Any future government will need to listen to what businesses want from the apprenticeship system to plug the skills gap effectively

On of the things I was most proud of during my time as Education Secretary was introducing a step change in 2017 in our country’s approach and ambition on apprenticeships – stronger standards, built by employers, overseen by the Institute for Apprenticeships and Technical Education and backed up with an Apprenticeship Levy to drive employer investment. At the same time, employers had more control about which apprenticeships and skills they wanted to invest in for their own organisations. 

Several years later of course the reform of the Apprenticeship Levy is long overdue, but we shouldn't lose sight of just how much positive progress we’ve seen across the country, enabling thousands of people to have the opportunity of a high-quality apprenticeship that can really turbocharge their career. 

National Apprenticeship Week is a great time to celebrate apprenticeships and the huge benefits they bring for both employee and employer, not least because they are also a key driver of social mobility - crucial for delivering opportunity and boosting productivity and growth. 

An apprenticeship gives someone the opportunity to learn while they earn, and it provides a different education pathway to the more traditional academic route. It means that organisations can develop local talent pipelines with up-to-date skills that match the needs of the twenty-first century. Also, as crucial as they are for young people, apprenticeships are no longer restricted by age. Many employers are using them as a solution to plug the skills gap and develop their existing, more experienced talent by also offering them to mature workers - people who would like to reskill, change career or perhaps who are re-entering the labour market. It underlines how apprenticeships can also be part of how we have lifeline learning for people even as they get well into their careers. 

Apprenticeships are available across a wide range of sectors – in technical areas like engineering, manufacturing and IT but also in law and teaching, healthcare and HR. At the Purpose Coalition, we work with many organisations that are flag-carriers for fantastic apprenticeships, running extensive programmes which deliver real opportunity to the individuals that participate and to the communities they serve, often in areas where there have traditionally been fewer high quality opportunities and where young people particularly may feel they have had to move away to find rewarding jobs.  

Employers’ engagement with local schools and colleges helps young people to better understand the sort of opportunities that are available and where they might lead them career-wise. There is also a growing focus on ensuring a diverse and inclusive intake that reflects the communities that employers serve, with encouragement for girls to pursue subjects that have traditionally been male dominated.  

One other major shift has taken place alongside the steady success of apprenticeships - there is a growing expectation from society, particularly from young people, that the organisations they work for should be a wider force for good and a place where they feel that, collectively and individually, they can make a real difference. That sentiment of values aligning extends to apprentices, and it is an issue which our long-standing Purpose Coalition partner and one of the world’s largest consumer co-operatives, the Co-op Group, has chosen to highlight for this year’s National Apprenticeship Week. With an apprenticeship programme that delivers opportunity into many of the country’s most deprived areas, the Co-op has found that an increasing number of young people - 56% this year - say they want to work or volunteer in something that creates genuine social value in communities. They’ve even created an A-Z list of apprenticeships in “jobs with purpose”, from an archivist to a zookeeper, via a firefighter and nursery worker, which you can find here.

The Co-op has also been a leading proponent of reform to the Apprenticeship Levy and recently commissioned a study which found that £96m of apprenticeship levy funds remained untouched in the year 2022/23. That figure is rising and suggests that the rigidity of the current system is contributing to an unwillingness or inability to invest in apprenticeship training. The Co-op highlights that the unspent sum could have supported over 9,000 apprenticeships across private and public sector - a huge waste of talent and a significant loss to the country’s economic growth. 

Certainly, when I introduced the Apprenticeship Levy, its design was intended as a starting point and we would rapidly take on board early experiences and have a Levy 2.0 that would work much more efficiently, flexibly and drive social mobility. It’s been frustrating to see only smaller ‘tweaks’ when there’s so much consensus from businesses on how we could make the levy work better. 

As one of the UK's largest aerospace engineering companies, and a Purpose Coalition partner, Leonardo’s extensive apprenticeship programme offers opportunities across its engineering, manufacturing and business disciplines. It is a business which is also passionate about Levy reform. Its CEO, Clive Higgins, himself a former apprentice, joined me and former Skills Minister, Anne Milton at a meeting with the Chancellor last year to press for reform. It followed a letter signed by a range of Purpose Coalition members which urged the Chancellor to consider a range of potential options for improving the levy, including more transparency and engagement with employers on how the central levy, returned to HMT, is invested. With another budget looming, it is, perhaps, the final chance for this Government to make significant progress on reform measures that would help bridge the skills gap and contribute to regional prosperity. It’s an opportunity that should be taken. 

The Labour Party has pledged to change the Apprenticeship Levy to a ‘Growth and Skills Levy’ which would allow it to be used on a greater range of courses. It will also enable firms to use up to 50% of contributions on non-apprenticeship training and allow SMEs who don’t currently pay the levy to continue to receive 95% co-payments. In its revised Mission document on Breaking Down Barriers, just published, it also makes a renewed commitment to high-quality apprenticeships as a route to higher skilled, better-paid jobs.  

This week I visited the team at train company, Lumo, a new Coalition member whose London to Edinburgh route is playing an important part in improving regional connectivity. Just as important is its role in delivering opportunities to the region, including through its apprenticeship programme, with 90% of its team undertaking a custom designed apprenticeship. Talking to staff, it was clear just how positively they viewed apprenticeships as an opportunity to develop and progress. Making it easier for more companies to take these crucial steps is vital if we are to level up, break down barriers, or whatever the government of the day want to call achieving equality of opportunity. 

Apprenticeships can play a major role in shaping economic growth and in delivering equality of opportunity to those areas of the country most in need of support, but we need to continue to listen to business about what works for them. As we approach a General Election, it’s clear that skills need to be at the centre of that national debate. In the Purpose Coalition, we’ll be doing what we can to make sure that happens.