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This year鈥檚 National Apprenticeship Week (6-10 March) comes at a time when the issue of apprentices is particularly pressing. Next month the government鈥檚 apprenticeship levy 鈥� which aims to boost the number of apprenticeships across all sectors and improve the quality of courses 鈥� comes into force. As the 6 April approaches 鈥� the date by which larger employers have to start paying for this programme 鈥� many companies are expressing doubts about both the costs involved and the outcomes that can be expected.

It鈥檚 no secret the sector is plagued by a lack of skills. It is burdened with an ageing workforce (Mark Farmer鈥檚 Modernise or Die report predicted a 20-25% decline in available labour in 10 years mainly caused by the rate at which older workers will retire), and is still recovering from the loss of an estimated quarter of a million workers over the past five years since the downturn. And these problems look likely to be compounded by the potential loss of migrant workers following the UK鈥檚 departure from the EU.

So, construction definitely needs fresh blood and the government鈥檚 strong-arm apprenticeship levy approach could be a way to do it. The levy鈥檚 stated aim is to create 3 million new apprenticeship starts by 2020 across all sectors. That is an average of 600,000 a year. And it鈥檚 only bigger firms that will pay: employers with a pay-roll bill of more than 拢3m.

But construction employers with a pay-roll bill of more than 拢80,000 already fork out for a levy to the Construction Industry Training Board (CITB). This means an estimated 750 businesses in the sector face paying two training charges. There are already worries about the construction industry鈥檚 ability to compete with other sectors in attracting apprentices, and once apprentices have been recruited the concern is that companies will not be able to obtain the right level of funding or ensure that the quality of the training matches their needs. So, is this all-industry apprenticeship levy the right approach for the construction sector?

Quantity over quality?

The government believes its levy will increase investment in apprenticeships to 拢2.5bn over the next year, which is double 2010 levels. But its aims are as much to do with quality as quantity 鈥� as well as increasing overall funding, the government will require firms taking on apprenticeships to offer training from an approved list of providers, which will have to meet particular standards.

What those standards will be is under consideration, but under the plans, current apprenticeship frameworks will be phased out before 2020 and apprenticeship standards, developed by employer groups known as 鈥渢railblazers鈥�, will be adopted.

However, the Institute for Fiscal Studies has voiced concerns that the huge expansion in the number of apprenticeships by 20% from 2014/15 levels could have an impact on the quality of provision. The IFS report warned that the government鈥檚 increase in apprentices represents a 鈥渟ignificant expansion of apprenticeships [that] could come at the expense of quality鈥�.

Our job is to make the levy work but we are unable to do that because the information is not available. It鈥檚 really frustrating

Suzannah Nichol, Build UK

It seems one consequence of the new incentives on offer is that some pre-existing training will be reformatted as an 鈥渁pprenticeship鈥�. Chris Jones, director of learning and development at Bam Construct UK, says his company is now converting current training courses to fall within the apprenticeship definition so it can claim government funding.

He says: 鈥淢any of our current construction trainees study via day release for a range of qualifications [HNC, HND, foundation degrees and honours degrees], none of which qualify for funding from the apprentice levy. So we are reformatting these development programmes so that they align with the new government apprentice standards, thereby assuring their quality.鈥�

While Jones says the funding from the levy has been the spur to reshape training, he also thinks that by so doing Bam now has a 鈥渟tructured development programme鈥� in place. However, there are concerns that other employers will simply rebrand their existing courses, which may be of a lower standard, with little or no additional benefit. The IFS in its report said: 鈥淭he increased subsidies will incentivise employers to re-label existing training schemes as apprenticeships.鈥�

Training provider Stephen Bartle, head of apprenticeship management at University College of Estate Management (UCEM), rejects the idea that training standards will be adversely affected. He says there is a 鈥渓ow risk of inappropriate training with the upcoming Institute of Apprenticeships [the new independent body that approves standards and assessment plans], which will play a leading role in ensuring that only directly relevant training will be funded鈥�.

Martin Cawley, UK business manager at University College of Estate Management, believes the onus is on the construction industry to ensure standards are maintained. 鈥淎s the apprenticeship standards are going to be driven by the employers themselves, groups of employers will be able to state what the apprenticeship should cover, what kind of skills they are looking for, and the knowledge needed for the job role.鈥�

Finance

So, how do firms access the new funding? Surprisingly, information has been a little thin on the ground, making planning difficult, particularly for smaller businesses. Suzannah Nichol, chief executive of trade body Build UK, says: 鈥淓mployers can鈥檛 turn on a sixpence. Our job is to make it work but we are unable to do that because the information is not available. It鈥檚 really frustrating.鈥�

There鈥檚 been a lack of detail in particular around how firms can claim government funding to pay for training. Levy-paying companies will be able to get funding from 1 May but from next year, companies that do not have to pay the levy 鈥� mainly smaller firms that fall under the 拢3m wages bill threshold 鈥� will be able to claim funding to train apprentices through a digital vouchers system. But the details of how this will work have yet to be published.

And whatever the mechanism, the extra admin may put many firms off. Bam鈥檚 Jones says the administrative tasks associated with the levy, such as firms having to negotiate their own contracts with training providers and making claims to the government for grant, will add to companies鈥� workloads, which might put smaller firms off claiming.

