The apprenticeships minister should be a joint Department for Education and Treasury role to ensure the policy and financial side of the levy are aligned, a think tank’s director and former special adviser to education ministers has said.
Policy Exchange has also called for the requirement for apprentices to pass GCSE level equivalent maths and English to be abolished, for small and medium-sized employers to be funded for off-the-job training hours for apprentices under 25, and for a quarter of the levy to fund non-apprenticeship training.
Iain Mansfield, Policy Exchange’s head of education who is a former special adviser to three education ministers, published a report that warned the apprenticeship system is not delivering the number of apprenticeships the UK needs – with young people, those from disadvantaged backgrounds and SMEs being hit the hardest.
Endorsed by former education secretaries Nadhim Zahawi, Gavin Williamson and Lord Blunkett, as well as the DfE’s former director of apprenticeships Keith Smith, the report makes several “significant” proposals for reform.
It pointed out that the government’s apprenticeship levy system suffers from both a “lack of transparency and poor understanding about its purposes”, adding that the apprenticeship budget, the money raised by the apprenticeship levy, the amount of money in levy-payers’ accounts and the money actually spent on apprenticeships are “all different things, both in principle and in fact”.
The report claimed that over the last five years, “£4.3 billion was raised by the levy but not spent on apprenticeships, but rather kept by or returned to the Treasury”. To calculate this figure Policy Exchange compared the annual funds raised from apprenticeship levy employer receipts to the spend on the DfE’s annual budget for England. It does not include apprenticeship spending in the other devolved administrations – data that is not published – so the true figure likely to be smaller.
Join up the apprenticeship minister role
Mansfield’s report warned the current situation, in which the minister for apprenticeships – the minister most directly accountable in the eyes of parliament and the public for apprenticeships – has no responsibility for the levy has “hindered reform, by splitting responsibilities and reducing the incentives to deliver change”.
To address this, he said the apprenticeship minister role should be a joint ministerial role between the DfE and Treasury, with responsibility both for apprenticeship policy and the apprenticeship levy.
Spend a quarter of levy funds on non-apprenticeship training
The report also called for the levy to be transformed into an “apprenticeship and skills levy”, with up to 25 per cent of the levy able to be spent on “high quality employer-relevant skills training that relates to occupational standards, studied at a regulated college, university or training provider”.
This should include bootcamps, T Level placements, approved Higher Technical Qualifications and “specified qualifications relevant to the shortage occupation list, as well as pre-employment development for those currently in long-term unemployment”.
Policy Exchange’s report said all employers should also be able to draw down £1,000 for each T Level placement they provide, which would cost the government an additional £50 million annually.
Fund off-the-job training for young apprentices at SMEs
Training providers have long argued that the government’s rules that require an apprentice to spend around a fifth of their time studying off-the-job training is a major barrier for SMEs.
To overcome this, Policy Exchange has recommended the government provides SMEs with a contribution of £2,500 to fund the off-the-job training hours for apprentices under 25, with an additional £500 achievement premium for completion. The think tank estimates that this would cost around £260 million a year.
Develop new contract for employers that could force apprentices to repay training costs
For use “only by employers that wished it”, Policy Exchange said the government should develop a “model apprenticeship contract for employers” who wish to ensure they retain apprentices after completion, to require an apprentice who completed their qualification to continue with the employer for a period of time, or else repay a portion of their training costs.
This would not impact apprentices who did not complete their apprenticeship and use of this contract would be “entirely optional”.
The model contract would be a template that would be of use to employers where concern that apprentices would leave after completion was seen as a barrier to taking on apprentices.
How to increase apprenticeships among young people
The report states that the “rapid and severe” fall off of apprenticeships among young people “must be reversed if we are to increase social mobility”.
To this end, the government should abolish the apprenticeship minimum wage with minimum wages aligned with the national minimum wage for each age group.
The child benefit regulations should then also be amended so that parents of an apprenticeship aged 16 to 19 continue to receive child benefit, as they would if the child was at school or college, while mayoral combined authorities should offer free public transport to all apprentices under 25.
Policy Exchange has also called for 16 to 19 apprentices to be funded through the DfE’s education funding budget instead of the levy, and for an end to the requirement to pass GCSE level equivalent maths and English to complete an apprenticeship as this rule is “limiting opportunity for those who are not academically gifted”.
Read the full report here.