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Chancellor Announces a Summer Statement in Response to Coronavirus

By: Rachel Miller

Chancellor Rishi Sunak has announced a raft of new measures designed to protect, support and create jobs, including a job retention bonus.

Rishi Sunak Covid-19, 10 Downing Street mini budget

The “Plan for jobs” announced by the chancellor in his summer statement is part of the government’s plan to secure the UK’s economic recovery from coronavirus.

The key measures are:

  • A new Job Retention Bonus will be paid to employers who bring staff back from furlough. UK employers will be paid £1,000 for each employee who is continuously employed until the end of January 2021 earning over the lower earnings limit (£520 per month).
  • There will be a new Kick Start Scheme to support the creation of jobs for young people aged 16-25. Funding will cover 100% of the relevant National Minimum Wage for 25 hours a week, plus employer NICs and minimum statutory employer pension contributions. The scheme will target those on Universal Credit who are deemed to be at risk of long-term unemployment.
  • There will be additional funding for employers providing traineeships. The Government will fund employers in England who provide trainees aged 16-24 with work experience, at a rate of £1,000 per trainee.
  • From 1st August 2020 to 31st January 2021, the Government will pay employers in England £2,000 for each new apprentice they hire under the age of 25 and £1,500 per apprentice aged over 25. This is in addition to previously announced incentives.
  • The rate of VAT will be cut on food and non-alcoholic drinks from 20% to 5% from 15 July 2020 to 12 January 2021. The reduced (5%) rate will apply to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises across the UK. The reduced rate also applies to supplies of accommodation and admission to attractions across the UK.
  • A temporary ‘Eat Out to Help Out‘ scheme will run throughout August. Every diner in participating establishments across the UK will receive a 50% discount (up to £10 per head) on their meal. The discount can be used unlimited times and will be valid Monday to Wednesday on any eat-in meal (including on non-alcoholic drinks). Participating establishments will be fully reimbursed for the 50% discount.
  • The nil rate band of Residential Stamp Duty Land Tax will be extended with immediate effect from £125,000 to £500,000 until 31 March 2020.
  • A new Green Homes Grant to support green jobs will provide homeowners and landlords with vouchers to pay £3 for every £2 spent making a home energy efficient (up to £5,000 per household). For those on the lowest incomes, the scheme will fully fund energy efficiency measures of up to £10,000 per household.
  • The Government also announced a range of measures to support the creation of jobs including: a Construction Talent Retention Scheme to support the redeployment of workers at risk of redundancy; a new Office for Talent which will focus on attracting, retaining and developing top research and science talent across the UK and internationally; a Green Jobs Challenge Fund to help environmental charities and public authorities create and protect 5,000 jobs in England; an Automotive Transformation Fund to develop and embed the next generation of cutting-edge automotive technologies in batteries, motors, electronics and fuel cells.

4 Reasons Why You Should Adopt Blended Training

The following article is by Robin Singh, Technical Support Executive. Robin is an expert in various LMS and employee training Currently, he is a resident learning management expert at ProProfs.

Every student is different. In recognizing that, educators not only accentuate the differences that exist between students of various ages or intellectual abilities, but also the fact that two persons can be at the same phase of physical and cognitive development and still have different needs, preferences, and approaches to learning.

Some acquire knowledge by listening, others thrive on visual cues. From these highly individual affinities stem different learning styles. Auditory, visual, kinesthetic, and reading/writing approaches to learning are only a few of them. Others are more hybrid and suggest combinations of learning techniques that vary from one person to another. Read more

10 Famous People Who Were Apprentices
June 30, 2020
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Apprenticeships have been around for centuries, originally in manual trades such as stone masonry, painting and plumbing.

They’ve come a long way and below are some familiar faces who started out their careers as an apprentice.

Jamie Oliver – Like many chefs, Jamie started his career as a catering apprentice. After leaving school with only two GCSE qualifications, his apprenticeship has definitely helped him to succeed in his chosen career.

Sir Ian Mckellan – Sir Ian didn’t go to a drama school like most other big-name actors, but instead he completed a three-year apprenticeship at the Belgrade Theatre in Coventry.

Karen Millen – The famous designer started her career as an apprentice, studying at the Medway College of Design in Rochester. She also sold t-shirts to her friends on the side, before opening her first shop.

