3 Benefits of apprenticeships |
benefits of an apprenticeship
35. Drawing on its annual survey of employers and
apprentices, the DfE summarised the benefits of undertaking an
apprenticeship or employing an apprentice. For employers:
84% of employers surveyed were satisfied with
apprenticeships and 60% were highly satisfied. When asked about
the benefits of the programme:
of employers said apprenticeships improved their product or service
said apprenticeships improved their productivity; and
· 6% of
employers report benefits to their business of hiring an apprentice.
Evidence suggests that employers recoup their
investment within one to two years, if they retain their apprentice.
For apprentices, looking at the impact one to three
years after starting:
said the skills and knowledge gained as part of the apprenticeship
could be used across a range of jobs and industries;
said their career prospects had improved; and
said their literacy had improved, and the same proportion said
the same about their numeracy.
36. Many other submissions highlighted potential
benefits for employers and apprentices. BT described apprenticeships
as providing a loyal workforce that could be trained to meet forecast
skills gaps, while
EEF suggested that employing apprentices would give businesses
a competitive edge:
UK manufacturers can no longer hope to compete
on price alone; they need employees with the higher level skills
which can be acquired from apprenticeships.
The University and College Union emphasised that
employers could recoup their investment in an apprentice within
37. We received a number of submissions about the
impact of apprenticeships on salary. The DfE's figures, looking
at apprentices of all ages, show an increase in lifetime earnings
of between £48,000 and £74,000 for those who complete
a level 2 apprenticeship, and between £77,000 and £117,000
for those who complete a level 3 scheme.
City and Guilds provided different figures, drawing on their own
research, showing an average increase in salary of £1,524
per year for level 2 apprenticeships and £1,634 per year
for level 3. In each
case the baseline figure was average earnings for those with a
level 2 or level 3 qualification who have not competed an apprenticeship.
38. Government funding for apprenticeships for 2013/14,
provided through the Skills Funding Agency, totalled £750m
for 16 to 18 year-olds and £712m for those aged 19 and over.
Funding for 2012/13 was £860m and £750m respectively.
The UK is one of the few countries, alongside Canada and Australia,
where Government invests in apprenticeships for people aged over
26. The data we have seen on benefits to salary for apprentices
covers all apprentices, as opposed to those aged 16 to 19 who
are the focus of our inquiry. At present it is not possible to
determine whether Government funding would deliver greater benefits
if investment focused only on younger apprentices.
39. Another way of looking at the benefits of apprenticeships
is through their value for money to Government. Many of the submissions
to our inquiry referred
to research by the National Audit Office in 2012 which suggested
returns of £18 per pound of government investment.
This was calculated by estimating the net value to the economy
(comparing future benefits to the economy against future costs)
against the amount of public funding invested.
Quantifying benefits of different
40. There is clear data to show that when considering
all apprenticeships, completion has a positive impact on earnings,
but at present, the data is simply not available to allow for
a comparative assessment of different frameworks. David Massey
from UKCES suggested to us that the overall picture in terms of
wage gains for apprentices did not tell the whole story:
Earnings overall have gone up in all the BIS
evaluation evidence. On average, earnings do increase, especially
for younger apprentices. But I suspect that if we had the data
at a granular level so that we could look at individual frameworks,
we would find somewhere that earnings increases are fairly marginal
if not at all. Then we would be looking again and saying, "Does
this achieve the outcomes we want it to achieve?" but until
we have got those data, we cannot make that judgment.
41. Matched administrative data is being collected
by HMRC and BIS.
This may provide a better picture of what happens to apprentices
once they have completed an apprenticeship, but if it does not
allow for a framework to framework comparison, it will be difficult
to determine whether an individual apprenticeship has had the
sort of positive impact that should be necessary to qualify for
Government support, under our fifth principle of income transformation.
The Minister told us that data on apprenticeships needed to be
able to provide an answer to the question "in three to five
years after leaving school, what are the earnings and employment
rates of particular programmes and institutions?".
42. Once the data is available to make comparisons
between different frameworks then apprenticeships can be assessed
as to whether they are income transformative. Controlling for
other factors that might affect income, apprenticeships that are
not income-transformative should cease to be accredited.
43. Further data collection on why individuals undertake
apprenticeships and their experiences whilst in training and after
completion of the apprenticeship would also help illuminate how
different apprenticeship programmes lead to different labour market
outcomes (including earnings) for different people.
Conclusions and recommendations
is a general consensus in the evidence that government investment
in apprenticeships represents good value for money and provides
a range of benefits for employers.
45. Good quality
apprenticeships can provide long term benefits for young people.
46. We recommend that the Government review the
benefits provided by funding adult apprenticeships and apprenticeships
for young people respectively and assess whether more or all of
the money would be better spent on 16 to 19 year-olds.
47. We recommend that the Government expand the
existing matched administrative data sets on apprenticeship outcomes
with information on the occupation and industry in which individuals
are employed. This would help prospective apprentices make informed
comparisons between different frameworks and would aid in evaluating
the impact of apprenticeships policy.
48. We recommend that the Government review the
data collected on apprenticeships to allow assessment of the effect
on income of different apprenticeship frameworks.
49. Having accepted our fifth principle, that
apprenticeships should be income-transformative, the Government
should set out how it will put this into practice.
48 DfE () paras 1.6-1.7 Back
DfE () para 1.3 Back
BT () p.1 Back
EEF, The Manufacturers' Organisation () para 4 Back
University and College Union () para 21 Back
DfE () para 1.5 Back
City & Guilds (AAT0020) para 15 Back
Skills Funding Agency, Annual Report and Accounts 2013/14, June
2014, p.8 Back
Skills Funding Agency, Annual Report and Accounts 2012/13, June
2013, p.8 Back
Taking Action for Canada, Expanding Apprenticeship Training in Canada: Perspectives from international experience,
April 2014; National Centre for Vocational Education Research,
Australian vocational education and training statistics: Apprentices and trainees - Annual 2013,
June 2014 Back
Association of Employment and Learning Providers (), para 9; CBI
(), para 5; OCR (), para 27 Back
National Audit Office, Adult Apprenticeships: Estimating economic benefits from apprenticeships - technical paper,
February 2012, p.5 Back
Ibid., p. 25 Back
Q12 [David Massey] Back