The Recent Evolution of Apprenticeships

CVER's Chiara Cavaglia, Sandra McNally and Gu Ventura discuss the evolution of apprenticeships in England over the last 20 years.

The number of apprenticeship starts in England has reduced dramatically in recent years following government reforms and the COVID-19 pandemic. The composition has also shifted from almost complete domination by low and intermediate level apprenticeships to one where higher and degree apprenticeships constitute a significant share (26 per cent in 2020). Even though the number of apprenticeships has decreased, policy changes have likely improved their average quality. One might characterise the changes (at least up until the pandemic) as a substitution of quantity for quality. But this might have come at the cost of less equitable access with, for example, those living in disadvantaged neighbourhoods losing out from these changes.

Our report, ‘The recent evolution of apprenticeship participation and pathways’ documents these trends and assesses how they have affected different groups of people - by age group, socio-economic background, gender and ethnicity. We also look at the prior attainment of individuals undertaking different types of apprenticeship, the extent of progression and drop-out rates across apprenticeship types. Finally, we interpret what these patterns imply for broader concerns on the efficacy of the system and for social mobility. We study the change in apprenticeships between August 2014 and July 2020, using comprehensive national data (the Individual Learner Record). For younger age groups, we can link information to school records.

Changes in the number and composition of apprenticeships were strongly influenced by changes in government policy over these years, which included the overhaul of how apprenticeships are funded (with the introduction of the Apprenticeship Levy from 2017), the replacement of apprenticeship frameworks by employer-led standards, and new rules aimed at improving the quality of training (including a minimum duration, a minimum threshold for off-the-job training and a more rigorous final assessment). In line with these efforts, there has been a marked increase in the planned duration of apprenticeships. The net impact on productivity depends on whether the improvement in quality offsets the fall in numbers and the extent to which newer (more expensive) apprenticeships are displacing pre-existing forms of training (which is difficult to evaluate).

Changes in number and type of apprenticeships on offer appear to have had distributional implications. Whereas in 2015 apprenticeship starts were more frequently observed among people living in the most deprived fifth of neighbourhoods of England, by 2020 they were more evenly split across types of neighbourhood. This change is driven by bigger relative falls in lower-level apprenticeships (Levels 2 and 3) in more deprived neighbourhoods, particularly among older individuals. Young individuals from disadvantaged backgrounds are less and less represented at successively higher levels of apprenticeship. In fact, they are more likely to start a university degree than to study for a degree apprenticeship. Cast in this light, it is difficult to see such apprenticeships as being a route to improve social mobility.

Unlike in most other countries, apprenticeships in England are not predominantly used to facilitate the transition from school to work. Individuals over 25 years of age account for 40 per cent of all apprentices. Further, they account for the vast majority of those undertaking higher apprenticeships (at Levels 4 and 5) and over half of those undertaking degree apprenticeships. This matters because returns to apprenticeships are considerably higher for younger individuals (McIntosh and Morris, 2018). Women and ethnic minorities are under-represented among younger apprentices (up to age 25).

Another part of the story is that drop-out rates across apprenticeship types are relatively high. About 11 to 26 per cent of individuals drop out within one year (depending on the level of the apprenticeship and the age of the apprentice). The overall achievement rate varies between 60 and 70 per cent, which is lowest for older individuals (25+) on higher apprenticeships and highest for younger people on Level 3 apprenticeships. The fact that so many individuals fail to complete their apprenticeship is a cause for concern, especially given the high subsidy from the taxpayer.

Overall, our report points to improvements in the quality of apprenticeships on offer but fewer possibilities to access them because of their reduced number and more stringent academic requirements when offered at higher levels. Questions for policy makers include whether there ought to be more explicit targeting of firm-level incentives towards younger people and how opportunities may be made more widely available for those from disadvantaged backgrounds.

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CVER Discussion Paper 039, The Recent Evolution of Apprenticeships: Participation and Pathways is published 8 December 2022. Link: https://cver.lse.ac.uk/textonly/cver/pubs/cverdp039.pdf. 

On Track to Success? Returns to Vocational Education against different alternatives

Sönke Matthewes and Guglielmo Ventura explore the labour market consequences of students’ enrolment in FE colleges in England

In the wake of Brexit and the global pandemic, skills shortages across the UK economy risk hampering efforts to reverse a decade of languishing productivity and festering inequality. Reinvigorating the long-neglected British vocational (or technical) education system is often hailed as a solution to this problem.