Stella McCartney – Like Alexander McQueen, McCartney started her fashion career as an apprentice tailor with Edward Sexton on Savile Row. Read more

ViewPoint: Assessing the Apprenticeship Levy Three Years On
June 2, 2020
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By Sarah Rowan / HRMagaize

This year marks the third anniversary of the government’s apprenticeship reforms, and with each passing year, we’ve seen the commentary on it evolve. 

From the initial drop-off in starts, to the looming expiration date of levy funds, the quality of the standards on offer and now to the lack of available funding for SME apprenticeships.

Given that the 2017 shake-up of the system was the most significant in a generation, such teething problems are to be expected. The current levy is a tax on organisations with a payroll of more than £3 million, requiring them to pay 0.5% of their wages bill into an apprenticeship fund, with the money needing to be used within 24 months. 

Last March, as that two-year expiration date approached for the first time, concerns were raised about the amount of levy funds still left unclaimed.

At the time £3 billion of levy funding had yet to be used and was due to expire at a rate of £120 million per month. This clearly was the impetus employers needed and it led to a 15% increase in apprenticeship starts in 2018/19. 

However, the most recent figures are less than encouraging. In the first quarter of the 2019/20 academic year, new starts were down 4.7 per cent to 125,800 from 132,000 in the same quarter the year before.

Despite this downturn in new starts, apprenticeship funding is running out – at least for non-levy payers. Under the current system, a levy-paying business can transfer up to 25% of its funds to other non-levy paying SMEs in its supply chain.

The government had envisaged that this would create enough funding to supplement the cost of apprenticeships for SMEs, but recent research by the Association of Employment and Learning Providers (AELP) found this not to be the case.

On average, apprenticeship providers are turning down approaches from 40 SMEs per month due to lack of funds. In designing the system this way, the government seems to have underestimated how much of their entitlement levy-payers would actually use and what they would spend it on.

The most recent HMRC statistics for August to October 2019 reveal that ‘starts’ on level six (degree-equivalent) and level seven (masters-equivalent) apprenticeships have risen 49.4 per cent since the same quarter in 2018/19 and are now nearly five times higher than the same period in 2017.

Consider that a level seven, MBA-style apprenticeship can cost up to £27,000 and you start to uncover some of what’s at the root of the funding shortfall.

“The fact that it’s running out of money actually means that it’s working well,” says Anthony Impey, founder of business ISP Optimity and chair of the Federation of Small Business’ (FSB) skills and apprenticeship policy group.

David Hare, director in the talent solutions team at Grant Thornton, agrees: “What we’ve seen is that the uptake of apprenticeships has perhaps been a bit higher than the government initially anticipated. There is more spending going on in the system that the budget had allowed for.”

That may be the case, but the dramatic increase in the degree-level apprenticeships certainly prompts speculation as to whether employers are using their funds in the right places; is such spending going to help organisations meet their future skills needs, and, crucially, what role does HR have to play in influencing how that money is spent?

Hare says that skills shortages have prompted employers to take action and many are coming alive to the fact that apprenticeships can be a good solution for this. But he also acknowledges that there will have been some pressure from finance directors to ensure the money is spent before it expires.

“The dilemma is that the system incentivises employers to look at how they can reclaim their levy funding,” says Ben Willmott, head of policy at the CIPD. Tom Richmond, founder and director of educational think tank EDSK, believes that this model has led to an explosion of ‘fake apprenticeships’.

Funding

A 2020 report by EDSK claims that over £1.2 billion of levy funding has been allocated for apprenticeships which, prior to 2017, wouldn’t have been classed as such.

“In many respects, employers have responded rationally to the incentives created by the government. For levy-paying employers, they are keen to re-label their existing training courses as ‘apprenticeships’ to draw down their own levy contributions as quickly as possible,” comments Richmond.

“For non-levy employers, the small pot of money reserved for them operates on a first-come-first-serve basis, so they are understandably keen to use up the available funding before someone else does.”

According to Willmott, the rebadging of existing, and often expensive, training programmes undermines the ambition of the apprenticeship system, and makes them a “proxy for all workplace training”.

