With financial support from the LCR Combined Authority, GMLPF undertook and has now published a piece of research that looks at the state of the apprenticeship market locally and the condition of the provider base. One of the primary reasons for undertaking the research was to “take the temperature of the market”. Furthermore, we aimed to assess the scope to regrow the apprenticeship programme from the relatively low levels of starts and participation we see now compared to historical figures.
The LCR Combined Authority were keen to understand any practical and policy issues with a view to using the report to lobby for change. The research has been shared with the Employment and Skills Board to inform discussions with DfE and IfATE.
View full report & appendices.
Key Findings
Since the introduction of the apprenticeship levy and reforms, local starts have fallen markedly. Since 2017, the apprenticeship market has changed significantly and through one-to-one interviews and an anonymous provider survey we identified the following key points:
Market Involvement
Concerningly, 11.8% of providers are planning to exit the apprenticeship market entirely, and an additional 23.5% intend to scale back their provision. This is alarming, considering our historically low participation levels. It indicates a reduction in capacity within the local skills system, which is crucial for addressing employers’ skill needs. While some providers plan to expand, the proportion looking to exit or reduce provision outweighs them. This highlights the challenges we face in growing apprenticeship participation levels and the risk of diminished capacity and capability locally.
Primary Issues
The three main issues affecting apprenticeships are funding, staffing, and administration.
Demand
Despite investment, awareness of the apprenticeship program among local employers and schools remains low. 70.6% of providers believe employers are not sufficiently aware of the program, and this is particularly true for SMEs, who have traditionally been a foundational part of the program. Additionally, 64.7% of providers feel school leavers lack awareness. Poor promotion in schools, competing options, and shorter courses contribute to a decline in apprenticeship starts and participation, especially among 16-19 year-olds.
Funding
While the sector appreciates the overdue funding review by IfATE, the current funding levels are inadequate and limited. Funding bands often fail to account for rising costs and, in some cases, have been reduced. 70.4% of survey respondents believe the current funding levels are insufficient to cover delivery costs, with 58.8% of providers indicating their programs run at a loss. No providers consider current funding levels adequate or profitable. Many providers can only deliver apprenticeships when cross-subsidized by other programs due to the loss of contracts and exclusion from funded programs, this has destabilized the provider base and contributed to decisions to exit the market.
Doom loop of low-value provision
The ongoing problem of low-value provision has created a vicious cycle for many local providers. These providers have historically delivered a mix of services in areas with strong employer demand and priority areas like management. While high levels of demand have offset low funding rates, recent challenges with engaging small and medium-sized enterprises (SMEs) and decreasing demand have led to increased learner withdrawal due to pandemic burn-out or changes in employment related to the cost of living. Additionally, funding cuts for management qualifications have trapped providers in a “doom loop” of low-value provision, making it difficult for them to sustain apprenticeship delivery. The lack of funding band stability, where the rate for a specific standard rapidly decreases shortly after its launch, further hampers providers’ ability to plan and develop alternative provision. Some providers have attempted to diversify their offerings and invest in new areas, only to see funding rates lowered again.
Staffing
Staffing is a significant challenge, as in other parts of the FE sector, due to limited funding and perceived instability. Providers struggle to attract and retain staff, leading to high vacancy rates and longer hiring times. This hinders their ability to meet current demand at suppressed levels, let alone handle increasing demands.
Administration and compliance
Another issue is the heavy administrative and compliance burden of the apprenticeship programme compared to other programmes. This is undermining its success. Barriers include difficulties faced by SMEs when using the Apprenticeship Service, inflexible approaches to off-the-job training, EPA and challenges accessing additional funding for specific learners.
To address these challenges, we have made several recommendations in the primary areas of funding, staffing, administration, quality, and demand. These recommendations are interconnected and can be found in the report. We have also identified which stakeholders should take the lead on each recommendation.
Key recommendations include increasing stability and funding for standards to account for rising living costs; providing more incentives to boost demand, retention, progression and completion; launching recruitment campaigns for the sector along the lines of test-and-learn pilots for the adult and community learning sector; offering more operational flexibilities around EPA, use of the Apprenticeship Service, off-the-job and changes to English and Maths to help engagement of learners; and expanding access to investment funding to ensure that all parts of the FE sector can access capital and revenue funding. Additionally, driving demand by promoting the programme to local SME employers and improving engagement with schools would help raise awareness and participation among young people.