countries to offer apprenticeships at both Level 2 (equivalent to GCSEs) and Level 3 (equivalent to A-levels) instead of just the widely-recognised international benchmark of Level 3.

There are now several examples of ‘vertical differentiation’ (i.e. splitting an occupation into training courses at higher and lower levels) that have generated groups of new apprenticeship standards containing almost identical descriptions of a role at both Level 2 and Level 3 and sometimes even Level 4 (equivalent to the first year of a degree).

For instance, the ‘Investment Operations Administrator’ standard sits at Level 2 while ‘Investment Operations Technician’ is at Level 3 and ‘Investment Operations Specialist’ is at Level 4, even though the Level 3 version describes itself as an “entry level role”.

Similarly, there are separate standards for ‘Rail Engineering Operative’, ‘Rail Engineering Technician’ and ‘Rail Engineering Advanced Technician’ that span Levels 2, 3 and 4 respectively. The same pattern is evident yet again with the standards for ‘Housing/Property Management Assistant’, ‘Housing/Property Management’ and ‘Senior Housing/Property Management’.

Such practices contradict the requirements laid out by the IfA, which states in its guidance that an apprenticeship occupation must “cover a recognised stand-alone occupation, for which there is a genuine demand in the job market” and “be one for which someone can achieve full competence without the need for further training beyond the apprenticeship.”

Producing two or three versions of the same apprenticeship indicates that at least one of them is unnecessary as it does not represent the level of skill and knowledge required to enter an occupation.

Nonetheless, the availability of substantial government subsidies for anything badged as an ‘apprenticeship’ means that employers are being driven to create these duplicate roles irrespective of their value or relevance in the labour market.

Professional development courses being labelled as ‘apprenticeships’

A central point made in the Richard Review was that increasing the skills of people within an existing job should not be viewed as an apprenticeship. The use of the apprenticeship brand to cover supervisory or management positions does not meet the Government’s description of an apprenticeship, the Richard Review’s perspective or the ILO definition, yet these ‘apprenticeships’ account for a large proportion of the new apprenticeship standards.

Given the 90 per cent subsidy available for any course or programme that is designated as an apprenticeship, even at managerial levels, employers are now actively incentivised to relabel training courses as ‘apprenticeships’ that they previously paid for themselves. Accordingly, the deadweight costs of this activity could be extremely high.

The National Audit Office (NAO) had previously warned in September 2016 that “employers might artificially route other forms of training into apprenticeships”. The list of approved apprenticeship standards contains numerous professional development opportunities for those already in a job, such as ‘Early Years Centre Leader’, ‘Golf Course Manager’, ‘Hospitality Manager’ and ‘Retail Manager’.

Perhaps the most obvious example of relabelling professional development courses is the ‘Chartered Manager Degree Apprenticeship’. Management courses are a form of professional development – not training for a discrete occupation. One of the key organisations behind this standard – the Chartered Management Institute (CMI) – found in its own survey of managers seeking ‘chartered’ status back in 2015 that the three most common reasons for training to become a ‘Chartered Manager’ were “to demonstrate my continued professional development”, “to gain professional recognition” and “to demonstrate my commitment to management as a profession”.

To further demonstrate the power of the 90 per cent government subsidy introduced by the levy, employers have recently produced a ‘Senior Leader Masters Degree Apprenticeship’ aimed at Chief Executives, Chief Financial Officers and Chief Operating Officers amongst others. Cranfield University’s School of Management – one of the most prestigious management schools in the country – state on their website that their existing ‘Executive MBA’ programme is “for middle managers wanting to move into a senior management role and those on a fast-track career path within their organisations”.

This MBA has now been “designed to meet the requirements” of the new ‘Senior Leader’ apprenticeship. If anyone wishes to pay for this Executive MBA independently, it would cost them or their employer £32,000 to start in April 2018. Now that this course is set to be absorbed into the new ‘senior leader’ apprenticeship, non-levy paying employers will be able to claim a 90 per cent subsidy from government towards the cost of the external training instead. The Financial Times recently reported that “British business schools cannot believe their good fortune as companies look to use the levy to send executives on MBA courses” and the article quoted Paul Baines, MBA course director at Cranfield University, as saying “the apprenticeship levy creates a new opportunity for us”.

The financial consequences of failing to protect quality

The impact on the public finances of allowing employers to label almost anything they wish as an ‘apprenticeship’ should not be underestimated. The latest government statistics on the number of people starting apprenticeships on the new employerdesigned standards show how much money is at risk.

When combined, the ‘Retailer’, ‘Customer Service Practitioner’, ‘Hospitality Team Member’ and ‘Business Administrator’ roles already account for 14 per cent of the people training towards any apprenticeship standard in any sector. Two professional development courses ‘Chartered Manager Degree Apprenticeship’ and ‘Team Leader / Supervisor’ account for a further 10 per cent of the people starting any apprenticeship.

This means that these six standards alone – all of which fail to meet the historical and international definition of an apprenticeship – account for almost 25 per cent of all apprenticeship starts on the new standards.