But Mark Dawe, chief executive of AELP, argues that overall, the commitment by levy payers to spend their funds is predominantly a good thing. “My view is that the more levy payers engage, the more they’re showing everyone the power of apprenticeships, the better,” he comments.

David Phillips, interim managing director of skills credentialing at City & Guilds says that fundamentally we just need to trust that employers are making the right choices for their organisations.

Impey, who also chairs the Department of Education’s Apprenticeship Stakeholder Board, agrees: “We can’t create a system, which is based on giving employers control…and then turn around to employers and say, ‘we know we gave you a choice, but I’m afraid you’ve been making the wrong choice’.”

But how does HR know what the ‘right choice’ is for their organisation? “HR should have a very good strategic understanding of the skills that they have and that the organisation needs, in order to succeed,” says Willmott. “That way decisions around investment in skills are not purely tactical and are not made simply to utilise levy funding.”

Upskilling the Workforce

The key to getting this workforce planning right is to resist the temptation to solely focus on immediate skills gaps, says Sebastian Tindall, head of L&D at Vitality. “For us, the pressure has never been to spend the money at all costs but rather invest it wisely to get the best out of our people,” he comments.

Andy Moat, people director of B&Q, agrees that sometimes the incentive to spend the levy funds can be a distraction for employers. “We’ve fallen into the trap in the past of treating government funded learning like a KPI and chased a target, at the expense of the learning experience,” he says.

The retailer has recently seen 123 employees complete its level three retail team leader apprenticeship and has bigger plans. By May 2020 B&Q aims to have 1,100 of its employees on apprenticeships, across 28 standards that encompass all of its business functions. “We were determined not to repeat the same mistake, so we are very much focused on quality not quantity,” adds Moat.

At both Vitality and B&Q, the majority of apprenticeships have been delivered at level three but they’ve also each invested in higher-level apprenticeships too. 

“A lot of people will assume that when you invest in an MBA-style apprenticeship, you’ll be doing it for an executive with 15 years of experience and they don’t need it,” comments Tindall. “But it’s a viable alternative to university for a young person. They’ll build experience, get none of the student debt and draw a salary.”

Vitality currently spends about 80% of its levy on level three standards, with approximately 20% portioned off for specialist and higher-level training. It’s a balance that works for them, says Tindall, and allows them access to niche skills such as actuarial science, which is key in their industry.

While these employers might have made the strategy work for them, there are many other non-levy payers who have yet to feel the benefit of the 2017 reforms, despite now having access to the digital apprenticeship service (DAS).

Impey says that while opening up the DAS to SMEs is a really positive move, it creates another crisis to navigate because there’s not enough funding.

Furthermore, because of concerns about affordability, the government has limited each SME to three apprenticeship starts. “I would describe that as having an unsatisfactory situation for the last three years to an unacceptable situation in the future,” remarks Impey.

SME Impact

It’s a stark contrast to the apprenticeship landscape prior to 2017, when SMEs accounted for the majority of apprenticeships. The current situation could have wide-ranging consequences both for the organisations themselves and the communities they’re based in. 

“The impact on small businesses is that they’re not able to grow. They’re not able to respond to changes in the marketplace brought on by automation and digitisation, and it risks stifling their productivity,” says Impey.

And while large organisations tend to cluster near big cities, SMEs are based everywhere, meaning their impact is, arguably, greater. “Small businesses are great agents of social change because they have this footprint that is truly nationwide.

“They are embedded in their local community, suppliers are local, customers are local and so are employees,” adds Impey. “If the government is genuinely committed to a strategy of ‘levelling up’, then enabling small businesses to train and develop their staff is really, really important.”

Pre-coronavirus, there were expectations across the industry that the March budget would bring a much-needed cash injection, allowing SMEs to take full advantage of their access to DAS. The AELP, for one, has called for the further allocation of £1.5 billion pounds.

“We don’t really care where the money comes from,” says Dawe, “But that money is needed, just to bring things back to where they were for SMEs prior to 2017.” Any such boost will surely only be a temporary fix for what is fundamentally a design flaw, but many stakeholders caution against further reform.

Phillips says that what is needed is patience and persistence to make the current system work. Impey agrees: “It’s quite important that we don’t look at what’s happening in the apprenticeship system as a system failure. It’s actually to do with market demand exceeding the funding available.”

