Employers are in the driving seat, but they don’t train drivers

In an attempt to pose as doing something to help tackle the shortage of heavy goods vehicle (HGV) drivers the government has announced that the Department for Education (DfE) will be spending £10 million to train an estimated 3,000 drivers.  Set aside for the moment that this is a drop in the ocean compared with the shortfall of up to 100,000 claimed by the Road Haulage Association (RHA). Ignore the fact that the government is only now acting despite having been warned by the Transport Select Committee and others of an emerging crisis as long ago as 2016.  This debacle also signals a failure of government apprenticeship policy.

In 2017 the government introduced the apprenticeship levy to pay for apprenticeship training in England.  The levy is in effect a payroll tax, paid by employers with a wage bill of over £3 million per year at a rate of 0.5 per cent of annual pay. Employers can claim back the cost of training registered apprentices, with any unused balances subsidising similar training at smaller establishments.

The reform was heralded by the government as solving England’s chronic lack of investment in training by “putting employers in the driving seat”. The problem was from the outset that many employers wanted to drive in a direction government didn’t like. Bodies such as the Confederation of British Industry have consistently argued that employers should be free to choose what training they spend levy money on, and not be restricted to government approved apprenticeships.  To their credit DfE have resisted such calls, which would greatly increase what the Treasury calls “deadweight” – paying for work that would have happened anyway.

Even without an easing of the rules however, there is ample evidence of employers “playing the system” to get their levy contributions back.  A study by the Institute of Employment Rights in 2018 argued that some 40 per cent of so-called apprenticeships were simply a rebadging of existing training. Others have documented the growth in “apprenticeships” for established senior managers at the expense of provision for new entrants and the young. A great deal of the training funded by the levy is nothing like the popular idea of apprenticeship – helping a young person enter a skilled occupation.

Clearly, amongst the many things employers have not spent the apprenticeship levy on is HGV training.  There are recognised apprenticeships that could have been funded from the levy.  There are certainly major firms who will have paid substantial sums into the levy pot. Why then is the taxpayer being asked to stump up and help bail them out?

It’s hard to get figures on what employers in the retail, distribution, transport and logistics sectors have spent on apprenticeship training as the DfE apply confidentiality rules to the levy as for any other tax.  Collectively, however, the major employers in these sectors will have paid hundreds of millions of pounds in levy while at the same time seeing the numbers starting apprenticeships in retail collapse.  It is a real indictment of our approach that while the cash, the qualifications and the crying need for HGV training were all in place, the ‘employer driven’ training system spectacularly failed to deliver.

There are many lessons to be learned from the current crisis in road transport.  The most obvious is that the dogmatic implementation of Brexit pursued by the current government has caused entirely predictable problems in the logistics sector, as it has in agriculture, hospitality and care.  An even bigger message however is that a model of capitalism in which large firms off-load their responsibilities onto smaller suppliers and ‘self-employed’ contractors  (as we documented here) is not a basis for long term security or prosperity.

In relation to apprenticeship training.as in so many other aspects of our daily lives, we need to rid ourselves of the dogma that the market knows best.