The great training robbery: assessing the first year of the apprenticeship levy

Since 2013, groups of employers (known as ‘Trailblazers’) have come forward to design a new wave of apprenticeships. I doubt you will be surprised to learn that the list of new apprenticeships includes Engineers, Chefs, Technicians, Accountants and Hairdressers. However, if I told you that the same list of new apprenticeships also includes working on a hotel reception desk, serving customers in a delicatessen and sending a Chief Executive on an MBA course, you might well raise an eyebrow.

There is nothing wrong in principle with the Government asking employers to design apprenticeship training courses. Many employers have used this opportunity to produce high-quality apprenticeships targeted at young people making the transition from education to work. However, any training course that is labelled an ‘apprenticeship’ by employers can gain access to the enormous government subsidies now being generated by the apprenticeship levy – which will reach £2.7 billion by 2020. As a result, some employers are evidently keen to rebadge existing training courses as ‘apprenticeships’ when they are, in fact, not apprenticeships at all.

The new report that I have published with the Reform think-tank makes for sobering reading. As has been widely reported in the national media and sector press, the number of people starting an apprenticeship has dropped dramatically since the introduction of the levy (most months are around 30-40% down on the previous year). What’s more, the age category with the highest number of people starting to train towards one of the new employer-designed apprenticeships is the over-25s, not young people. We are also seeing a shift away from lower-level apprenticeships towards Higher and Degree Apprenticeships. Such findings suggest that more experienced and older workers are increasingly becoming the focus of the apprenticeship programme, at the expense of less experienced and younger employees.

In terms of apprenticeship quality, the news is just as concerning. The list of roles now counted as an ‘apprenticeship’ includes serving customers in a coffee shop, greeting customers and cooking fries in a fast-food outlet and performing basic office administration. These low-skill (and typically very short) training courses do not meet the historical definition of an apprenticeship in this country, nor do they meet the existing definition of an apprenticeship in other countries. Furthermore, the apprenticeship levy is being used to rebadge leadership and management courses as ‘apprenticeships’, with some of the most popular employer-designed apprenticeships including becoming a ‘Team Leader’, ‘Supervisor’ or ‘Manager’. Cranfield University’s School of Management has even relabelled its MBA programme as an ‘apprenticeship’, demonstrating just how far employers are willing to go to chase down the available subsidies.

The financial impact of this inappropriate rebadging and relabelling is substantial. Our report showed that almost 40 per cent of the new apprenticeships designed by employers are merely ‘apprenticeships’ in name only, meaning that by 2020 £600 million pounds a year will be wasted on such courses. This will damage the apprenticeship brand at the exact moment when the Government wants to encourage more young people to consider apprenticeships instead of university.

Brexit is coming. Our labour market will almost certainly need to adapt in some way. We need to upskill this country’s workforce rapidly and effectively if we are to meet this challenge. Spending hundreds of millions of pounds on low-skill training courses and sending senior executives on MBA courses is poor value-for-money, and in the end it is young people and taxpayers more broadly who are likely to lose out.

Tom Richmond is Senior Reseach Fellow at Reform