|Practice area:||Education and Labour Markets|
|Client:||Social Mobility Commission|
|Published:||24 June, 2020|
London Economics were commissioned by the Social Mobility Commission to undertake an analysis of the impact of the Apprenticeship Levy on the outcomes of learners from disadvantaged backgrounds.
Announcing the publication of the report, the Commission said that the apprenticeship system is failing disadvantaged young people and Covid-19 will make it worse. Learners from disadvantaged backgrounds are being left behind by the apprenticeship system, with numbers slumping by more than a third since the introduction of the apprenticeship levy.
The report, Apprenticeships and social mobility: Fulfilling potential, also reveals that most of the benefits of apprenticeships are going to those from wealthier backgrounds. However, the analysis found that apprenticeships are one of the most effective means of boosting social mobility for workers from poorer backgrounds – if they can get into and through the system.
The report reveals:
- A 36% decline in apprenticeship starts by people from disadvantaged backgrounds, compared with 23% for others
- Just 13% of degree-level apprenticeships, the fastest growing and most expensive apprenticeship option, go to disadvantaged apprentices
- Most disadvantaged apprenticeship starters came from three regions: north-west England (25%); the west midlands (15%); and London (15%)
- More than 80% of apprenticeships undertaken by disadvantaged learners are in enterprises in the services, health, education or public administration sectors
- Only 63% of apprenticeships are successfully completed by disadvantaged men, compared with 67% for more privileged men
- On average, apprentices from disadvantaged backgrounds earn less than non-disadvantaged apprentices
- There is a 16% boost to wages for disadvantaged learners who complete their training, compared with 10% for others
Report authors London Economics’ analysis shows the 2017 Apprenticeship Levy reform was followed by a collapse in overall apprenticeship starts that hit disadvantaged learners hardest. In addition, disadvantage gaps have opened up at every stage, from employer candidate selection to training quality and pay rates after completion.
London Economics consultant and lead author Alice Battiston said:
“There is a severe disadvantage gap throughout the entire apprenticeship training journey, and this has worsened over time. Not only has the proportion of new starters from disadvantaged backgrounds declined over time, but they have also benefited less than their better-off peers from the shift towards higher-level programmes.”
Steven Cooper, joint Deputy Chair of the Social Mobility Commission, commented:
“The apprenticeship levy, introduced in 2017, has disproportionately funded higher-level apprenticeships for learners from more advantaged communities, rather than those from disadvantaged socio-economic backgrounds who would benefit more.”
Barriers to success
Disadvantaged apprentices are less likely than more privileged peers to complete their course, with the main reasons for dropping out including low levels of pay; with SMEs more likely to pay apprentices the minimum wage. “The relatively low completion rate achieved by disadvantaged apprentices, particularly at intermediate level, is another alarming point emerging from our analysis. Specific interventions are needed to reduce drop-outs,” argued Battiston.
Apprenticeships boost social mobility
Despite the many barriers faced by disadvantaged learners, our report confirms how effective apprenticeships can be in promoting social mobility.
People from less privileged backgrounds who complete an apprenticeship get a bigger boost in their earnings than other learners. This is particularly true at intermediate level – the first step on the apprenticeship journey. Furthermore, apprentices from disadvantaged backgrounds are more likely to complete their course on time.
Following the COVID-19 pandemic, however, there are concerns disadvantaged apprentices are at greater risk from an economic decline, with many employed in hard-hit sectors such as hospitality and retail.
Alice Battiston added: “The pandemic is likely to have made the disadvantage gap worse. There needs to be urgent consideration of the impact of the apprenticeship levy on social mobility outcomes.”
Steven Cooper said:
“It is no longer credible for the government to assume that apprenticeships automatically improve social mobility and leave the system to its own devices. Strategic action and direction are needed to target the system better on disadvantaged communities and improve the system’s value for money. This is an easy win for the government in its attempts at levelling up – if it can get this right. The government must look at the structural barriers in place and take action to channel resources where they will have the greatest effect.”
The full report and technical report are available through the links above.