What has been the impact of apprenticeship reforms on employer behaviour?

7 September 2021 Michelle Rea

Today (07 September) sees the publication of: The Benefits of Hindsight: Assessing the impact of apprenticeship reforms on employer behaviour, a report by Peter Dickinson and Professor Terence Hogarth of the Warwick Institute of Employment Research (IER) and funded by Gatsby and the Edge Foundation.

Along with Edge, Gatsby commissioned IER to undertake research into the impact of the Spring 2017 apprenticeship reforms on employers' decision making related to taking on apprentices.

Following the introduction of the Apprenticeship Levy in 2017, the number of apprenticeship started declined significantly. Research undertaken at the time of the introduction of the Levy indicated that there could be an initial impact on the number of apprenticeship starts - some short-term fall-off in the number of apprentices as the new systems for taking on apprentices bedded in.

Since the Levy’s introduction, the number of apprenticeship starts has been consistently lower than in the period before while there has also been an acceleration of pre-existing trends towards older and higher level apprentices. Whilst numbers began to recover from the low 2017 base, apprenticeship recruitment was hit further by the pandemic. A rough and ready estimate suggests that apprenticeship starts fell by around 14% as a result of Covid-19.

Apprenticeships remain an important means through which employers meet their skills needs. But the levy has had an impact on employer behaviour in relation to apprenticeship recruitment and the type, age and level of the apprentice they take on.

Other key findings which emerged include:

  • a reduction in apprenticeship recruitment by non-levy payers;
  • an increased preference for people working towards higher level apprenticeships;
  • specific barriers in particular sectors, such as, backfilling costs;
  • a continuation, and potentially an acceleration, of trends in the profile of apprentices which pre-dated the reforms, including older apprentices and those who are already employed.

The reforms have increased levy-paying employers’ financial investment in apprenticeships but also stimulated their preference to use it to train existing staff at higher levels, sometimes through converting existing training provision to apprenticeships. This may generate higher level skills, but the cost might be a lower number of apprentices, fewer trained by smaller employers, as well as fewer younger and lower-level apprenticeships.