Total apprenticeship starts for May, June and July fell a staggering 61% compared to the same period last year.

Provisional figures published by the DfE this morning, as part of the Statistical First Release, include the apprenticeship starts after the levy system began on the 1 May.

All apprenticeship starts from May (with the exception of 16 to 18 year-olds at employers with fewer than 50 employees) will have involved, for the first time, a mandatory financial contribution from the employer, either from the levy account or the 10 percent co-investment.

The Department for Education said: “Between February and April 2017, there was an increase in apprenticeship starts compared to the same point a year earlier (174,100 and 118,800 respectively), an increase of 47%. Between May and July 2017 (quarter 4 of the 2016/17 academic year), apprenticeship starts have decreased to 43,600 from 113,000 over the same period in the year before (quarter 4 of the 2015/16 academic year), a decrease of 61%.”

Responding to the dramatic fall in starts since May, a Department for Education spokesperson said:“Our apprenticeship reforms have put control back into the hands of employers so they will gain the skilled workforce they need to compete globally.

“We know that the last year has been a period of huge change for employers but it is right that they are taking their time to plan ahead and maximise the opportunities the apprenticeship levy can bring.”

Mark Dawe, chief executive of the Association of Employment and Learning Providers told FE Week: “Sadly we saw these numbers coming long before the levy even started because of the way the new funding system has been designed.  Until we see the September starts, we don’t know whether the three million target is under threat but the numerical target isn’t really important here.  What is needed are changes that will restore incentives for employers to recruit young apprentices and a guaranteed minimum budget for non-levy payers’ apprenticeships which will ensure that there are opportunities in the many areas of the country without large employers.  

“AELP is receiving plenty of anecdotal and factual evidence from its members that the government’s own social mobility agenda is being undermined by the levy reforms with fewer lower level apprenticeships available to offer a ladder of opportunity and the damage is also being done in sectors that are crucial for the post-Brexit economy such as hospitality and health and social care. 

“We therefore need a proper debate about future funding systems and approaches in anticipation of the levy being used up by levy payers.  This has to take a hard look at the barriers which are putting off employers from taking on apprentices such as the level of financial contribution required from them and the amount of time mandated for off-the-job training within an apprenticeship.”

And Neil Carberry, managing director of people policy at the CBI tweeted this:

First #apprenticeship #levy stats – 61% drop in starts. No argument now that policy doesn’t need redesign to work, as @CBItweets has said.

— Neil Carberry (@Gramscisghost) October 12, 2017

This was followed by a statement in which he said the “disappointing data” would “come as no surprise to companies, who have repeatedly made clear that the current design of the apprenticeship levy system is not effective”.

“Businesses believe in apprenticeships but there can be no argument now –  reform of the levy system is needed urgently to ensure its success,” he said.

And shadow skills minister Gordon Marsden had this to say on Twitter about today’s statistics:

Govtstats 61%% fall in Apprs starts dreadful , dire- worse than feared.Stakeholders been warning for months.DfE shambles over nonlevy payers

— Gordon Marsden MP (@GordonMarsden) October 12, 2017

The five-per-cent tolerance on the notorious English and maths condition of funding rule will apply “until further notice”, the Department for Education has said today – but exasperated sector leaders want the policy to be scrapped altogether.

The rule states that any 16- to 18-year-old student who does not have at least a C, or a 4 or above,  in their English and maths GCSEs, and who fails to enrol in the subjects, will be removed in full from funding allocations for the next-but-one academic year.

The tolerance was first introduced for the September 2016/17 allocations, based on enrolments for 2014/15.

The government said the penalty would be halved, and would only apply to providers where more than five per cent of their students (by value) did not meet the funding condition.

This tolerance was then added to the 2017/18 allocations, and the DfE has now extended it “until further notice, in recognition of the continued efforts of post-16 providers to deliver the 16-to-19 maths and English policy”.

“We expect that the clarity over the level of tolerance in future years will provide providers with increased certainty on which to plan,” it said in its announcement.

But Mark Dawe, the AELP’s chief executive, said that instead of extending the tolerance “it would be much better to simply drop the compulsory resits policy”.

“Let’s do an upfront assessment of learners to determine whether they should do GCSEs or functional skills,” he urged.

David Hughes, chief Executive of the Association of Colleges, said it was “good news that the government has extended the tolerance”.

But he added: “We still need a proper strategy from DfE about English and maths.

More discretion  is needed, he said “about the best qualification for each student, curriculum changes, new qualifications, designing a new transition year, investment in teachers, realistic success measures for colleges, and building understanding of what works”.

Meanwhile, James Kewin, deputy chief executive of the Sixth Form Colleges Association, said: “GCSEs are important for many of our students that have aspirations to progress to higher education and certain occupations, but they are not right for all young people and we would welcome the flexibility to offer alternative qualifications where appropriate.” 

And Gordon Marsden, shadow skills minister, said today’s announcement did not “address the real issue” and was “simply tinkering at the edges and leaving continuing uncertainty for providers, adding to the ordeal for  thousands of learners that the flawed resits procedure has become”.

He urged his government counterpart, apprenticeships and skills minister Anne Milton, to “have the courage of her convictions and finally order a fundamental review to see if a move to functional skills would address the negative and pressurised endless resits which are damaging outcomes for both providers and FE learners”.

Since 2013, all 16- to 19-year-olds without at least a grade C in GCSE maths or English have had to enrol in courses in these subjects alongside their main programme of study.

This requirement was tightened in 2015 to require all of those with a grade D – now a 3 –  in those subjects to sit a GCSE course, rather than an equivalent stepping-stone course such as functional skills.

But after last year’s GCSE results showed huge numbers of learners aged 17 and older failed to improve their grades in resits, many in the sector demanded the government to scrap the policy.

FE Week reported in December 2016 that colleges had lost almost £3 million in funding through failure to comply with the condition of funding rule.

The Education Funding Agency’s 2016/17 allocations, published in November 2016, revealed that £2,842,016 had been deducted across 26 general FE colleges, the first year deductions were in force.

And in December FE Week highlighted what was described as an “incredibly unfair” flaw in the rule, which made it impossible for colleges to achieve 100-per-cent compliance.

The Association of Colleges has previously called for the condition of funding tolerance to be made permanent.