Conservative manifesto pledge: Allow employers to use their levy to pay apprentices’ wages

Martin Doel argues AGAINST

The apprenticeship levy is a bold policy that surprised many when it was announced, but it is of a piece with much of the last government’s thinking in terms of what is now being called Red-Toryism; it involves a more interventionist and less purely market-driven approach. In its application of what is effectively a hypothecated tax, it could be a game changer in ensuring employers commit to developing the skills of their workforce to increase productivity, national prosperity and promote individual careers.

To be this game changer, however, levy policy needs to be stable and subject to only incremental, well-considered change, rather than spasmodic development based on self-interested lobbying.

The most oft-stated concern of both employers and further education providers is the frequency of change in our technical and professional education system. It was therefore surprising to see in the Conservative manifesto, under a section headed ‘Career Learning,’ a proposal that companies be able to access the apprenticeship levy to support wage costs during a period of career training (the nature of this training is not specified).  This, when the levy has barely been introduced and its impact has certainly not been assessed, either in output terms, or in terms of the amount of income generated.

A separate, but related, concern is in relation to the potential for ‘gaming’ – a phenomenon that has sadly afflicted a series of skills initiatives, including but not limited to individual learning accounts, train to gain and the early stages of the apprenticeship ‘renaissance’. If the levy is related to a specific and clearly defined apprenticeship product, its application and impact will more easily be ensured and assessed. The wider the product book, the wider the potential for its abuse or misuse; to prevent such abuse or misuse, would be an overweening bureaucracy, again following a pattern that has become wearingly familiar in skills reform. Already we have seen the potential for gaming around the Register of Apprenticeship Training Providers.

If the uses of the levy are to be expanded, it would be best for this to be in relation to training costs in a family of apprenticeship products that can be more easily monitored at the outset.  Work placements and/or traineeships in the college-based route might be candidates for this broadening, providing a useful incentive for employers to become fully involved and committed to the development of young people and prospective apprentice/employees. Tracking and accounting for subsidised wage costs would be much more difficult to achieve, particularly with a new and untested apprenticeship levy IT system.

No one can know how much might be available until the levy has operated for at least a year

A further additional candidate for liberalisation of the levy, which is mentioned in the manifesto, is for large employers to pass on their levy vouchers to smaller employers in the supply chain. Sensibly, at the launch of the levy this has not been allowed, but it has been well signposted as a future development. 

Involving smaller employers in this way also avoids one of the other pitfalls of the proposal to cover wage costs in other training programmes. Namely, losing the prospect of using underspent levy funds to underwrite apprenticeship training costs for smaller employers who do not pay the levy. 

Though there are estimates of how much underspend may be generated, no one can know how much might be available until the levy has operated for at least a year. This uncertainty provides a clue as to why a (small c) conservative line has been taken in the allocation of apprenticeship funding for non-levy payers. Without the apprenticeship levy underspend by large employers, government will need to fund this directly, or accept that apprenticeship growth will slow and be concentrated in large employers.

We have a once-in-a-generation opportunity to develop a world class technical and professional education system, with high-quality apprenticeships at its heart. Realising this potential will depend on implementing policy in a considered, evidence-based and focused way, not veering one way and another even before we understand the consequences of policy changes already underway.                    


Martin Doel is FETL Professor of Leadership in Further Education and Skills at UCL