The number of people starting apprenticeships dropped significantly in the first three months after the introduction of the apprenticeship levy, new government figures have revealed.
Provisional figures for 1 May to 31 July 2017 – the first quarter after the levy was introduced – show that starts dropped by more than 60 per cent. “Between May and July 2017, apprenticeship starts have decreased to 43,600 from 113,000 over the same period in the year before, a decrease of 61 per cent,” the Department for Education’s statistical first release states.
However, in the previous quarter, there was a 47 per cent year-on-year increase (from 118,800 in between February and April 2016 to 174,100 in the same period this year), suggesting a rush by employers to recruit apprentices before the new system was introduced.
The same report also reveals that, year on year, the number of apprenticeship starts at intermediate level has dropped by over 10 per cent. While the overall number of starts dropped by 2.5 per cent, from 503,700 in 2015-16 to 491,300 in 2016-17, based on provisional full-year data, that reduction is largely due to a 10.1 per cent drop in intermediate level starts. In the same period, higher and advanced apprenticeship starts rose by 35.1 and 3.9 per cent, respectively.
April 2017 saw the introduction of the apprenticeship levy, paid by all large UK businesses. It is hoped this will fund the government’s ambition of three million apprenticeships by 2020. But it was feared many employers would simply view the levy as a tax, due to the complicated nature of the new funding system, and not invest their levy funds in apprenticeship training. According to the data published today, there have been 18,500 levy-supported starts since the introduction of the levy in April.
The statistical first release urged caution over the latest figures, stating: "It may take time for organisations to adjust to the new funding system, and so it is too early to draw conclusions based on the number of apprenticeship starts recorded since May 2017."
But Stephen Evans, chief executive of Learning and Work Institute, said the data showed “worrying signs”. "The headlines will be grabbed by the 61 per cent fall in apprenticeship starts since the levy's introduction," he added. "It's too early to tell if this is teething problems, a more permanent problem, or the result of apprenticeship starts being brought in before the levy's introduction. Our concerns over quality and access remain, there's still time to address these so we have a world-class apprenticeship system."
Target under threat
Shadow skills minister Gordon Marsden said the “appalling statistics are a damning indictment of the government’s failure to give the necessary time, focus and resources to their apprenticeship programme".
"They undercut government’s boasting about how swimmingly their apprenticeship programme is going - now cruelly exposed as such by these figures showing a disastrous fall in numbers from 113,000 to 43,600," he added. “We have consistently warned, alongside sectors leaders such as the AELP, that the government’s lackadaisical approach to the introduction of the levy would damage the apprenticeship programme. Today's dire figures are the chickens coming home to roost."
Mark Dawe, chief executive of the Association of Employment and Learning Providers, said: “Sadly, we saw these numbers coming long before the levy even started because of the way the new funding system has been designed.”
He added: “Until we see the September starts, we don’t know whether the 3 million target is under threat but the numerical target isn’t really important here. What is needed are changes that will restore incentives for employers to recruit young apprentices and a guaranteed minimum budget for non-levy payers’ apprenticeships which will ensure that there are opportunities in the many areas of the country without large employers.”
Mr Dawe said AELP was receiving “plenty of anecdotal and factual evidence from its members that the government’s own social mobility agenda is being undermined by the levy reforms with fewer lower level apprenticeships available to offer a ladder of opportunity and the damage is also being done in sectors that are crucial for the post-Brexit economy such as hospitality and health and social care”.
'Reform needed urgently'
Neil Carberry, CBI managing director for people policy, said: “This disappointing data will come as no surprise to companies, who have repeatedly made clear that the current design of the apprenticeship levy system is not effective. Businesses believe in apprenticeships but there can be no argument now - reform of the levy system is needed urgently to ensure its success.
“Firms are still having to adjust to the new system against difficult timescales, but the challenges of the levy run deeper than just a timing issue. That’s why the CBI has consistently said that for the levy to really meet business and learner needs, more flexibility is vital so firms can deliver high-quality training.
“There is still time to get the levy right but this needs real urgency. The government must invest now in the Department for Education’s commercial skills, work with firms to build a better understanding of how businesses will react to policies, and empower the Institute for Apprenticeships to challenge underperforming aspects of system design. In the long-term, the right choice is to evolve the system into a flexible skills levy."
University and College Union general secretary Sally Hunt said: "Ministers must be concerned by this drop, which seriously undermines efforts to improve social mobility. With two years to spend the levy cash, there may be some employers biding their time but that does nothing for those people who want, and need, access to training now. The government must do more to ensure that anyone who wants an apprenticeship can get one, but quality must remain paramount and no attempt should be made to row back on the commitment to off-the-job training which is central to good apprenticeships.
"The government should also recognise that apprenticeships are not the only valid route for people to gain skills in the workplace, and should make levy funding available for other types of training."