First delivered in London on 23rd October 2024. Check against delivery.
Speech for BPP University Talent Roadshow on the Apprenticeship Levy
- Introduction: Lessons from Tolkien's Apprentice
Good morning, everyone. It's a pleasure to be here at BPP University's Talent Roadshow to discuss the Apprenticeship Levy.
Before we delve into the details, I'd like to start with a story that offers valuable lessons for our apprenticeship system.
As some of you may know, I greatly admire J.R.R. Tolkien's work. In his lesser-known tale, "Smith of Wootton Major," Tolkien introduces us to a young apprentice cook named Alf. Alf's journey serves as a cautionary tale about the perils of poor-quality training and a flawed apprenticeship system.
In the story, Alf is apprenticed to the village Master Cook, who is past his prime and neglects his duties. The Master Cook's complacency and lack of skill lead to a disastrous feast, where the villagers are served inedible food. This failure embarrasses the village and highlights the consequences of inadequate training and oversight.
The parallels with our apprenticeship system are clear. Like the village of Wootton Major, we risk letting down our young people and our economy if we allow substandard training or poorly designed apprenticeship programs to persist. The consequences of such failures can be far-reaching, affecting not just individual careers but entire industries and communities.
However, the story takes a turn when it's revealed that Alf is the King of Faery in disguise. He takes over as the new Master Cook, revitalising the village's culinary traditions and passing on his skills to a new generation. This transformation reminds us of the immense potential that lies within our apprentices and the power of high-quality, well-structured training programs.
As we discuss the Apprenticeship Levy and its impact, let's keep Alf's story in mind. It underscores the importance of maintaining high standards, providing proper support, and recognizing the hidden talents of our apprentices. Let's ensure that our apprenticeship system avoids the pitfalls of Wootton Major's initial failure and instead emulates Alf's eventual success in nurturing skills and talent.
- The Success of the Apprenticeship Levy
Since its introduction in 2017, the Apprenticeship Levy has been a catalyst for positive change in our skills ecosystem, addressing many of the issues highlighted in Tolkien's tale. According to the Department for Education, the levy has raised substantial funds – £3.6 billion in 2022/23, with projections reaching £4 billion by 2024/25.
The impact of the levy is evident in the numbers. The Office for National Statistics reports that in 2023, there were 752,150 apprentices employed across the UK, a 1.6% increase from the previous year. This growth demonstrates the increasing recognition of apprenticeships as a valuable pathway to skilled employment, a far cry from the neglectful system depicted in Wootton Major.
BPP University, one of the UK's largest apprenticeship providers, has been at the forefront of this transformation. They've trained over 13,000 apprentices across various sectors, working with 6 out of 9 major UK banks and 20 of the UK's largest corporates. This level of engagement from top employers shows how far we've come from the days of apprenticeships being seen as a lesser option.
These positive trends are further evidenced by recent data from the Department for Education. The 162,320 achievements reported for the 2022/23 academic year represented the highest number since before the pandemic in 2018/19. Achievement volumes were 18.3% up on the 137,220 reported for 2021/22. This upward trend suggests that the quality and completion rates of apprenticeships are improving, demonstrating the effectiveness of the reforms.
- Five Key Principles for Success for the Levy
I have five key principles for the Apprenticeship Levy:
(i.) Prestige & Culture, (ii.) Quality Qualifications, (iii.) The Ladder of Opportunity, (iv.) Lifelong Learning and (v.) Meeting Our Skills Needs
(i). Changing the Culture and Increasing the Prestige of Skills and Apprenticeships
There has been significant strides in elevating the status of apprenticeships. The Education and Skills Funding Agency's Apprenticeship Evaluation Survey 2022 found that 86% of employers say apprenticeships have helped them develop skills relevant to their organization.
The transformation of careers guidance has played a crucial role in this cultural shift. The Careers Strategy, launched in 2017, placed a strong emphasis on promoting apprenticeships as a viable and prestigious option. This has led to significant improvements in how apprenticeships are presented to young people.
According to a report by The Careers & Enterprise Company, 73% of schools and colleges now achieve the Gatsby Benchmark related to encounters with employers and employees, up from just 37% in 2017. This increased exposure to employers and apprenticeship opportunities has been instrumental in changing perceptions.
BPP's partnerships with leading employers like RBS, EY, and Starbucks demonstrate the growing prestige of apprenticeships in the corporate world. These collaborations ensure that apprenticeship programs are aligned with industry needs and standards.
