Apprenticeship levy is a 'blunt instrument', MPs say

Friday, March 31, 2017

The Government’s apprenticeships policies lack focus and will not close the skills gap because they fail to concentrate on the sectors and regions where training is most needed, an MPs' report warns.

They also say that the target for three million apprenticeship starts by the end of this Parliament could hamper attempts to raise quality, in the joint report by the Commons education and business select committees.

MPs also criticise the apprenticeship levy, which starts next week, saying they were not ‘convinced that such a blunt instrument’ was the best way to achieve the Government’s aims.

The levy will apply to businesses with a payroll of more than £3m and will be charged at 0.5 per cent of companies’ wage bills.

The report said, ‘Our country needs to invest more in training and it is right that employers should contribute, but this training must take place in the sectors of the economy and the regions of our country where it will do most good.’

Neil Carmichael MP, chair of the Education Committee and co-chair of the sub-committee on Education, Skills and the Economy, said, ‘Apprenticeships are vital if we are to close the skills gap, which could grow wider post-Brexit. We must train our young people for jobs that the economy needs, but the Government has failed to show how its three million target and levy will help achieve this.

‘Ministers must recognise that apprenticeships are a means to an end and not an end in themselves. They need to place greater emphasis on outcomes, focusing on areas of the economy where training is most needed, and ensuring quantity does not trump quality.

‘For too long apprenticeships have been seen as inferior to the university route and failed to benefit young people from disadvantaged backgrounds. We fully support the Government's attempts to improve the prestige of apprenticeships, but it will take more than words to achieve this aim. If the quality is there the prestige will follow.’

Co-chair Iain Wright MP,  and chair of the Business, Energy and Industrial Strategy Committee, said, ‘The Government’s flagship apprenticeships policies positively focus on raising participation but are inherently contradictory. Ministers have a centrally-dictated, top-down three million target, welcome though that focus is, at the same time as insisting that this approach will be bottom-up and address the skills requirements of individual firms, sectors and regional economies. These requirements will often be very different and the Government should target those sectors of the economy and regions of the country where skills shortages are particularly acute.’

He added that too much training was ‘sub-standard’ and said the Government’s apprenticeship reforms would be judged on ‘whether the planned increase in the quantity of apprenticeships is matched by an increase in their quality’.

The Association of Employment and Learning Providers urged the Government to act on the committee’s recommendations.

Chief executive officer Mark Dawe said, ‘In particular ministers must address the “lack of clarity” about the long-term funding arrangements for smaller non-levy paying employers.

‘In AELP’s view, a guaranteed minimum budget of £1bn a year is needed to maintain the apprenticeship opportunities that SMEs offer.

‘We agree with the MPs that last August’s funding proposals for 16- to 18-year-old apprentices represented “the opposite of social mobility’ and we remain concerned that the subsequent changes to funding are still not adequately addressing the issue.’

Commenting on the committee’s observations on the levy and its impact on the economy and key sectors, he said the Government had to make up its mind.

‘When the non-levy paying employers join the Apprenticeship Service (TAS), the programme’s funding allocations will be entirely driven by employer demand, irrespective of which sector an employer is in. In theory then, the Government could have no real say on whether key sectors can be favoured unless it starts widening the differences between sector and standards funding rates vary significantly. If it chooses to do this, it would be helpful in line with the Industrial Strategy if we could have an agreed strategic approach.’

Gordon Marsden MP, Labour’s shadow skills minister, said, ‘Today's report confirms what Labour have been saying all along, that while the Government are obsessing over reaching an arbitrary target for apprenticeship starts, they are doing nothing to ensure the right outcomes for learners.

‘The fact that the Government's approach lacks focus and targets the wrong industries shows that they have failed to develop an industrial strategy worthy of the name, and can only offer headline chasing gimmicks instead.

‘Closing the skills gap and giving young people and older learners the skills they need should be essential to securing our post-Brexit future, yet once again this Government have nothing serious to offer the country.’

A Department for Education spokesperson said, ‘The Government’s focus is on building a world-class education and skills system that will give everyone a chance to climb the ladder of opportunity to rewarding careers.

‘We are investing over £500 million a year of new funding for technical education and the apprenticeship levy will double the annual investment in apprenticeships to £2.5 billion by 2019-20.’

It is the second time this week that the apprenticeship levy has been criticised, following a warning from the IPPR think-tank that it will worsen the North-South divide in training opportunities and jobs.

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