Well, it seems that it’s going to happen. I’m not trying to make any political points when I say that I was sceptical when it was first announced. Measures which hit employers in the pocket – which this surely will - have a tendency of entering that wonderful Westminster black hole known as the U-turn.
Quite what the Apprenticeship Levy will look like is still a matter of some dispute. We do know that the levy is going to initially set at 0.5% of payrolls over £3m. Employers who pay the levy and use training are promised a top up to their digital accounts, meaning that they should expect to get more out of the system than they are putting in.
By my calculations, a firm with a payroll of around £5m will be paying an extra £10,000 in tax.
So let me set out my thinking.
Relevant training which addresses a need is a good thing. Evidence clearly shows this. It benefits the employer, the individual, families, society and UK plc.
However, not all training is relevant or high quality or needed. And this is where I get myself into trouble. I’m an advocate of high quality, relevant training. I’m not an apologist for unnecessary, box ticking courses – how I enjoyed and miss those debates about Driver CPC!
And this is where I genuinely worry about the Apprenticeship Levy.
Operationally, I admit to having concerns. Figures banded around Whitehall suggest that 25% of the £3bn raised by the scheme will be spent on administration. That seems a ridiculously high amount and not in keeping with the drive to efficiency evident across the rest of government. I’m also nervous about who is actually going to administer the scheme. Following the Autumn Statement, BIS – the home of skills, has shrunk yet further. DfT – well does it exist anymore? The logistics industry's sector skills council has closed. The Skills Funding Agency offices resemble the Marie Celeste. Who is actually going to run the scheme? Please don’t let it be the National Apprenticeship Service! This is going to be a massive project, please let there be genuine expertise running it.
But at a more strategic level, here are my criticisms.
I believe in demand-led skills. Let employers and individuals articulate what they want, let them drive the agenda, then let colleges and providers respond accordingly. This is how the market works successfully elsewhere. Government might then choose to provide funding, or loans, or nothing whatsoever. At the level of principle – irrelevant – but at least we will have qualifications which fulfil my criteria. High quality. Relevant. Demanded.
What the government is in danger of doing is creating something akin to the following.
An employer gets vouchers to spend on apprenticeships. Government even adds to their contribution, so the employer can walk into the (metaphorical) shop feeling quite rich. After all, for many of them, and I guess the idea of the policy, they will be about to spend more on apprenticeships than they have done in the past.
However, having entered the 'apprenticeshop' their enthusiasm will quickly wane. They discover to their chagrin, that there is nothing they want to buy. Government retains control over apprenticeship frameworks. If they don’t want to make it, you can’t buy it – even if you want a thousand of them. For instance, in the logistics sector employers want an LGV driver apprenticeship. Government has said no. Oh, and remember that government also sets the price of the apprenticeship!
So an employer can have this lovely thick ration book. But there might be nothing you want to buy. And just because you want to buy it, doesn’t mean a thing.
The computer says no!
Remember, you can’t spend your voucher anywhere else. So what are you going to do? Put it back in a drawer and forget about it? Buy something you don’t really need or want?
Either way, how will your business benefit?
We need to get away from the idea that delivering more training courses is a metric of success. Three million more apprentices seems like a great idea. But it’s a great notion because, if done correctly, it will lead to efficiency and productivity across the country. If done badly, we will end up with frustrated employers, a broken apprenticeship brand, and a glut of unemployed hairdressers.
Ross Moloney, MD, FireDog Research, former CEO Skills for Logistics