From the HR perspective, Tindall believes that the levy system has made L&D more effective. “The money is sitting there, and the only consideration is how to allocate that money fairly,” he comments. “If we said that three or four years ago, you would think: ‘we’d love to be in that situation’. We are in that situation now and yet people are calling for reform.” 

It’s unlikely that calls to overhaul the system will subside anytime soon. The CIPD has long argued for reform with its own research showing that 53% of levy-payers would prefer a wider training levy compared to 17% whose preference is for an apprenticeship levy.

Sandra McNally, director of the education and skills programme at London School of Economics’ Centre for Economic Performance, says that some degree of further reform is inevitable. “It is a good idea to have a policy that incentivises firms to take on apprenticeships,” she says. “But this is not enough to address the skills deficit in Britain.”

With many employers now using the levy for that very purpose, it has resulted in a marked shift in demographics. Apprenticeship starts by over-25s have increased by 44.8% since the 2017 reforms, while starts by those under 19, have fallen by 12.8%.

Moat argues that everyone should be able to take advantage of the levy. “There’s a tendency to assume apprenticeships are just for younger candidates, but I strongly believe that apprenticeships should be available to everyone, from those who have just left school to people who have been in the workforce for many years, including older workers,” he told HRmagazine. 

“We have one of the most age diverse apprenticeship schemes in the industry, with apprentices aged from 20 to 61-years-old.”

But McNally notes that while we do need to focus on reskilling and upskilling, not every employee will require the extensive training that an apprenticeship provides. “It would be useful to consider ways of incentivising [reskilling] that go beyond apprenticeships,” she comments. “One possibility would be to extend research and development tax credits to [include] training, which is done in Austria.”

There are further lessons to be drawn from abroad, McNally says, noting a proliferation of apprenticeship standards in the English system. The Institute of Apprenticeships website currently shows 710 standards, where Germany has 320 and Switzerland has just 240.

Richmond also points to this and believes the Swiss and German systems focus on quality where the English one offers quantity, often at a lower skill level. “No other country would allow these courses into their apprenticeship system,” he claims.

Despite the impact on SMEs, Impey – a long-time apprentice employer himself – advises against reforming the system at the moment. “I think the question around funding is much, much bigger than ‘how do we make apprenticeships affordable?’ It’s ‘how do we respond to this new economy?’,” he comments.

“In the modern global economy, talent is your most important infrastructure. It’s the engine of the economy. Having the right skills investment and the right lifelong learning system in place is almost the most important infrastructure consideration that we need to make now.”

ESFA Reveals Calculations for the Furloughed Apprentice Wage Top-up

REPORT FROM FEWEEK.

The Education and Skills Funding Agency has finally confirmed that the national minimum wage requirement for a furloughed apprentice applies to just the “training hours during the furlough period”.

In an email from a senior manager in the funding policy team, seen by FE Week, an explanation with two worked examples is provided.

A furloughed employee can take part in volunteer work or training, as long as it does not provide services to or generate revenue for, or on behalf of the employer.  Training in this context includes apprenticeship off-the-job training. Where their provider can continue to deliver training remotely, a furloughed apprentice can therefore continue their apprenticeship whilst furloughed.

Where training is undertaken by furloughed employees, at the request of the employer, they are entitled to be paid at least their appropriate national minimum wage for this time. In most cases, the furlough payment of 80% of an employee’s regular wage, up to the value of £2,500, will provide sufficient monies to cover these training hours. However, where the overall time spent training, during the furlough period, attracts a minimum wage entitlement in excess of the furlough payment, employers will need to pay the additional wages. This is because time spent training is treated as working time for the purposes of the minimum wage calculations and therefore must be paid at the appropriate rate, taking into account the increase in minimum wage rates from 1 April 2020.

Employers should consider the hours that an employee is expected to train during the period of the furlough (which must be a three-week minimum). Employers will need to ensure that the furlough payment provides sufficient monies to cover these training hours. Where the entire furlough payment equates to less than the appropriate minimum wage entitlement for the training hours during the furlough period, the employer will need to pay the additional wages to ensure at least the appropriate minimum wage is paid for the time spent training.

