Time to levy change?

Materials World magazine
1 Jul 2018

Kathryn Allen takes a look at recent reports on the apprenticeship levy.   

In January 2018, Materials World discussed the apprenticeship levy and how it had been received since its implementation in 2017. We spoke to industry experts, professors running apprenticeship degrees, and an apprentice, about the benefits of apprenticeships and the levy, as well as industry reservations concerning its effectiveness. The overall opinion was optimistic, while acknowledging some issues still need ironing out. 

However, recent studies reveal a less favourable view of the levy’s progress in its first year. Statistics from the UK Department of Education, released in April 2018, show that since the introduction of the levy, the number of apprenticeship starts has declined. Prior, between August 2016 and January 2017 there were 269,600 apprenticeship starts, however between August 2017 and January 2018, while the levy was in place, there were 206,100 reported starts. The paper does note that, as a new system, numbers are expected to grow in the coming years and that data may not yet have been reported, with finalised numbers to be released in November 2018. 

But, this has still resulted in calls for reform of the levy. At the Apprenticeships Conference in London in April 2018, Jane Gratton, Head of Skills at the British Chambers of Commerce, called for the government to relax the levy restrictions, making it more flexible to help businesses recruit and train. 

More bad news 

A report from EEF – The Manufacturers’ Organisation, A Levy Price to Pay? The Apprenticeship Levy One Year On, claims that, ‘In the month immediately after the levy, starts fell by 83%. Since then, starts have continuously been down compared to pre-levy years, and as of yet, have failed to return to pre-levy levels.’ However, the paper also claims the fall has not been as dramatic in engineering and manufacturing industries. At this pace, the EEF claims the government has a long way to go if it is to meet its target of three million starts by April 2020.

This report also claims 52% of manufacturers want improvements made to the levy, 17% want to see it scrapped, and only 5% want it left as it is. Some of the improvements suggested include increasing the lifetime of levy funds from 24 months, removing the requirement of 20% of training to be off the job, and providing financial incentives for employers and/or learners to undertake certain apprenticeships. 

Julie Feest, Chief Executive Officer of the Engineering Development Trust, commented, ‘EEF is highlighting serious issues in its recent research and in our many conversations with manufacturing employers, we can confirm the conclusions it has reached [...] Any new flexibility in the levy system, resulting from discussions with government, should allow unused funds to be invested by employers in programmes such as Industrial Cadets, which ensures high quality pull through of candidates into apprenticeships from education, thus providing employers with a diverse pool of STEM talent to draw from.’ 

On a similar note, think tank Reform released The great training robbery: assessing the first year of the apprenticeship levy in April 2018, authored by Tom Richmond, Senior Research Fellow at Reform, claiming that the changing age profile of apprentices, with a shift towards the over-25 age group and training at higher levels, means younger employees are missing out. This report also claims that the quality of apprenticeships has declined, with roles that are now considered to be appropriate, including low-skill and often short training courses, concluding that the levy is currently too complicated for employers, focused on inappropriate forms of training, and unlikely to deliver value for money. 

Industry insight 

Discussing these calls for reforms, Dr Iain Baillie, Site Manager, Materials Engineering, Rolls-Royce and Vice President of the British Institute of Non-Destructive Testing (BINDT), UK, told Materials World, ‘The introduction of the levy hasn’t really had an impact on apprenticeship numbers at all [for Rolls-Royce].’ The level of funding Rolls-Royce can access, falls short of the costs to train an apprentice, but Baillie explained that, as apprentices are an important way to attract talent to the company, decisions are made based on expected demand rather than how much levy funding can be accessed. 

Baillie added, ‘I’d very much welcome an increase in the amount you can claim back [the amount that can be drawn down from the levy pot per apprentice] as our calculations are that it costs us around £200,000 to deliver one apprenticeship, but we can only claim back £28,000.’ This recommendation of reviewing the funding band structure and removing the upper limit was also made in the EEF report, which stated, ‘There should be no upper limit. If employers, and providers, can together demonstrate the true cost of training to the UK Institute for Apprenticeships, then this should be the overall upper limit – this was [the] government’s pledge to employers – that they would cover the true cost of training and assessment.’

Rolls-Royce is a Lead Employer for the Non-Destructive Testing (NDT) Engineer Degree Apprenticeship, which began in collaboration with BINDT and the UK Trailblazers initiative. The company was part of a committee, along with other organisations such as EDF Energy and National Grid, which agreed on core fundamentals that apprenticeships must provide. This includes not only passing the degree, but also completing NDT qualifications, measured against two international standards, undertaking a technical project, and passing a formal interview, assessed against the UK Incorporated Engineer standard. 

Acknowledging that, as a lead provider Rolls-Royce is able to claim back the maximum amount of funding from the government and that smaller NDT companies are not able to, Baillie said, ‘The UK government could look at making obtaining apprenticeship funding easier. Perhaps allowing NDT training schools the opportunity to be lead providers is one option. Currently, lead providers require Ofqual [The Office of Qualifications and Examinations Regulation] approval.’ Baillie was hopeful that BINDT could persuade the government to do this. 

In response to claims that the age profile of apprentices is changing, Baillie said, ‘We use apprenticeships to develop and train new staff. We welcome apprentices of any age – most applicants tend to be 17–24 years old, but we also have older apprentices on some of our other schemes.’ The average age of an NDT apprentice at Rolls-Royce is 19.  

Nobody knows

A spokesperson from Skills Training UK, a lead provider for apprenticeships that Materials World spoke to about the levy in January 2018, told Roger Lyon, Project Manager of the Trailblazer Phase 3 Apprenticeship Scheme at BINDT, that ‘its not necessarily that [employers] struggle to draw down the funding [...] but that they are not aware of the apprenticeship schemes in the first place. We have an active sales team who call up employers to tell them that these programmes are available as it is very often the case that they were not aware that they existed’.

The general consensus appears to be that, despite being a good idea, the levy is missing the mark due to use restrictions, complicated administration processes, and a lack of industry expertise.