Perverse incentives and tangled pathways

8 Feb 2020, 8:00

If the new government is serious about its proposals, it must address the many problems with the levy, plus the accessibility of courses for those outside towns and cities, writes Emma Hardy

Apprenticeships should be the perfect vehicle for meeting the challenges of social mobility, bridging the skills gap and raising productivity.

However, the government’s rushed implementation of the apprenticeship levy has resulted in unforeseen consequences and perverse incentives, while previous obstacles remain unresolved.

The pathways for post-16 FE, apprenticeships and skills training are confusing and dislocated. There has been no real move to untangle the jumble. To compound the problem there is no guarantee that every child in secondary education will receive full, impartial information and guidance on all their choices post-16.

The Baker Clause was an important step forward, but there are still grave concerns around FE access to secondary schools and the careers advice children are receiving. It is certainly worth considering a national careers service with a guaranteed offer for each child.

Alternatively, the quality of careers advice could be made an important part of Ofsted’s judgment of a school, alongside proper support and funding for schools to provide it.

Should a child decide on following the existing apprentice route the barriers to progression and universal access remain significant. Parents lose child benefit for under 19-year-olds taking on apprenticeships.

Combined with the low level of apprentice pay this puts a severe cap on travel costs and associated expenses and therefore limits the choice of placements available. For those living outside of urban centres, with greater distances to travel, the situation is more acute. If you are one of the 4 million children living in poverty your opportunities further diminish.

This situation needs addressing through a combination of transport schemes or travel passes, making child benefit available to parents with u-19 apprentices, and an increase in the apprentice wage.

For the majority of apprentices their journey traditionally began at level 2 or 3. However, the number of these apprenticeships has fallen precipitously since the introduction of the apprenticeship levy. Small and medium-sized enterprises (SMEs), which provide the lion’s share of new jobs, are now receiving half the funding they were before the introduction of the levy. Current estimates are that 40,000 to 50,000 apprenticeship vacancies are going unfilled because of the lack of funding.

The biggest falls are in the north-west and north-east: areas in desperate need of job opportunities and economic growth.

The government needs to take urgent action to solve this crisis of its own making by providing a funded pot for SMEs. Further, its level needs to be guaranteed in order to give certainty to SMEs and to training providers alike, so that both parties can provide the apprenticeships that are needed and at the same time allow effective planning for the future.

In its original estimates, the DfE counted on the large businesses who pay the levy spending around half on their own apprenticeships. However, and some might say predictably, they responded to the levy by increasing spending on training in their own businesses well beyond that. Some of this was accounted for by an increased number of higher-level apprenticeships up to degree level. Currently around 50% of university graduates leave to take non-graduate jobs and there is no doubt that degree apprenticeships have a role to play in alleviating this skills mismatch, as well as providing a recognisable route to high level qualifications through apprenticeships.

However, there is strong evidence that some companies have “apprenticised” their trainee workforce by simply rebadging or moving over their existing programs. This is clearly not what was intended and has opened a debate on what is and is not an apprenticeship.

This important discussion leads to fundamental questions on the way post-16 FE, apprenticeships and skills training should be organised, integrated and funded. We need good answers if we are truly to address the challenges of social mobility, bridging the skills gap and raising productivity. There are no good answers to be found “on the cheap” and gaming the system just creates winners and losers where we need everyone to be a winner.

This sector needs a serious commitment to long-term investment and planning from all parties for the benefit of all.

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