Our worked examples show how to calculate whether the furlough payment equates to less than the appropriate minimum wage entitlement for time spent training.

Example 1:

18 year old first year apprentice is on a 37 hours per week contract and has been furloughed.  They are continuing to training for 1 day per week (7.5 hours per week).

In terms of the National Minimum Wage Regulations they are entitled to £4.15 for every hour they train. (Note that the NMW legislation does not apply to time not in work or training).

Over the 3 week furlough period (the pay reference period) this amounts to a NMW entitlement of £93.38 (£4.15 x 7.5 hours x 3 weeks).

The 80% furlough payment that they have received from their employer is £368.  This furlough payment provides sufficient money to cover these training hours.

Example 2:

22 year old second year apprentice is on a 37 hours per week contract and has been furloughed.  They have agreed, with their employer and provider, to train for 4 days per week (7.5 hours per day) (to cover as much off-the-job training as possible during this period).

In terms of the National Minimum Wage Regulations they are entitled to £8.20 for every hour they train.  (Note that the NMW legislation does not apply to time not in work or training).

Over the 3 week furlough period (the pay reference period) this amounts to a NMW entitlement of £738 (£8.20 x 7.5 hours x 4 days x 3 weeks).

The 80% furlough payment that they have received from their employer is £728.16.  This furlough payment does not provide sufficient money to cover these training hours and the employer would need to top up the difference (£9.84).

*Note is both cases above the apprentice, prior to furlough, was paid at/close to the National Minimum Wage. 

Apprenticeship Week
January 25, 2020
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An Activity Pack is available for National Apprenticeship Week 2020, which is full of fun and engaging activities for students.

The pack consists of 10 easy to use activities and answer sheets, so you’ve got everything you need to get your students engaged and informed about apprenticeships!

Interactive Apprenticeship Quizzes
Challenge your students with online interactive Apprenticeship Quizzes!

The quizzes can be set as homework or delivered as part of a lesson. Fun multiple choice questions will help students to think about the benefits and opportunities of apprenticeships.

AW2020 Daily Broadcasts 
Daily broadcasts will run throughout NAW2020 from 9.30am – 3pm, Monday – Friday. Interviews will feature a range of apprentices from different employers, sectors, backgrounds and apprenticeship levels. Join Friday for a live broadcast with members of the Young Apprentice Ambassador Network! Find out more here. 

ESFA: New Apprenticeship Service Webinars & Roadshows
January 23, 2020
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Webinars

ESFA are holding several webinars from January to March aimed at employers, training providers, and any organisations/ individuals with an interest in the apprenticeship service.

All webinars are hosted by subject matter experts to help service users to understand more about the apprenticeship service.

Attendees will have the opportunity to ask experts questions in a live Q&A and take part in interactive polls.

Topics include:

  • apprenticeship eligibility
  • apprenticeship funding rules
  • moving from apprenticeships frameworks to apprenticeships standards
  • off-the-job apprenticeship training
  • transitioning smaller employers onto the apprenticeship service

You can sign up now.

You can watch all apprenticeship service webinar recordings on YouTube.

Provider Roadshows

ESFA will host the second series of provider roadshows in February and March 2020 for main providers on the register of apprenticeship training providers (RoATP).

The events will be collaborative and consultative.

The events will focus principally on the transition of smaller employers that do not pay the apprenticeships levy to the apprenticeship service. ESFA will also talk about the full withdrawal of apprenticeships frameworks and end-point assessment organisations (EPAOs).

ESFA will provide you with opportunities to network with other providers, and to feedback around key themes so that we all have a chance to share good practice and learn from experiences of others. They will write to providers in January with more details about the agenda, and about the venues.

In the meantime, our roadshow dates are as follows.

  • Tuesday 25 February – North East
  • Tuesday 3 March – North West
  • Monday 5 March – London
  • Tuesday 24 March – Midlands
  • Thursday 26 March – South Central
  • Tuesday 31 March – South West
The Challenges of Apprenticeship Expansion in England, the USA and Australia
January 17, 2020
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New research by Dr Johann Fortwengel and Professor Howard Gospel of King’s Business School with Dr Phillip Toner of the University of Sydney, Australia, has highlighted the difficulties of expanding apprenticeship numbers, especially in industries with little historical experience of this form of training.

