Apprenticeship Levy in UK – The evidence on the composition and distribution of apprenticeship training

The Apprenticeship system has been subject to a number of major changes in recent years. These include: the introduction of the Apprenticeship Levy in 2017 for employers with an annual pay bill of more than £3 million; a change in funding rules for all employers; and the transition from Apprenticeship Frameworks to Apprenticeship Standards which, amongst other things, introduces end-point assessment on all apprenticeships.

In this Briefing Note, we explore the evidence on the composition and distribution of apprenticeship training undertaken in England in recent years using a matched apprentice-employer level dataset. This contains information from the ILR (Individualised Learner Record) matched to the IDBR (the Office for National Statistics’ Inter-Departmental Business Register).

Overall the number of apprenticeship starts has fallen significantly since the introduction of the Apprenticeship Levy, from around 0.5 million starts per year before the Levy was introduced to around 0.4 million per year today. There are now around 12 apprenticeship starts per 1,000 employees in SMEs and 15 starts per 1,000 employees in the largest enterprises with 250+ employees. Approximately half of all apprenticeship starts are now Levy funded.

There has been an acceleration in the switch from Intermediate to Advanced and Higher-level apprenticeships, with almost 20% now at Higher level compared with only 4% at this level in 2014/15. These trends are matched by a corresponding declining share at Intermediate level, from 60% in 2014/15 to only 37% in 2018/19. Apprenticeship starts were mostly concentrated in ‘Health, Education & Public Administration’ and the ‘Services industries’. Finally, more northern regions seem to have higher levels of Apprenticeship training intensity, while London is the region with the lowest level of such training intensity.

Overall, the evidence presented does not suggest that there was a direct association between the introduction of the Levy and the decline in the number of apprenticeship starts, as large enterprises (which are more likely to be paying the Levy) experienced a smaller reduction in the number of starts compared to smaller enterprises (less likely to be paying the Levy). For smaller enterprises which are less likely to be directly impacted by the Levy, the strong decline in starts may be linked to a combination of adapting to the new funding system, the constraints on the pool of funding actually available for apprenticeship training, and the ongoing switch from Apprenticeship Frameworks to Apprenticeship Standards which have higher quality requirements.

The next steps will be to specifically examine employers who are subject to the Levy and look at their apprenticeship training patterns over time. This will enable us to assess what happened to training volumes before and after the introduction of the Levy for firms that are subject to the Levy. Furthermore, we plan to use information from the ILR and the employers’ Digital Accounts to explore how changes in the funding rules have affected different employers, and what proportion of Levy funds available in their Digital Accounts have been used.

Chosen excerpts by Job Market Monitor. Read the whole story @ Exploring trends in apprenticeship training around the introduction of the Apprenticeship Levy: emerging evidence using a matched apprentice-employer dataset