Levying the playing field: apprenticeships and universities

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The government’s Apprenticeship Levy policy is steaming ahead in the face of significant opposition.

The levy is a charge of half of one per cent of an employer’s’ payroll when it has a wage bill over £250k in a month, equating to roughly two per cent of businesses. Smaller employers will have apprenticeships subsidised at a rate of ninety per cent and employers with fewer than fifty staff members will be able to train 16 to 18 year-olds at no cost to the business. With implementation due in May 2017, there isn’t a great deal of time for employers and training providers to get their heads around the finer details if they haven’t thus far. And, by the way, it’s all the more complicated for anyone operating across the UK’s four nations.

When the Department for Education released its latest batch of information on the policy, some big hitters came out to decry the plans as under-baked and over-hasty. The Confederation of British Industry has called for its implementation to be delayed, claiming that training will be worse under the new regime rather than better. And the Chartered Institute of Personnel and Development is also highly critical of the proposals, branding the approach ‘irresponsible’.

The gloomy predictions reminded me of some on-the-job training I once endured. As a sixth former, I had a Saturday job selling electrical goods in a high-street store. I was packed off to the Leeds store one gloomy day to sit through presentations on developing my sales skills. In what was otherwise an unremarkable session, I remember a slide showing the text ‘opportunityisnowhere’, in which it was pointed out to us that this could be read as ‘opportunity is nowhere’, or ‘opportunity is now here’. A trite point, perhaps, but I can’t help but feel that the levy is precisely in this state: there are lots of things about it which make it likely to fail as a policy, but equally there is significant opportunity, particularly for universities.

The idea of higher level work-oriented education is hardly revolutionary. Higher National Certificates (level four) and Diplomas (level five) have a vocational focus, and the dovetailing of academic and learning for work is integral to Foundation Degrees (to level five). But neither of these has become any sort of gold standard in the overall marketplace of education. You can read elsewhere on Wonkhe about the decline of the Foundation Degree.

However, the sums of money involved make redoubling effort in this area an attractive prospect for universities. DfE’s apprenticeship annual budget should reach £2.5bn by 2020, and the levy should be at least that in 2017-18 if the government’s figures are accurate. Perhaps, this time, there will be a golden age of apprenticeships for which degree standard – levels four, five and six, and in some cases up to master’s level seven – will become desirable for students, for employers, and for providers. And universities could be there to take a chunk of £5bn in spending.

What are universities developing for the apprenticeship market?

  • The Open University is working with professional services firm KPMG to combine workforce analysis and training provision. Initially, three higher apprenticeships are on offer, in healthcare, management and digital solutions. With scope to deliver significant content online, and the tried-and-tested distance learning approach, the OU’s model could be a neat solution for some employers looking to outsource this training provision, particularly those larger businesses operating nationally where otherwise they might need to find a large number of local providers.
  • Birkbeck, University of London, is also entering the fray with three offerings for the coming year. Degree apprenticeships will be available in Digital Industries and management. As with the OU, it’s straightforward to see the extension of the existing business model – in this case evening classroom education – to new areas. And London should have enough employers able to access the offering.

As with undergraduate degrees, the apprenticeship scheme comes with fee caps so there are limits to the income generation from these programmes. But with the potential for large-scale delivery, and for repurposing existing activities, there is a probable upside for these institutions. The levy could be just the boost needed to make up for the decline in part-time education.

Opportunity knocks

Universities and colleges will also need to think carefully about their own staff and the potential for deploying their levy funds. Just over half of the total money raised by universities is spent on staff. Including on-costs, that amounted to over £17bn in 2014-15 so the levy spend from the sector is going to be significant. DfE estimates that there are 2,590 employers in the education sector liable for the levy with a total spend of £385m each year.

A major concern is that employers will simply divert their existing staff development budgets towards paying the levy. That will reduce the net gain intended by the scheme, but will probably adjust the distribution of who gets the training opportunities: it’ll be easier to fund anything with an official apprenticeship designation. Let’s hope that universities as employers can be less cynical than this and take up the opportunity to invigorate staff training, particularly in cases where they can recycle the levy through their own educational programmes.

The aims of the government’s policy – to provide high-quality skilled employees – is on the face of it a Good Thing. But, as ever, the quality of implementation is crucial. We will have to see which way the political wind blows, and whether the calls for delay of implementation are successful. For universities, particularly those which can fit apprenticeships most easily alongside their existing portfolios, opportunity is now here.

The government’s consultation on its latest update to the levy scheme is available here. The deadline is 5th September. Further guidance has been promised in October and December 2016.

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