Professor Howard Gospel, Emeritus Professor of Management, King’s Business School
Professor Howard Gospel, Emeritus Professor of Management, King’s Business School

The team also found that successful attempts to renew apprenticeships involved efforts to synchronise government-led and employer-led initiatives, and engaged employer associations, unions and others. This kind of coordination was more likely to lead to a sustained increase in apprentice starts; simply providing funding and leaving employers and market forces to determine the types and structure of programmes available was less effective.

Professor Howard Gospel, Emeritus Professor of Management said:

“Apprenticeships were a theme in the UK election; the Conservatives, Liberal Democrats and Labour all talked about investment in apprenticeships.  But expanding the number of apprenticeships and ensuring they are valued by employers is challenging to get right.

“Our research shows that while both England and Australia have delivered increases in apprentice numbers since the 1990s, that growth faltered when expansion into new industries led to doubts over quality and confusion over what apprenticeships should really deliver.” 

Dr Johann Fortwengel

Dr Johann Fortwengel, Senior Lecturer in International Management, adds:

“These experiences are important lessons for the US, where efforts to increase apprenticeships have so far been proportionally smaller. Expansion into new areas has been on the agenda since the Obama administration, but with little real progress to date.”

The researchers tracked efforts in England, Australia and the US to revive apprenticeships as a solution to skills shortages, youth unemployment, and broader challenges like rising income inequality. Historically, these ‘Anglo-Saxon’ economies  have lacked effective support for industry-wide apprenticeship training schemes. Also, compared to countries, such as Germany or Switzerland, demand has historically been limited, with a large proportion of young adults choosing the university route over an apprenticeship.

UK

In England* apprenticeship starts grew by 400 per cent from 1996 to 2017, especially from the late 2000s onwards. Growth was driven by changes in the definition of apprenticeship and by the extension of apprenticeships beyond construction and engineering into non-trade specialisms, especially from the mid 2000s onwards.

Expansion into the service sector has also prompted two major dips:

  1. First post 2010 in the face of doubts over standards in new non-traditional training programmes for sectors like hospitality and retail, and
  2. Second since the introduction of the apprenticeship levy in Spring 2017.

Howard Gospel says: “There are multiple reasons for disenchantment with the apprenticeship levy. Some employers see it as too complex, or excessively interventionist. Other commentators are concerned that it is funding already well qualified existing employees on degree and other higher qualifications. To date the initiative hasn’t delivered on some high hopes for what it might achieve.”

Australia

By comparison with England, Australia grew its number of apprenticeships relatively steadily from 60,000 in 1995 to 377,000 in 2012, with consistent employer and bipartisan political support.  Extension of apprentice-type training to new service sector occupations accounted for over 80 per cent of the increase.

Publicly funded non-profit Group Training Organisations (GTOs), often linked to employer associations and unions played an important part in the growth, and were successful in recruiting smaller employers to apprentice schemes, which often lack the financial and staff resources to support their own training program. A relatively strong technical college system also helps in Australia. However, funding was cut back sharply due to escalating government expenditures and concern at declining quality, prompting a collapse in trainee led by non-trade apprenticeships.

”Support for the traditional apprenticeship model remains strong in Australia in government, and among employers and unions. It continues to be an important institution for young people seeking to enter the labour market and for older people looking for a skilled, better paid job,” says Dr Phillip Toner.  

“However, the extension of this model into new occupations, mostly in the service sector such as lower-skilled hospitality, sales, security guards and clerical work has been largely unsuccessful. Employer support for extending apprenticeships to these roles was only partly founded on real labour market need, and more substantially down to generous government employment subsidies. This fact has been revealed by the sustained collapse in this type of training over the last 6 years following the cessation of the subsidies.’’ 

USA

In the US, President Obama re-visited President Clinton’s relatively unsuccessful efforts to revive apprenticeships in the 1990s and also sought to target non-traditional sectors such as ICT and health. The policy of expanding apprenticeships has continued under President Trump, with the explicit intention of encouraging greater involvement of industry and to promote apprenticeship in new areas.

However, to date, little progress has been made.   

