The chief secretary to the treasury said that she wants to look at education budgets when she oversees this autumn’s spending review. But before anyone in our part of the sector gets too excited, the minister insisted that in terms of a child’s age, the younger the better as far as impactful expenditure is concerned. And with Brexit delayed, uncertainty over the economy and the public finances will continue which means that providers can’t become too hopeful about possible relief for the growing pressures on the apprenticeship levy.

FE Week’s reports on the IfATE forecast of a growing levy overspend have since been followed by the NAO warning about the long-term sustainability of apprenticeship programme. The Institute projected a massive budget deficit of £1.5bn by the end of 2021-22 which ensured that the matter was raised by MPs when the Public Accounts Committee quizzed government officials about the NAO’s recent findings. And no surprise, the DfE’s permanent secretary regularly referred to hard choices to be made throughout the hearing.

It’s not a problem that can be ignored especially when new apprenticeship starts in non-levy paying SMEs are being strictly rationed at all levels because of the budgetary difficulties. AELP was already on the case about this at the end of last summer as our September 2018 submission on the next phase of programme reforms testifies. But the worsening position has forced the AELP board to go back and revisit what we proposed then. In a more benign climate, we could push harder for the government to enlarge the apprenticeship budget by increasing the £2.2bn receipts from the levy after bringing more employers within its scope. Ministers might well decide that this is the way forward but it is sensible to consider other options within the current budget as we have done in our latest proposals which I have discussed with Anne Milton.

Let’s be absolutely clear; AELP wants a thriving apprenticeship programme for all levels, all ages and all sectors. Robert Halfon is also totally right in saying the degree apprenticeships have added considerable prestige to the programme and we would be delighted if half of HE provision was eventually made up of them. But as the calculations in our statement show, the growing number of starts at levels 6 and 7 cannot be sustained by the levy alone. Instead different financial models have to be found for the highest level apprenticeships and the Augar review may put forward ideas on this. Unless tough choices are made, we are in serious danger of losing the other things that we have traditionally valued so much in the programme.

With new level 2 starts less than half than their pre-levy number, the availability of intermediate level apprenticeships for young people in SMEs across the country is the biggest problem we face. Starts for young people at all levels have fallen by nearly a quarter. In the light of these alarming developments, we cannot claim that apprenticeships offer a ladder of opportunity if the bottom rungs are being chopped away.

The government seems to have lost sight of the importance of SMEs offering apprenticeships when they have been the bedrock of the programme over the last two decades. They are the employers who have consistently been making a positive impact on social mobility and productivity by investing in fantastic apprenticeship opportunities at all levels of the programme, especially for young people. The AELP proposals, which are out there for debate and discussion, would restore a proper balance to what the priorities of the programme should be. Therefore in addition to ending levy funding for level 6 and 7 apprenticeships, we propose full funding by government of level 2 and 3 apprenticeships.

A few eyebrows are being raised throughout AELP’s broad membership about these proposals. But having been given a powerful kickstart by the levy, we believe that the popularity of degree apprenticeships will continue to grow as these apprentices will still earn while learning, making them years ahead of their full time HE peers when they receive their degree and apprenticeship.

 

Mark Dawe is chief executive of Association of Employment and Learning Providers (an extract from this article appeared in FE Week)

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