There is a risk that increasing flexibility around the new apprenticeship levy could lead to its failure, warns Iain Mackinnon
The siren calls are getting louder, but will they be silenced? As we draw closer to the implementation of the apprenticeship levy, organisations are voicing their opinions on how they would like it to work. The Confederation of British Industry wants firms to be able to spend their levy pot on all training, not just on apprenticeships, while the Scottish government gave a heavy hint in its recent consultation that it too wants that flexibility.
I’m not convinced. If we get this wrong the levy will end up being a colossal waste of money. We will fail to make the difference we are capable of making and we will divert huge sums into administrative costs, which should be spent on apprentices.
I’m not speculating here. I was a civil servant 30 years ago when the government set about abolishing the statutory levies run by the old industry training boards. We had letter after letter from employers complaining about the bureaucracy and the money wasted on administration.
We also knew that many of them had people ‘gaming’ the system – keeping their liabilities as low as possible and claiming back as much as possible, regardless of the wider business benefit.
A virtue of the current levy design is that it will be run in a very streamlined way, with the biggest opportunities for waste simply designed out. It will cover every company in the land, for a start, so there’s no need for anyone to adjudicate claims that a particular organisation is ‘out of scope’, which was a huge issue 30 years ago.
As it stands, companies can only spend their levy pot on statutory apprenticeships. There’s no room for argument and no need to pay anyone to judge claims for exemption; something unequivocally is, or is not, a statutory apprenticeship. That simplicity is a valuable prize and we should think very carefully before we throw it away in search of something better.
There is also a clear focus on a major weakness in our economy: the lack of enough high-quality apprenticeships. Everyone agrees it’s a problem but, if we get it right, the relentless focus on apprenticeships through the levy should make the real difference we need.
But there’s more to training than apprenticeships, I hear you cry – and many more people to worry about than those lucky enough to get an apprenticeship.
I agree on both counts; of course that’s right. But what both claims are really saying is that there’s not enough money to go round – that the levy is a huge new bagful and it would be great to divert some to other things that also need doing. However, the levy pot can’t solve every problem and there’s big risk in trying to make it do so.
For instance, 25 years ago an entrepreneurial housing association in San Francisco bought a fast-food franchise to make some money. However, it then decided it was wrong to employ people on a part-time basis when they really needed full-time jobs, and that it was also wrong to pay people industry-standard wages when so many needed a proper pay packet. By the time they’d made both changes, they’d destroyed their profit and therefore failed to achieve the goal they started with.
The point is not whether they were right or wrong (they kept the franchise in the end because they liked employing people on good pay). The point is that the best may be the enemy of the good. Try to do too much and you may fail to do anything at all worthwhile.
This topic needs more debate. We’re designing a system to fit the whole UK economy and if we get it wrong – because we pounce on simplistic solutions – we may waste a valuable opportunity to make a real difference.
Iain Mackinnon is managing director of the Mackinnon Partnership