When the Levy Breaks — Interview with Mark Dawe

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Is the government’s apprenticeship policy working? And why is there a fall in new apprenticeship starts but a potential levy overspend? MWS’s Deborah Talbot talks apprenticeship policy and funding with Mark Dawe, CEO of the Association of Employment and Learning Providers (AELP).

Deborah:

Figures reported in FE Week at the end of last year show that there’s been an overall drop in new starts but a massive rise in management apprenticeships, leading to a potential levy overspend. What’s your take on those trends?

Mark:

I think for the government there’s an element of: “Right, we’ve got the levy. Let the large employers start apprenticeships in whatever they want. Let’s get this moving.” Also, we’re moving from a system that was predominately L2 and L3 – no one was allowed to deliver anything else – to L4 to L7 as well.

The levy payers were taking their time to work out what they wanted and how to link it to their training and development plans. We also believe policy has worked against non-levy payers who were delivering about two-thirds of all apprenticeships before the levy came in. So, the combination of the two has had an adverse effect on starts.

Then what we’re seeing is the use of the levy for management training, particularly at degree level. If you think a management apprentice costs £27k and a care worker £3k, that’s one apprentice replacing nine. You can see how money is being used up while the numbers are plummeting.

The big question is where government money should be going? I have no issue with any apprenticeship, whether it’s L2 or L7. It’s a very clear curriculum through the different job roles that will support both productivity and social mobility.

But should the government be sponsoring people doing an MBA who are already in a good job and there’s going to be an enormous productivity benefit from it, or should they be supporting those who have been let down by school who need a first step into work and the training?

Deborah:

Does it have to be one or the other?

Mark:

I think when there’s a scarce resource, the government has to decide how to prioritise. We would argue that more students at university should be doing degree apprenticeships. But if we’re going to see that shift, then of the £10 billion spent on HE every year, some needs to go into degree apprenticeships. How do we get our hands on that? One idea is that funding could be split between the levy and a student loan.

Deborah:

Is there any evidence on how apprenticeship trends are affecting social mobility?

Mark:

There is some data. For example, degree apprenticeship students are less likely to include those who had free school meals. And inevitably, those individuals who have had a bad time at school, who have struggled and not got support in their school career are most likely to go into lower level apprenticeships, but last year they faced a 38% drop in apprenticeship opportunities at level 2 compared with the year before.

Deborah:

What should the ESFA be doing in response to these trends?

Mark:

Our big concerns are this. We think that there should be no employer contribution for those under 25s, in SMEs, at L2 and L3. We also think that there should be much more flexibility around the off the job training. At the lower levels, where you have people paid on an hourly basis, on the job training is far more relevant than off the job. We also need flexibility, so employers aren’t scared off by the cost.

There’s a real issue about functional skills – English, maths and IT – which a lot of lower-level apprentices don’t have. These are under-funded currently, and this immediately causes bias against those individuals.

In the SME sector, off the job training and employer contributions put a lot of businesses off, but now the ESFA aren’t dishing out any more money. We’re about to launch an advertising campaign in January to encourage more SMEs into apprenticeships, who will then go to their provider and their provider will say, “sorry, I haven’t got any more money.”

That is really frustrating, because the policy is really good, and the standards are excellent. It’s just where we are at the moment is causing real damage.

Deborah:

Where does this crisis leave FE colleges, who have been negatively impacted by funding cuts, and universities, who have recently benefitted?

Mark:

On HE, I think the degree apprenticeships will have a significant impact on social mobility once they settle in, and that’s really good. It comes back to where does the money come from, as I’ve already said.

In the FE world, well the first thing is that 75% of L2/3s were delivered by independent training advisors anyway. The colleges have been encouraged to get more apprenticeships because it’s the only place there’s extra money. That would involve changing the way they work with employers, which some have done but many haven’t. Therefore, the stall in numbers is affecting the colleges disproportionately because they’re losing the market anyway.

But it’s not really about the institutions. We need more apprenticeships because there’s been a skills shortage for the last few years anyway. And with Brexit, in whatever form, it’s not going to get any better. Most companies are now talking about how it’s to get financial capital to support their business – it’s the human capital that’s the real challenge now.

Deborah:

If the government thought this was important, wouldn’t there be more money floating around the system for it?

Mark:

The government are saying the right things, and I think they do recognise how important it is. There are two key issues they are struggling with.

One is that when the policy was launched, it was in the Department of Business, Innovation and Skills (BIS). The focus was on employers’ productivity and letting employers do what they wanted. Social mobility and the individual were put into the second tier. With the shift of the policy to the Department for Education (DfE), there’s a recognition that both are important. But the way it has been implemented works against social mobility. What’s preventing them from acting and changing things? Is it the civil servants? Is it the Minister? Is it the Treasury? Is it Number 10? It’s hard to understand where the resistance is, given they want to see these changes happen.

The second is there’s not a lot of money around, and there are lots of demands on it. The question is, is it being directed to the right place? Should HE contribute more? Should there be a higher employer contribution at the higher levels when they are training existing staff? The government needs to decide what its priorities are and then incentivise them through funding, whether that is at L2, a national drive for more STEM L4s or supporting women in construction, for example.

Having said that, the easiest thing would be to put up the levy. And we wouldn’t resist that, but I think others might.

Deborah:

What’s your final message?

Mark:

That the apprenticeship system is great, but we need to revisit where things have gone wrong or just or have not been right from the start and make those adjustments. And we need to make them in a very transparent, open way, and then work out where the money goes and how we make this fundable.

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