New Deal talking points: What are Labour’s plans for apprenticeships?

Labour wants to reduce unemployment within the 18-21 age category and to do so, it plans to establish a guarantee that everyone aged 18 to 21 will have access to an apprenticeship, or training or support in finding work.

To help achieve this, Labour propose to establish ‘Skills England’ to bring together businesses, training providers, unions and national and local government to ensure there is a highly trained workforce. Skills England will work with the Migration Advisory Committee, an independent, non-departmental public body which advises the government on migration issues, to make sure that training meets the needs of the labour market.

In addition, Labour also plans to reform the Apprenticeship Levy, by replacing it with a new Growth and Skills Levy.

Why change the apprenticeship system?

Labour believes that apprenticeship numbers have plummeted, skills shortages are widespread and that the skills system in England is confusing for young people, adults and employers.

Labour plans to ensure that Skills England works with the Institute for Apprenticeships and Technical Education and the Education and Skills Funding Agency to ensure that training programmes become available as soon as they are identified as needed - rather than having a time-lag, as exists now, caused by the approvals required for apprenticeship qualifications.

With regards to the Apprenticeship Levy, Labour considers this is currently “broken” with the “rigid rules” ignoring vital skills and training needed to access apprenticeships. The new Growth and Skills Levy has the aim of providing businesses with greater flexibility by making funds available for a range of training courses, not just apprenticeship schemes.

What could this mean in practice?

Whilst the Labour party has promised greater cohesion and better training to address skills shortages, there is little detail on how exactly they plan to do this. Other than promising the removal of a time-lag in approving apprenticeship courses, the remaining pledges are vague. It’s possible that there will be more apprenticeships available once research has been gathered on what roles are required by businesses. To date, however, no process has been laid out as to exactly how the party aims to guarantee training and reduce unemployment now that it is in government.

More detail has however been provided on the proposed Growth and Skills Levy:

• Up to 50% of a company’s total Levy contributions can be used on non-apprenticeship training whilst the remaining 50% remains reserved for apprenticeships.
• Companies who do not pay the levy will continue to receive 95% funding, though it’s not clear if this is just for apprenticeships or this includes non-apprenticeship training too.

So, what is ‘non-apprenticeship training’?

Labour has suggested that Skills England will hold a list of approved qualifications which businesses can spend their money on. This list would be created in collaboration with devolved authorities, businesses, unions and wider experts.  Labour has said that the categories will include:

• Modular courses including digital and green skills, social care and child care; and
• Functional skills and pre-apprenticeship training, particularly focussed on digital skills and technology which can be run alongside an apprenticeship.

On the face of it, this would appear to be a helpful way for businesses to use their Levy funds, particularly as a freedom of information request showed that between 2019 and 2022, £3.3 billion of unused apprenticeship levy was returned to the Treasury. It’s not clear whether this is for all age categories or just 18-21 year olds, but if the former, this could also be a way employers can more easily address performance issues, assuming there is a course which matches the performance concern.

It remains unclear whether the amount that will be collected from employers will change or if the trigger for payment, which currently sits at an annual pay bill of £3 million, will be amended.

Conclusion: apprenticeships are to stay

The proposed changes mean that apprenticeships will continue exist, and presumably in their current form. Perhaps there will be more apprenticeships, given the guarantee being offered to those aged 18-21 and a more focussed review on what roles will need filling in future.

It would also appear that a levy will remain, but what it can be spent on will differ.

It also seems inevitable that apprenticeship regimes will continue to differ across the UK, since apprenticeships are devolved to the government in Wales and Scotland, and those governments have not indicated any plans to make changes. This is a matter which often causes confusion amongst employers who may operate and have offices in various locations across the UK.

Greater detail on Labour’s plans will no doubt emerge over the coming months, but this is unlikely to be a priority in the immediate term.  Some apprenticeship schemes may eventually be removed or reformed, but this is likely to take time, given that research will presumably be required to ascertain what skills and training is needed. In any case, there is likely to be a phasing out of any existing apprenticeships deemed no longer desirable, rather than immediate change.

Our view therefore is that businesses, certainly for this year’s intake of apprentices, should continue to base their apprenticeship training on the current regime.

For more analysis of Labour’s plans and other articles in our talking points series, visit our Labour Policy Impact Hub.