Our skills system is a long way from meeting the economy’s needs

The levy and other reforms have failed to deliver an apprenticeships system that works for those who need it most or for the real economy, writes Graham Hasting-Evans

The levy and other reforms have failed to deliver an apprenticeships system that works for those who need it most or for the real economy, writes Graham Hasting-Evans

18 Mar 2023, 5:00

Going back before all the skills reforms which started 10 years ago, we had around half a million apprenticeship starts. Many of these were young people commencing their careers in SMEs at level 2, and some at level 3.

One of the principle aims of the government’s apprenticeship reforms was to increase the number of starts to 600,000 per year and offer all young people the opportunity of a higher-quality apprenticeship.

Ten years on, it is great to see the increase in level 4-and-above apprenticeships; this should help towards increasing productivity. Policy improvements such as flexi-apprenticeships, accelerated apprenticeships and occupational traineeships, now integrated into study programmes, are also welcome developments.

However, the number of apprenticeship starts in the past 12 months was just 349,200, of which only 77,520 were by young people aged 19 years and under. This is a long way from the ambition set out for these reforms. Just as worrying is the decline in level 2 starts, when there are still 9 million jobs (28 per cent of the total) in the economy at level 2 or below. Many of these are crucial sectors in the context of the challenges we face as a country on net zero and social care.

Then there is the non-completion rate, which is just as concerning as the reduction in starts. This drop-out rate at level 2 is high across all sectors; over just a few years, construction level 2 achievements have declined by nearly 50 per cent and in health and care to one-third of where they were when the levy came in.

Red lights for green skills

To achieve net zero, every job will change and 60 or more new occupations will be developed, among them construction for new assets such as non-fossil fuel power stations and retrofit of domestic and commercial property. Yet a recent NAO report, Decarbonising the Power Sector says the government has not yet established a delivery plan, and therefore we cannot be confident that net zero is achievable.

Our skills system is just not suitable for our dynamic and ever-changing situation

Key to the implementation is green skills, and some international comparisons indicate that we are falling behind on these. While we have access to good, high-level technical skills and are starting to see the innovation come through in design and manufacturing, the problem is that the construction workforce that will build and install net zero assets and retrofit our 29 million properties is the level 2 workforce.

In construction in 2021/22, only 4,680 completed level 2 apprenticeships against an average demand of some 30,000 annually. Meanwhile, the alternative qualification route could be at risk from the DfE’s funding reform of level 2-and-below qualifications. Alarm bells should be ringing!

Our skills system, which is designed for larger programmes such as apprenticeships and T levels, is just not suitable for the dynamic and ever-changing situation of greens skills and digital innovation. We need a skills system that can flex, like the more agile systems based upon modularisation and micro-credentials happening in Europe, USA and the Far-East.

An aging system

We face similar problems in our response to an aging population. Most informed views describe our social care system as ‘broken’.

In a sector with 1.65 million jobs, over half of employees have no relevant qualification, and 21 per cent are qualified at level 2 or below. These are arguably poorly-paid jobs, and on any given day there are over 165,000 vacancies, which is only forecast to get worse. Turnover rates are 29 per cent on average and as high as 50 per cent for younger workers. Despite this high demand, only 9,430 level 2 achievements were recorded in 2021/22.

It’s the same problem with social care as with net zero: a failure to properly invest in skills for a level 2 workforce. Worryingly, policy is only heading further away from facing up to this.

We do not need to start again with the skills system, but we must urgently consider properly funded modularisation so it can support dynamic developments in new sectors and upskill some 30 million employees in the existing workforce.

The levy and our qualifications are simply not designed to meet the biggest challenges we face.

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One comment

  1. I think the link between higher education attainment and increased productivity is unreliable in mature economies, especially in the UK which is dominated by services.

    You only have to look at the 2000s and the massive increase in university degrees. We’ve never had such high levels of attainment, yet where are the productivity gains?

    The increase in level 4 and above via apprenticeships, which is mostly levy funded and commonly to existing older employees, is arguably little more than a perk,used by business to recoup tax and keep a lid on wage demands.

    Awarding bodies love the idea of modularisation, more certificates = more income, without the inconvenience of having to think about increased funding budgets.