Monday 5th February 2018

The Apprenticeship Levy is Working

Stewart Segal, the former Chief Executive Officer of AELP and former Director of Strategy, Policy and Funding of 3aaa Apprenticeships discusses his current views on the Apprenticeship Levy and how he believes it has been a positive thing so far.

“It is coming up to a year since larger employers started to pay their Apprenticeship Levy.  With such a fundamental change to the Apprenticeship system there are bound to be different views as to how the system should be implemented, but the vast majority support the principle of establishing a national system for developing the skills we will require to drive productivity.  Recent figures issued by the government show that the numbers of Apprenticeship starts are below that of previous years.  There is no doubt the starts are down but with any major policy change this was likely to happen and there are some good reasons to explain it.  What is important is that this does not prompt any immediate, hasty responses from Government.  I am well aware that we have a new Secretary of State, a fairly new Minister, a new Chief Exec of the Institute for Apprenticeships (the employer body), a new Head of Apprenticeships in the Department and a new CEO of the Government Skills Agency.  Let’s hope they listen to employers and providers before making any changes.  When employers are asked about the Apprenticeship system they want to get a wide range of responses.  The one thing they all say is that there are too many changes!  We now have the Apprenticeship Levy so we have to make it work and I am confident employers and training providers in partnership will make it work and meet the 3 million starts target by 2020.

A core element of the Apprenticeship Levy is that employers take more control of their programmes.  That is definitely happening and it is only the training providers who recognise this and respond to the new environment that will be able to deliver the more flexible standards that have been introduced.   It is the partnership working that is so important.  As employers take control of the programme they will also realise that they need the specialist support provided by an experienced, flexible training provider who can support the development of a long-term strategy as well as delivering high quality Apprenticeship programmes.  So why have the starts dropped?

Over half of the Apprenticeship starts are now in employers that pay the Levy.  We don’t know what that figure was before but the best estimate was 40% so it may be that starts in Levy payers have not dropped.  Many employers took the opportunity to review their programmes and their numbers will pick up.  We can see that happening already.  The reduction in numbers may well have been in the employers that do not pay the Levy which is not surprising because the Government have run a very poor procurement exercise for those providers which has caused an inevitable disruption in starts.  A number of recommendations have been made by the sector to improve these start numbers but allowing good providers to expand their provision will be key.

So, what do we need to make the Apprenticeship Levy work.  A stable system where employers and training companies can plan with no fundamental changes to the system.  That does not mean there will not further improvements we can make such as allowing Levy payers to spend 10% of their funds with their supply chain which may be introduced this April.   We must also drive forward the introduction of the new Apprenticeship Standards but again we must allow employers more flexibility to deliver qualifications as part of the process if they want them.  If there is one area that I think we need to review it is that of how we encourage employers to recruit more young people to the programme.  It is great that an employer can train both their existing and new recruits through Apprenticeships but we need to look at the incentives to recruit young people as there are additional costs to make that happen.

So with a responsive Government and engaged employers, the Apprenticeship Levy will work but that will only happen through effective partnerships between employers and responsive training providers.  I can see that 3aaa is already responding to that challenge.”

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