We face an uncertain future. With the most recent Office for National Statistics data showing that productivity was 30 per cent higher in France and 35 per cent higher in Germany than in the UK, our widening productivity gap cannot be ignored if we are to compete successfully and obtain the “easy” post-Brexit trade deals promised by this government.
The core of any skills policy needs to address the current and future needs of our economy, the productivity gap, regional inequality and the career and progression opportunities for our young people. Without urgent action from government, its skills policy risks failing on every level.
The levy has encouraged large companies to actively look for ways to upskill existing employees, which is desperately needed as the implications of automation and the fourth industrial revolution become clearer, and it has started a national conversation about apprenticeships. But the levy has also contributed to reducing opportunities for young people who arguably would benefit the most from a vocational training route and has limited small and medium enterprises (SMEs) in their chance to upskill their workers on the same scale.
The latest government data on apprenticeship statistics showed that the system is disproportionately impacting younger people who are starting with lower qualifications. The number of level 2 apprenticeships has fallen from 63 per cent in 2011-12 to 36 per cent in 2018-19. The number of people aged under 19 on apprenticeships has fallen to 25 per cent. In the context of an apprentice system where we have the lowest annual level of participation since 2010-11, with 72,400 fewer people participating in 2018-19 than in 2017-18, these percentages are even more worrying.
The data provides the evidence that levy-paying businesses are finding ways to use their levy and government funding on higher-level apprenticeships for existing employees instead of traditional training routes that businesses would have paid for themselves. Arguably, we are subsidising training costs for big business at the expense of SMEs.
A recent Ofsted report (for EQV (UK) Limited) showed this system at its worst with employees not even being fully aware that they were apprentices: “Apprentices do not benefit from a well-planned programme of study. Most apprentices and their line managers do not know they are on an apprenticeship. Too many apprentices do not develop the knowledge, skills and behaviours needed to progress in their careers. They just complete their management qualification.”
This is clearly at the extreme end, but last year the National Audit Office expressed its concerns that the use of the levy for new higher-level apprenticeships was really “public money…being used to pay for training that already existed in other forms”.
There is a strong argument for upskilling the existing workforce to support increased productivity. If, for instance, an individual earns a promotion, they could find themselves performing a different role to the one that they used to be in.
The concern remains that, with the system the government has created, for one group of people to benefit from the levy system another must lose.
At this present time, the people who are losing out from the apprenticeship reforms this government has introduced are younger people with fewer qualifications in areas dominated by SMEs because the non-levy pot of money is not sufficient to meet demand and large businesses are preferring to use their levy on existing employees rather than take on brand-new lower-level apprentices.
As we celebrate all our apprentices during National Apprenticeship Week, there are some easy, immediate steps the government could take to remedy some of the problems. They could listen to the coalition of voices including Labour, businesses and chief executive of the Institute for Apprenticeships and Technical Education calling for greater government funding for SME apprenticeships by increasing the funding available for non-levy payers.
With almost one in five young people failing to achieve five GCSEs with grades A*-C, or the equivalent in alternative qualifications, the government needs to acknowledge the level young people are starting from and also increase financial support for level 2, traineeships and level 1 apprenticeships.
Education should provide equality of opportunity for everyone at every stage of their life, therefore there must be an accessible progression pathway for everyone. The current system is stopping young people starting their career journey by not providing the appropriate level they need and denying SMEs the opportunities to have apprentices which could help address the productivity gap. Let’s hope National Apprenticeship Week is more than just a week of photo opportunities for the secretary of state, and that he uses it to listen and improve the system his government created. In this post-Brexit world, our country cannot afford to get this wrong.
Emma Hardy is shadow FE and HE minister, and MP for Hull West and Hessle