Britain needs more apprenticeships for reasons of equity and efficiency: specifically, to improve life chances and enhance productivity. So, how can we get more and better apprenticeships? Bright Blue recently held a roundtable discussion with top decision makers and opinion formers to explore this question.
Things are improving, from a low base
Apprenticeships almost died when big industry declined in the 1980s. At the time apprenticeships were almost exclusively associated with manual work. This is no longer true. Now they are on the up. Though still low, the number of apprenticeships in the UK has increased rapidly over the last four years, beyond the numbers promised in the Conservative’s manifesto and the committed to in the Coalition agreement.
The understanding of what an apprentice scheme looks like is no longer narrowly focused on physical labour. A number of financial services companies have started their own schemes. Santander started with 50 apprenticeships in 2012 and throughout this year Santander will beoffering over 200 apprenticeship opportunities. Santander reports that those who go on their apprenticeship scheme are more likely to stay with the company. Apprenticeships are also essential in developing the talent necessary for the knowledge-based, high-skilled industries of the future such as creative industries and hi-tech manufacturing.
This is all good news, but Britain still has a long way to go to match our international competitors. There are roughly 20 apprenticeships for every 1,000 workers and just 15% of employers in the UK have or offer apprenticeships. In Germany, 40% of those who continue study after school are on apprentice schemes. In the UK 40% of school leavers are at University but only 10% in apprenticeships.
The Richard Review found significant variability in the apprenticeships offered by different companies. Fewer than 200,000 of the 520,000 apprenticeships starting every year in England are at level 3 (A level standard) or higher. Contrastingly, 90% of new apprenticeships in Germany are at level 3 or above.
What needs to be done?
There are a number of things that needs to be done to increase the amount and quality of apprenticeships.
The first priority is to create greater awareness of apprenticeships. A big challenge is to get schools to promote apprenticeships. Most teachers are still focused on the “university pathway”. Therefore, businesses need to be better integrated with school to promote the “apprenticeship pathway”. Also, the Government will incentivise schools to focus more on the success of their pupils in the labour market by publishing statutory guidance which, in the words of Matthew Hancock MP, “strengthens their duty to secure inspirational careers”. Also, new accountability tables are going to be brought in, which will judge school performance on a number of criteria including the destination of their pupils. Increasing the number of Higher Apprenticeships is important because talented school leavers will have the opportunity to achieve a degree-level education through apprenticeships. Already some pupils have turned down University offers to take Higher Apprenticeships with companies such as Rolls Royce and Network Rail.
Unlike with Universities, apprenticeships do not operate in a national market; learners tend to choose providers in smaller geographical areas on the basis of convenience not quality. So, competitive pressures on providers from the demand-side are limited. First, learners need better and more standardised information to compare different providers. Second, much like the purpose of student maintenance loans, learners need financial and practical support to be able to transit to different areas of the country where different apprenticeships are offered. Currently, apprenticeships are very low paid; in fact, three in ten apprentices are paid less than the relevant National Minimum Wage.
Young people certainly need greater understanding of apprenticeships, and need to be more discerning customers, but businesses also need to extend apprenticeship provision. The barriers at the moment include lack of time, resource and knowledge, as well as the fear of training up staff that are then “poached” by different businesses.
Bright Blue is about to start a research project exploring different policy options to better incentivise businesses to offer high-quality apprenticeships, and build a national infrastructure to enable young people to make more informed choices about apprenticeships.