     Dr Johann Fortwengel continued:

“between 1998 to 2017, there was a 65 per cent in apprentice starts in the US. However, as far as we can see from Department of Labor figures, extension into new sectors and occupations has been limited.  Given our findings, that may be a blessing in disguise: there is an opportunity to reflect on what might work before ploughing resources into this effort.”

*Because of differences in apprenticeship systems and data across the jurisdictions of the UK, only England is examined here. 

ViewPoint: Utilities Demand More From Apprenticeship Levy
January 6, 2020
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CONTRIBUTOR: Nick Ellins, Chief Executive – Energy & Utility Skills

Image result for utilities sector

The utility sector led the way in implementing the government Apprenticeship reforms, was the first to secure a Trailblazer Standard and graduate an apprentice through the new system. They offer to act as a proven and credible ‘critical friend’ to an incoming government.

Now, Energy & Utility Skills, a skills and assurance organisation for the UK utilities sector, published a comprehensive review into the delivery and effectiveness of Apprenticeship reforms. The work forms one part of its workforce renewal and skills strategy to ensure that the gas, power, water and waste management industries has the human capital required to deliver environmental infrastructure and essential services to nearly 67 million UK consumers.

The employer-led review was independently written by Professor David Way CBE, a leading figure in UK skills and Apprenticeships. The report found the energy and utilities sector – which is of high strategic importance to government plans to boost UK productivity and will invest more than £100bn in the economy – has made the policy reforms deliver high quality workers but further adjustments are needed to make the apprentice system fit for purpose.

The ‘Test and Adjust’ report calls for six key actions:  

  1. Filling the funding gap

The predicted funding shortfall for Apprenticeships must be transparent. Any funding gap should be filled by a combination of increased public funding and lowering the payroll threshold to below £3m for employers who contribute to the Apprenticeship Levy. Public funding offers a proven healthy return for the UK economy

Linking Apprenticeships to the Industrial Strategy 

Success should be about more than the number of Apprenticeship starts, it should be linked to outputs and productivity. The sector calls for a change in approach to ensure critical skills delivery is incentivised, quality is increased and not undermined by funding cuts.

Sector training pot 

Unspent Apprenticeship Levy funds are returned to treasury. The sector askes that Levy funds are retained within the sector to create a flexible ‘sector training pot’ to be used for tackling skill challenges and enhancing productivity. Employers in the energy and utilities sector are currently losing up to £2.5million a month of unspent Levy

Employer leadership 

The employer-led approach must be extended to all parts of the Apprenticeship system. Employers know best when it comes to the skills and knowledge required in their businesses. This is tested at the end of the Apprenticeship programme by an Independent End Point Assessment organisation. Why then go back and check if 20% of their time was spent on ‘off the job’ training? Employers need to have more control over how their apprentices are trained.

UK wide approach 

Over half of the sector’s employers operate across the UK’s four nations, delivering services to around 67 million UK-wide customers. Every company in England must pay the Apprenticeship Levy based on their UK PAYE bill. However, it is only directly available to fund apprentices in England. In the other 3 nations it is passed back to their governments. This often leads to employers having to pay twice for Apprenticeship training. It is not uncommon for companies operating across the 4 nations to have cohorts of apprentices on two different Apprenticeship programmes.  The sector calls for a coherent UK-wide framework that works for employers and apprentices

From T-Levels to Apprenticeships 

The industry is positive about the introduction of T-Levels but calls for more transparency and detail on the pathways from T-Levels to Apprenticeships and employment. The sector is keen to see T-Levels and Apprenticeships working as one continuous process.

Nick Ellins, Chief Executive of Energy & Utility Skills, said: “The energy and utilities sector employs over half a million people, generates 5% of GDP and contributes £51m annually to the Apprenticeship Levy pot. They set the standard in delivering successfully against the policy reforms and from the start sought to positively help the government to ‘test and adjust’ its approach.

This report from Professor Way, sets out clearly for the incoming government, where to adjust the reforms to bring immediate benefits and policy success. Too much time is being spent focusing on the Apprenticeship Levy as an end in itself, what matters is the quality of the talent that emerges into the economy and society, and how effectively the system works for the employers who foot the bill.”

