Ben Rowland adds weight to the argument in favour of keeping the Apprenticeship Levy.

The productivity problem

According to the Office of National Statistics (ONS) in 2016, Italy, the US, France and Germany all had higher GDP per hour worked than the UK – in the case of Germany, 35% more. As the Financial Times put it in August “The average French worker produces more by the end of Thursday than their UK counterpart can in a full week.” Ouch. 

Bear in mind that in 1960 we had the highest productivity in Europe. Low productivity affects big employers and small employers, it’s across the UK and it’s in industries that we think of as our stars: according to Economic Statistics Centre of Excellence the biggest declines in our productivity have been in computer programming, energy, finance, pharmaceuticals and telecoms.  

Our skills are lower because we spend less on them

In 2016, the OECD found that England had one of the largest proportions of low-skilled young workers. It was found that young English workers were less skilled than older workers with things not set to change.

The average French worker produces more by the end of Thursday than their UK counterpart can in a full week.

The key issue here is that we don’t spend enough money on training. In 2010, the CIPD found that the cost of training per employee in the UK was half that spent by other EU countries. 

And this is about to matter more than ever

All of this is being exacerbated by two challenges, one shared across the world, one that is more homegrown.

The global challenge is the impact of technology on the jobs that exist today. While technology may create new jobs as quickly as it destroys old ones, the skills required will be vastly different – we may end up in a world with mass unemployment alongside mass vacancies.

The homegrown challenge is Brexit. While the long term impact is unclear, there will be an uncomfortable/disastrous (delete according to your politics) adjustment required as a reliable source of labour (EU citizens) for both skilled and non-skilled labour is blocked.

Introducing the Apprenticeship Levy

Recognising the UK’s embarrassing productivity and training performance, the Government introduced the Apprenticeship Levy in April 2017.  

At a stroke, it removed the main psychological barrier that stopped employers spending on training, namely the fear that one’s competitor who did not invest in training would poach staff that you had spent time and money developing.  

Alongside the levy there has been an overhaul of the apprenticeship system with new standards designed by employers replacing outdated framework programmes and the removal of age barriers, meaning that anyone can be an apprentice. 

Why are employers slow on the uptake?

These reforms have created an ecosystem that is designed by employers for employers and where the funding is ring-fenced. But employers have been slow to embrace it. In May this year, research by the Open University suggested that less than 10% of levy funds had been deployed.

Why is this?

There are three main reasons: the first is that the Levy was introduced too quickly. The second is that the Government has not approved new standards quickly enough and/or has kept funding bands (the maximum levy an employer can use per apprenticeship) too low. There is some truth in both of these, particularly the latter.

Once employers get to know apprenticeships, they embrace them. 

The third reason given is that the requirement for an apprentice to spend 20% of their time learning away from ‘normal’ work is too much. This reflects the fundamental aversion UK employers have towards training: when push comes to shove, UK employers prefer their staff to be doing the job now than getting better at the job for the future.  

This attitude explains why the productivity of our people, our companies and our economy as a whole are so low. We need to change this attitude if we want to shift our productivity.

Where we are now does not have to be where we are in the future

But there is reason for cautious optimism here, that the Levy will be increasingly used and that it will become the engine behind a transformation of UK skills and productivity.

For hundreds of employers who were sceptical of apprenticeships at first and doing it because they ‘had’ to, once they embarked on the process, they realised quickly the benefits of training their staff and they now keep coming back for more.  

They see the power of the blend between rigorous off-the-job training combined with conscious and reflective practice ‘on the job’, supported by an external coach and the line manager, all aimed at an externally validated ‘Standard’. The productivity gains can be astounding and are not limited to the individuals involved – teams are transformed too. 

What is the evidence for this? Alongside a growing body of anecdotal evidence and case studies – have a look out for National Apprenticeship Awards winners and you’ll see what I mean – there is the steady growth of apprenticeship numbers as employers get used to and embrace the new programmes.

And the growth of providers who are demonstrably committed to ‘corporate grade’ apprenticeship programmes.

Conclusion 

The UK has a chronic productivity problem. A lack of training is one of the causes and part of that in turn is employers’ disinclination to spend time and money on training. The Apprenticeship Levy changes this by forcing large employers to address this and making it very attractive for smaller employers to follow suit. Once employers get to know apprenticeships, they embrace them. 

Now is the time for all employers to jump in if they, and the economy as a whole, are to solve our productivity problem.

About the author

Ben Rowland is co-founder of Arch Apprentices