Workforce, Pensions and Training

IFS: ‘Cavalier’ apprenticeship target for public sector must be dropped

The government has suffered a harsh blow to its ambitious plan to create three million apprenticeships by 2020, with the Institute for Fiscal Studies (IFS) warning that employers will have a big incentive to simply re-label existing training schemes – all while the actual quality of apprenticeships plummet under the strain of excessively quick programme expansions.

In new analysis published as part of its forthcoming Green Budget 2017, the IFS concluded that the significant expansion and design of the new apprenticeship system risks being poor value for money, with specific elements potentially becoming “particularly damaging for the public sector”.

First off, it argued the government has failed to make a convincing case for “such a large and rapid expansion in apprenticeships”. Despite quoting statistics that show a drop in employees’ training, better measures have revealed a “much more modest decline”. It is also making “wildly optimistic claims” about the extra economic activity that investing in apprenticeships could spur.

“While there is a clear need for a better-trained workforce, this cavalier use of statistics risks undermining what might be a perfectly sensible case for a gradual expansion of apprenticeships in areas where quality can be assured,” the Institute said in a statement.

Expanding on this, the report said that in the public sector in particular, it is unclear that apprenticeships are even the right option for increasing skills. Whilst apprenticeships are usually undertaken by people who haven’t completed post-secondary education, the public sector workforce is dominated by highly-educated staff – 63% of them had completed post-secondary education in 2015-16, compared with just 38% in the private sector.

“If the government wanted to focus apprenticeship provision entirely on the group who have not completed higher education, then the target for the public sector apprentices would be lowered to 62,000 apprenticeship starts per year rather than 97,000,” the analysis concluded.

“As it stands, the current target implies a huge increase in the number of apprentices in the public sector. According to the LFS, only 0.6% of public sector workers report being an apprentice, implying that the public sector is being asked to approximately quadruple the number of apprentices it is employing.”

Apprenticeship target and levy

Central government has set a 2.3% apprenticeship target for public sector employers, which the IFS argued takes “no account of big differences between organisations”. Discussions so far have all treated the public sector as a single entity, even though its employers are varied in size, turnover and ability to take in apprentices in a useful way.

“The great variation across public sector employers means that while some may not find it hard to employ enough apprentices to comply with the target, others will find it very hard indeed,” added the report.

“Unless existing employees start apprenticeships, the targets imply around one-in-five new public sector hires must be an apprentice. Such a blanket policy cannot be an efficient way to improve skills in the public sector. It risks costly reorganisation of training and inefficient ways of working. These targets should be removed.”

The Green Budget analysis also noted that while the apprenticeship levy increases taxes on large employers, the new subsidies to train apprentices effectively mean organisations will have to pay nothing, or at most 10%, of off-the-job training costs for apprentices.

This zero or near-zero cost “poses considerable risks to the efficient use of public money”, said the IFS, with companies having little incentive to choose cheaper training providers – but having a large incentive to simply rehash existing training schemes, ultimately undermining the apprentice ‘brand’.

Quantity over quality

Because of the mammoth new target to take on an average of 600,000 apprentices per year in this Parliament – a whopping 20% increase on the 2014-15 level – quantity risks being increased at the expense of quality. The government is trying to boost the quality of apprenticeships, but the IFS explained that the Institute for Apprenticeships may “come under pressure” to sign off apprenticeships quickly.

Ofsted, which will take on an expanded role with regards to inspecting training providers, has already expressed “serious concerns” about the quality of these schemes.

While the IFS accepted that the country “desperately needs an effective system for supporting training of young people in the UK”, the current one – whose levy and target will come into force this April – may not be it.

An author of the report, Neil Amin-Smith, argued the levy and its associated targets “risk repeating the mistakes of recent decades by encouraging employers and training providers to relabel current activity and seek subsidy rather than seek the best training”.

Another author, Jonathan Cribb, added: “The specific targets for most public sector employers in England to employ apprentices could lead to costly, and potentially damaging, re-organisations, and should be dropped.”

The government’s reformed apprenticeship system has not been without concerns, including from major bodies such as the IPPR, the LGA and the Chartered Institute of Personnel and Development. Most recently, councils have slammed the “disappointing” decision to base the apprenticeship target on headcount rather than full-time equivalent (FTE).

But despite these anxieties, the Department for Education, however, has insisted that its standards are “rigorously checked”. PSE approached the department for comment but did not receive a reply at time of publication.