Professor Wolf calls for all employers to pay apprenticeship levy as she rejects Conservative manifesto funding plans

A leading government vocational education adviser today warned the government would have to make all employers pay a levy to fund apprenticeships growth.

Professor Lady Alison Wolf (pictured above), author of the 2011 review of vocational education, outlined her plans in a new report despite Conservative manifesto commitments to fund extra starts by switching classroom-based FE funding and recycling savings from the welfare budget.

In a 26-page report for the Social Market Foundation, entitled Fixing a Broken Training System: The case for an apprenticeship levy, she called for businesses — even those not employing an apprentice — to pay into a centralised pot of cash as she said rebuilding the programme required long-term funding, not “bits of cash patched together by fiddling with departmental budgets”.

Professor Wolf claimed the welfare savings proposal in the Conservative manifesto was based on a “presumed but unsecured fall in current benefit payments”, and said the transfer from classroom-based funding had “already started” and would not suffice.

But in addition to the classroom funding switch and benefit savings recycle, more recent Conservative plans have outlined paying for apprenticeships with revenue from visa charges and bank fines.

However, Professor Wolf branded them “not remotely serious,” saying the visa charge would be applied in the context of “reiterated commitments to reduce immigration further year on year”. And on the bank fines proposals, she said: “It is quite extraordinary that a government proposes to rest a key part of its productivity policy (which apprenticeship is) on the assumption that bankers will go on breaking the law and falling liable to huge fines on an annual basis.”

Launching today’s report, she said: “Without new funds, Prime Minister David Cameron’s talk of improving apprenticeship quality while also having 3m new apprenticeships by 2020 is self-deception, at best.

“Under current budgets it simply cannot be done. To rebuild apprenticeship as a robust and credible institution for the long-term it needs a secure funding source. A small but hypothecated payroll levy on businesses is the only simple and robust way to do this.

“An apprenticeship fund is a practical way to kick-start the revival of apprenticeships now, forcing all employers to take note and take action.

“It will transform incentives, restore the employer-apprentice contract as the core of the system, and fund apprenticeship growth and improvement.”

She said the levy fund’s key features would be that every employer would pay in, anyone who employed an apprentice would receive “far more” than they put in, with training subsidised at higher levels than each individual contribution. Employers would choose their providers, and the apprenticeship fund would not be treated as part of general revenue, along the same lines of the student loans system.

“With such a fund, we have a strong chance of developing a reformed and excellent apprenticeship system,” she said. “But without such a mechanism, politicians singing apprenticeship’s praises will find themselves whistling in the wind.”

However, FE consultant Mark Corney (pictured right) told FE Week that discussions about a possible levy should come later in the Parliament, and should not apply to all learners.Mark-Corney

“If there is going to be a levy at all it is probably going to be on adults — it’s not needed on 16 and 17-year-olds,” he said.

A Department for Business, Innovation and Skills spokesperson said: “We are committed to supporting 3m quality apprenticeships this Parliament.

“We have already given employers control over designing quality apprenticeships and this report is a valuable contribution to the debate which we’ll review with interest.”

Professor Wolf’s latest report comes just a week after she said government plans to create 3m apprenticeship starts by 2020 were “largely unfunded” and warned FE could “vanish into history” to foot the bill.

The King’s College academic, in a report published with the Gatsby Foundation and entitled Heading for the precipice: can further and higher education funding policies be sustained?, she said the push for apprenticeship numbers risked “major cuts” to the rest of the adult skills budget and branded post-19 funding as “unstable, inefficient, untenable and unjust”.

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  1. Mike Thompson

    Maybe Professor Wolf needs to do a little bit more homework. Companies will be contributing one third of costs of an apprenticeship moving forward under the Trailblazer reforms. Back to school for you Prof…!

  2. I have aways, and continue to be proud of undertaking an apprenticeship, and I still, some 30 years later, hold it in higher regard than my subsequent academic achievements.
    This is largely due to the foundation my apprenticeship gave me on which to build my career. I also made friends of both my peers, and then bosses, who are still friends today.

    My apprenticeship was in Engineering, a sector I went on to teach in before moving into education management, and although the engineering and manufacturing sectors have declined since my apprenticeship, employer/apprentice relationships and commitment to traditional, modern and emerging skills is as strong as ever, in the majority of companies.

    There remains, however, a disconnect between the apprenticeships in traditional sectors like engineering and construction and those in the service sector like retail and health care. Quite often in these sectors employees are over the age of 25, they are on low wages and uncertain contract arrangements. This in turn leads to high net migration with employers struggling to retain staff and unwilling or unable to invest in their teams in order to reduce this high turnover.
    This can then result in employers seeking out free training, currently covered under the apprenticeship banner, to satisfy their mandatory requirements, but with no buy in or value placed on this training by the employer or learner.

    The Apprenticeship brand must reestablish itself as a high value programme and Prof Wolf is right to challenge employers to pay, whether that’s the current thinking of a third of the overall cost, or a levy, but we must be aware that this increase in apprenticeship quality will, initially, result in a significant drop in starters and there must be a cross-party Government commitment to see it through rather than chasing ambitious but unrealistic targets under current funding commitments.

    • Well said Noel. Quality apprenticeships involve employers who put a lot of time and effort into developing their staff. Engineering has always been a prime example of what that is about. The funding from government rarely covers a fraction of the costs involved with delivering a real quality apprenticeship. For example, eight months in a hotel for block release training at the beginning of an apprenticeship to attend a specialist engineering training centre. The current dilution problem of the brand goes back to government chasing numbers of apprentices rather than quality – that led to an explosion of older apprentices who were already experienced in their jobs, which were in areas that were not really suitable for apprenticeships that had real ‘substance’ (for example, supermarket retail and a host of other vocational areas). Putting a minimum time limit of one year has similarly done nothing to improve actual quality if the substance of a framework is not significant enough to justify inclusion in the apprenticeship brand. The target of 3 million will only be reached through yet more dilution of that brand to chase those numbers.
      I wish government would listen to employers who really understand what quality apprenticeships are about, and what they require, rather than an academic whose previous work has probably done more harm than good to the provision available to young people post-16 through the whole FE system.
      The ‘3 million’ and the word ‘quality’ are both sound bites that need a step change in our whole education system, starting with vocational links for 14 to 16 year olds for the school curriculum (something that was happening but was abandoned) and a much higher proportion of our young people gaining English and maths qualifications from their 11 years at school.
      Far more well qualified young people want to do apprenticeships in specialist engineering areas than are currently available. I am aware of several hundred applicants for five to six apprentice positions for just one company. That thirst for apprenticeships will dry up unless opportunities are created in the areas that young people want careers rather than jobs in.

  3. Strange how the Construction industry through one of the original Industry Training Boards (CITB) have this model of employer contribution via associated federations to finance apprenticeships, training and relevant information on the sector – It seems to work? Surely we have a model that would replicate to other sectors, but then again it’s not new and shiny and from the Government so obviously doomed