UK apprenticeships are on the decline — what went wrong?
The number of people starting workplace training has plunged amid mounting worries about youth employment. Too much of the funding, it is argued, is going to the wrong age groups
When Lucy Shepherd turned up to a job interview on an industrial estate on the edge of Crawley, near Gatwick airport, she had more than nerves to worry about.
One of the thousands of 16-year-olds whose GCSE exams were cancelled during the 2020 lockdowns, Shepherd had ended up without any passes after it was left to schools to award grades. Now 20, she admitted that her time at school, in Redhill, Surrey, had not been productive: “I was not the greatest… I was more funny than smart. But I wasn’t badly behaved.”
However, she convinced the interviewer that, despite her poor academic record, she had the drive to work and, in November, she started as an apprentice trade supplier at CCF, the home insulation arm of Travis Perkins. Proudly kitted out in CCF’s all-black uniform, Shepherd said she had been given a second chance in winning a place as an apprentice.
She is one of the lucky ones. Even though politicians have been promising for years to increase the number of school leavers going into apprenticeships, in reality, the amount of schemes on offer has plunged. At a time when Britain is grappling with a rise in the proportion of 16 to 24-year-old “Neets” — those not in education, employment or training — the fall is causing serious concerns.
The number of people starting out on apprenticeships in England has fallen — from 500,000 in 2015 to just 337,000 last year.
The slide is particularly striking since it comes despite a bold government scheme announced by then-chancellor George Osborne in 2015, and launched in 2017, to get “Britain’s great businesses training up the next generation”. Called the apprenticeship levy, it requires big businesses to put 0.5 per cent of their payroll towards the on-the-job training.
So, what has gone wrong?
For some, the problems start with the perceived vagueness about what problem the levy was meant to solve. Did the government want to use apprenticeships to train those leaving school who were not destined for academic learning? Or was the plan to boost the level of qualifications and skills for older workers through apprenticeships?
“What’s the levy for? Everyone’s got a different answer,” said Matthew Percival, head of work at employers’ body the CBI.
Anyone who thinks the apprenticeship levy should be aimed at training young people just entering the world of work will be disappointed. The number of apprenticeships started by under-19s fell from about 131,000 in 2015-16 to 77,000 in 2022-23. For those aged 19-24, it dropped from 153,000 to 98,000.
For those who argue that the aim of the levy should be to improve the skills of the existing workforce, the data paints a brighter picture: there was a fivefold increase in apprenticeships above A-levels and for those studying for management training qualifications similar to MBAs.
This week, a report by the Association of Colleges, whose members are among those offering the classroom training involved in apprenticeships, will argue that the current system is letting down the young. David Hughes, chief executive, said: “A programme that used to be really important in helping young people get a start in life — particularly those who haven’t done so well at school — has gone in the wrong direction.”
For centuries, apprenticeships have been used to provide the skills that employers have wanted from young people. Even as recently as the 1950s, nearly all teenage boys who did not go into further education became apprentices serving Britain’s manufacturing employers.
A levy is not a new idea either. There was a payroll tax in the 1960s before Margaret Thatcher phased most of those workplace training levies out. It was back on the agenda in the mid-2010s when a paper by the academic Baroness (Alison) Wolf, a professor at King’s College London, highlighted a “broken” apprenticeship system. She found that apprenticeships were operated by central government and produced poor-quality training in lower-level skills. In countries such as France and Germany, Wolf said, the push was for higher-quality, higher-level training.
She suggested a levy that should be paid for by all employers — big and small — and used to create a pool of funding for all businesses to put to use.
Osborne did not adopt the idea entirely, announcing a levy aimed at only the top 2 per cent of employers with a payroll above £3 million. They had to put 0.5 per cent of their wage bill into a pot to train apprentices; if they did not use the funds within two years, the money went to the Treasury. Firms that do not pay the levy contribute 5 per cent towards their training costs.
The apprenticeships would have to last at least a year and be based 80 per cent in the workplace, 20 per cent in the classroom.
