When George Osborne announced in 2015 that he planned to introduce an apprenticeship levy on all large businesses, he promised that firms that offered apprenticeships would “get more back than they put in” and said that Britain’s “great businesses” would train up the next generation.
Although the emphasis was primarily on volume — the government had made a manifesto commitment to create three million apprenticeships by 2020 — the introduction of the new policy was awash with rhetoric about how the levy would put apprenticeships on an equal footing to a university degree. Robert Halfon, the former minister of state for education, said: “I will be getting the message out there that top apprenticeships are as good as top university degrees.” There is little evidence, so far, that this is working. The government was criticised for the drop in the number of apprenticeships created in the months after the levy was introduced in April last year. The figures for the 2016-17 academic year, however, show that overall apprenticeship recruitment was almost identical to the previous year.
Few of these new starts were higher or degree apprenticeships. Some 36,600 out of 494,000 apprenticeships created in the year to July 2017 were higher or degree apprenticeships and 2,100 of these places were for 18-year-old school-leavers, compared with more than 26,000 places that went to apprentices aged 25 or over.
It’s not hard to see why employers may not be rushing to create more apprenticeships at this level. The new system requires every organisation with a wage bill of £3 million or more to pay a 0.5 per cent levy on their payroll. This can be reclaimed by employers to help to pay for apprenticeships. The levy fund, however, can only be used to cover the formal training costs associated with the apprenticeship.
Although an organisation may be able to reclaim up to £27,000 for the training element of a degree apprenticeship, they will be liable to pay their apprentices’ salaries plus recruitment and mentoring costs. It’s not unusual for employers to pay upwards of £100,000 in “extra” costs, thereby reclaiming the levy they’ve paid.
Advertisement
For most finance directors, this sounds very much like paying £4 to save £1 and many have concluded that it may be better to pay the levy in full, or invest in cheaper lower-level apprenticeships.
The other major barrier to employers offering more places is a lack of different types of apprenticeship. Since the ten standards were launched in September 2015 the list of roles has grown to about 30 and not all have begun recruiting.
The government may hit its target of three million new apprenticeships by 2020 but, even with the levy, the new system relies on employers making a significant additional investment to give apprentices a genuine alternative to university.
Martin Birchall is managing director of High Fliers Research
To produce The Times Guide to Higher & Degree Apprenticeships the independent market research company High Fliers Research contacted more than 250 employers of school-leavers, graduates and young professionals during December 2017.
The research identified how many higher or degree apprentices each organisation recruited in the previous 12 months on courses that lead to level 4 qualifications or above.
Advertisement
Employers who offer training schemes outside the apprenticeship frameworks: by sponsoring places on existing undergraduate courses; providing their own degree courses at university; or through programmes leading to professional qualifications were included.
Advanced or intermediate apprenticeships aimed at 16-plus school-leavers, which lead to level 2 or 3 qualifications, have not been included. The 50 organisations that recruited the most sixth-form school-leavers for higher or degree apprenticeships, or comparable schemes, took on more than 4,600 trainees in 2017.