Unbelievably, the government may be about to chop away the first rung on the ladder with its new funding system for apprenticeships, says Jon Graham

On the face of it, the combination of the apprenticeship levy’s start, the well-publicised industrial strategy and the government’s social justice agenda promise great things for a provider like JTL in 2017.

After all, we tick all the right boxes in that we offer virtually all of our apprenticeships to young people, we are a good STEM provider, and we’re meeting employer demand in traditional sectors where the unlimited but vital supply of migrant labour may be subject to future control.

So why are my trustees, colleagues and I looking forward to the new year with such real trepidation?

JTL is a national, not-for-profit training provider specialising in the building services engineering sector, with over 6,300 apprentices training each year in electrical, plumbing, heating and ventilating, and engineering maintenance services.

Seventy-five per cent of these apprentices are aged between 16 and 18, and borrowing the theme from this year’s 10th anniversary of National Apprenticeship Week, we offer them the first step onto the ‘ladder of opportunity’.

Unbelievably, the government may be about to chop away that first rung with its new funding system for apprenticeships.

Unbelievably, the government may be about to chop away that first rung with its new funding system for apprenticeships.

Our employers say that under the new system when the traditional age differentials in funding rates are removed, they would sooner employ young people aged 19 and over.

Some 16- and 17-year-olds aren’t allowed on site due to health and safety rules, and many of them have yet to pass their driving test, but the present funding makes it still worthwhile to take them on.

Remove the incentive and employers will switch back to recruiting older apprentices.

The so-called £1,000 incentive for employers to recruit 16- to 18-year-olds simply doesn’t work for STEM sectors. Our level three apprenticeships typically last four years, meaning the incentive equates to a mere £5 per week, which is of no interest to employers given the additional challenges of younger employees.

If the government increased the incentive to, say, £1,000 per annum, then the switch might be avoided but right now, JTL is expecting a complete change-around in its provision; at present 75 per cent of our apprentices are aged 16-to-18, but this might fall to-25 per cent, leaving far fewer opportunities for that age group than we can offer now.

Whether the number of apprentices tin that group will remain over 6,000 is another major concern. JTL has 3,500 employers on its books and the proportion which are levy-payers is tiny, perhaps one per cent.

We serve a few large companies such as Balfour Beatty, Kier and Carillion, but 85 per cent of our employers have seven operatives or fewer; they’re your typical ‘men-and- van’, but ones with excellent skills, high in demand.

There is a growing and strong body of evidence that by the end of the second year, levy-payers may be consuming nearly all of the levy pot themselves, leaving little funding for the thousands of SMEs who offer apprenticeships in our sector.

There is a growing and strong body of evidence that by the end of the second year, levy-payers may be consuming nearly all of the levy pot themselves

Unless the government puts an indicative annual budget in place for non-levy payers, the cry of “you can’t find a good plumber anywhere these days” will become even louder, especially in post-Brexit Britain.

The Skills Funding Agency is telling providers like us to change our business model and focus our efforts on the levy-payers. But this is ludicrous because such a strategy in no way responds to employment patterns in STEM industries. JTL receives over 20,000 applications a year from young people seeking an apprenticeship. What are these young people going to do if we have nowhere to place them?

I read over the holiday that the permanent secretary at the Department for Education has committed the department to formulate policy only after listening. If he wants to make an effective contribution to the industrial strategy, he needs to start listening fast.

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  1. An interesting take on a yet to be tested new model and a big risk indeed… although there is a different route that many young people do and could take, especially in this sector – 1 or 2 years at college (or another provider) getting a L2 qualification and work experience with an employer who can then taken them on aged 17 or 18, still benefit from the incentive and have someone who is competent too?

    I guess the dilemma for employers is do I pay 10% contribution towards a 19+ apprentice and get no incentive or take a 17/18 year old with a bit of experience as above and get the incentive? We are still able to sell the latter, even stronger with our year 1 or year 2 learners linked to local employers for work experience.

    (PS FE Week there is a spelling mistake in this article about half way down)

  2. I agree the economics are inescapable here. I would be very interested in the relative completion rates of 16-18 and 19+ in Jon’s business for the same qualification. In general, we find that 19+ candidates for our qualifications are more mature, more committed and can more easily grow into the team leaders of the future. I guess this is always the issue with using a single funding system to try to meet all requirements. Perhaps more flexible qualifications might be a way forward, able you start Phase 1 at an FE institution then transfer to a workplace training provider for phase 2?