Arguments in favour of vocational education are familiar: it caters for more than just academic talents, while equipping the future workforce with essential skills for the well-functioning of the economy. It can aid the transition from school to work and enhance productivity, thanks to closer links between what is taught and the skills employers need. Critics worry this may come at the expense of general skills - reducing future workers’ adaptability to ever changing patterns of work. In practice, whether students benefit from vocational education will depend on what is their alternative: those who would otherwise leave education altogether might well benefit from gaining extra skills, even if the qualifications gained are at a low level. The picture is less clear for those who would otherwise complete academic schooling and possibly go on to obtain a university degree. Empirical evidence from the UK has not yet provided a convincing answer.

In a recent study we contribute to this debate with new evidence about the payoffs to vocational education in England. A new empirical approach allows us to estimate these payoffs separately for two groups of students facing separate alternatives: (1) those who would otherwise enrol in an academic sixth form and (2) those who would otherwise take no post-16 courses.

We follow the education and labour market careers of three cohorts of state-educated students who sat their GCSEs between 2002 and 2004. At the time, the school-leaving age was still 16 and it was not uncommon for students not to take any course after their GCSEs (14 percent). Those 86 percent continuing their studies were evenly split between academic institutions (sixth form schools or sixth form colleges) and more vocational institutions (mostly Further Education colleges). Unsurprisingly, the three groups of students (vocational, academic and no further education) do not look alike in terms of their previous academic achievement or socio-economic status. Any simple comparison of their labour market careers would thus be misleading.

To overcome this problem and ensure we compare the education choices of otherwise similar students, we exploit the role of students’ geographic proximity to academic and vocational providers as a driver of students’ post-16 education choices. For this, we focus on students from schools without sixth form provision who move institution after GCSEs. Intuitively, students living further away from a Sixth Form college are more likely to enrol in an FE college. Similarly, living further away from an FE college increases students’ probability to choose an academic provider or, to a lesser extent, leave education entirely. We also take account of a vast range of student-, school- and neighbourhood-level characteristics to make sure students’ proximity to post-16 institutions does not reflect better labour market opportunities or residential sorting. Under this approach, the estimated payoffs relate to students whose education choices are influenced by distance to the different institutional types (‘marginal’ students).

Our analysis paints a rather different picture depending on the group of marginal students considered.  Let’s focus first on those who enrol in FE colleges as an alternative to Sixth Form Colleges. For these students, enrolling in vocational institutions leads to a loss in annual earnings at age 29-30 of £2,900 (or 11 percent) for males and £1,700 (or 8 percent) for females. These gaps open up very early in students’ careers (in their mid-twenties). They are not explained by differences in labour market participation as vocational and academic graduates are equally likely to be employed, but are due to vocational students being more likely to move into lower-paid jobs with worse wage progression.

But what drives this difference? We find that male vocational students are 5 percentage points less likely to achieve qualifications at Level 3 (A-Levels or equivalent) and about 5 percentage points less likely to obtain a university degree than if they had studied in a Sixth Form College. Additionally, vocational education almost halves students’ chances to enrol in more selective universities. The weaker academic progression is not compensated by a higher probability of starting an apprenticeship. Overall, differences in educational attainment and progression explain at least 20 per cent of the earnings penalty we found.

Our approach also allows us to unpack average payoffs and explore how they vary based on students’ underlying preferences for the academic and vocational options. They do so considerably: students with a stronger motivation to pursue academic education in Sixth Form Colleges (they are willing to travel longer distances to enrol) are penalised to a much greater extent if diverted to FE Colleges. But while payoffs to vocational education are negative for most marginal students, we find some tentative evidence that the least academically-inclined students benefit from it. Perhaps unsurprisingly, students who enrol in vocational education as an alternative to leaving education at age 16, seem to increase their annual earnings - although results are less conclusive as students’ choice to enrol in vocational education rather than dropping out is not strongly driven by whether there is an FE college in reach. 

In light of these results, policy efforts should focus on improving the quality of the vocational track by tackling some of its well documented problems. After all, recent economic studies from Nordic countries support the idea that vocational programmes can benefit students even compared to academic ones under certain conditions. First, vocational programmes must have well-signposted progression pathways to tertiary level education and have better career guidance and financial support for students. In this respect, the recent roll-out of Institutes of Technologies and the announcement of more comprehensive post-18 funding may improve vocational students’ progression through the system. Second, internationally, vocational programmes appear to work better when they are closely linked with workplace-based training. In the UK, apprenticeships have become less common for 16-19-year-olds than for older people over the years. Without strong incentives for firms’ involvement, recent reforms, such as the introduction of T-Levels with mandatory work placements and the consolidation of employer-designed apprenticeship standards, risk being futile.

