Opinion: Apprenticeships need support for manufacturing to Build Back Better

Boris Johnson announced a strategy to rebuild Britain and fuel economic recovery across the UK under a banner of ‘Build Back Better’. The manufacturing and transportation industries need to train more people and upskill the current workforce. Lee Collinson from Barclays looks at why apprenticeships and traineeships must be provided affordably and simply. 

Apprenticeships give employers access to skilled labour, people who are typically sponges for new knowledge. Young people and those seeking to be reskilled are paid to train. The direct relevance of the apprenticeship to the end job makes apprenticeships a win-win for many companies.

To indicate the demand for training, the logistics sector faces a shortfall of 59,000 HGV drivers, plus shortages of intralogistics operators, with 33% of the workforce set to retire. Skills are always in high deficit in manufacturing, especially with digitalisation.

 

Apprenticeships have also helped to give industries like manufacturing and logistics a more modernised image through the work of the Education and Skills Funding Agency, the Apprenticeships service and business groups.

This drive was working. Apprenticeships starts rose to their peak in 2011/12, with 520,600 starts a year across the whole economy. The highest apprenticeship starts in manufacturing and engineering were in 2015/16.

However, the covid-19 pandemic has put real pressure on this positive trajectory. Apprenticeship starts in manufacturing have dropped by 47%, from 101,300 to 53,530, between March and July compared with the same period in 2019, largely due to the lockdown. Make UK, the manufacturers’ organisation’s latest Manufacturing Monitor survey showed 30% of members expect to pause apprenticeship training over the next 12-months. “Only 45% of members said they were they’re planning on recruiting apprentices – significantly down on the average, between 75%-80%,” says Bhavina Bharkhada, Senior Campaigns and Skills Policy Manager at Make UK.

The aerospace sector been hit particularly hard by Covid-19. The main trade body for this sector, ADS, says that given the fall in revenues for aerospace and the restructuring companies are doing in response to the crisis to address financial and future sustainability, costs for training and apprenticeships must be supported.

ADS Director of Policy, Jonathan Hawkings, told Barclays “While many larger ADS members are committed to their apprenticeship training programmes, many smaller companies are facing difficulties in being able to take on new apprentices this year. A reduction in apprenticeship starts will have a knock-on impact on training providers and colleges, reducing the resources available for local training provision. If this resource and capacity is lost, there will be a lasting impact on the ability to train and upskill employees and apprentices as the economic outlook improves.”

Larger aerospace employers have been able to continue hiring apprentices, but the covid crisis is impacting everyone. Rolls-Royce’s Head of Learning and Development Delivery Sharon Etheridge said: “We recognise the importance of attracting future talent to Rolls-Royce which is why we are continuing to recruit apprentices, interns and graduates for 2020 and 2021. However due to the unprecedented impact of COVID-19 on our Civil Aerospace business, we have reduced the intake on our early career programmes this year. We have introduced a range of measures to support those impacted including prioritising them for future opportunities.”

Rolls-Royce has also deferred the start date for some of its 2020 intake to early January.

In July the government responded by increasing the financial incentive for companies taking on apprentices, giving £2,000 for each 16-24 year old hired in England and £1,500 for those aged 25 and over from 1 August 2020 to 31 January 2021. This is in addition to the flat £1,000 per apprentice offered before. Although this is welcomed by the sector, some have called for more to be done.

Support for multi-generational apprenticeships

A feature of apprentice training that is especially important in these difficult times is diversity and inclusion.

Thousands of people have lost their jobs, the workplace is changing and Covid shows that many people need to reskill, upskill and find different work – so apprenticeships must be available to older people too, not only the principle 16-24 target group.

Barclays sees real business benefits here. Having experienced, multi-generational employees helps to create a diverse workforce and many businesses, no matter their shape or size, are likely to benefit from recruiting and reskilling older workers. We believe that investing in multi-generational apprenticeships better reflects the make-up of a business’ customer, client or stakeholder base and if joining from other sectors, they are able to bring a range of new ideas and opinions to the table.

However, far more can be done to raise awareness of the various opportunities multi-generational workers have available to them – and this is more important than ever. All industry groups and training providers should signpost the opportunities for mature workers to retrain with an apprenticeship, and any subsidy payments available. Firms need better information about apprentice standards, too. “Government has to work closely with industry to raise awareness on the availability and suitability of standards to ensure employers of all sizes are informed customers,” says a corporate affairs spokesperson at FDF.

 

The Apprenticeship Levy

The levy was introduced in 2017 to compel larger employers to train people in apprenticeships. It’s a tax on training levied at 0.5% of all payroll bills with a £15,000 allowance, for firms with a gross payroll of £3 million or more. Employer groups support the principle of the levy but like any tax, it has faced controversy and now the Covid crisis is reducing apprentice starts, industry groups are campaigning government for it to reform.

Logistics UK, the Food and Drink Federation (FDF), Make UK and ADS have asked government to make targeted changes to the Apprenticeship Levy.

FDF and Make UK have asked government to commit to a comprehensive consultation on apprenticeships and the levy fund where nothing is off the table, including the option to move towards a flexible skills levy that can be used to pay for shorter, but high quality, courses and qualifications.

ADS says that it will take time to build sustainable provision that is sector specific. This is why an extension to the expiration of levy funds is needed for those employers with standards which are still in development, or for those who do not have access to suitable training provision yet.

Other business groups have broadly similar recommendations. Make UK recommends that government should extend the lifetime of employer levy funds from 24 months to 36 months, allowing employers a further year to use their digital funds to support the training and ensure that those apprentices who were furloughed do not miss out on the chance to complete their training due to expiration of the levy funds.

The urgency now, as Britain looks to “Build Back Better”, is to grasp this economic reset as an opportunity to deliver long-term and contemporary skills training, factoring in the rise of digital industries and skills, working from home, a retiring workforce, the effect of digital technology on manufacturing and logistics – and the need for people of any age to retrain and upskill. Apprenticeships are just one of several ways to offer suitable training to boost skills. Many large companies like PwC and IBM offer bespoke traineeships and school leaver programmes, and the Degree Apprenticeships are increasingly popular. City & Guilds offers new Functional Skills qualifications to help learners improve their maths, English and ICT skills and there are specialist training for trades like the PASS Electrical Training Course and many more.