鈥淟arge companies are reasonably good at claiming grant,鈥� he explains. 鈥淭hey have people whose job it is to do that. It鈥檚 not a straightforward process. It鈥檒l put a lot of small companies off claiming it.鈥� Although he does say the levy 鈥渉as the potential, if used in the right way, to raise the standard鈥�.

Sarah McMonagle, director of external affairs at the Federation of Master Builders, welcomes the opportunity for firms to write their own contracts which, she says, 鈥減uts the power back in the employers鈥� hands and will force training providers to pull their socks up鈥�.

She sees the levy as a 鈥渙nce in a lifetime chance鈥� and the 鈥渟ingle most important thing is to get the quality of the apprentices right鈥�. 鈥淚f it brings quality the numbers will follow,鈥� she says.

Construction losing out

But will construction get the apprentices it needs? The industry has voiced concerns that construction will be disadvantaged by entering into a nation-wide system, which could create a bottleneck that will limit access to both providers and the apprentices themselves.

Consultant Simon Rawlinson, head of strategic research and insight at Arcadis, says the government鈥檚 levy will 鈥渄istort鈥� the apprenticeship market, leaving construction competing with other sectors for a limited number of potential apprentices. He says training providers will now be under huge strain and may not prioritise construction courses because of the upfront costs this training requires.

鈥淓veryone will be competing for apprentices 鈥� even if they don鈥檛 need to,鈥� he says. 鈥淐onstruction does need them [but] if you are a young person why would you go into construction? Further education colleges might not be incentivised to grow in construction when it鈥檚 easier to grow in public sector [courses].鈥�

Construction could also lose out, some believe, because of the funding bands proposed by the government, which indicate the maximum amount of money an employer can use towards an individual apprenticeship. There are 15 bands with caps ranging from 拢1,500 to 拢27,000. Much of construction training appears to be in the middle of the bands. Upper end caps are for training such as architecture and civil engineering 鈥� at 拢12,000 鈥� with up to 拢5,000 paid out for learning trades such as wall and floor tiling, the CITB says.

Build UK鈥檚 Nichol believes the bands offer a poor deal for construction companies: 鈥淭he cost to the employer [of training] is a lot more than the government is allocating in the bands.鈥�

Arcadis鈥� Rawlinson agrees: 鈥淐onstruction seems to be about half way up the levels of funding. There appears to be a mismatch here.鈥�

Employers will have to pay the excess in training costs above the government funding. So, if an employer negotiates training for an apprentice that is 拢6,000 but the skill falls in a band with a cap of 拢5,000, the employer will pay the remaining 拢1,000. Most of the construction caps, according to the CITB, are between 拢4,000 and 拢12,000. A report from Department for Education and Skills from April 2003 gave a net average cost of apprenticeship training in construction as a little over 拢10,250.

Paul Bogle, head of policy and research at the National Federation of Builders, believes the funding could be helpful for smaller organisations 鈥渂ut only if you get the value bands right鈥�.

Opportunity to reform

But despite reservations, Bogle 鈥� as with others in the sector 鈥� feels the levy presents an opportunity, not least in encouraging the CITB to up its game. 鈥淚t is concentrating the industry鈥檚 mind in terms of what we are getting from the CITB. There鈥檚 a lot of pressure on the CITB,鈥� he says.

What the CITB fund supports is different from the new apprenticeship levy 鈥� it supports training in the workforce through grants but also helps develop qualifications for construction and promotes the industry. But there is doubtless some overlap. Significant anger from the sector at having to pay two training levies led to the CITB looking at reducing its levy to 0.35% of company鈥檚 pay bills.

Everyone will be competing for apprentices 鈥� even if they don鈥檛 need to. If you are a young person, why would you go into construction?

Simon Rawlinson, Arcadis

Steve Radley, policy and partnerships director at CITB, says: 鈥淲e believe we can cover the reduction.鈥� He explains his organisation is now looking to make efficiencies, to be 鈥渕ore targeted in what we do and concentrate on what we do best鈥�. 鈥淭he challenge for us in the next few months is proving what we give is relevant to the sector,鈥� he says.

He feels the CITB can do this, but welcomes the government鈥檚 levy for the 鈥渇orward-looking apprenticeship standards鈥� it will introduce.

However, the future of the CITB is still unsure, with former chief construction adviser Paul Morrell leading a review into the training body鈥檚 future, which is due to report at some point this year, though a timeframe has not been given. Meanwhile the CITB鈥檚 statutory training levy is up for renewal this autumn, with construction trade federations and non-federated employers set to vote on whether or not to continue it. The training body is speaking to the government on its options if the vote goes against it. Some of the federations have responded positively to reforms already undertaken by the CITB. For example, the FMB鈥檚 McMonagle says: 鈥淲ithout the CITB, our construction skills shortage would be much more severe than it is.鈥�

Build UK鈥檚 Nichol says: 鈥淟ast year the industry had a lot of frustration with the CITB but we are in a much better place now. There is concern if [building firms] pay these two levies but don鈥檛 get the skills at the end.鈥� Although, she adds:

鈥淲e have to be really grown up and say we are going to make it work as an industry. If the payments give us the skills in the end, this is value for money.鈥�

Training in the construction industry is about to embark on new period of reform, and while all the details have yet to be made clear, it does look as if the levy, combined with changes at the CITB, are serious attempts to address the current skills shortages. And as we prepare for the impact of Brexit, there is an extra incentive for the industry to make the most of the new apprenticeships on offer and to extract maximum value from the CITB.