In 2019, Edge published Our Plan for Apprenticeships which predicted a number of challenges ahead, in particular around the drift towards older employed apprentices and pointed out the need to ensure that the programme retains its focus on younger people starting their careers.
Today we publish The Benefits of Hindsight: Assessing the impact of apprenticeship reforms on employer behaviour a report by Research Fellow, Peter Dickinson and Professor Terence Hogarth of the Warwick Institute of Employment Research. The report, funded by Edge and the Gatsby Foundation, explores why employers substantially reduced and refocused their apprentice provision after the Spring 2017 apprenticeships reforms were introduced.
Following the introduction of the Apprenticeship Levy in 2017, the number of apprenticeship started declined significantly. Research undertaken at the time of the introduction of the Levy indicated that there could be an initial impact on the number of apprenticeship starts - some short-term fall-off in the number of apprentices as the new systems for taking on apprentices bedded in.
Since the Levy’s introduction the number of apprenticeship starts has been consistently lower than in the period before. As Edge predicted, there has been an acceleration of pre-existing trends towards older and higher level apprentices. Whilst numbers began to recover from the low 2017 base, apprenticeship recruitment was hit further by the pandemic. A rough and ready estimate suggests that apprenticeship starts fell by around 14% as a result of Covid-19.
The key findings of this research suggest that:
Apprenticeships remain an important means through which employers meet their skills needs. However, this research finds that the Levy has had an impact on employer behaviour in terms of apprenticeship recruitment by type, age, and level, including:
- a reduction in apprenticeship recruitment by non-levy payers;
- an increased preference for people working towards higher level apprenticeships;
- specific barriers in particular sectors, such as, backfilling costs;
- a continuation, and potentially an acceleration, of trends in the profile of apprentices which pre-dated the reforms, including older apprentices and those who are already employed.
There is evidence that for non-levy payers, the requirement to contribute to the costs of apprenticeship training does pose a problem and a disincentive to train apprentices.
The reforms have increased levy-paying employers’ financial investment in apprenticeships but also stimulated their preference to use it to train existing staff at higher levels, sometimes through converting existing training provision to apprenticeships. This may generate higher level skills, but the cost might be a lower number of apprentices, fewer trained by smaller employers, as well as fewer younger and lower-level apprenticeships.
On top of the impact of the Levy and apprenticeship reforms set out in this report, the pandemic has had significant impacts on vocational education as set out in Edge’s recent report, The Impact of Covid 19 on education.
Wider concerns about the levy have been expressed by the business community. Matthew Fell, CBI Chief UK Policy Director, was already saying in 2019:
“With apprenticeship starts significantly down, it’s clear that the Levy is not working as intended - especially for smaller firms. Despite its rocky start, employers want to support the Government’s efforts to evolve the system and play their part in making the Apprenticeship Levy work.
“Without urgent action, the Apprenticeship Levy risks becoming a roadblock to the Government’s wider and welcome efforts to modernise the skills system.”