IFS calls for government to abandon public sector apprenticeship target

31 Jan 17

Mandating public sector organisations in England to take on at least 250 apprentices every year is not an efficient way to boost skills in the sector, the Institute for Fiscal Studies has warned.

In an analysis of government plans to expand apprenticeship numbers to 3 million, partly funded through a levy on large employers, the IFS highlighted risks to value for money.

In particular, it noted that there could be particular damage to the public sector. The public sector requirement on apprenticeship numbers took no account of the differing needs of organisations, the IFS said. It called for the public sector target to be abandoned.

“Unless existing employees start apprenticeships, the targets imply around one-in-five new public sector hires must be an apprentice,” the think-tank said in a statement.

“Such a blanket policy cannot be an efficient way to improve skills in the public sector. It risks costly reorganisation of training and inefficient ways of working. These targets should be removed.”

Other risks highlighted centred on poor value for money. The design of the scheme encourages employers to take on more apprenticeships by heavily subsidising training costs, thereby removing incentives to ensure training is cost-effective. The attractiveness of the subsidies could also see employers reclassify existing training programmes as apprenticeships, the think-tank cautioned.

The scale of the programme’s growth also presents problems. The target to offer 600,000 apprenticeships a year in this parliament is a 20% increase on the 2014-15 level and risks sacrificing quality at the expense of quantity, the IFS said. Wages are also likely to be pushed downwards.

“The Office for Budget Responsibility assesses that it will reduce wages by about 0.3% by 2020–21,” the IFS noted.

“While only 2% of employers will pay the levy, at least 60% of employees work for employers who will pay the levy.”

Report author Neil Amin-Smith said an effective training system for young people was desperately needed, but current plans risked repeating the mistakes of the past.

“There is a risk that the focus on targets will distort policy and lead to the inefficient use of public money,” he said.

His colleague Jonathan Cribb, another report author, added: “With the subsidies for apprentices’ training costs at 90% or 100%, employers are encouraged to take on more apprentices. But this also provides them with little or no incentive to choose a training provider with a lower price.

“In addition, the specific targets for most public sector employers in England to employ apprentices could lead to costly, and potentially damaging, re-organisations, and should be dropped.”

  • Vivienne Russell

    Vivienne Russell is managing editor of Public Finance magazine and publicfinance.co.uk

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