The first article contains all that information; the second looks at an example of how one company is treating the new methodology - possibly not as useful, but gives good perspective (if you want to take it that far), as well as evaluation points:
‘The apprenticeship levy is a missed opportunity’
18th March 2016 at 00:00
Ministers must make a U-turn if they want a skills revolution, writes one expert
One ironic outcome of the Conservatives’ election victory has been the number of government policies that were espoused by Labour, or easily could have been. The apprenticeship levy – whereby, in effect, employers with annual payrolls of more than £3 million will pay a (reclaimable) 0.5 per cent levy to the government – is a case in point. If Labour had introduced such a measure, the business lobby and the right-wing press would have been up in arms. As it is, although there has been a good deal of grumbling from the CBI and others, there seems to be a general acceptance of the measure. But what is it intended to achieve, and will it meet its aims?
The government’s declared objective is to increase the amount of training so that by 2020, 3 million apprenticeships will have been created across the country. There is a general recognition that British firms’ investment in education and training leaves a good deal to be desired. International surveys repeatedly show the UK at or near the bottom of the skills development league.
It needs only the rumour of an economic recovery for complaints about skills shortages to surface. On some surveys, the amount of employer-funded training has actually fallen since the late 1990s, at a time when corporate profitability and savings have increased.
Various voluntary schemes, such as those promoted in the 2006 Leitch report, have made little difference. Nor have quite generous tax incentives. Will compulsion do the trick, after supply-side reforms have so far failed?
To begin with, the levy only applies to larger firms and it is unclear how smaller ones will respond: they are also having to cope with pension auto-enrolment and a significant increase in the national minimum wage. There are the obvious difficulties: dead weight (firms rebadging jobs as apprenticeships to meet their targets and reclaim the levy, when we know that many existing “apprenticeships” are just conversions of existing jobs); quality (the amount of spend per apprenticeship is only sufficient to pay for low-quality places, unless employers are willing to contribute more); and the mismatch between apprenticeship supply and demand. The supply has so far mainly been at lower skill levels when it is higher-level skills that are increasingly needed.
This, indeed, is one reason why, in spite of the fact that a levy scheme has operated in the sector for many years, two-thirds of construction firms are reported to be suffering from skill shortages.
It has also been suggested that some employers will respond by cutting other spending on workforce training and development and/or on wages, which are still only recovering from the 2008 financial crisis.
Comments have also been made about the amount of bureaucracy that is involved in companies paying money to the government, receiving vouchers for the same amount, using them to pay training providers, and the latter then exchanging these for money from the government.
Finally, it has been pointed out that while the levy is intended to raise £3 billion each year, the Treasury is planning to spend only £900 million on apprenticeships by 2020: is crafty chancellor George Osborne raising revenue by every means that he can without increasing personal taxes?
Better use of funds
All this suggests that a scheme that includes an element of compulsion but is targeted at sectors, areas and types of firm where there is an acute, unsupplied need for higher-level skills – with the initiative closely monitored for numbers, quality and value for money by an independent agency such as the National Audit Office – would be a much better use of the public and private resources involved than a blanket levy.
It would be even better if such a scheme were part of a national strategy to improve the quantity and quality of education and training for all those in – or likely to be employed in – productive work in both the private and the public sectors. What might such a strategy look like? A good start would be to improve the information that we actually have about apprenticeships – not only the actual numbers after allowing for “starts” and “conversions”, but also the numbers of and the types of participating employers.
Another step forward for the government would be to ensure that all apprentices receive the current minimum wage (and, in future, the national living wage).
But the real issue is whether and how far the aim of increasing apprenticeship numbers meshes in with other policies to support the vocational progression of learners.
For example, is it sensible to focus declining levels of state support on apprentices when other areas of adult skills – lower level qualifications, older or redundant workers seeking retraining, the growing numbers of selfemployed, etc – are being cut?
Why expand apprenticeships when traineeships – at around 20,000 a year – are lagging so far behind? Why not reform post-14 qualifications to create a genuine baccalaureate system, with academic, technical and work-based pathways replacing existing horizontal qualifications? Why not create common educational institutions post-16, or even post-14?
