Drop in apprenticeship starts shows need for reform

The latest Government statistics show that apprenticeship starts fell by more than a third in November 2017 compared with November 2016 and this demonstrates the need for the Government to reform the Apprenticeship Levy.

The Apprenticeship Levy was introduced in April 2017 to boost training across all business sectors but so far it seems to be having the opposite effect. The Government’s own statistics show a 35% per cent drop in apprenticeship starts in England in November 2017 compared with November 2016.

This is bad news given that the skills shortage is currently the number one concern for most construction employers and therefore it’s vital that the industry recruits and trains more new entrants. The latest statistics from the Department for Education were published shortly after the Federation of Master Builders’ State of State Survey for Q4 2017, which showed that small construction firms are experiencing record highs in terms of skills shortages. More than two thirds of small building firms are struggling to hire bricklayers and 63 percent are having difficulties finding carpenters and joiners. These figures underline the need for the UK construction sector to boost the number of home grown workers, especially given that Brexit is just around the corner and with it will most likely come tighter restrictions on hiring EU migrant workers.

So, in terms of apprenticeship numbers, what’s going wrong? In England, the introduction of an overly inflexible Apprenticeship Levy voucher system certainly hasn’t helped matters. We know that fundamental changes to how apprenticeship funding operates can lead to a hiatus while employers work out how to approach the new system or even let the dust settle before trying to engage with it. However, there’s something else going on here too.

The way that the England-only Apprenticeship Levy voucher system has been implemented makes it difficult for the construction industry to benefit compared with other business sectors. As we all know, major contractors don’t tend to directly employ tradespeople or directly train apprentices. For that reason, they want to pass their vouchers down through their supply chain and ‘spend’ their vouchers that way instead. However, under the Government’s current rules, large firms are only permitted to pass 10 per cent of their vouchers down to their sub-contractors.

This means that Apprenticeship Levy payers in the construction industry are struggling to make use of their vouchers. Furthermore, as contributions to the Apprenticeship Levy pot are not ring-fenced for different sectors, the current situation means that the construction sector could potentially be funding apprenticeship training in other, less strategic industries, such as leisure and tourism.

If the Government wants the construction industry to deliver 300,000 new homes in England a year then it must make the voucher system more flexible and allow Levy payers to pass 100 per cent of their vouchers to their sub-contractors.