Since the introduction of
the apprenticeships levy in April 2017, local leaders up and down the country have relentlessly called for it to be devolved. The
rationale is that local leaders know better than the central government when it
comes to understanding and meeting employers’ needs.
However, as with every new
policy, there are key questions that need to be answered:
- is the policy effective, i.e. likely to achieve the expected results? And
- what's the best level to implement this policy? Is it better to implement it at the national level or are local authorities more likely to achieve a positive impact?
This new report, undertaken
jointly by the Centre for Vocational Education Research and
the What Works Centre for Local Economic Growth provides
a real life example of how these questions play out in practice by looking at
the impact of devolution of the Apprenticeships Grants for Employers (AGE) to the
local level through City Deals.
The report first looks at whether
the AGE was at all effective in driving apprenticeships numbers. It provides
some evidence suggesting that the programme – at the national level – had a
limited but positive effect in driving apprenticeships take-up for small and
medium size businesses.
The bulk of the report
considers whether the devolution of AGE to several local authorities had a more
positive effect on take-up of apprenticeships in these areas. To do so, the report
compared apprenticeships take-up in local authorities that have negotiated
devolution of AGE in their City Deals with those who did not. The report finds
that devolution had close to no effect on apprenticeships take-up and in some
instances even had a negative effect.
The report offers one
possible explanation. Most of the flexibilities granted through the City Deals
were around eligibility of large employers, or firms taking more than one
apprentice. Results for the national scheme suggest that it didn’t matter for
large employers. The report also provides statistics showing that most smaller firms don’t take on more
than one apprentice. As such, the limited and even negative effects of
devolving AGE might be the result of local authorities negotiating
flexibilities on the wrong margins. This suggests that future efforts might be
better targeted at other means for increasing the number of apprenticeships
(our apprenticeship toolkit covers some of the possibilities).
The
natural conclusion of this experiment is that devolution per se is no silver
bullet in promoting local economic development. Before negotiating over powers,
central and local government need first and foremost to have an excellent grasp
of how a policy works in practice at the national level and in local area. Only
in this way, can local policy-makers hope to use their closer position to
employers to improve the effectiveness of local labour market policies.
