Apprenticeships and their impact on FE

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Since May 2010, there have been almost 4.9 million apprenticeship starts and almost 2.5 million since May 2015, according to government figures. This is an incredible uptake and underlines the government’s commitment to upskilling the population while providing a viable alternative to the traditional classroom environment.

A number of recommendations were made in the All-Party Parliamentary Group (APPG) on Apprenticeships’ 2020-21 annual report published in July 2021 could have positive implications for the further education (FE) sector over the short term, while others looked further in the future.

In terms of the former, one recommendation implored HM Treasury to raise the minimum wage of apprentices in line with the National Minimum Wage. The APPG also stated that the Department for Work and Pensions should extend Kickstart schemes into 2022 and the Department for Education (DfE) should provide bespoke guidance to providers.

As for the latter, the DfE was urged by the APPG to “establish a government-run advice and one-stop shop for small businesses providing support to take on an apprentice and assisting them with the process”.

STEM subjects

The main aim of FE apprenticeships is to direct school leavers to jobs in crucial areas, helping them upskill, while being paid. This ‘earn as you learn’ route is proving popular in so-called STEM (Science, Technology, Engineering and Manufacturing) subjects with these accounting for 25.1% (63,600) of new apprenticeship starts.

As has been reported extensively, the UK economy loses around £1.5bn per year due to STEM skills shortages, highlighting the importance of encouraging students to take FE apprenticeships in these areas.

Increases in the available apprenticeship jobs and reductions in the number of apprentices are two of the reasons why the government decided that there needed to be a far greater investment in skills and knowledge acquisition

programmes across the UK workplace. The new apprenticeship scheme is an attempt to close the skills gap.

How does the Apprenticeship Levy work?

Introduced in April 2016, the Apprenticeship Levy seeks to improve funding for the vital apprenticeship sector, creating valuable investment to close the skills gap in key industries and increasing uptake of apprenticeship jobs.

By 2019-20, the funding available for investment in apprenticeships in England rose to over £2.5 billion. This is double that spent in 2010-11 in cash terms, although new starts from the Covid-19 dominated period between August 2020 to April 2021 stood at 253,100, representing a year-on-year drop of 6.9% on a year previous.

All employers are encouraged by the government to set up an account in order to take advantage of the benefits offered by the apprenticeship scheme.

The fund is key to encouraging and enabling a business to hire apprentices. As inexperienced but well-educated workers, apprentices have the potential to add value to a business, after on the job training.

The income needed to allow a business to spend time with this employee, rather than hiring someone who can already do the job, has to be made up. And it is, by the Apprenticeship Levy.

The government has responded to criticism of the Levy and the subsequent drop in the number of apprenticeship starts since its introduction by stating the quality of apprenticeships has improved since the reforms have been put in place. This new calibre of apprenticeships could very well lead to an increased demand for them in the future.

Who pays the Apprenticeship Levy?

The Education and Skills Funding Agency (ESFA) invited all employers, in both the private and public sectors, to use the apprenticeship service from January 2020. For employers with a pay bill of less than £3m that do not pay the Apprenticeship Levy, use of the service is optional. Those companies with an annual pay bill over £3m are liable to pay the Apprenticeship Levy. Currently, just 2% of employers pay the Apprenticeship Levy.

FE students are the ideal apprentice candidates for the levy.

The Apprenticeship Levy is a good chance for Further Education students, aged from 16-18, to get jobs within highly reputable companies and to learn while they earn money.

Government guidance states that “the apprenticeship funding system includes 30 funding bands, with the upper limit of those bands ranging from £1,500 to £27,000”.

The upper limit of each funding band is the maximum amount of funds a levy-paying employer can use towards an individual apprenticeship from their apprenticeship account.

As of July 2020, “when employers take on a 16-18-year-old on an apprenticeship standard, they receive £1,000 to help meet the extra costs associated with this”.

What are the advantages of the Apprenticeship Levy?

Apprenticeship schemes are beneficial to companies and apprentices alike, as employers can benefit from the expertise that has lacked within the company and apprentices learn, by getting real-world experience, but also life skills for the future.

A detailed report into apprenticeships undertaken on behalf of the Department of Education showed that 86% of apprentices were satisfied with their apprenticeship. Degree apprentices were found to be the most likely to be satisfied (94%).