There is much talk this week about the decrease in apprenticeship starts between May and July 2017. In the newly released Statistical First Release for Apprenticeships the figures for Q4 of the funding year do not make pretty reading:
Between February and April 2017, there was an increase in apprenticeship starts compared to the same point a year earlier (174,100 and 118,800 respectively), an increase of 47%. Between May and July 2017 (quarter 4 of the 2016/17 academic year), apprenticeship starts have decreased to 43,600 from 113,000 over the same period in the year before (quarter 4 of the 2015/16 academic year), a decrease of 61%.
Is this a trend or a blip?
Well, we are firmly in the “blip” camp. This was a difficult period for anyone working in the delivery of apprenticeships. Most apprenticeship starts happen in the first quarter (Aug to Oct) of the funding year which runs from August to July. This is when most young people leave school or college and are looking to start an apprenticeship. The final quarter is always lower as it is the end of the academic year, students are sitting exams and will be looking to start an apprenticeship in Q1. However, this year, in May to July, colleges and training providers were working in testing circumstances.
Introduction of the Apprenticeship Levy
The apprenticeship levy came into being in May 2017. This meant that all employers with a wage bill of over £3m became a separate funding entity. Levy employers now pay 0.5% of their monthly wage bill into their Levy account and this is used to fund their apprenticeships. There was a notion that levy employers were chomping at the bit for starts. This has not been the reality. We have talked to numerous employers about their levy funds and it is clear that most are not rushing headlong into spending it. They are, sensibly, taking their time to plan programmes of delivery. They know they have 24 months to spend their funds. We have found with the employers that we are supporting, that they want to implement organisational wide programmes rather than just piecemeal delivery. Coupled with this, we recently wrote that employers were also still not maximising the levy. We don’t think there is anything to worry about here. From our conversations with employers, they are going to spend their levy, they are just planning to do it right.
Introduction of 10% co-investment
May 2017 was also the trigger point for all non-apprenticeship levy employers to co-invest and contribute 10% to the cost of an apprenticeship. This is a significant change, but actually, it is not a huge game changer. Our experience is that employers are not overly put off by this contribution if the can see a return on investment. We think co-investment is a good thing as it also sieves out the employers who do not take apprenticeships as seriously as they should. If an employer is unwilling to contribute just 10% of the costs of an apprenticeship that will eventually provide them with a well trained and skilled member of staff, then there have to be questions raised over their commitment. What we expect to see with the 10% co-investment is greater employer interest and involvement in the apprentice and the programme which will lead to perhaps slightly fewer numbers but better quality apprenticeships. We would always welcome quality over quantity.
Training Provider Allocations
The period May to July was witness to new funding allocations to training providers and it is fair to say that this did not go smoothly. Training provider allocations were described as a “horror show” by FE Week and for those in receipt of them, it certainly was. Essentially, most training providers were allocated a fraction of their previous funding amounts for May to Dec 2017 leaving many unable to keep their commitments to employers. The allocation was also split between May to July and then August to December. It left many training providers simply unable to start their usual volume of apprentices.
Time to panic?
Absolutely not. Employers know the value of apprenticeships. With the introduction of apprenticeship standards and new funding rules all happening between May and July, there was always going to be a period of uncertainty and change. We are confident that levy employers will start spending their levy once they have planned their delivery programmes and non-levy employers will soon come to accept the 10% co-investment. Coupled with this, once training providers see some stability in their funding allocations they too will be more confident about going out and getting the expected apprenticeship starts.