- January 8, 2019
- Category: apprenticeships, People Plus
Apprenticeships Update – the Levy Review Grows Ever More Important and a new Skills Project from DfE.
The end of 2018 saw important developments including the public revelation of what has been said privately for some time that levy funds will be insufficient to pay for the Government’s ambition for three million more Apprenticeships by 2020.
We have also seen the outline of a ten-year skills ‘project’ with a strong emphasis on technical skills. This is welcome though I am surely not alone in wondering about its shelf life in especially uncertain times.
The question that I am mostly asked at the moment is what lies ahead for the Levy. It is good that everyone is now aware that current Levy arrangements are financially unsustainable if the numbers in training grow strongly as hoped. This concern can now be addressed openly to help find solutions.
We know there will be a review of the Levy and Ministers want the Levy to work well for employers before they introduce further changes. Reassurances by the ESFA on current funding mean that this order of events may not need to change.
However, employers will be understandably anxious. The Levy makes them an easy target as a source of increased funds. The arbitrary payroll threshold looks especially vulnerable. There is already debate about whether the flexibility to recoup more than an employer pays in is affordable. The facility to deploy 25% of Levy to the supply chain needs more demonstrations of its value.
The next move by Government will be critical. The Levy has been described as an austerity measure. As we move into the so-called post-austerity era, there must be an opportunity for reforms to make the Levy part of a strategy to transform Apprenticeships and skills rather than a taxation measure.
When I was asked last year to review the Levy arrangements of another Commonwealth country and when I visited Switzerland to look at their Apprenticeship arrangements, I was struck by large business readiness to make some contribution to the greater good of the country, especially if it helped create more opportunities for young people.
However there was also a clear expectation that employers could influence how the money they contributed would be spent. I am not sure that this is obvious to employers here and it is why responding positively to employer messages about greater flexibility will be important.
If the Levy remains, it will need to be calibrated to take unnecessary pressures off the rest of the system so that we don’t see band rates set at the lowest levels and therefore compromising quality. The NAO report should be highly influential on this.
When I was CEO of the National Apprenticeship Service, some providers would say to me that they could run training for much less than Government paid. However these were the providers who were more assessors than trainers and a number have struggled following welcome training practice reforms. Cheapest is rarely best when it comes to training and quality.
There needs to be sufficient total funding to support the skills growth the country needs. Insufficiency tends to create unhelpful divisions between and within the FE and HE worlds. All levels of Apprenticeships are important for social mobility with people able to progress as far as their talents allow.
The Levy review must look at Government’s expected contribution to Apprenticeship funding. Is it right to construct funding on the basis that large employers will subsidise the rest through their unspent Levy funds? It should also look at simplification. For example, could companies investing in Apprenticeships and providing T level work placements simply be exempt from the Levy?
Employers might want to read Damian Hinds’ plans for ensuring all young people find a path to a skilled job. It is a mixture of old and new messages including a few Groundhog Day references such as Apprenticeships being seen as for other people’s children. This suggests depressingly that not much progress has been made in the past decade and underlines the powerful argument made by Stuart Youngs in my book about Apprenticeships that Government needs to invest in a sustained programme of cultural change rather than short-term marketing campaigns.
The plan importantly emphasises technical skills education and training. Success will be judged by getting more people up out of the bottom part of the skills and employment ‘hour glass’ and into the middle and above where the productivity gap can be bridged.
Employers need to be aware of the intention to develop Local Industrial Strategies through Skills Advisory Panels, ensuring the training provided locally meets the needs of employers. This will be a challenge for employers with a wide geographical spread.
Although it sounds bureaucratic, I have seen a similar approach work in Australia where area planning did avoid wasteful competition between institutions and focus investment on meeting the needs of local employers.
Finally, as we enter 2019, it will be very interesting to see what is agreed by those at the forefront of determining flexibilities for unused Levy funds, such as those in the West Midlands Combined Authority. For example, will we see some flexibility in training rates to incentivise priority training needs? The employer messages should be especially influential as we come closer to the Levy review and to the commitment to three million more Apprenticeships by 2020.
David Way CBE
Apprenticeship Ambassador for PeoplePlus and editor of ‘A Race to the Top: How to achieve three million more Apprenticeships by 2020.’