(ii). Ensuring Quality Qualifications
The core part of the reforms have focused on ensuring the quality of apprenticeship programs. The Institute for Apprenticeships and Technical Education reports that as of 2023, there are 200 different level 6 & 7 apprenticeship standards in the UK. These cover a wide range of occupations, from Aerospace Engineers to Game Programmers.
Degree Apprenticeships at levels 6 and 7 have been particularly successful. BPP offers over 45 apprenticeship standards, including high-level qualifications in law, management, accountancy, and healthcare. The quality of these programs is evident in the results. For instance, BPP's Level 4 Professional Accounting Technician Apprenticeship achieved a 95% pass rate in exams with both ACCA and ICAEW.
(iii). Providing a Ladder of Opportunity
Our apprenticeship system now provides a powerful tool for social mobility. They offer a debt-free route to higher education and skilled employment. The last government's commitment to fully funding training costs for 16-21-year-olds in SMEs is a significant step towards inclusivity.
The impact on social mobility has been substantial. The Social Mobility Commission's report found that apprenticeships can boost earnings by 16% for disadvantaged learners, compared to 10% for their peers.
Furthermore, apprenticeships are breaking down barriers to entry into prestigious professions. For instance, the legal sector has seen a significant increase in diversity through apprenticeship programs. The Solicitors Regulation Authority reports that 33% of legal apprentices come from lower socio-economic backgrounds, compared to just 21% of trainee solicitors.
It's important to note that apprenticeships are not just for young people starting their careers. The Department for Education reports that almost half of apprentices are over 25, showing that these programs provide opportunities for career changers and those seeking to upskill. This diversity in age range further enhances the social mobility impact of apprenticeships.
(iv). Enabling Lifelong Learning
The Apprenticeship Levy has opened doors for adults to train and retrain throughout their careers. There's no maximum age limit for apprenticeships, allowing individuals to upskill at any stage of life.
BPP's range of programs, from level 3 to level 7, supports this lifelong learning approach. Their Data and Analytics Apprenticeships, for instance, offer progression from foundational to advanced levels, catering to the evolving needs of both individuals and businesses in the digital age.
It's crucial to emphasise that lifelong learning should be sacrosanct in our skills system. The recent discussions about potentially limiting Level 7 apprenticeships set a dangerous precedent. These higher-level apprenticeships play a vital role in upskilling our workforce and keeping our industries competitive on a global stage. The Institute for Apprenticeships and Technical Education notes that Level 7 apprenticeships have seen a 37% increase in starts between 2020/21 and 2021/22. This growth demonstrates the demand for these high-level skills in our economy.
Undermining Level 7 apprenticeships would not only limit individual progression but also hamper our ability to address skills gaps in critical areas such as AI, data science, and senior leadership. We must ensure that our apprenticeship system continues to support learning at all levels, throughout people's careers.
Myth Busting for Level 7
The myth of level 7 apprenticeships, is that many are being done by well-off graduates, with big business gaming the levy on senior leadership courses
It is worth reminding ourselves of some important statistics statistics:
- 27% of all L7 are healt sector related;
- Less than 10% of businesses that use L7 management apprenticeshipsare in the FTSE 350;
- 60% are in public services;
- 60% of level 7 apprentices are in the lower half of deprivation in England;
- Over 70% of level 7 apprentices come from a background where their parents do not have a degree;
(v). Meeting UK Skills Needs
The apprenticeship system is crucial in addressing real skills gaps across various sectors. The levy has encouraged employers to invest in training that directly benefits their businesses. The Centre for Economics and Business Research found that 78% of businesses reported increased productivity as a result of hiring apprentices.
BPP's tailored apprenticeship programs, developed in collaboration with employers, ensure that training meets specific business needs across industries like financial services, law, and healthcare. This approach helps to create a workforce that is not only skilled but also aligned with the evolving demands of the UK economy.
The impact of apprenticeships on the economy is substantial. The Centre for Economics and Business Research indicates that apprentices contribute £550m per year to the British economy, and for every £1 spent on apprenticeships, the UK economy gains £21. This return on investment demonstrates the value of apprenticeships in driving economic growth and productivity.
