No conversation about social mobility is complete without somebody mentioning the good idea of apprenticeships. Countries like Germany, where apprenticeships are firmly embedded in the economy, demonstrate the modern day value of one of the world's oldest systems for vocational training.
But in England, something strange has happened to apprenticeships since government reforms five years ago. There has been a sharp drop in the number of entry-level apprenticeships and apprentices are now just as likely to live in the poshest areas as the poorest ones.
The story of how this happened reveals a lot about the government’s struggle to boost productivity and make the economy work for everyone.
Between 2010 and 2015, apprenticeships grew quickly but they were too often short courses of poor quality which accredited existing employees for basic skills such as “making coffee, serving sandwiches or cleaning floors”, as an official Ofsted report found at the time.
In response, the government implemented a series of reforms to try to drive up quality and make sure apprenticeships were filling genuine skills gaps. Under new rules, an apprenticeship had to last for at least 12 months and involve 20 per cent of time in off-the-job training.
Funding system
Large employers were put on the hook for funding the system via a “use it or lose it” levy on their wage bills, which they could either spend on apprenticeships or hand over to the treasury.
Many of these reforms were sensible. But it was possible to foresee how employers might respond. Just before the levy began, I wrote that the “new breed of British apprentice may in fact be a middle-aged employee taking notes in a management seminar”. That is indeed what has happened.
Business schools enjoyed a boom in executive MBAs as large employers decided the most efficient way to spend their levy money was on expensive management apprenticeship courses for existing employees, while small and medium-sized companies struggled with the complexity of the new system.
In a recent analysis, the Business West chamber of commerce described this as "middle class capture" of the system.
"Apprenticeships, previously widely used by young people and SMEs, are becoming increasingly dominated by older employees and larger companies; the area of the economy that needs the least support," Business West policy analyst Georgina Navalles concluded.
Against that, one could argue it is a good thing if apprenticeships are no longer seen by England’s middle class as something for “other people’s children” but rather an attractive path for anyone to take. Yet it’s hard to cheer when the shift has involved a huge reduction in younger and poorer people’s participation.
Economic productivity
The number of apprenticeships has declined overall since 2015, especially at entry level. The number of under-25s starting apprenticeships each year dropped more than 40 per cent between 2014/15 and 2020/21. While home postcodes are not a perfect measure of socio-economic background, the number of apprentices from the most deprived areas has declined the most.
This bodes ill for economic productivity as well as social mobility. Analysis by the Centre for Vocational Education Research shows that people who start their apprenticeship when aged 19-24 receive a larger salary increase post-completion than individuals who begin their apprenticeship when aged over 25. In most cases, the differential is about twice as large.
This suggests apprenticeships are a bigger boost for skills and productivity when they are concentrated on young people.
The new system has also led to some problematic gaps in apprenticeship provision. A group of employers has created a Level 3 apprenticeship in plumbing and domestic heating which takes four years to complete, for example, but Patrick Mcleod, assistant principal at South Gloucestershire and Stroud College, says there is no longer a Level 2 apprenticeship standard in plumbing.
In a typical year, the college would have started 45 apprentices on Level 2 plumbing and 15 on Level 3. Now it starts just 15-20 on Level 3.
There are reforms which could improve access while maintaining high standards, from more practical and financial support for SMEs to requirements on bigger companies to spend a proportion of their levy money on young new hires.
The government is right that apprenticeships should be a quality route to a decent career for people of any background. But right now, the system lets down the people who could benefit from it most. – Copyright The Financial Times Limited 2022
