What’s next for degree apprenticeships?

In the run up to last week’s autumn statement, there was a great deal of discussion about the future of degree apprenticeships.

Colleagues were concerned that the Chancellor was about to restrict the use of levy funding for the senior leader apprenticeship – a standard which supported 4,880 of 106,360 higher apprenticeship starts in 2021-22. In the end, it didn’t happen. But the question hangs: what’s next for degree apprenticeships?

We should start by reflecting on why government might even consider restricting the flow of funding to some degree apprenticeships. Particularly since the introduction of the levy in 2017, higher and degree apprenticeship starts have grown consistently – from c48,000 in 2017-18 to c82,500 in 2019-20 and c106,500 in 2021-22. Over the same period, overall apprenticeship starts have bounced around a little – from c376,000 in 2017-18 to c322,500 in 2019-20 and c349,000 in 2021-22, well below their 2015-16 peak of more than 500,000.

Left wanting

Put simply, government has a “be careful what you wish for” problem. The (only) common thread of skills policy over the last twenty years has been focus on employer responsiveness – which over time came to be branded employer “leadership” and then “ownership” of the skills system. The levy was the pinnacle of the policy – giving employers the ability to spend “their” levy however they wanted – within the many and complex rules of the system, but still…. Government just wanted employers to want something slightly different when given the freedom to choose.

I doubt that anyone in government has a problem with the growth of degree apprenticeships – or the growth in starts on leadership and management standards – per se. They’re now a proven product, addressing real, longstanding needs in the economy and labour market. UK growth is anaemic. Productivity growth has been dire since the financial crisis – driven in large part by failures of leadership, management, and tech adoption.

There is great evidence that degree apprenticeships will help to address these issues. For example, DfE’s most recent apprenticeship evaluation found that 91 per cent of degree apprentices were satisfied with their programme – with 85 per cent of apprentices reporting that their programme had enabled better job performance. And employers whose main programme was at a higher level tended to be more satisfied with their apprenticeship that those whose main programme was lower level.

The challenge for policymakers isn’t so much the growth in higher apprenticeships; it’s the corollary reduction in apprenticeships at lower levels amongst younger learners. Starts at level two have fallen from over 290,000 in 2015-16 to c161,500 in 2017-18 – and c91,500 in 2021-22. At level three, they’ve fallen from c191,000 in 2015-16 to c166,000 in 2017-18 – and c151,500 in 2021-22. Starts among learners aged under 19 have fallen from over 130,000 in 2015-16 to c106,500 by 20117-18 – and to c77,500 by 2021-22.

When it gave employers the choice through the introduction of degree apprenticeships and the levy, government did not anticipate the marked extent to which employers would step back from levels two and three – and support for younger apprentices. I would argue that there is a more strategic policy failure here, which continues to undermine skills policy now: the belief that the critical mass of employers know what they want, let alone what they need, and will invest strategically in workforce skills.

At least two critical factors will push the reduction in apprenticeship starts among younger learners up the agenda. First, the proportion of young people not in education, employment, or training (NEET) is rising. The proportion of 16 to 18 years who are NEET has risen from 5.8 per cent in 2016 to 8.4 per cent in 2022; and, among 18 year olds, from 9.9 per cent to 15.9 per cent in 2022. Second, in that context, government simply doesn’t have many – if any – other good policy levers to pull. Over the last 15 years, apprenticeships have become the only workplace training show in town.

So, government either needs to think about how it drags the apprenticeship programme back toward lower levels and younger learners – and/or it needs to come up with some exciting new policies to support young people who want to develop their skills in the workplace. And at this point in the election cycle, tweaking what you have is the more likely move.

Scaling up

All of which, of course, creates an uncertain outlook for universities thinking about how they evolve and grow their apprenticeship operations. Many institutions have invested heavily and worked incredibly hard to build their apprenticeship provisions, and will be thinking about where they go next, pre- and post-election. It would be reasonable to conclude that the most sensible thing to do is to sit in a holding pattern until after the election – pending clarity on the new government’s agenda in this space.

I don’t think that works – for two reasons. First, because while we can be confident that there will (always) be meddling around the edges of apprenticeship policy, we should also be confident that degree apprenticeships are now here to stay. Second, my sense is that we are approaching the end of the first generation of university apprenticeship operations; many are delivering good quality, some are delivering at scale, few are delivering sustainable commercial returns.

Our advice is simple: go hard or go home. Delivering provision which employers, and Ofsted, consider to be good quality is hard – particularly given the many and competing pressures on colleagues. Delivering provision which the ESFA deems to be compliant is a Sisyphean life choice – even for career experts in the field. It isn’t worth trying unless you plan to work at genuine scale.

Colleagues often ask me whether it is possible to make delivery apprenticeship programmes commercially sustainable. The answer is, as above, yes… if you go big. Commercially successful apprenticeship provisions are scaled, specialist, tech-enabled operations:

• They have carefully considered course offerings – balancing a focus on subjects and occupations where they know there is volume, with an honest appraisal of where and how they can compete to access that volume such that it is real for them.
• Where they are part of a wider institution, they systematically leverage wider resources to benefit their students and clients – and to drive growth. Where you put your apprenticeship operation in your structure, and how you position it culturally, are crucial considerations.
• They work with large, national clients to deliver high-volume programmes – at the conscious expense of smaller, local businesses. Whilst many universities will consider it a matter of purpose to support their local business community they need to consciously manage the commercial inefficiencies – including by offsetting them with large contracts.
• They are driven by technical experts – able to translate the expectations set out in Ofsted’s inspection framework, and requirements of the ESFA’s funding rules into slick, sustainable operational processes, and ways of working which mitigate the real risks in this space.
• They use apprenticeship specialist tech to support quality, compliant, customer centric delivery. It quite simply is not possible to be sustainably compliant if you are not using tools developed specifically for the purpose of supporting apprenticeship delivery.
• Many also deploy mixed resource models – separating teaching and learning roles from those which support the wider learning journey. Most commercial providers have, after some experimentation over the last ten years or so, found ways of doing this which don’t undermine quality or student experience.

Consideration of your course offering is particularly important given current policy uncertainty. The way to maximise efficiency and commercial outcomes is to support the maximum number of apprentices, working with the smallest possible number of clients, across the smallest possible number of apprenticeship standards. Some of colleagues’ concern about any restriction of funding for the senior leader standard will have been rooted in its volume attractiveness.

Carefully diversifying your offering mitigates your exposure to policy change which affects a particular standard, collection of standards, or level of apprenticeship. Different institutions will reach different conclusions on this as they reflect on their goals, institutional strengths, and risk appetite over the next 18 months and more. I’d love to hear colleagues’ views as degree apprenticeship provision continues to mature and evolve.

This article is published in association with MH&A. Join Wonkhe and MH&A on Wednesday 6 December 12.00-1.00pm for a free online event Go hard or go home: where next for degree apprenticeships.