- Looking to the Future
While we've made great strides since the introduction of the Apprenticeship Levy, I do believe
the system should evolve to meet changing needs. We need to consider reforms carefully, ensuring we don't lose the progress we've made. Whilst a wholehearted believer in the Apprenticeship Levy, I am not someone who says the Apprenticeship Levy should be preserved in Aspic. But the Apprenticeship must be a Ronseal Levy and do what it says on the tin.
As we look towards potential changes under a Labour government, we must advocate for the continued support of higher-level apprenticeships, including Level 7 programs. These advanced apprenticeships are vital for developing the high-level skills our economy needs. The Institute for Apprenticeships and Technical Education reports that Level 6 and 7 apprenticeships now account for 28% of all starts, up from just 3% in 2016/17. This growth demonstrates the increasing demand for higher-level skills in our economy.
Constructive Engaagement
It will be important to engage constructively with Skills England - who acknowledge in their latest report, UK shortages in management and digital skills.
The full shape of Skills of Skills England is yet to be finally determined, though a Bill is progressing through Parliament which will see the consolidation of IFATE into Skills England. The Bill when passed - will have an impact on what until now has been an ‘employer-led’ Skills system - as more power to decide on qualifications will be passed to the DFE, and by extension the Secretary of State.
Moreover, it will be necessary to consider how proposals for Foundation Apprenticeships and shorter apprenticeship programs might complement our existing system. These could provide additional flexibility and entry points into skilled careers.
The changes to the Apprenticeship Levy to a ‘Growth and Skills’ Levy may come in the Budget - including the percentage of levy spent on skills v apprenticeships.
However, we must be cautious about any changes that might undermine the progress we've made. The Apprenticeship Levy has been instrumental in driving employer engagement and investment in skills. According to the Department for Education, levy-paying employers have seen a 35% increase in apprenticeship starts since the levy's introduction. Any reforms must build on this success, not diminish it.
Using the Levy
For businesses looking to maximise the benefits of the Apprenticeship Levy, there are several strategies to consider. Firstly, companies should align their apprenticeship programs with their long-term skills needs, using the levy to address skills gaps and future-proof their workforce. Secondly, businesses can explore transferring unused levy funds to smaller companies in their supply chain or local community, fostering stronger business relationships and contributing to local economic development. The Department for Education reports that only 13% of levy-paying employers currently transfer funds, indicating a significant opportunity for growth in this area.
Higher education institutions also have a crucial role to play in maximising the impact of the Apprenticeship Levy. Universities can expand their offering of degree apprenticeships, particularly in high-demand areas such as digital skills, engineering, and healthcare. According to Universities UK, degree apprenticeship starts have grown by 368% since 2016/17, but there's still room for expansion.
Additionally, universities can partner more closely with businesses to co-design apprenticeship programs that meet industry needs while maintaining academic rigor. The University Vocational Awards Council suggests that spending on degree apprenticeships should increase from the current 20% of the apprenticeship budget to around 40%, reflecting their importance in addressing high-level skills gaps.
- Conclusion
I started this speech with a lesser-known Tolkien story, Smith of Wootton Major. Let me end with another that you will all know, Lord of the Rings. Sam Gamgee was an Apprenticeship gardener. Whether it was a level 7, I do not know, but he was elected seven times as Mayor of the Shire and became an adviser to the KIng.
Our apprenticeship system, bolstered by the Apprenticeship Levy, has made significant strides and produced many Sam Gamgees.
The statistics speak for themselves. It is worth repeating a few:
The Education and Skills Funding Agency reports that 60% of apprentices continue to work for the same employer after completing their training. The average apprentice generates - according to Stand Out CV/St Martins Group - revenue of £33,759 per year for their employer, showing that apprenticeships are not just a cost but an investment in future productivity.
Moreover, the social mobility impact of apprenticeships cannot be overstated. The Social Mobility Commission found that apprenticeships can boost earnings by up to 16% for disadvantaged learners. This is a clear indication that our apprenticeship system is working as an engine of social mobility.
As we move forward, let's continue to champion apprenticeships, refine our approach, and ensure that this powerful tool for skills development remains fit for purpose in our ever-changing world. By working together – government, education providers like BPP, and employers – we can create a skills ecosystem that drives innovation, boosts productivity, and offers opportunities for all.
Let's ensure that our apprenticeship system continues to uncover and nurture the hidden talents in our workforce, just as Alf's true identity and skills were eventually revealed in Wootton Major. In doing so, we can transform not just individual careers, but entire industries and communities.
Thank you