There is plenty of evidence to suggest that tertiary systems – where every student progresses to a single institution after 16 – are both fairer and more efficient than mixed or all-through ones. Such systems also facilitate progression to further education or training because there is only one kind of educational institution with which employers and training providers have to deal, and (as they are comprehensive) there is less likelihood of vocational studies being looked down upon in favour of academic courses.
Finally, one important difference between the UK and many other major EU countries is the relative weakness of most employer bodies. In Scandinavia, France and Germany, chambers of commerce and similar organisations link local employers with educational institutions and students.
This is partly about culture but it is also about incentives. Why not strengthen the capacity of smaller and medium-sized firms, in particular, to work with colleges and other training providers by legislating to give chambers of commerce or other local business bodies the ability to make a compulsory charge on local firms to meet their running costs and those of local training and other productivity initiatives?
That really would be a U-turn worth making.
Roger Brown is emeritus professor of higher education policy at Liverpool Hope University and chair of Barton Peveril Sixth Form College in Eastleigh, Hampshire
‘Employers aren’t angels, but it’s not all about greed’
18th March 2016 at 12:00
Not all businesses are motivated solely by money on apprenticeships, despite what the sector might think
Some 20 years ago, the Financial Times published a cartoon that showed a man with a sign round his neck saying “Will work for food” and a rotund businessman asking him “How much food?”
It’s a viewpoint that is sadly all too common in FE: that business people care only about their own narrowly defined self-interest and that they will work hard to find ways around rules designed to push them into more acceptable behaviour, such as the new apprenticeship levy.
But that’s not the reality I see. And with businesses in the driving seat on apprenticeship reforms in England, it’s important to show the other side of the coin.
I have recently been advising a large maritime business on the apprenticeship paper that it was preparing for its board. Unquestionably, the board commissioned the paper because of the levy, but that’s good news, isn’t it?
If the government had set out to get every company board to put apprenticeships on its agenda, there would have been plenty of critics telling them that it couldn’t be done, so what a prize if the levy pushes many more to do so.
Compelling arithmetic
The arithmetic for this particular company is compelling: it will have to pay a levy of more than £500,000 a year. Any board would take notice of that. Chancellor George Osborne is fond of saying that the levy is an unusual tax in that you can get it back, so any board will obviously ask how that can be done.
But not at any price. If the only motivation was to “get its money back”, this company would not hesitate to turn its in-house high-level apprenticeship into a statutory, government-funded apprenticeship.
The company did hesitate, though: money isn’t everything. I’ve worked with at least as many companies over the years that fear entanglement with government as those that want to get their noses in the trough. This one knows well that government money comes with strings and wants to think through what it would have to give up in exchange.
It is worried about losing its intellectual property if it joins the government system: would all of its competitors get to see that fat file of training materials it has compiled, developed at the firm’s own expense? As each apprentice costs more than £100,000 to train, the company’s concerns are far from trivial.
I’ve reassured the firm that the Trailblazer process focuses on outcomes – the standard to be achieved – so businesses needn’t worry about giving away their intellectual property. It has decided to take the plunge by committing to converting its in-house programme into a statutory apprenticeship.
That’s a good win for UK plc. The levy has prompted this innovative business to work with its competitors to make a new apprenticeship openly available, and a higher-level one at that. If I worked at the Department for Business, Innovation and Skills, I’d chalk that one up as a success for its policy.
The board paper also took stock of the range of apprenticeship activity across the business, with numbers, and explained the rationale for current activity. What HR director wouldn’t relish the opportunity to have their board asking why there are so many apprentices in one part of the business and none in another?
'Unanswered questions'
There are plenty of unanswered questions on apprenticeship policy, but while politicians and commentators debate, companies must plan. A key gap for this company is what happens outside England. It has operations across Britain, so it needs to know how the devolved administrations will manage the levy. Will they, for example, restrict the fund to apprenticeships (as in England) or open it up to other training?
The Treasury has said that the devolved administrations will get their “fair share” of the levy pot, but has not yet translated that into something countable, so the political wrangling goes on with no end in sight. That’s unhelpful when employers are trying to plan.
The maritime sector takes training seriously because of the risks involved in so much of the work, but I doubt if the example I’ve quoted is out of line with how other employers are responding to the levy. Employers aren’t all angels, but it’s not all about greed either.
Iain Mackinnon is secretary to the Maritime Skills Alliance, but writes in a personal capacity. He tweets @IainAMackinnon
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