1.The programme involves more than just increasing apprentice numbers, but this is the only outcome the Department for Education (the Department)is monitoring. While apprenticeships are considered to be a key way of developing skills and improving productivity, the Department’s only measure of success is to monitor the overall number of apprenticeship starts against a target of 3 million in the five years to 2020. The Department is reforming the programme to make it more employer-led, and it is therefore not directly involved in deciding in what sectors or at what levels apprenticeships take place to fill skills gaps in the economy. The Department has good data on which apprenticeships deliver the most impact and provide the greatest return on investment. However, the Department has not set out how it will monitor the success of the programme. In particular, it is not clear how the Department will monitor whether the programme is meeting employers’ needs and improving the opportunities for under-represented groups. The Department has announced some financial measures designed to encourage the take-up of apprenticeships among younger people and those with additional education or health needs. But it has yet to establish the fairest and most effective way to support people from all backgrounds into apprenticeships. It is also unclear how the apprenticeships programme will address the needs of emerging industries and skills shortages around Brexit and in other major programmes we have examined, such as High Speed 2 and implementing the entitlement to free early years education and childcare.
Recommendation: The Department should publish, and regularly report on, a broader range of success measures, both at local and national level. These measures should include whether apprentices move on to higher apprenticeships, whether successful apprentices benefit from increased earnings, and whether the programme is delivering improved access to under-represented groups across all occupations.
2.The development of new apprenticeship standards is taking longer than expected and some may not meet the needs of certain sectors and employers. The Department originally intended to have the 1,600 new apprenticeship standards in place by 2017, but this timeframe has now been extended to 2020. As at April 2016, only around 2,600 people had started an apprenticeship under a new standard. The Department accepts that some of the new standards that have been introduced are unnecessarily narrow and overlap other standards. The Institute for Apprenticeships will be charged with setting up an appropriate system for approving and reviewing standards. The Department expects that this will involve some consolidation, which should lead to the number of standards falling over time.
Recommendation: The Department should streamline the process for devising, implementing and reviewing standards. We expect the Department to report back within the year on progress against its target of having all apprenticeship starts covered by the new standards by 2020.
3.It is not clear how the Institute for Apprenticeships (IfA) will operate and whether it will have the capacity and capability to fulfil its functions. The IfA’s broad remit will be to regulate the quality of apprenticeships including keeping standards to a manageable number and ensuring they deliver relevant, up-to-date skills. Despite the importance of these functions, the Department has yet to define: the precise roles and responsibilities of the IfA; how these roles and responsibilities will fit alongside those of the existing oversight bodies; and the resources to which the IfA will have access. It is also unclear whether the employer-led IfA will draw on the perspectives of other important stakeholders such as the trade unions.
Recommendation: The Department must clarify the intended role of the IfA as quickly as possible, alongside that of existing oversight bodies. This should include setting out who is responsible for the success of the programme, who has the power to intervene when value is not being delivered, and who takes the lead if the programme is not working as planned.
4.There are risks associated with the new method of funding apprenticeships by means of a levy on large employers. We are not convinced that the Department has thought through the range of risks that might arise and how it will combat them. Levy-paying employers will be allowed to use their contributions to fund a greater number of apprenticeships among their own workforce. However, the system may encourage some stakeholders to behave in ways that work against the objectives of the programme. For example, employers and training providers might collude to recover and share levy funds while offering little or no genuine training, or employers might artificially route other forms of training into apprenticeships. The Department must not repeat the sorts of mistakes that were made when Individual Learning Accounts were introduced in 2000 which suffered from a lack of checks on learners, providers, and the quality of learning; and poor contract management which led to substantial fraud and abuse.
Recommendation: The Department, working with the various oversight bodies, needs to systematically identify the full range of risks associated with potential abuse of the system and ensure that they are addressed from the start. It should be clear who is responsible for managing the risks, detecting problems as they arise, and taking action quickly should concerns emerge.
5.The Department has not done enough to engage with Small and Medium-sized Enterprises (SMEs). Small businesses employ about half of all apprentices, but many have little awareness of, or engagement with, the changes taking place. The Department has prioritised its engagement with levy-paying, large companies despite the fact that, in many local areas, there are few or no large employers and SMEs are predominant. SMEs may also be disengaged because the Department is yet to determine whether or how levy-paying large companies may transfer levy funds to train apprentices in SMEs who form part of their supply chain.
Recommendation: The Department should engage more actively with SMEs to improve awareness of the value that apprenticeships can bring them, and to identify and address the factors that may deter engagement. The Department needs to ensure that SMEs are able to play an active role in the development of new standards.
6.The value of apprenticeships, in terms of improved earnings and career progression, is not sufficiently clear to prospective apprentices and their parents. The Department tracks destination data, which can be used to demonstrate how well successful apprentices progress in the sector for which they were trained. Analysis shows that successful apprentices enjoy increased earnings compared with those who do not achieve their apprenticeship or who follow other learning routes, but the premiums vary significantly between different sectors and levels. However, this information is not being used effectively to communicate the benefits of apprenticeships, especially to young people. It is very common for people to find out about apprenticeship opportunities through family and friends, rather than through formal careers guidance. The Careers and Enterprise Company, the National Careers Service, and the National Apprenticeship Service all play a role in raising awareness of apprenticeships as a potential career route. But the Department considers that the way that schools use material from these bodies is not consistent enough.
Recommendation: The Department needs to make better use of the data it has to communicate the value of apprenticeships to potential apprentices, schools and careers services.
25 November 2016