The government’s target of creating three million apprenticeships by 2020 is viewed by most as ambitious. The most cynical see the target as meaningless and fear a dilution of what an apprenticeship is. How many McDonald’s and Starbucks apprentices will be included to make up that three million?
Nevertheless, a significant part of the government’s policy to reach the target is due to come into force on 6 April 2017. From that date, large companies will be required to pay 0.5% of their payroll into a pot to fund apprentice training. A £15,000 allowance effectively means that only companies with a pay bill of more than £3 million will have to pay the apprenticeship levy. The government predicts that 2% of employers will end up paying it.
The levy has caused much debate, with some business leaders seeing it as just another tax – a way for the government to offload funding for education and training. But the levy has been widely welcomed by engineering and industry for increasing activity and interest in apprenticeships. High-quality apprenticeships have always been seen as vital to engineering and manufacturing – offering a viable, practical route into the profession. Much has been done recently to make that pathway easier and more attractive.
However, there are concerns. The levy is the biggest change to apprenticeships for decades. It changes not just the funding mechanism, but also the way apprenticeships are implemented. Christian Warden, from skills organisation Semta, says the levy will put employers in the driver’s seat. Instead of firms receiving training from a provider, which gets money from the Skills Funding Agency, funding will go direct to the employer, which will then purchase training from a provider.
“It turns the model on its head,” says Warden. “Employers will be able to pay for things they want and negotiate their spend with a provider. If they’re not happy with the performance of a provider, they won’t necessarily pay for it. It should introduce competition. We’ve been asking for this type of change for years.”
Most training providers are further education colleges, although there are groups of training associations and private providers. Some sectors have an established way of funding and providing training. For example, the construction and civil engineering sector already has a levy administered through the Engineering Construction Industry Training Board. Warden says the government’s plans are causing challenges in such sectors and that it’s not yet clear how the levy will affect them.
The latest guidance from government has also caused consternation, principally because rules about connected companies and variable pay could mean some firms with a pay bill of less than £3 million could pay some levy at different points throughout the year. Warden says this could see the number of companies paying the levy “rocketing up”.
There have already been some delays to the levy’s introduction. Last month the Department for Education delayed the introduction of an apprenticeship provider register, to allow authorities to “finalise the approach”. Warden says: “Some of the detail behind it is probably lacking, and what detail there is has been drip-fed out. Companies in our sector like to plan, and it’s not many months away.”
Firms are concerned about how much money they will be able to get back, what they will be able to spend their money on, and how the scheme will be administered. “They’re also worried about the quality aspect – where the governance is going to come from once the industry training boards and national training organisations are gone,” says Warden.
More detail and guidance from government are expected to be released before the end of the year, before or as part of the Chancellor’s autumn statement due towards the end of this month.
Alan Lusty, chief executive of Birmingham-based engineering services company ADI Group, echoes these concerns: “Within the levy, new agencies and training companies will be coming together quickly and only time will tell if it is a success,” he says. “My biggest concern is that too many people make money out of the scheme and the money doesn’t get through to the apprentices.”
ADI, which employs 500 people, does not have a typical approach to apprenticeship training. Concerned about the national shortage of technical skills and a lack of information about engineering careers, the company began working with local schools five years ago to raise awareness about engineering.
This work has led to the development over the past 18 months of the UK’s first pre-apprenticeship scheme for 14- to 16-year-olds. As part of the two-year programme, which launched in September, ADI hosts 12 students for half a day each week in its workshop, where they gain experience with equipment and tools. The course, accredited by EAL, represents 10% of the student’s GCSE curriculum. Around 26 students applied this year, and of the 12 accepted five are girls.
The company and school plan to expand the scheme next year to cater for 11- to 13-year-olds. Lusty hopes that the pre-apprenticeship model will be adopted by other companies and schools and is planning to promote it to other firms. “We want the scheme to be usable for any business,” he says. “We will start to roll it out early next year.”
“When we started working with schools, we saw that no one was talking about apprenticeships. We’ve gone through two generations not acknowledging apprenticeships.”
Peter Finegold, head of education and skills at the institution, agrees that working with local schools needs to go deeper than ambassadorial show-and-tell. “Authentic, meaningful exposure to local companies is a powerful way of inspiring young people. But engineers from local companies could help shape school strategy too. We need more school governors with engineering and business expertise.
“We need to reframe a new corporate civic responsibility. Teachers are key mediators and a major source of careers knowledge for young people. Yet very few know about modern industry – especially technical routes into careers.”
There are efforts to educate teachers about training. The institution is working with STEM Learning Ltd, the IET, BP and other companies on the “Insight into Industry” scheme, where teachers spend five or ten days immersed in all aspects of a modern company.
Warden, from Semta, also believes the changes have to go deeper, to transform how both academic degrees and apprenticeships are seen: “There needs to be parity of esteem,” he says. “Employers are seeing that the apprenticeship route can have as much value as the academic one over a long period, and that they get a greater return on investment and business impact much quicker.”
The range of apprenticeships available in engineering and manufacturing is increasing, he adds, and apprenticeships for people already in the workforce are growing in popularity. “The link to the institutions is critical here,” says Warden. “Engineering apprentices have always been a bedrock of the upskilling and development programme, and it’s imperative they are part of any industrial strategy.”
Undoubtedly, some of the three million will be asking if you would like fries with that, or if you want chocolate on your cappuccino. But a large proportion will be helping to secure the future of engineering and industry – and few would argue that that is a bad thing.