Report author, Professor David Way, CBE, said: “Employer-led reforms to the Apprenticeship programme are beginning to bear fruit, especially by improving quality. This will be vital for future productivity growth and for the expansion of the Apprenticeship programme.

The Apprenticeship Levy has not yet had the transformational impact on employer investment in skills training that Ministers were looking to achieve. However, employers are now familiar with the systems and are steadily increasing the proportion of their Levy payments that they are able to use.

By extending the employer-led approach to all parts of Apprenticeships and ensuring employers see the Levy arrangements as fair and transparent, there is every prospect that we will see the growth in high quality Apprenticeships that will drive the productivity increases needed for the UK to compete in the global economy.”

Nick Ellins concluded: “The Apprenticeship reforms have brought undeniable benefits to the employers in our sector, and they wish to accelerate the gains being made by identifying and embedding reforms that will work for the incoming government and for business. Their track record of turning theory into practice makes them a tried and tested partner for government. It is time to step back, draw breath, talk candidly, target the resources and efforts to maximum effect and use this insightful research to help Apprenticeship policy progress to support the needs of the whole UK economy”

Government Announces Pay Rise for 2.8 Million People
January 2, 2020
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National Living Wage set to increase by 6.2% in 2020.

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  • Annual pay rise of up to £930 for a full time worker.
  • National Living Wage (NLW) increasing from £8.21 to £8.72.
  • New NLW rate starts on 1 April 2020 and applies to over 25 years olds.

The national minimum wage for apprentices is to increase by four times the rate of inflation in April, the prime minister has announced. The official minimum wage for apprentices currently stands at £3.90 per hour, but in April it will increase by 6.4 per cent to £4.15.

Low-paid workers will receive a 6.2% pay rise with a new National Living Wage (NLW) of £8.72 per hour, the biggest cash increase ever, the Government has announced.

Nearly 3 million workers are set to benefit from the increases to the NLW and minimum wage rates for younger workers, according to estimates from the independent Low Pay Commission. The rise means Government is on track to meet its current target for the NLW to reach 60% of median earnings by 2020.

The new rate starts on 1 April 2020 and results in an increase of £930 over the year for a full-time worker on the National Living Wage. Younger workers who receive the National Minimum Wage will also see their pay boosted with increases of between 4.6% and 6.5%, dependant on their age, with 21-24 year olds seeing a 6.5% increase from £7.70 to £8.20 an hour.

The Government has fully accepted the Low Pay Commission’s recommendations after they consulted stakeholders such as unions, businesses and academics, before recommending the NLW and NMW rates to the Government. In September the Chancellor pledged to increase the NLW towards a new target of two-thirds of median earnings by 2024, provided economic conditions allow, which, on current forecasts, would make it around £10.50 per hour.

The introduction of the NLW has already delivered the fastest pay rise for the lowest earners in 20 years, putting more cash into the pockets of those who need it the most. Supported by the NLW, the lowest paid saw their wages grow by 8% above inflation between April 2015 and April 2018.

The Chancellor has also announced his plans to expand the reach of the National Living Wage to cover workers aged 23 and over from April 2021, and to those aged 21 and over within five years. This is expected to benefit around 4 million low paid workers.

The Government will set out more details on the future policy framework, including the important role of the independent Low Pay Commission, by the Spring.

Further information

2020 NMW/NLW rates increases

The increased rates were recommended by the Low Pay Commission, an independent body that advises the government about the National Living Wage and the National Minimum Wage.

The National Living Wage (for over 25 year olds) will increase 6.2% from £8.21 to £8.72.

The National Minimum Wage will rise across all age groups, including

  • A 6.5% increase from £7.70 to £8.20 for 21-24 year olds
  • A 4.9% increase from £6.15 to £6.45 for 18-20 year olds
  • A 4.6% increase from £4.35 to £4.55 for Under 18s
  • A 6.4% increase from £3.90 to £4.15 for Apprentices

The £930 increase in annual earnings compares the gross annual earnings of a person working 35 hours per week on the new NLW rate from April (£8.72) versus the 2018/19 NLW rate (£8.21). The £3,680 increase in annual earnings compares the gross annual earnings of a person working 35 hours per week on the new NLW rate from April (£8.72) versus the 2015/16 minimum wage rate (£6.70).