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Apprenticeships hit the mainstream

Blog posted by: Esme Winch, Thursday, 16 February 2017.

Earlier this month, the Institute for Fiscal Studies (IFS) launched its Green Budget at the City of London’s Guildhall. An in depth discussion of apprenticeship reform took place, with the IFS presenting its thoughts on the Apprenticeship Levy as well as several concerns that NCFE shares, such as the risk of increasing the quantity of apprenticeships at the expense of quality.

In recent years, apprenticeships have remained somewhat on the fringes of the education establishment, often viewed as an alternative to traditional routes in to work for the less able or privileged. From the discussions that have taken place, such as the one that took place at the City of London’s Guildhall, apprenticeships are now very much part of the national economic dialogue.

The increase in profile is also thanks to the recent reform and forthcoming launch of the Apprenticeship Levy. NCFE can attest from our own perspective to an increase in employers who are looking more closely at their planning and recruitment strategies and building opportunities to include apprenticeships as a viable and sustainable part of their workforce.

The IFS is acutely aware of all of these factors. In their analysis, 60% of employees in the UK will work for an employer that pays the levy, showing the scale of this measure.

They feel that the levy will increase the incentive to employers to hire apprentices, particularly those aged 19 and over for whom employers paid at least 50% of training costs prior to 2017.

However, the IFS is quite scathing of the levy and associated reforms. In their analysis, the levy will put downward pressure on wages. The Office for Budget Responsibility assesses that it will reduce wages by about 0.3% by 2020–21.

The IFS was also critical of the proposed target of 3 million apprenticeships in this parliament (equating to 600,000 new apprentices a year), which they believe risks increasing quantity at the expense of quality. In their opinion, as the government tries to increase the quantity of apprenticeships, the Institute for Apprenticeships maycome under pressure to approve new apprenticeships quickly which could compromise the end product.

During the launch, the IFS also noted that they believe there is yet to be a convincing case made for such a large and rapid expansion in apprenticeships. In seeking to justify the changes, the IFS claims that government often quotes statistics that show a collapse in employees’ training. However, a more granular analysis of training shows a much more modest decline. The IFS highlights that the government has indicated they believe the investment in apprenticeships could generate a benefit cost ratio of up to 20:1. It is not clear how these estimations have been made, which is something the IFS was quick to point out as they stated the case for ‘gradual expansion of apprenticeships in areas where quality can be assured’.

The IFS is most critical of the target that has been set for public sector employers with at least 250 employees that 2.3% of their workforce must start an apprenticeship each year. In their opinion, ‘such a blanket policy cannot be an efficient way to improve skills in the public sector’ and ‘these targets should be removed’.

So what can we take away from all this? Apprenticeships are certainly in the spotlight, and we no choice but to adhere to the guidelines set out by government. However, NCFE shares in some of the above concerns, and we continue to work with ministers and civil servants to ensure the best quality outcomes for apprentices and colleges who take advantage of the new opportunities the Levy presents.


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