According to Tom Richmond at EDSK, the education and skills think tank, the structure of the levy is at the root of the current problem. He argued that it has encouraged the levy-paying employers to use up their contribution by sending existing and senior workers on expensive apprenticeships for management skills, so as to use it up within the two years. Hence the large numbers using the levy for professional development courses.
This appears to be borne out by the data. Level 2 apprenticeships — typically, people leaving school at 16 without formal qualifications and aiming for a specialist skill such as joinery or painting — dropped from about 291,000 apprenticeship starts before the levy to just 76,300 last year. For level 3, an A-level equivalent, the numbers fell from 190,900 to 147,900. Higher apprenticeships — levels 4 to 7, from foundation degree to master’s level — increased from 27,200 to 112,900.
This is “nothing to do with helping inexperienced young people who are trying to get on the career ladder,” Richmond said.
There are many who applaud how higher-level apprenticeships have helped them in their careers and meant that they avoided the average £50,000 debt run up by graduates. At car maker JLR, Suleman Ahmed has just started out on his degree apprenticeship after leaving school with four A*s in physics, maths, further maths and chemistry. He could have gone to Cambridge but decided on the apprenticeship. “When I graduate, I will have four years’ work experience with a top global engineering firm,” said Ahmed, 19.
There are plenty who contend that apprentice schemes should not only be the preserve of the young starter. Lyndsay Casey, 42, started working at recruitment business Adecco when she was 20. Despite leaving school in Yorkshire without maths or English GCSEs, she worked her way up the ranks to become head of operations, and two years ago she did a level 7 apprenticeship — in essence, an MBA.
She said the course had made her a better, more productive manager: “It’s changed my approach. I’m more considered, I’ll seek more opinions and support, and I don’t feel I need to do everything on my own.”
But for many employers paying the levy, the view is that the system needs a complete overhaul.
Nathan Kennaugh, managing director at the hi-fi and TV retail chain Richer Sounds, said the system was not “nimble” enough, pointing out that his company wanted to send staff on one-week courses to learn, say, about using Excel — not one-year apprenticeships to acquire such skills. He also said that when he had considered using the levy to pay for a high-level management apprenticeship, he discovered it would be faster and more cost-effective to use a traditional training course.
For the hospitality industry, the strict requirement to spend 80 per cent of the time working and 20 per cent studying is not practical when so much of its work is seasonal in nature. One idea is to adopt a more flexible approach so that the learning could be placed in chunks away from the busy periods. “The rules are quite inflexible,” said Kate Nicholls, chief executive of UKHospitality.
John Roberts, the chief executive of cookers to freezers chain AO World, wants to set up a new working group with other big employers to find a better scheme. “We can take all the learnings from that and incorporate them into the rules of the levy for every other business to benefit from,” he said.
Labour has put changes to the levy on the agenda in the run-up to the election, promising to turn it into a “growth and skills” levy, allowing 50 per cent of the funds to be used for other training. The aim appears to be to encourage firms to reduce spending on higher-level apprenticeships and focus more on younger people.
The government insisted that under-25s were making up “over half of all apprenticeship starts”.
A government spokesman said: “Since 2010 [when the Conservative-Liberal Democrats coalition came to power], almost 5.8 million people have started apprenticeships, which are now more rigorous, provide more training and better reflect the needs of employers.”
While some employers detest the levy and see it as little more than a tax, others have embraced it. Defence giant BAE Systems has a vast college site on the edge of Preston where it trains apprentices on its fighter jet programmes, and has another in Cumbria for submarines. It has bolstered its number of apprentices from 567 in the year the levy started to a record 1,417 this year.
Back in Crawley, Shepherd reflected on how her apprenticeship is boosting her career hopes and self-confidence after she left school without qualifications. “I can see what it looks like on paper, but I’ve got a brain up there,” she said. In six months, she should have a piece of paper with her level 2 apprenticeship — and is already considering what qualification she will start next.
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