Having flicked through my social media feeds last night, I was shocked to find so many training provider staff hailing Philip Hammond’s announcement of cutting non-levy employer contributions from 10% to 5% as a great celebration for SMEs looking to train apprentices.
Not only will this decision have a negative effect on starts in the short-term, but it will reduce wages for young people in the long-term. In fact, this decision will have an adverse effect on social mobility, the apprenticeship ‘brand’ and quality of training.
Firstly, reducing employer contributions will slow starts short-term
Philip Hammond made the schoolboy-error of holding back the implementation of this plan until April 2019. This means that some employers who were thinking of taking on an apprentice in the next six months, will now wait until the Spring before buying apprenticeship training.
This will slightly reduce interest in the short-term
Secondly, the decision is based on zero evidence
I am yet to see a credible piece of research that says starts at non-levy payers are down because of the 10% contribution. If that were the case, why aren’t starts for 16-18-year olds in small businesses outperforming every other category? Their status of ‘free’ has been the same pre- and post-apprenticeship reforms, yet they too have suffered a large drop in starts.
Longer-term, this will make little difference to numbers. 20% off the job is a bigger barrier.
Thirdly, contributing 10% drives up outcomes for the apprentice
Reducing the contribution, just as providers are getting better at articulating that their training adds value to a business, is a huge backwards step. It will tempt a number of the wrong sort of employers back. The ones that had left the scene. The ones that don’t care how good the training is, they just want to pay a 22-year-old £3.90 instead of £7.70.
Of course, I’m not suggesting that’s all small businesses. I run my own little company and know the vast majority want to do things right. But, employment is at its highest levels since the 70s and apprenticeships numbers are down. You cannot tell me, that a 10% contribution hasn’t had a hand in making some employers, who didn’t value the off-the-job element of apprenticeships, change their ways and just put people into work at the higher wage.
Apprenticeships starts should support social mobility through great training, not give access to low wages.
Fourth… the brand!
The timing of this is odd. Apprenticeship starts are up from last year, new standards are bedding in and from January we are expected to see huge increases in End-Point Assessments. To me, it felt like the tide was about to turn. Employers of all sizes would start to see that apprenticeship training is of high quality, it can transform their staff and business fortunes. Yet, this will open up the market to more training providers who can’t communicate the value their training brings.
This will reduce the perception of apprenticeships as a quality training programme.
Please prove me wrong…
It goes without saying, I am a huge fan of quality apprenticeships. I’m lucky to have worked with many great providers, colleges and universities on their apprenticeship strategy and employer engagement success. But, at many of those organisations there is a disengage between the curriculum staff and business development teams.
I don’t believe this blanket drop in employer contributions will make much more than a slight mole hill in starts. It is usually a tiny percentage of the overall cost of employing an apprentice. The real skill is designing training that adds value to the learner and the business, then articulating how it does that so that employers are biting your hand off to get involved!
For the organisations in the apprenticeship space hailing this as a new dawn, please prove me wrong. I haven’t seen a single employer or apprentice celebrate this news, so this is your chance to deliver excellent training that improves UK productivity whilst giving young people more opportunities to learn a skilled job.
I genuinely hope the supply side is right and I’m wrong!
If you’re a training provider, SupplyTrain offers employer engagement support. We can give your team tools to articulate the value of your training.
If you are an employer, SupplyTrain can find you the training your company and staff need to progress. For small businesses, this service is free.