According to provisional government statistics released in February 2018, apprenticeship starts for the first quarter of the 2017/18 academic year decreased by 26.5% compared to figures reported at the same point in 2016/17. However, the decrease was not as large as the drop between Q4 2015/16 and Q4 2016/17.

At a recent skills award ceremony, Dame Judith Hackitt, chair of not-for-profit Semta which is tasked with skilling engineering and advanced manufacturing, warned that the apprentice levy was in need of urgent radical reforms to reverse the ‘collapse’ of new start apprenticeships.

‘We are not asking for the levy to be scrapped but it does need a rethink if it is to achieve what we all want and what the UK needs for the future.

‘We have seen the number of new starts collapse with many companies postponing or halting apprenticeships. What should have been a win-win has become a lose-lose,’ Hackitt said.

In her speech, Hackitt said that to train individuals in the engineering and manufacturing sector costs more that £27,000. She said providers are reluctant to offer courses, which cost more than the cap, so there is a need to recognise the true cost of different types of apprenticeship, rather than having one simple cap.

Hackitt said: ‘There needs to be greater flexibility for employers and providers to agree payment schedules especially in sectors like ours where upfront costs are high.

‘The expiry date of funds needs to increase – an average engineering apprenticeship takes 48 months.

‘The rules on transfer of unused levy need to be relaxed – moving the current cap at 10% to 50% would stimulate levy funds being used across supply chains.’

Hackitt also warned against using the levy to fund other training schemes, and said the process of approval of apprenticeship standards needs to be streamlined.

‘We all need to work together to make this as easy to implement as possible, not create unnecessary obstacles when we all want the same thing – more and more young people taking up apprenticeships,’ she said.

The City of London Corporation, for example, has exceeded its target to employ 100 apprentices in a single year by hiring 102 young adults in 12 months to learn skills as diverse as tree surgery, animal handling and museum curation.

Catherine McGuinness, policy chairman at the City of London Corporation, said: ‘I'm proud that we have has risen to the challenge set by government to have 2.3% of our workforce as apprentices.’

There are more positive views from young people and employers in Grant Thornton’s newly published ‘Generation Apprentice’ report based on a survey of 1,000 young people (aged 16-25) and 1,000 parents (of under 18s).

This found 77% of young people and 79% of parents think that apprenticeships offer good career prospects, while 42% of young people think apprenticeships and university degrees have the same value and 60% do not think that you need to go to university to get a well-paid job.

The report also investigated the attitudes of 500 UK employers that qualify for the apprenticeship levy (those with a pay bill of more than £3m). Of these, half said that they plan to recruit more apprentices than they do now in the next five years, and 79% said the apprenticeship levy has encouraged them to hire more apprentices than they would have done otherwise.

Keely Woodley, partner and head of Grant Thornton’s human capital practice, said: ‘This changing attitude represents an evolution in the expectations of young people and parents when it comes to learning beyond school.

‘For employers, navigating the apprenticeship levy and the wider changes to the apprenticeship system is challenging, but they should be exploring opportunities to think laterally about talent development approaches.’

Grant Thornton’s ‘Generation Apprentice’ report is here.

Report by Pat Sweet