Are Apprenticeships poor value for money?

IFAHR180 provides outsourced HR services, HR projects and HR consultancy for clients across the globe. Nearer to home today (31/1/17), apprenticeships are hitting the UK headlines with an Institute for Fiscal Studies (IFS) report suggesting that the Government’s Apprenticeship scheme funded by an Apprenticeship Levy will be poor value for money and sets arbitrary targets.

The think tank pre-released a chapter, ‘Reforms to apprenticeship funding in England’, from the forthcoming IFS Green Budget 2017. And there were no holds barred in their criticism of the way the Government intend the whole funding and growth in quality apprenticeships to work.

Their overarching conclusion was to question ‘whether the new apprenticeship levy, the new system of subsidies for apprentices’ training and the government’s targets are the best way of achieving the desired outcome,’ that desire being to improve on the relatively low skills of workers in the UK.

Whilst the INCREASE in spending will actually be around £640M according to the IFS, the levy itself will raise far more money than the additional resource planned to go into apprenticeship training – around £2.8 billion. This will be raised by a levy on businesses (IFS call it a payroll tax) which will surely impact on the pay of existing workers PLUS that ADDITIONAL money is not being planned to fund an increase spending on apprenticeships.

The IFS have concerns about the way employers who take on apprentices are incentivised and in return how the Government will keep a check on the quality of the training. Plus the legally binding target of achieving 3 million new apprenticeship by 2020 will potentially bring ‘inefficiencies’.

Finally the IFS state the…”need to move away from arbitrary targets and across-the-board 100% funding to a more gradual expansion, a stronger focus on quality, and a policy designed to maximise impact rather than numbers.”

So what does this mean for business? As employers, we all have a responsibility for our employees – whether they are taken on through the ‘normal’ channels or through an apprenticeship.  So in spite of the noise around apprenticeships you may well find out that taking on an apprentice is exactly right for your organisation and you in turn can develop a valuable person for your business.

At HR180, we’re in the business of helping organisations to build meaningful training and strong workforces so if you are determined to make apprenticeships work for you and for your trainees then we are the superheroes you need. Get in touch here or call 0113 287 8150.

Here’s some further reading from our back catalogue:

Apprenticeships: the poor relation?

Employment law implications of apprenticeship growth plans

Apprenticeship levy set to launch in 2017