Don’t knock apprenticeships – give them time and support

Kirstie Donnelly MBE, Managing Director at City & Guilds Group, talks about the apprenticeship system.

21 February 2018

By Kirstie Donnelly MBE - Managing Director at City & Guilds Group

Six months on from the introduction of radical reforms to the UK’s apprenticeship system, some seemingly worrying statistics have started to emerge. 

In January, official figures highlighted a significant drop in the number of new apprentice sign-ups; a year-on-year reduction of some 41,000 new apprentices were registered between August and October.

But the question is, does this drop in numbers really signal a failure in the system, or is there more behind the numbers than there first appears?

Firstly, we know that many employers remain confused about the way apprenticeships are now funded and what they need to do in response, which may go some way to explaining this drop.

City & Guilds research released less than two months ahead of the Introduction of the levy, which came into force in April last year, found that a third of employers who are required to pay into the apprenticeship levy were simply not aware of its existence and this was echoed by the CIPD just a few months ago. 

We need to make sure all employers understand that the apprenticeship system is for them. That it spans multiple industries, encapsulates a wide array of different jobs roles and can be used to train staff at every career stage from entry level through to senior management.

Also we need to explain funding better so employers aren't turned off by perceived complexity and red tape. Most HR teams in large companies will know that employers with a pay bill of over £3 million must now invest 0.5% of that bill into a central apprenticeships fund, which they can then reclaim to fund apprenticeships for their staff.

What is often not understood is that despite not having to pay into the levy, small businesses are also able to benefit from apprenticeships; only having to fund 10% of the cost of training an apprentice, with the remainder being paid by the government. 

And if a business has fewer than 50 employees there will be no requirement to pay towards training apprentices under the age of 19 at all.

Better awareness of these changes, and their benefits, is urgently required – especially amongst SMEs, who are likely to be key users of the system if they are properly engaged. Recent research from the Federation of Small Businesses found that just 24% of SMEs already offered apprenticeships but a further 24% would consider taking one on in the future. Harnessing this enthusiasm would have huge benefits for everyone from the apprentices themselves to businesses and the wider UK economy.

It is a well-known fact that productivity in the UK is the lowest of the G7 economies and that a key contributing factor to this poor output is lack of investment in training. Unsurprisingly perhaps, UK workers receive less employer-provided training than any other EU country except Poland, Greece and Romania. The levy presents a valuable opportunity for organisations to re-think the way they fund training and development  for employees at every level of their business.

That employers appear to be taking their time to strategically think through how they spend their levy rather than rushing to create lots of low-quality apprenticeships Is to be welcomed, even if It results In a temporary drop In numbers.Finally, once the new system has had time to become properly established and employers have been given the opportunity to see how apprenticeships can benefit their business at every level, Government should consider widening the levy to become a skills levy. Brexit may be the biggest upheaval to the availability of skilled and talented employees for a generation – up-skilling and training existing staff is going to be critical to plugging this gap.

Apprenticeships and the levy have the potential to help create a workforce that is fit for the future. I hope that when we are looking at the apprenticeship numbers this time next year we will see that the opportunity has been seized by employers.