Apprenticeships are vital to meet the needs of the next decade

By Anthony Painter, Director of Policy and External Affairs at Chartered Management Institute


15 11 2022


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The UK’s economic model is faltering badly. This weakness is a post-pandemic, post-Brexit feature. Underlying weaknesses in productivity growth are longstanding, going back to the 2008 global financial crisis at least. The Bank Of England is expecting to see no growth overall from 2019 to 2026. Meanwhile, public services are bowing under demand pressures. That the NHS has seen waiting times for A&E soar is just one illustration.

In recent polling, CMI discovered that over 70% of managers report skills gaps in their organisations. These are skills gaps in the current rather than future workforce and they are being felt now as managers report increased stress and declining productivity. So on one hand we have a faltering model of growth and unsustainable public services, while on the other, we see huge skills gaps. Indeed, it is clear that growth, public service quality, and skills gaps interplay with one another.

Skills within the current and future workforce are crucial to the UK’s future prosperity, which makes current debates about apprenticeships so consequential. Apprenticeships have a particular set of characteristics when placed alongside other forms of skills development and learning. They involve skills being immediately applied within the workplace and they respond to employer needs. And resources to fund them already exist via the apprenticeship levy. In England at least, apprenticeships are accessible to employees of all ages and at all levels. Interestingly, in Scotland the funding is directed to 19-24 year-olds and, in the context of a new economic transformation strategy, they now have an adult skills conundrum which migration may not be enough to resolve.

Without that clarity, we run the risk of reforms that, unwittingly, undermine the positive impacts of apprenticeships...

These features make apprenticeships particularly well-suited to meeting the varied skills needs of the future economy. Resources, policy, standards, learner and employer confidence are designed into the system. Yet, there is ferocious criticism of the current approach from a series of angles. Critics point to too few SMEs in the system, apprentice numbers dipping after the 2016 reforms were implemented, too few young people, and some question whether higher level apprentices should feature at all. And, of course, many larger companies who incur the levy want to claim a bigger portion of the apprenticeship pie, hence their support for a skills levy with far more flexibility.

The intention here is not to question the validity of these concerns. Although it should be noted that the shift to more rigorous standards post 2016 and the pandemic inevitably suppressed numbers as longer term workforce planning became impaired. Notwithstanding this, the criticisms show that there lacks consensus around what problem the apprenticeship system is primarily intended to respond to.

Without that clarity, we run the risk of reforms that, unwittingly, undermine the positive impacts of apprenticeships and diminish any returns on public investment. Amid the deep challenges afflicting our economy, public services and wider society, apprenticeships should be seen as one of the focused means of securing for employers the vital skills they need at all levels in the near and long-term. If we are clear about this primary purpose then the current system starts to look far more like a foundation to build on than a policy in need of radical redesign.

Fundamentally, the 2016 apprenticeship system leant towards addressing the ‘human capital’ element of England’s long-standing productivity challenge. CMI modelling shows this is broadly working, as investment in apprenticeships through the levy is on-track to return three-times the initial investment over a decade.

Management apprenticeships, often caricatured as the preserve of elite professionals, shows reassuring signs of spreading opportunities to those denied them previously.

Over two-thirds of management apprentices come from families where a parent had not been to university. They spread across sectors, firm size, and regions. A very significant proportion are working in health, social care, emergency services, local government and other public services – environments with good progression opportunities. Over 90 percent of management apprentices are committed to training and developing others, thereby cascading opportunity.

Of course, apprenticeships are just one element of a wider system but can provide a particular and important focus within this wider system.

Of course, apprenticeships are just one element of a wider system but can provide a particular and important focus within this wider system. The publicly funded part of the skills system, including T-levels, work support, other vocational qualifications, and adult education budgets, should be funded adequately to expand participation by providing good opportunities where apprenticeships aren’t the best fit.

New forms of student financing through the Lifelong Loan Entitlement, where genuine opportunities for decent paid work exist, can help support this expansion if designed well. In the longer term, individual learning accounts, with robust counter-fraud mechanisms, should be explored again and developed. Employers should be incentivised to invest in more and better training and with a longer term horizon through tax reliefs similar to those provided for research and development. High-level skills are investments.

It is almost trite to point out how abrupt changes in policy, of which there have been many, have failed to develop a whole skills system that adequately supports either our future skills needs or sufficiently wide participation. LWI has highlighted this time and time again. So let’s try something different. Let’s direct apprenticeships towards the deep needs of our economy and public services. Make the system clearer, more transparent, and support small employers and those with greater needs. Most importantly, make sure it’s focused on acute public needs: productivity, better public services, levelling up, and a rapid green transition. And ensure that the skills system as a whole can balance productivity and participation.

Anthony Painter is Director of Policy and External Affairs at Chartered Management Institute

Explore more CMI research on the future of the apprenticeship levy