Has the UK’s apprenticeships scheme run aground?

Apprenticeship take-up rates are falling in the UK, renewing calls for the government to review its policies on the matter.

Recent numbers from the National Audit Office (NAO) suggest the government isn’t likely to hit its ambitious target of three million new apprenticeships by 2020, despite relentless efforts to drive up numbers.

“Despite making changes to the apprenticeships programme, the department has not enticed employers to use available funds or encouraged enough potential recruits to start an apprenticeship,” NAO head Amyas Morse said in the BBC.

“It has much to do to meet its ambitions. If the department is serious about boosting the country’s productivity, it needs to set out clearly whether its efforts are on track to meet that aim,” he added.

Apprentices spend at least half their time at work, learning through on-the-job training, and the other half attending college, university or a training provider. The option is most suitable for school leavers with a clear idea of the career they would like to pursue and who don’t want to choose the traditional university route.

In the wake of higher tuition fees, apprenticeships seem an obvious choice.

Hoping to increase its popularity and plug the skills gap, the UK government overhauled the apprenticeship system in 2017, introducing a levy or tax on large employers, which they could later claim back to pay for training.

Under the new system, UK employers with wage bills larger than GBP3 million were required from April 2017 to pay 0.5 percent of their payroll into a central apprenticeships fund. These payments would then be translated into vouchers that they can then claim back to fund training.

Companies with wage bills under GBP3 million pay 10 percent of training costs directly to the training provider whilst the government pays the remaining 90 percent, up to a limit according to a funding band. If the company has fewer than 50 employees, the government foots the bill of training 16- to- 18-year-old apprentices.

The levy was meant to give employers an opportunity to invest in high-quality training, both to grow their business and get the skilled workforce they need.

However, the scheme came under heavy criticism from the get-go. Many employers found it overly complex, and were unsure how it was meant to work and whether they would be required to pay the levy. 

In fact, many smaller firms have given up entirely on apprenticeship schemes, while many of the larger ones failed to even claim back the money they paid in.

According to the BBC, the larger firms were treating the levy as an additional tax on their business while the smaller companies were reluctant to have their apprentices attend college a day in the week. The scheme stipulates that as part of the apprentice’s part-time study element, with the employer’s agreement, they are to attend college one day a week (or a “day release”) or a “block release” (blocks of a week or more) or study online.

As a result, apprenticeship numbers have dipped. Prior to the new scheme, there were 509,400 starts a year. Last year, however, there were just 375,800, indicating a 26 percent decline.

“It’s clear that the apprenticeship levy is in urgent need of simplification in order to make a success of it,” Reed Recruitment chairman and chief executive was quoted saying in The Independent.

“It is also clear that financial incentives on their own are not enough to achieve the kind of results the government had hoped for.”

Pimlico Plumbers founder Charles Mullins echoed the view, saying the scheme “too damn complicated and time-consuming” for businesses already saddled with the burden of “tax bureaucracy”.

“Business owners, especially of SMEs, just don’t have the time to get their heads around how to claim the money. What we need is a simple system where the government pays businesses directly for each apprentice they take on.”

Meanwhile, to encourage employers into the scheme, the UK government announced a new leaderboard that would recognise and promote outstanding apprentice employers, encourage employers to improve the quality of their apprentice offer and help potential apprentices and parents to easily identify opportunities with high performing employers.

The leaderboard, announced by Education Secretary Damian Hinds to mark the National Apprenticeship Week from March 4 to 8, would rate the Top 100 large apprentice employers as well as the top 50 SMEs.