The government lied in both its 2015 and 2017 manifestos. It committed to “create three million apprenticeships for young people by 2020”, when in truth ‘young people’ are not being prioritised.
In reality, apprenticeship starts of all ages count towards the target, and so far this year a record 47% of starts are adults aged 25 and over. In fact, since counting towards the target began in 2015, more than 10,000 apprenticeship starts have been for people aged 60 and over. Yes, you read that right, aged 60 and over.
The number of adult apprentices has rapidly grown to around 230,000 starts per year, and this is expected to rise further. But this isn’t the place to debate the merits of adult apprenticeships, something introduced 10 years ago.
At question here are opportunities for 16 - 18 year-olds, which for over five years have remained fairly static at around 120,000 (25%) of annual starts. The government won’t admit it, but the ‘employer-led’ funding reforms introduced in May remove the need to offer places to 16 - 18 year-olds.
Official DfE starts data for May won’t be published until October, but all the evidence suggests there will be a sharp fall in the number of young people given the opportunity to take up apprenticeships. So, as someone who understands how the apprenticeship market responds to funding reform, this blog will serve today as a warning and in future as an ‘I told you so’.
There are four main reasons why so many apprenticeship opportunities for the young, particularly those aged 16 - 18, will have disappeared from May. Also included are some suggested solutions.
- For starts from May, apprenticeship providers can for the first time switch all their 16 - 18 funding to adults. This is because when working with large employers there is no requirement to use any of their levy credit for 16 – 18 year-olds. Whereas before May, providers were allocated around £700 million, half the total apprenticeship budget, which was ring-fenced to 16 - 18s. The removal of the ring-fence now means the government doesn’t have the power to ensure it is ‘creating’ any places for young people, whatever its manifesto says. The switch to adults will happen in part because existing employees are lower risk and less costly, plus even adults with degrees can be recruited from May. Part of the solution would be to return to a form of ring-fencing where particularly large employers must use some of their levy credit to recruit 16 - 18 year-olds.
- For starts from May, funding can’t be used to cover the cost of 16 - 18-year-old recruitment. It was an established norm prior to May that providers would pay for all the recruitment costs, including advertising a vacancy, shortlisting, interviewing and assessment. This was possible because the 16 - 18 funding rates in particular were relatively high. From May, recruitment is not only an ineligible cost, framework rates have typically fallen for 16 - 18 apprentices by 30%. As a result, rather than pass the recruitment cost on to the employer, providers are likely to see employed adults (who come with no recruitment costs) as a more attractive market. Part of the solution could be to make recruitment an eligible cost again, alongside a financial incentive for job creation through a competitive recruitment process.
- For starts from May, all but the smallest employers will for the first time pay for 16 – 18 year-olds. Even the smallest employers will struggle to access the funding owing to very limited non-levy allocations. If you were to pick one big mistake in the funding reforms, it was to make employers pay for 16 - 18 year-olds. As reported in FE Week, one very large engineering apprenticeship provider - after speaking to their employer customers - is predicting a two-thirds reduction in demand for 16 – 18 year-olds from May. Part of the solution could be to scrap employer contributions for 16 - 18 year-olds completely. And as the failed introduction of advanced learning loans for adult apprenticeships showed, this would not be the first U-turn on apprenticeship fees.
- For starts from May, the incentives to recruit 16 – 18 year-olds are insufficient and in many cases lower than before. Beforehand, employers recruiting an apprentice onto a standard would receive a cash incentive ranging from £600 to £5,400 (depending on the price for the standard) as well as a completion incentive from £500 to £2,700. The completion incentive has been ditched and the 16 - 18 incentive has been slashed to a flat £1,000 regardless of the framework or standard, which would not even cover 20% of the £3.50 minimum wage. On a two-year apprenticeship, it would pay for less than 10% of the wage. The apprenticeship grant for employers, which typically provides £1,500 per young apprentice at a small employer, is also being scrapped. There are similar provider incentives (some temporary) but even taking account of these, the funding for frameworks has typically fallen by 30%. Charging employers for an apprentice with one hand and paying them an incentive for the same apprentice with the other is plainly bonkers, and this situation should be a priority to sort.
For the reasons above, opportunities for the young to take up an apprenticeship will dramatically reduce.
When the figures in October confirm my prediction, the response from government may be to rely on T-level reform as a solution; something that, at best, won’t be fully operational until the end of 2022.
Robert Halfon is no longer the skills minister, so despite his repeated references to “the ladder of opportunity” he can now only watch from the side-lines, with the new skills minister, Anne Milton, now in charge.
It’s up to you now Mrs Milton. Are you serious about the manifesto commitment to the young or happy to peddle a lie and let all the opportunities go to adults?