Just under a year on from the introduction of radical reforms to the UK’s apprenticeship system, some seemingly worrying statistics have started to emerge.
In January, official figures highlighted a significant drop in the number of new apprentice sign-ups; a year-on-year reduction of some 41,000 new apprentices were registered between August and October.
But does this drop really signal a failure in the system, or is there more behind the numbers?
We know that many employers remain confused about the way apprenticeships are now funded and what they need to do in response. City & Guilds research released less than two months ahead of the introduction of the new apprenticeship levy, which came into force last April, found that a third of employers that are required to pay into this were simply not aware of its existence. This was echoed by the CIPD just a few months ago.
We need to make sure that all employers understand that the apprenticeship system is for them – that it spans multiple industries, encapsulates a wide array of different job roles, and can be used to train staff at every career stage, from entry level through to degree and leadership and management apprenticeships. This is not just about training technical workers in factories.
We also need to explain the funding process better so employers aren’t turned off by perceived complexity and red tape. Most HR teams in large companies will know that employers with a pay bill of over £3m must now invest 0.5 per cent of that bill into a central apprenticeships fund, which they can then reclaim to fund apprenticeships for their staff. However, they might not necessarily understand exactly how to do this yet.
What is often missed is that, despite not having to pay into the levy, small businesses are also able to benefit; only having to fund 10 per cent of the cost of training, with the remainder being paid by the government. Unfortunately, some smaller businesses that were already using apprenticeships pre-levy see this 10 per cent payment as off-putting – previously, they didn’t have to make any contribution at all.
Better awareness of these changes, and the huge benefits apprenticeships can bring for a relatively small investment, is urgently required – especially among SMEs, which make up 93 per cent of UK businesses.
Recent research from the Federation of Small Businesses found that just 24 per cent of SMEs already offered opportunities for apprentices, but a further 24 per cent would consider taking one on in the future. Harnessing this enthusiasm and doubling the number of apprentices used by SMEs would have huge benefits for everyone, from the apprentices themselves to businesses and the wider UK economy.
It is well-known that productivity in the UK is the lowest of the G7 economies, and that a key contributing factor to this poor output is the lack of investment in training. UK workers receive less employer-provided training than any other EU country except Poland, Greece, and Romania.
The levy presents a valuable opportunity for organisations to rethink the way they fund training for employees, at every level of their business.
Once the new system has become properly established and employers have seen how apprenticeships can benefit their business at every level, the government should consider extending the remit of the levy to ensure that employers get best value from it – potentially allowing funds to be used for careers advice and guidance, work placement activities, or even a broader “skills levy”.
Brexit may be the biggest upheaval to the availability of skilled and talented employees for a generation – upskilling and training existing staff is going to be critical to plugging this gap.
Apprenticeships have the potential to create a workforce that is fit for the future. I hope that when we are looking at the numbers this time next year, we will see that the momentum has grown and employers are taking control of their levy investment.