Labour eyes widened apprenticeship levy, return of EMA and individual learner accounts in government

Council of skills advisers, led by Lord Blunkett, publishes 'revolutionary' recommendations

Council of skills advisers, led by Lord Blunkett, publishes 'revolutionary' recommendations


A future Labour government should widen the apprenticeship levy to include other forms of training, bring back the education maintenance allowance and rollout further devolution, its council of skills advisers have said.

The party’s Council of Skills Advisers, chaired by former education secretary in Tony Blair’s government, David Blunkett, published its ambitions for the future of skills policy this morning.

Commissioned by party leader Keir Starmer, the report was teased at last month’s Labour party conference, and is designed to shape future policies to address the nation’s skills gaps and bolster economic recovery if the party wins the next election.

Here are the key recommendations…

Expand the apprenticeship levy

Teased at the party conference, Labour seeks to reform the levy into an “apprenticeship and learning levy” so that it can contribute to specified training costs that are not limited only to apprenticeships, with a particular steer towards 16 to 25-year-olds.

Furthermore, all apprentices on level 2 qualifications should be given the right to progress to a level 3 advanced apprenticeship, it said.

The 25 per cent limit on transferring levy funds should be lifted to make it easier for smaller firms to access.

Currently employers with a £3 million or more wage bill pay into the levy at a rate of 0.5 per cent of their wage bill, but are only expected to use half of their sum to pay for apprenticeships while the rest goes towards paying for small and medium-sized employer apprenticeships and other parts of the system.

Labour’s party conference announcement said under its new levy system, large employers could “spend up to 50 per cent of their levy contributions on non-apprenticeship training, with at least 50 per cent being reserved for apprenticeships to preserve existing provision”.

Question marks were raised over how small businesses would continue to access the levy if larger employers use more of it. The report has not shed any further light on how the funding for this new system would work.

The council’s report does put an emphasis on expanding apprenticeships for younger people and to that effect recommends that Labour should “reinstate and develop a Young Person’s Taster Apprenticeships programme to offer meaningful and engaging vocational opportunities at age 14 to 16”.

‘Shared apprenticeships’ for SMEs and larger firms

While not addressing the details of how a new apprenticeship and learning levy would work between larger and smaller firms, the council has proposed a shared apprenticeship scheme between SMEs and larger firms which have greater resources.

They only exist in small numbers at the moment, according to the report, and would aim to help businesses keen to get involved but without the resources to do so. Further details have not been shared.

Introduce a skills tax credit for SMEs

The council said SMEs should be given an additional incentive to provide training for their
employees and suggested the introduction of a skills tax credit.

The report said: “As recommended by the Learning and Work Institute, this could be modelled on the R&D tax credit, and could allow employers to deduct 230 per cent of the cost of apprenticeships and accredited training from their tax bills, with a higher skills credit,
allowing 300 per cent of training costs to be deducted, in priority, levelling up areas.”

The idea of a skills tax credit has been put forward by various sector leaders and organisations in recent years.

Establish a National Skills Taskforce

Key players should be brought together, such as further and higher education bodies, trade unions, central and local government, and employers of all sizes, the report said, to develop long-term plans and ensure devolved decision making meets national objectives.

In addition, government departments should be co-ordinated more to develop skills policies.

Regional and sub-regional devolution

Decision-making and spending should be devolved where possible, the council suggests, with the NST helping simplify the “patchwork” of local bodies responsible for skills, such as local enterprise partnerships, mayoral combined authorities and local authorities. Combined authorities should take the lead in revamped skills commissioning.

Local skills improvement plans (LSIPs) – documents produced in collaboration with employers to direct skills commissioning – should be an ongoing process and not one-off exercises, it said.

Career service overhaul

The careers services should undergo a “complete shakeup”, Labour’s plans say, and feature trained careers leaders in all schools. Furthermore, regional or sub-regional careers hubs should be formed to provide every student with access to mentors and engagement opportunities with colleges, universities and employers.

Career awareness training should be made available to teachers, and a young people’s taster apprenticeship programme should be developed to offer vocational opportunities for those aged 14-16.

Job Centre Plus should be responsible for an all-age careers advice service, it added.

Further collaboration between FE, HE and businesses

“Post-16 learning, both vocational and academic, must be seen as a seamless pathway through apprenticeship, further and higher education – which instead of being juxtaposed as competitors, should instead be seen as partners in delivering a high-skill, high-productivity, technologically enabled workforce for the future,” Labour’s proposals said.

That could take the form of local “clusters” of colleges and universities where governance and back-office functions are merged.

Ofsted review

Although not going quite as far as Labour’s 2019 proposals in which the party suggested abolishing Ofsted in favour of a two-phase inspection system, the latest report does still advocate a review of the education watchdog.

That would be a national review of the inspectorate, although there are no further details on the scope of that review.

Quality assurance for higher education providers that lies with the Office for Students should be re-examined, with a separate quality assurance agency to be considered.

Reintroduction of the education maintenance allowance

The EMA should be resurrected in England for all 16-to-19-year-olds – including those on apprenticeships, the council proposes.

EMA offered students a weekly payment to help youngsters with their studies, but was scrapped by the coalition government in 2011 in England. It continued in the devolved nations.

This isn’t the first time Labour has called for a return of EMA.

Reintroduce ‘individual learner accounts’

Labour says individual learner accounts will share the cost of learning between the individual, employer and the state, and feature in the devolved budgets for combined authorities.

It hopes to incentivise employer co-funding to “further boost the range of training that can be made available to workers”.

For years, ministers have tinkered with the idea of handing choice and power to the student by giving them access to a “bank” of the loans and grants they can spend on tertiary education.

The idea has had various names – Individual Learning Accounts, as they were under New Labour in the early 2000s, as well as personal learner accounts, individual education budgets, skills accounts, skills wallets. But a software system open to fraudulent abuse under the ILA system, launched in 2000, caused a horrified Estelle Morris to end them just a year later.

Form learning and skills ‘passports’

The council says these would develop individual profiles for learners to add to throughout their life as they develop skills records and qualifications.

Public procurement contracts to include upskilling

Public procurement and supply chains should seek to boost apprenticeship recruitment as part of their conditions, or contain clauses relating to skills and training.

Labour says it is “vital” for social value, and should be evidenced in contracts as to how apprenticeships will be created.

Right to retrain

Progression pathways for adults must be opened up, according to the report, with plans for a new “right to retrain” providing more flexible access to free courses for adults, specifically a first level 2 qualification from an approved provider.

Elsewhere, financial support for adult learners should be expanded.

Lord Blunkett said: “What the report spells out today is nothing short of a revolution in meeting the skills needs of the nation.

“It addresses the immediate pressures of the moment, but it also offers a social democratic solution to the challenges of the future, including the rapidly increasing impact of artificial intelligence and robotics, re-equipping the nation for the economy of tomorrow.”

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