Can apprenticeship overhaul ease skills shortages?

The new Labour government has announced an overhaul of the UK's apprenticeship system as it seeks to address the country's longstanding skills shortages. Despite previous government interventions, job vacancies caused by firms finding it hard to recruit people with the right skills or qualifications have more than doubled over the past decade. Here we look at the latest changes to the apprenticeship system.

Develop vital skills

The government has announced a new Growth and Skills Levy which will replace the existing apprenticeship levy and include new foundation apprenticeships.

The government says these new apprenticeships will give young people a route in to careers in critical sectors, enabling them to earn a wage whilst developing vital skills.

The new levy will also allow funding for shorter apprenticeships, giving learners and employers greater flexibility over their training than under the existing system – where apprenticeships must run for at least 12 months.

The training eligible for funding under the new levy will develop over time, informed by Skills England's assessment of priority skills needs, the government adds.

The Department for Education will set out further details on the scope of the offer and how it will be accessed in due course.

Needs and gaps

A recent report from Skills England, the government's new body for the skills system, has assessed the nation's working skills, as well as future skills needs and gaps which employers are struggling with across the country.

The report has found that employer investment in training has been in steady decline over the past decade, with training expenditure at its lowest level since records began in 2011, and investment per employee down by 19% in real terms. This highlights the need for government reforms to the skills and apprenticeships system.

It also shows that, across the UK, almost one in ten, or over 2.5 million roles are in critical demand, with more than 90% being in roles that require training or education. 

Major concern

Alex Veitch, Director of Policy at the British Chambers of Commerce (BCC), said: 'Skills shortages continue to be a major concern for businesses and a drag on economic growth.

'The proposed new Growth and Skills Levy was a key part of the government's plans at the election. It is welcome ministers have acted early to give more details about skills reform.

'We've long argued that the current Apprenticeship Levy needs urgent reform to make it more flexible. Businesses need a simple, coherent and responsive system that properly incentivises employer investment in training.'

Cycle of failure

The new Growth and Skills Levy must end the 'cycle of policy failure' in addressing Britain's chronic skills shortages, according to the Resolution Foundation.

The think tank says the government must get its design and implementation right if it's to boost the number of apprenticeships after years of decline and ensure that Levy funds go to young people who need it most.

The Foundation says that Britain's chronic skills shortages are underlined by the fact that the share of job vacancies caused by firms finding it hard to recruit people with the right skills or qualifications has more than doubled over the past decade from 16% in 2011 to 36% in 2022.

Skills shortages aren't just preventing firms from recruiting either: an increasing share of workers are judged by their current employers to not have the right level of skills required to do their job.

Addressing chronic shortages

Louise Murphy, Senior Economist at the Resolution Foundation, said: 'For too long, well-intentioned reforms have failed to end the cycle of failure when it comes to addressing chronic staff shortages across Britain.

'One-in-three vacancies today stem from firms not being able to find people with the right skills, while too many young people struggle to find a route into skilled work that doesn't involve university.

'The new Growth and Skills Levy offers a fresh chance to break this cycle. But the government must get the detail right if it's to avoid repeating the same policy mistakes.'

Providing opportunities

Businesses continue to look to the future. They must invest wisely, using the available government support, to develop a skilled, motivated workforce.

We are happy to advise in detail on the best approach to suit your circumstances. Please contact us for more information.