Member Article

Apprenticeships can drive UK growth, says AAT, provided we create enough in the right areas

New research from the Association of Accounting Technicians (AAT), the UK’s leading qualification and membership body for accounting staff, demonstrates how apprenticeships can deliver the skills that Britain will need in the future. Apprenticeships are already a success story, but geographical coverage is uneven and employer incentives still operate on a one-size-fits-all basis. With the forthcoming move to an employer-run apprenticeship system, AAT believes there is a real opportunity to incentivise the kind of apprenticeship places that the economy will need, right across the UK.

Apprenticeships for the Future is the Cebr’s (Centre for Economics and Business Research) latest report for AAT, and follows the finding that apprentices are delivering £1.8 billion of benefits to business[1]. In recent years, there has been a dramatic rise in the number of apprenticeship starts and a steady rebalancing of apprenticeships towards a services-based economy[2]. Apprenticeships are now more age[3] and gender[4] balanced than in the past, providing a viable route into employment and, particularly in the case of accountancy, into higher education. Many young people see apprenticeships as a desirable alternative to university, during which they will be paid not charged.

With employers set to receive funding for apprenticeships directly, AAT believes there is a significant opportunity to adapt the current system for the future. By targeting funding at priority sectors, emerging skills gaps, and addressing geographical imbalances, apprentices can provide the skills that the UK economy will need to continue to grow.

Schools also have a critical role to play in driving the take-up of apprenticeships. Only 31 per cent of young people say that teachers have ever discussed the idea of an apprenticeship with them[5]. Attitudes in the teaching profession need to change, says AAT, so that pupils receive independent and comprehensive advice on all the options available to them, particularly as apprenticeships become an alternative to university.

The report identifies several areas that would benefit from an immediate apprenticeship boost:

• Construction and ICT show a decline in apprenticeship numbers, despite suffering from acute skills shortages. ICT apprenticeship starts dropped by 28 per cent between 2010/11 and 2012/13, while construction starts reached a ten-year low.
• London, the South East and Scotland are underrepresented for apprenticeship starts relative to their working-age population. London accounted for 13% of employment in the UK in the three months to May 2014, but just 8% of apprenticeship starts in 2012/13.

Cebr expects a large proportion of future jobs to be created in sectors that rely on vocational education and qualifications. Its forecasts show a requirement for over half a million new associate professional and technical jobs between now and 2020, with growth projected in sectors such as pharmaceuticals, digital technology, advanced manufacturing and green technology.

In Apprenticeships for the Future, AAT makes five formal recommendations to the Government on developing apprenticeships policy.

Mark Farrar, Chief Executive of AAT says: “We need to build on the success of apprenticeships – and this is the time to do so. As we move to employer payments and contributions, incentives should be targeted. A one-size-fits-all system won’t do enough to boost particular skills, particularly where those skills cost more to deliver.

“There has been a huge increase in the number of apprentices in recent years, which has helped businesses and transformed lives. Now we can look to ensure that all areas of the country benefit fully, with the apprenticeships for the future that the UK needs to drive growth.”

AAT’s five recommendations

1. Young people should be enabled to make an informed choice about all the opportunities available to them. Only 31% of young people say that teachers have ever discussed the idea of apprenticeships with them, which suggests that attitudes in the teaching profession need to change. Independent and comprehensive careers advice on apprenticeships must be provided to all school pupils.
2. Funding policy should reflect the changing needs of the economy. As the system moves towards employer contributions, it should differentiate between types of apprenticeship, offering greater funding incentives for places that address identified skills shortages. A one-size-fits-all percentage for employer contributions is unlikely to close skills gaps, or maximise the number of apprenticeship places on offer, particularly where the shortages relate to places that cost more to deliver. Conversely, higher employer contributions may be sustainable where needs are already being met.
3. Regional disparities in apprenticeship numbers should be addressed through the greater focus on the local ownership of skills education and funding. Local Enterprise Partnerships (LEPs) have a major role to play, but there is currently too much regional variation in their capacity and capability to ensure effective delivery. It may be necessary to vary the employer contribution according to the location of an apprenticeship, as well as its type.
4. Better data is required below regional level to allow skills shortages and certain types of unemployment to be targeted. Government departments and agencies should examine how they currently record data and seek to use business surveys, and other techniques, to map skills shortages at a local level.
5. The Government should consult further with employers and providers about the details of its new funding mechanism before going ahead. A new system provides a crucial opportunity to target incentives at priority sectors and locations where additional places would provide the greatest economic benefit. The impact of the changes should also be monitored closely after introduction.

[1] Research conducted by Cebr for AAT earlier this year calculated that apprenticeships delivered a net economic benefit of £1.8m to British businesses in 2012/13.

[2] In the 2012/13 academic year, there were more than half a million apprenticeship starts in England alone, treble the number from 2002/03.

[3] In 2012/13, people aged 25 or over accounted for over two-fifths of apprenticeship starts in England. There were some 3,260 apprenticeship starts among those aged 60 or over.

[4] There is an equal balance of male and female apprentices (very slightly more female, at 54.7 for 2012/2013).

[5] This is based on an Ipsos Mori survey of 2,796 young people conducted for the Sutton Trust between February and April 2014.

This was posted in Bdaily's Members' News section by AAT (Association of Accounting Technicians) .