worker-646443_640.jpg

NOTE: DUE TO THE NATURE OF THIS SUBJECT, FACTS ON THE GROUND MIGHT HAVE CHANGED BY THE TIME YOU FINISH THIS ARTICLE.

Let's take a hypothetical situation. You like chocolate. I'm a chocolate-maker. You've been telling me for years how much you love chocolate, and how you want me to make more. Then one day, I tell you I'm going to give you 3 million bars of chocolate. You're happy. But the day I'm supposed to start giving you the chocolate, I give you a half-eaten bar of Cadbury's and tell you that I'll get back to you in a few months.

You'd be a bit mad.

Well, in a nutshell, that's what happened with the government's new apprenticeship program.

On April 6, 2017, after months of anticipation in the education and business sectors, the government instituted their new Apprenticeship Levy, one of the flagship reforms to the now drastically changed apprenticeship landscape in the UK. The effects of the levy have been, and will continue to be, wide-ranging and the education industry in Britain has been trying desperately to adapt. The reaction has been...mixed, let’s say.  So, here we thought we’d sort through some of the rubble, show how the saga so far has unfolded, find some of the benefits and some of the drawbacks for learners, centres and assessment organisations alike.

The Apprenticeship Levy was devised by the government as a way to close the skills gap in the UK, with the aim of creating three million new apprenticeship starts by 2020. In order to do this, the government is effectively taxing companies whose annual pay bill is more than £3. The levy is charged at 0.5% of the employer’s annual pay bill. Employers who aren’t connected to another company or charity will have an Apprenticeships Levy allowance of £15,000 each year. Employers can then access funding through a digital apprenticeship service account. This will allow them to select and pay government-approved training providers and post apprenticeship vacancies for 24 months. The main idea is to force large companies, like those that make up 40% of Britain’s private sector economy, to actively contribute to the training and education of apprentices.

There was a lot of buzz around what the levy would do for employers.

It was thought the levy would dramatically increase the amount of government funding for apprenticeships, creating £3 billion worth of cash for employers to take advantage of. The government also plans on applying a 10 percent top-up to all funds, meaning for every £1 paid in, the employer gets £1.10 to spend, which would give employers incentive to hire.

There was also a broadening of the scope of who could undertake an apprenticeship. Before 2017, people who’d attained university degrees were not able to access apprenticeship funding. But from this year onwards, funding will be available to all workers, regardless of education level. Resources could be used for graduate hiring, technical skills training, leadership development and so on. Employers can even hire students at university with no experience in a particular sector.

And the government stated that, from May 2017 onwards, non-levy-paying employers who offer apprenticeships to 16-18 year olds will receive 100% funding for the cost of training. Non-levy-paying employers training 19 year olds and over will have 90% of their funding provided.

It seemed like a reform that had quite a lot of support. 37% of employers who will pay the levy surveyed by Manpower believe apprenticeship hires will rise. 27% of employers surveyed believe the take-up of apprenticeships will increase. And 68% of employers surveyed believe they would take advantage of the funding provided.

Those seemed like pretty big ups, especially for large employers looking to train apprentices and apprentices looking for placements. Then some things started to go wrong.

When the levy was first rolled out, business leaders started rumbling in Northern Ireland. The BBC reported that many businesses there did not have access to the funds being collected. At the moment, Northern Ireland has no economy minister, so answers on this question may not be answered for some time.

There is continued uncertainty among some businesses, voiced by Neil Carberry, CBI Director for People and Skills policy, about the delivery of high-quality training, slow processes in approving new standards and ineffective careers guidance in schools. Even Ofstead has voiced concern about the possibility of low-quality education and low-quality wages in the push to fill the sheer number of apprenticeships promised by the government.

But one of the main issues raised was that smaller employers would not directly benefit from the levy. Large employers are more likely to take advantage of and benefit from it, whereas small and medium sized enterprises would not have access to proportionate funding in certain areas.

Further, by the end of April, the amount of cash colleges and providers were to receive from the government in order to deliver apprenticeships to small employers between May and December seemingly evaporated. The ESFA said that it would be pausing the £440 million procurement process for the 98 percent of employers not subject to the levy after it was massively oversubscribed. A pause was instituted to deal with the fallout. But when the government came back, the funds providers had received for the next eight months was extremely small, with some facing cuts of up to 80 percent compared to the previous year. Many redundancies are feared in the coming weeks from the cuts.

While many levy-paying (i.e. large) employers are still excited, non-levy paying companies (i.e. many small and medium sized companies) are the ones dealing with the collateral damage of the government’s policies, with many apprenticeship positions losing funding almost instantly.

Outrage has been sparked across the industry. Perhaps in an act of cheek, the Association of Employment and Learning Providers (AELP) has called for an increase in the promised number of apprenticeship starts, from 3 million to 4 million over the next parliament in their election manifesto.  This call is most likely a way of trying to coax the government to properly deliver on its initial promise.

The Department of Education has stated that no new answers should be expected until after the general election on 8 June, 2017. So, until after the election, providers and employers are in limbo, and it is unclear at this point if the sector will receive more of the same under a Conservative government or something different with a different party.

It has been an interesting few weeks, and employers and providers should be getting some answers mid-June. Stay tuned for more updates as they develop, and join the conversation by tweeting @TQUK.