Higher hopes (part 2)
In the second of a two-part blog, Richard Guy sets out how Government might adopt a better approach to managing spend on higher and degree apprenticeships.
The recent Autumn Statement contained no announcements about the future of funding for apprenticeships at levels 6 and 7, providers and employers should expect this topic to re-emerge because – as noted in my previous blog- both major parties are likely to find ways to constrain access to apprenticeship funding in future.
There are certainly problems in funding some higher-level (and other) standards from a Treasury perspective. Higher level apprenticeships are generally expensive and adding a degree to a standard further increases cost. And it’s true that the state already invests significant amounts into degree education through the student loans system therefore it may seem wrong to offer another way of doing this at the expense of the tax (levy!) payer.
However, the problem with this argument is that the current HE system does not necessarily supply skills which readily convert into economic benefit. Only a minority of degree programmes are directly linked to professions and even where they are, they can sometimes lack an effective method of ensuring progression by students into a job with training that leads to occupational competence in a profession. Apprenticeship funding could be used to provide a cost-effective, post-degree function for designated professions consisting mainly of on-the-job training.
For degree apprenticeships one problem is that some in the HE sector (with some employers) have developed standards designed primarily to “get a degree” rather than achieve occupational competence in a level 6/7 occupation. Perhaps the best example of this is the standard for Police Constable, a level 3 occupation which magically became level 6, simply because of a decision to incorporate a degree into the programme: The occupation actually remains level 3. If the employers want a degree surely they should be paying the excess costs. By contrast, the solicitor's apprenticeship standard (a genuine level 7 occupation) does not even require a degree and provides a clear alternative route to qualification as a solicitor. It is the occupation, its level and the training necessary to achieve occupational competence which should drive the content of standards, not the level or content of any qualification.
Management standards are a problem in a different way (at all levels) because, more often than not, the apprentice is already in post as a manager and already operating as if they are occupationally competent. For more senior managers this is even more problematic because the apprentices are usually fully occupationally competent as managers at a lower level. In the current system, there should arguably be larger reductions in funding for prior learning here, but generally the reductions are modest. On the other hand, the management standards tend to cost a good deal less than other higher apprenticeships.
In the short term, there are a few ways in which Treasury might proceed to restrict spending:
Cut out some high-level apprenticeship standards altogether.
Introduce co-funding by learner and the levy. This would mean apprentices paying part of the cost of higher-level apprenticeships and presumably accessing student loans to do so.
Introduce co-funding by the employer and levy, effectively “employer pays twice”! This was proposed recently in the IFS report “Investment in Training and Skills”. The IFS proposed this on the basis that it used to be the case (before the levy was introduced) that adult apprentices were funded at 50% of the full funding rate, which was available only for 16- to 18-year-olds. However, in practice the old system did not require any contribution from employers because providers were able to price most apprenticeship frameworks (with their reduced requirement for off-the-job training) at a level that did not require employer investment. Training 16- to 18-year-olds in any given apprenticeship will always cost more than for adults. Young people start from absolute scratch and “maturation” is part of the training. It is therefore not clear what the “full price” was in the old system.
Crying out for a strategy
If Treasury moves in this direction short term to save some money here and there as the apprenticeship budget comes under more pressure, then we will end up with layer upon layer of complex funding policy based on cutting those apprenticeships some people or politicians do not like the look of.
There is a fundamental set of criteria which define what an apprenticeship is, which may perhaps explain why the public and politicians tend to see a problem with some high level (and other) apprenticeships. The common perception of the word “apprenticeship” relates to a person:
Training for the first time to become occupationally competent in a demanding occupation. Many higher-level apprenticeships do or can meet this criterion.
Entering training from scratch and becoming fully trained in the whole occupation. Degree apprenticeships can meet this criterion especially training for one of the level 7 professions with a degree which is occupationally focussed. This criterion can also be met for management training when it is concerned with entry into an employer’s initial management training programme (eg Aldi). However, this criterion would not be met for very high-level management, nor for people already in post as managers. It would also not be met for some apprenticeship standards when they are used as “add-ons” to a person’s main role, such as the business improvement standards.
Training mainly in the workplace with off-the-job training supporting the learning. This criterion could be met by many high-level apprenticeships but not for those degree apprenticeships where the degree is adopted as an end in itself.
Entering training at a relatively young age. This is a difficult area because no-one wants to block or even discourage an adult from changing careers later in life. In reality, entry by older people is perfectly acceptable provided the norm and the design is about entry by younger people.
Why not adopt a set of criteria similar to these in order to determine now and for the long term, what is an apprenticeship and what is not?
The apprenticeship budget is derived from the Apprenticeship Levy and although the Treasury regards this as a simple, non-hypothecated tax, its name implies (and employers and people at large feel understandably) that it is a levy for the purpose of delivering apprenticeships, or at least some sort of employer-based training. For most of us the argument for cutting some higher-level apprenticeships should not be about maximising the tax return for the Treasury; it should be about maximising skills supply to the economy via apprenticeships and perhaps other employer-led skills budgets.
So, if the problem for Treasury is that some higher-level apprenticeships should not be funded because there are insufficient apprenticeships at lower levels, then surely the primary consideration is how we can grow apprenticeship volumes for skilled occupations at levels 3, 4 and 5, especially for the initial training of younger people? If we have more apprenticeships for these skills shortage occupations than we can fund, then it would be reasonable to look for reductions in the cost of higher-level occupations.
Ideas for Action
Therefore, to deal with the negative aspects of higher-level apprenticeships listed above, provide a framework for future funding and at the same time grow apprenticeships at levels 3, 4 and 5 to the right volume, we could take these steps:
Research sector by sector to determine what apprenticeship volumes (and at what level) our economy needs. This is an essential first step.
Develop a strategy to deliver the volumes/levels needed. If this could be located in a wider skills strategy, then it could take account of skills supply from other sources.
Incentivise apprenticeships which begin with a vacancy (or soon after) or genuine job move, as opposed to apprenticeships which are about the workforce development of existing staff (especially existing staff in a related occupation). This could be done either by pricing the former up significantly and the latter down, or via eligibility rules, or both. Apprenticeships for young people could also be incentivised, as used to happen (not lease because the cost of delivering an apprenticeship for a new and/or young recruit is much higher than for existing staff).
Remove apprenticeship standards which do not meet criteria a) to d) above and/or fund them only in circumstances where they meet these tests. There is nothing wrong at all with this training but while it is called “apprenticeship” it has to be delivered with all of the additional features of apprenticeships, costing more than necessary. This training could be shorter in duration, lower cost and (if within skills designated as important to sectors and growth) moved into another programme co-funded by employers or via levy funds (as proposed by Labour).
Is it not about time that decisions on important skills issues were taken within a coherent framework designed to deliver the skills which the economy needs? We have seen seven or eight years of careful, rational, coherent and consistent development of occupational standards, quality apprenticeships, the levy, T Levels and Higher Technical Qualifications (HTQs). We are actually getting somewhere after thirty to forty years of to-ing and fro-ing on skills policy.
Now all of a sudden, we see a headline-grabbing announcement of the “Advanced British Standard” and now a potentially piecemeal and approach to apprenticeship funding. Let us hope we are not reverting to type on skills.