The latest figures from the Office for Budget Responsibility have revised the expected levy receipts from the original estimate of £3 billion down to £2.7 billion per annum by 2019- 20. The apprenticeship standards that cover low-skill training courses, duplicated roles across multiple levels and professional development courses have accounted for 22 per cent of the funding attached to the new standards over the past two years.

If this trend continues, the Government will be spending almost £600 million per annum by 2019-20 on training courses that have been incorrectly labelled as ‘apprenticeships’.

Addressing concerns over apprenticeship quality

Employers and training providers have been given access to hundreds of millions of pounds in government subsidies so long as whatever they deliver has been labelled as an ‘apprenticeship’.

It is therefore essential that, for the first time in years, the Government builds a strong platform underneath their levy reforms by taking a robust and unequivocal stance on what should and should not be classified as an apprenticeship.

In a recent OECD report on the costs and benefits of apprenticeships, they noted that respected apprenticeship systems such as Austria, Germany, Canada and Norway do not even entertain the idea that you can have apprenticeships in anything other than skilled or highly-skilled roles.

The report added that:

…apprentices who undertake only unskilled work learn few new skills …[and] in these circumstances, there may be a high dropout rate from apprenticeship programmes, and students will tend to shun apprenticeships. In the long run, even just a small proportion of low-quality apprenticeships can damage the overall reputation and ‘brand’ of apprenticeships.

Allowing employers to decide for themselves what they wish to be labelled an ‘apprenticeship’ was never, and will never, be an appropriate solution because employers’ incentives are not properly aligned with the needs of apprentices and society as a whole.

Instead, the following definition – which builds on the work of the ILO and OECD – would provide a more rigorous and stable foundation for apprenticeships in this country:

Proposed new definition of an apprenticeship

‘Apprenticeship’ refers to an education and training programme that combines vocational education with work-based learning in relation to entry into a new skilled occupation or trade. It follows a systematic programme that utilises both on- and off-the-job training. On completing an apprenticeship, the apprentice will be fully competent in their occupation, which means that they will be able to:

• operate independently in the workplace
• take responsibility for initiating and completing tasks and procedures
• use their factual, procedural and theoretical understanding to complete tasks and address problems
• exercise autonomy and sound judgement to deliver complex and non-routine work
• investigate and review the methods used by them and others in the workplace

This new definition would make a significant contribution to preventing the possible misuse of the apprenticeship brand by employers and training providers. Any standard that is not able to meet this definition should be withdrawn immediately and either revised or discarded accordingly in order to protect apprentices and taxpayers.

Professional development courses that are not related to acquiring initial occupational competence would not be acceptable, while low-skill roles would also be rejected because they do not support an apprentice to reach a sufficiently high level of competence, responsibility and autonomy in the workplace.

There is nothing wrong in principle with apprenticeships being offered at both lower or higher levels, which is why it is better to focus on the rigour, depth and breadth of the training course rather than worrying unduly about which level it is associated with.

Far from representing a departure from current government policy, this recommendation fits squarely with the views of the expert panel led by Lord Sainsbury that was established in November 2015 by then Minister for Skills Nick Boles (with strong endorsement from the Prime Minister).

The panel were asked to advise ministers on measures that could improve technical education in England. Their final report in April 2016 made the following observation about the quality of apprenticeship standards:

…[we are] concerned that some existing apprenticeship standards, at least at face value, seem to overlap significantly with others, be firm- rather than occupationspecific, and/or contain insufficient technical content. If this is indeed the case, it risks a proliferation of low-value or niche standards, creating complexity and recreating all the problems of the previous system.

The panel recommended that “at the earliest opportunity, the Institute for Apprenticeships reviews all existing apprenticeship standards to satisfy itself that there is no substantial overlap between standards, and that every standard is occupation rather than firmspecific and contains sufficient technical content to warrant at least 20% off-the-job training.” Following this review, the panel advised that “standards found to be overlapping or wanting in terms of breadth or technical content should be revised, consolidated or withdrawn.”

Two years later the IfA has still not carried out this review, despite the Government saying at the time that “we accept and will implement all of the Sainsbury panel’s proposals, unequivocally”. This review of existing standards, if it is based around the new definition of an apprenticeship outlined above, would protect the apprenticeship brand from further damage and strengthen the quality of apprenticeships in future.

The Government should introduce a new internationally benchmarked definition of an ‘apprenticeship’ and any apprenticeship standard that does not meet this definition should be withdrawn.

Tom Richmond, Senior Research Fellow at the Reform Think Tank

About Reform: An independent, non-party, charitable think tank whose mission is to set out a better way to deliver public services and economic prosperity. 

Now that the apprenticeship levy has completed its first full year of operation, last Friday (13 Apr) Reform published “The Great Training Robbery: assessing the first year of the apprenticeship levy” which reviews the available evidence to determine whether the levy will, as the Government hopes, “incentivise more employers to provide quality apprenticeships” and “transform the lives of young people who secure them”.