We’re still underestimating the power of apprenticeships and that’s ruining our economy

Talk to any UK business chief these days and the refrain will be the same. They’re worried about Brexit, and the uncertainty it brings. They’re also grappling with the advance of artificial intelligence, and increasing globalisation.

But then they might well add, they could do without some domestic burdens. They will rattle off four items in no particular order: business rates, minimum wage, upward-only rent reviews, and the apprenticeship levy. This quartet make their lives in a tough world even tougher. All four, they see as unnecessary, as additional costs they could well do without.

Often, too, this roll-call is accompanied by anger and a fair few expletives. Certainly, three of them – business rates, minimum wage, and the apprenticeship levy – are seen as government interference, the uncaring, distant centre adding to their bills. Two – business rates and the apprenticeship levy – are regarded as taxes by other names, as charges on top of the other taxes they must pay.

That the apprenticeship levy should come to be seen this way is dreadful, and a perception that urgently needs fixing.

When I was at school, admittedly many moons ago, some pupils left at 16, mostly to become apprentices in the local shipyard. The rest stayed on to the sixth form and university, or a trainee job in the shipyard, bank or building society.

The point was that those of us who went to university thought nothing less of those who had left at 16. They were our friends, they’d chosen to take a different path, that was all. In fact, if anything we were jealous – they were the ones with money, with leather jackets and motorbikes.

Neither did we think we were guaranteed to earn more. My town contained several examples of folk who’d left school as soon as they could and learned a trade as an apprentice, only to subsequently strike out on their own and do extremely well for themselves.

That route to entrepreneurship was borne out by The Sunday Times Rich List which always shows that those who accumulate the most wealth in our society often do not hold degrees. Frequently, too, those who invent a widget that supplies a simpler way of doing something, and go on to make their fortune, obtained the idea while working in a trade, having previously been an apprentice.

It was a huge loss to our economy, to our process of wealth creation, when this tap was turned off. Apprenticeship schemes were scrapped, due to lack of funding and government support.

At the same time, university numbers soared. Late in the day the government woke up to the fact that there are too many universities, some of which are not fit for purpose, teaching courses that should not carry a degree qualification (my own favourites was seeing a sign at one university for “students on the short course in holocaust studies” whatever that is, and at another, a notice informing “students in hairdressing skills” their class had moved) to students who should not be there, and costing the earth.

A swathe of young people was being directed towards university when they, and the economy, would be better off, if they gained on-the-job experience combined with studying, learning a vocational skill.

The result is a resurgence of interest in apprenticeships, and the introduction in April 2017 of the levy scheme. Large employers, those with wage bills of more than £3m, pay 0.5 per cent of their payroll into a central pot that is then used to fund apprenticeships. Firms with a smaller payroll pay 10 per cent of the costs to the provider, with the Government paying the remaining 90 per cent. If a company has fewer than 50 employees, the Government funds all the costs of training 16 to 18-year-old apprentices.

All well and good. Except it is far too complicated to apply in practice, and employers do not understand it – and worse, actually oppose the charge as a tax. The aim was to create three million apprenticeships by 2020. That now seems like a pipe dream. According to the Department for Education’s figures, there were 114,400 apprenticeship starts in England in the three months from August to October 2017, some 49,800 down on the same period the previous year.

Two surveys among employers suggest the reasons why. The HR body, the Chartered Institute for Personnel and Development, polled more than 1,000 firms and found that 22 per cent don’t know whether they have to pay the levy or not. A study by the EEF manufacturers’ organisation shows that more than one-third of manufacturers see no benefit from the scheme.

The EEF survey signals where at least part of the problem lies: 75 per cent of manufacturers complain they are unable to spend the money tied up in the apprenticeship levy fund. That’s because caps are imposed on the amount that can be spent, and conditions attached as to what it can be used to fund. So anything involving learning how to use high-level technology and advanced engineering is unlikely to pass muster.

Many apprenticeships take four years; the levy funding has to be spent in two. I could go on – there are problems for instance with bigger companies trying to introduce their smaller suppliers into the training programme – but you get the picture. It’s a mess, and it desperately needs sorting. The scheme has to be decluttered and the value of apprenticeships must be championed, to employers, young people and their careers advisors, and local councils and government.

What should be a source of national dynamism, a future promise of prosperity, is instead, an irritant. That should not be allowed to happen.

Chris Blackhurst is a former editor of The Independent, and executive director of C|T|F Partners, the campaigns and strategic communications advisory firm