Overall, if we are to be serious in this country about promoting growth and reducing inequality by improving and diversifying skills, there needs to be much more policy attention towards the Further Education sector and the challenges its students face.

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Matthewes and Ventura (2022). On Track to Success? Returns to vocational education against different alternatives. CVER Discussion Paper 038. London School of Economics. 

Do Management Practices Matter in Further Education?

Better management practices in FE colleges could help students from disadvantaged backgrounds, say Sandra McNally, Luis Schmidt, Anna Valero

In the first study to evaluate management practices in Further Education (FE) colleges, published today, we find that well run colleges boost student performance and can help close the gap between poorer pupils and their peers.

The FE sector plays a vital role in helping people acquire education and skills,  in improving social mobility (Augar Review, 2019) and in “levelling up”  opportunity across and within regions. FE and Sixth Form colleges enrol about half of every group completing compulsory full-time education at age 16, including a disproportionate share of students from disadvantaged backgrounds. FE colleges are also important for adults who wish to train and reskill. Despite their importance, we know relatively little about how to improve efficacy in FE colleges.

Our study is the first to evaluate management practices in colleges – and although its findings are inevitably specific to the institutional context of the UK, it also has relevance to institutions with similar aims in other countries (such as community colleges in the US). In addition to looking at overall performance, we also examine whether better management practices help students from disadvantaged backgrounds. This is a very pertinent issue as the share of students from disadvantaged families enrolling straight after GCSEs is about twice what it is in other educational settings.

We investigate whether management practices in FE colleges influence performance in 16-19 education. We collect our own data on management practices using the methodology of the World Management Survey (WMS) (Bloom and Van Reenen, 2007) as applied to the FE sector. These methods were first applied to the manufacturing sector in a handful of countries and have now been carried out across 35 countries worldwide and in a variety of sectors including schools, universities and healthcare (see Scur et al. (2021) for an overview). Across these different settings, good management practices are a key driver of performance.

In our survey, college principals are asked 21 questions about their management practices across college operations, monitoring, target setting and people/talent management, and each is scored between 1 and 5, where 5 indicates the college has fully adopted good practice. We link our survey data to administrative data for educational outcomes, progression and other important characteristics of these institutions and the people who attend them.

Our first key finding is that structured management practices appear to matter for educational achievement and progression to university education. For example, if the management score increases from an average of 4.28 (out of 5) to 4.64, the probability of a young person achieving a ‘level 3’ qualification (e.g. A-levels or BTECs) or going to university increases by 2 percentage points. 

Our second main finding is that good management practices are more important for achieving a level 3 qualification for students from low-income backgrounds. In a hypothetical scenario where a learner is moved from a college with relatively poor management practices (i.e. 10^th percentile) to a one with relatively good practices (i.e. 90^th  percentile) they are eight percentage points more likely to achieve a level 3 qualification. This is nearly half of the educational gap between those from poor and non-poor backgrounds. The labour market return to level 3 qualifications is at least six per cent (Machin et al., 2018). Improving college management practices could reduce inequality and improve social mobility.

The effect on progress to university is driven by students who enter FE colleges with good GCSEs at age 16 and by institutions focused on higher education qualifications (Level 4 or higher, e.g. Foundation Degrees, HNCs, HNDs). Well-managed FE colleges have the potential to be engines of social mobility at this higher level, at least for those students who are already well-prepared when they enter.

What factors lead to good management? We find that spatial competition from nearby colleges may help. Although good leadership is correlated with good management, we find that management practices do not simply reflect the influence of college principals or more effective leadership. Management practices can be thought of as a type of technology (Bloom et al., 2016), evolving slowly as particular leaders come and go. An important area for future research is to further explore the interaction between management practices and leadership styles, as we know that principals do matter for outcomes in this sector (Ruiz-Valenzuela et al. 2017).

This paper suggests good management practices at FE colleges play a big role in the prospects of young people in general, and those from disadvantaged backgrounds in particular. Furthermore, as ‘good management’ is slow-changing, any positive effects apply to new groups of college entrants each year. Improving management practices in colleges across the country could therefore be an important channel for reducing inequalities.

About the authors
Luis Schmidt is a pre-doctoral researcher at the LSE’s Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD).

Anna Valero is a Senior Policy Fellow at the LSE's Centre for Economic Performance, London School of Economics, and Deputy Director of the Programme on Innovation and Diffusion (POID), London School of Economics.

Sandra McNally is a Professor of Economics at the University of Surrey. She is Director of the Centre for Vocational Education Research at the London School of Economics and is also Director of the Education and Skills Programme at the Centre for Economic Performance, London School of Economics.