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

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

Neil Carberry argues FOR

The Conservative manifesto pledge to allow firms access to levy funding to cover wage costs for some forms of training came as a surprise – and we certainly shouldn’t read too much into one line, in what was a long and complex manifesto.

But the commitment – and other commitments to levy flexibility in manifestos from many of the parties – represents a change from the debate of the past two years.

Parties seem to have worked out that the challenge in delivering real change in the English skills system is not primarily about where the money comes from. Instead, it’s about the incentives at work in the system and how we encourage the growth of high quality provision.

Delivering great training should always be the best option for levy payers – and without changes to the system as set out in 2015, that wasn’t going to happen.

This is a trend that we should welcome. For too long, English skills policy has been stuck on a two-year cycle of new policy and too little time for delivery. The new approach to standards, coupled with levy funding, has the potential to change that.

As I set out a couple of weeks ago in FE Week, stability in this system is essential to long-term investment by employers, confidence amongst providers and belief in the value of technical and professional routes amongst potential learners.

Delivering great training should always be the best option

We know that there are big challenges to face, so the approach should evolve over time. Manifestos can reflect that, as they look to 2022. Among the key issues are effective quality control and learner protections. Likewise, the standards approval process needs to quicken and become more interlinked. These are big jobs for the new Institute for Apprenticeships.

But there is more to evolving the system for success than this. At present, there is still a strong sense amongst many businesses that the long-promised focus on genuine skills needs has not followed the imposition of a significant new payroll tax in the way that they had hoped. Globally, training levies are generally designed to be reclaimable in full by employers who do the right thing. Yet we started building a system where those who don’t play – or who game the system – are not necessarily worse off.

The answer to this is to ensure firms can reclaim more of the real costs of providing high quality training that focuses on improved outcomes for learners – not just participation. As the CBI has said repeatedly since 2015, that should start with a better reflection of the cost/benefit position firms face when making investment decisions about training.

Up until now, government has stuck to a simplistic definition of employer cost: training cost is only training cost if it is charged for by a provider for off-the-job training on an apprenticeship. This may sound great in Whitehall, but it is nonsense for businesses in Walsall, and across the country.  It is not a model into which one can hammer the entirety of what firms do to support good learning – and it sets up perverse incentives that limit the impact of the policy.

The CBI has always been clear that this needs to change, to take account of things like senior staff time spent supporting training, capital costs for equipment in training centres, or an ability to support other firms with your levy. While we might not have chosen learner salary cost as our first priority, the Conservative proposal at least shows that parties are thinking about repairing the mistakes of 2015.

If accompanied by good standards of quality control and learner protection, more levy flexibility is a change to be welcomed, and will help build a higher performing system.

 

Neil Carberry is Director for People and Skills at the CBI

Manifesto promise: Scrap fees and loans in further education by doubling the Adult Education Budget

Graham Taylor argues AGAINST

There is much to admire in the Labour manifesto on education and skills. Labour has promised to make all further education free at the point of use. And who wouldn’t want this?

They would “introduce free, lifelong education in Further Education (FE) colleges, enabling everyone to upskill or retrain at any point in life”. Fantastic.

More specifically, they promise to “replace advanced learner loans and upfront course fees with direct funding, making FE courses free at the point of use, including English for Speakers of Other Languages (ESOL) courses”.

Oh, and they’re also promising to scrap university tuition fees.

Wonderful.

And boost school funding and introduce free primary school meals for EVERYONE.

Hooray!

We know that all manifestos are largely works of fiction, full of motherhood and apple pie promises to attract voters.

Asking me to evaluate their promise is a tough call, though. Saying I don’t support it is hardly likely to make me popular with the learners that access those services, and who struggle to save up for their fees, or are faced with the prospect of thousands of pounds in debt after completing their courses.

So yes – I would love all education to be free. But I would also love free beer for the workers.

Clearly the question here isn’t what we would all like, but what is actually affordable without raising taxes too high or running up more debts.

And frankly, this policy is regressive.

It means the rich will get things for free as well as the poor. At present colleges bend over backwards to waive fees for those who can’t afford them. In any case, many adult learners already have free entitlements to study English and maths; first-time level 2 and level 3 courses and fees are waived for the unemployed.

But why would the state take on such a massive burden for learners who can actually afford to pay for their studies? 

So of course there must be a cap. The unintended consequences of this can be surprising. 

For example in Scotland, where there are no higher education tuition fees, there’s a smaller proportion of disadvantaged learners studying than in England – where there is no cap and fees help to subsidise (via bursaries, etc.) learners who can’t afford to pay. 

In Scotland the rich have ‘crowded out’ the poor; this is what happens when resources are limited. 

Student loans are effectively a graduate tax, as the richer you become, the more you pay back. In many cases (some forecast up to 66 per cent) the loan will never be repaid, because the threshold of earnings, currently £21k, will not be met in some years or at all. 

I would love all education to be free. But I would also love free beer for the workers

That’s a progressive tax.

There are many things that could be improved to help disadvantaged learners access education, but waiving all fees is not the solution.

Here are some things Labour could offer, to achieve the same end: provide funding for a mentoring system for vulnerable learners; improve access to mental health diagnosis and support; force schools to offer better independent careers guidance on post-14 and post-16 educational options that might be best for each learner; allow businesses to choose which courses and qualifications are most appropriate for their workforce, rather than being restricted to apprenticeships.

Or how about this? Protect the FE budget in real terms until 2022 and allow us to charge fees as well. Giving us the freedom to vire funds between 16-18s and adults depending on demand would also be welcomed.

Doubling the Adult Education Budget would cost about £1.5bn extra per year; compare this to the money being poured into the apprenticeship programme (some £2.5bn by 2020). So if adult education takes priority over health, social care, schools, security and infrastructure, then so be it. But they can’t all be affordable without another financial ‘crisis’.

So rather than serve up universal promises, I would feel more confident in Labour’s proposals if they were suggesting policies that more accurately targeted socially and financially disadvantaged and vulnerable learners.

 

Graham Taylor is principal and chief executive of New College Swindon