New report examines the impact of apprenticeship reforms on employer behaviour
A new report from IER provides an explanation for the decline in the number of apprenticeships starts following the introduction of the Apprenticeship Levy in 2017. The research, funded by the Edge Foundation and Gatsby Foundation, was based on reviewing statistical evidence, and conducting interviews with a range of employers to find out how their apprenticeship recruitment had changed following the Levy's introduction.
The report's authors – Peter Dickinson and Terence Hogarth – explain the fall in the number of apprenticeship starts with reference to an increasing preference for employers to place people on relatively high level and more costly apprenticeships, and a fall in the number of apprentices being taken on in smaller, non-Levy paying enterprises.
The Benefits of Hindsight: Assessing the impact of apprenticeship reforms on employer behaviour is funded by Edge and the Gatsby Foundation. The authors follow up issues first raised in the Edge report, Our Plan for Apprenticeships, (2019), which predicted a number of challenges ahead, in particular around the drift towards older employed apprentices.
The report finds that following the introduction of the Apprenticeship Levy in 2017, the number of apprenticeships started declined significantly, and there has been an acceleration of pre-existing trends towards older and higher-level apprentices.
Whilst numbers began to recover from the low 2017 base, apprenticeship recruitment was hit further by the pandemic, with one estimate suggesting that apprenticeship starts fell by around 14% as a result of Covid-19.
The reforms have increased levy-paying employers' financial investment in apprenticeships but also stimulated their preference to use it to train existing staff at higher levels, sometimes through converting existing training provision to apprenticeships. This may generate higher level skills, but the cost might be a lower number of apprentices, with fewer trained by smaller employers, as well as fewer younger and lower-level apprenticeships.
The key findings of this research suggest that:
Apprenticeships remain an important means through which employers meet their skills needs. However, this research finds that the Levy has had an impact on employer behaviour in terms of apprenticeship recruitment by type, age, and level, including:
• a reduction in apprenticeship recruitment by non-levy payers;
• an increased preference for people working towards higher level apprenticeships;
• specific barriers in particular sectors, such as, backfilling costs;
• a continuation, and potentially an acceleration, of trends in the profile of apprentices which pre-dated the reforms, including older apprentices and those who are already employed.
In addition, the researchers find evidence that for non-levy payers, the requirement to contribute to the costs of apprenticeship training does pose a problem and is a disincentive to train apprentices.
Click here to read the report
