The UK is heading towards a perfect storm of an increasingly uncertain future post-Brexit, where a "no deal" arrangement with Europe remains firmly on the table and where the engine of industry is still wheezing to keep up the pace after the financial crisis.
Despite a welcome spike in the latest ONS figures, productivity (output per worker per hour) is still lagging behind the other G7 nations. Never since 1975 have there been more people in work, yet skills shortages have reached critical levels.
Enter the apprenticeship levy, designed to turn around low productivity by putting businesses in the driving seat. It is the company bosses who are now in charge of what content apprenticeships should contain to best address their own skill shortages – not the government, as used to be the case.
National skills shortage
This has caused a shift in what we traditionally think of as an apprenticeship, because it transpires that many firms have felt it necessary to use levy money to train senior staff who already have many years of work experience.
While much of the national skills shortage lies in practical areas like technology and engineering, we know that management, a skill relevant to all businesses, is suffering more than most. Seventy-one per cent of businesses do not train first-time managers, according to the Chartered Institute of Management (CMI), with many bosses wrongly assuming that good employees will instinctively know how to effectively manage and motivate a team.
We also know that management ability is strongly linked to productivity. Last month, the ONS calculated that a 0.1 increase in its index for management expertise coincided with a 9.6 per cent increase in business productivity. OECD analysis has provided further evidence of this, and what’s more the CMI estimates the UK needs nearly two million new managers by 2024.
In response to the increasing demand for better management skills, last month Aston Business School welcomed its first cohort for the Executive Apprenticeship MBA – one of the first MBA apprenticeship programmes to launch in the UK.
The programme is based on our existing Executive MBA but priced to match the £18,000 government cap for masters-level apprenticeships. This means that businesses can provide quality management training for staff without having to pay anything on top of their levy allocation.
The growth in MBA apprenticeships has led to criticism that universities are exploiting the system to offer levy-friendly programmes designed for people that don’t fit the traditional profile of an apprentice. On Friday Tom Richmond, author of the recent Reform report critiquing the levy’s first year, told Tes that these courses "don’t meet any historical or international definition of an apprenticeship".
The idea that an apprenticeship can only be for a young, inexperienced trainee is old-fashioned. The apprenticeship levy has broadened the definition to encompass skills that do not fit the traditional mould but are nonetheless vital to jump-starting productivity.
The evidence is clear – better managers lead to more efficient workforces, and if firms believe this is a barrier to growth it is right that they should be free to spend their levy funds as appropriate, just as if a software company wanted to fill a shortage in coding skills.
The real problem, as quite rightly exposed in Reform’s report, is low-level, low-skill apprenticeships where businesses are using the levy to buy in cheap labour with no or little regard to the development of the apprentices.
Apprenticeship provision in England is still heavily weighted towards intermediate/level two programmes – equivalent to five GCSE passes. These make up two-thirds of course starts for under-19s, according to the Chartered Institute for Personnel and Development. Worrying findings from Ofsted found many of these kinds of apprentices are making the coffee, serving sandwiches and cleaning floors – with some not even aware they were on an apprenticeship.
Theresa May wants three million apprenticeship starts by 2020, but quantity over quality will not fix our productivity crisis. The government must do more to deter employers from wasting their levy on poor-quality programmes, but to consider higher-level apprenticeships that offer much sought-after skills as part of the problem is to miss the central point of the levy’s reason for being – to make the UK more productive.
The suggestion that MBAs only benefit the apprentice is not the case. These apprentices have the advantage of already being in a position of authority in their organisation. This means from day one they can make changes to their management style and working practices, the benefits of which trickle down to improve the performance of the team.
The boss of Pimlico Plumbers says MBA apprentices are not even able to "bang a nail in". That could be true, but what they lack in plumbing experience they redeem through strong, strategic leadership that will put businesses on course for a more prosperous future. To grow a great business, you need both.
Professor George Feiger is executive dean of Aston Business School