Serious question marks have been raised by MPs over the government’s flagship apprenticeship levy.
A joint report by the Commons education and business select committees claims the scheme lacks focus and targets the wrong industries.
MPs conclude that the government’s apprenticeship policies “have a worrying lack of focus and will not fill widening skills gaps” unless then concentrate on sectors and regions where training is most needed.
Companies that hire graduates will still have to pay towards the £3 billion annual charge with no benefit and ministers have no plan to target it at areas of acute skills shortages.
The levy, introduced in the first week of April, is a “blunt instrument that risks being unduly focused on simply raising participation levels”, according to the MPs.
The criticism comes amid anger from the business community, The Times reported.
The aim of the levy is to fund three million apprenticeships by 2020 in an attempt to raise skill levels and combat low productivity. It will be charged at 0.5% of the annual wage bill for businesses with payroll costs of more than £3 million.
MPs welcomed the government’s ambition to improve training, focus more on employers’ needs and make apprenticeships a “prestigious alternative” to traditional education.
But they said: “There continues to be a worrying lack of focus on the sectors of the economy where training or upskilling are, and will be, most needed.”
Concentrating on the quantity rather than the quality of outcomes was a mistake. “This may fail to meet the needs of different sectors of the economy and regions of the country.”
MPs said there was an urgent need for technicians in construction, engineering and manufacturing, where training has been shown to raise skills and boost wages. However, more than two thirds of apprenticeship starts were in other sectors.
“The government has not set out how its increase in apprenticeship numbers will help fill the country’s skills gaps. The current balance of provision is skewed towards sectors with low wage returns and few skills shortages and we are not convinced that tinkering will bring about the major changes necessary.”
MPs recommended that the government took the data on skills shortages that is used for decisions on immigration and applied it to apprenticeships.
Industries such as pharmaceuticals and the creative arts will have to pay heavily into the scheme but will receive no benefit as they tend to recruit graduates, the report showed. Outcomes also needed to be better monitored, with just 67% of apprenticeships completed in 2015-16.
“We need to be measuring and celebrating apprenticeship completions, rather than focusing on starts,” the report said.
About 2.4 million apprenticeships were started without the levy in the last parliament.
The government expects the two highest-paying sectors under the levy to be education and human health and social work, where there is “no significant wage effect” from training.
“These are not the sectors of the most persistent skills shortages or where apprenticeships produce the highest wage returns. As a result, the contribution that apprenticeships can make towards solving skills shortages and improving productivity is undermined,” MPs said.
Iain Wright MP, chairman of the business, energy and industrial strategy committee and co-chairman of the sub-committee on education, skills and the economy, said: “The government has emphasised in its emerging industrial strategy the importance of supporting and promoting UK productivity and states that apprenticeships will be an important part of this.
“However, too much training remains sub-standard and detrimental to the career of apprentices and, more widely, the performance of our economy.
“The success of the government’s reforms will ultimately be judged on whether the planned increase in the quantity of apprenticeships is matched by an increase in their quality.”
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