Daniel Rossall-Valentine is Head of Campaign for This is Engineering at the Royal Academy of Engineering, and Deputy Chairman of Sevenoaks Conservative Association. He writes in a personal capacity.
Apprenticeships can aid social mobility by providing young people from all backgrounds with an opportunity to “earn and learn”, building a career with a long term future.
I’ve been fortunate for the last three years to work with an organisation that has unparalleled access to business and educational leaders so have been in the front seat as the apprenticeship levy has been implemented. The scheme is far from a failure, but it does need urgent tweaks if it is to win the confidence of employers and fulfil its potential.
The Apprenticeship Levy was announced by George Osborne in his July 2015 budget. It came into effect in 2017. The former Chancellor set an ambitious target of starting three million apprenticeships by 2020.
The levy is payable by all employers with an annual pay bill of more than £3 million through PAYE at a rate of 0.5 per cent of their full pay bill. Each employer sets up an individual apprenticeship account that holds all levy payments and that an employer can use to pay for apprenticeship training.
Money paid into an apprenticeship account remains available to that employer for 24 months from the date of payment. Any amount that remains unclaimed after that period will expire and is then available to cover the cost of apprenticeship training at small and medium-sized enterprises (SMEs) who have not paid the Levy.
The Levy was, and is, a bold attempt to encourage employers to train and progress staff, and a brave effort to tackle some of the UK’s greatest cultural problems; our belief that education primarily takes place in classrooms, our excessive faith in “credentials” and our concomitant under-estimation of on-the-job experience and training.
However, despite its noble intent, the Levy remains a rather clunky system which was created following rushed implementation with insufficient problem analysis, design, testing or adaptation. Whitehall unfortunately defaulted to its long-standing preferences for finding “one best way” and for creating a single top-down template lacking in flexibility.
The Levy has received a good deal of criticism, little of which has so far been accepted by the Government. One exception relates to levy-sharing. Levy-paying firms could only share 10 per cent of their levy with other businesses but from April 2019 firms have been able to share up to 25 per cent with other businesses in their supply chain.
The design errors can be categorised under three headings:
Some aspects of the system are too rigid
The claim-back system is too inflexible
Some aspects of the system are too loose
Many large organisations which run excellent training schemes, internships, traineeships and work placements have resigned themselves to simply paying the charge, because their schemes are not compliant with the rules of the levy.
Other organisations have failed to find suitable training schemes in their localities, and so would like to collaborate with other employers to create suitable training, but the Levy only allows them to use 25 per cent of the funds for joint ventures.
Several essential reforms are required urgently.
The apprenticeship levy has the potential to rapidly deliver the apprentices that the economy needs and produce a highly skilled, productive workforce. But it has become very clear that this has not yet happened, and the levy is not working to its potential. The Levy’s design faults are serious, but not insurmountable. The Government needs to listen to its critical friends and produce fast reform of this scheme to help Britain compete and to ensure that our young people get the training and jobs that they need and deserve.