Accountancy Apprenticeships: A Year In Review
Accountancy Apprenticeships: The Good
Accountancy programmes continue to be an attractive destination for school leavers and graduates under apprenticeship programmes. In 2019 approximately 7,000 new Level 7 Professional Accountant apprentices started their programmes. It was the 7th most popular standard (just behind customer service practitioner and just ahead of hair professional). In our estimates, this represents approximately 25% of all new students to the world of accounting.
Across the FI network, we now have over 1,300 Level 7 apprentices who include the most relevant professional qualification (either CIMA, ACCA or ICAEW) for their job role. With our focus on regional coach and employer service teams, we have seen much greater engagement and consistency as these standards have been bedded in at employers. It is clear that the accounting and auditing professional firms are the biggest sectors of employers developing staff through the Level 7 programme, but other sectors are now getting on board. The key value of the apprenticeship programme for many employers is it aligns the development of the skills and behaviours as well as the knowledge through the professional qualification. This is a big step forward.
There have been far fewer clarifications from regulatory bodies over the last 12 months which has been fantastic for providers and employers alike. Trust is a key thing to build up between an employer and their chosen training provider and with a constantly changing playing field in 2018 this was a challenge so a welcome change has been consistency in this area.
Ofsted announced they will be inspecting under their new Education Inspection Framework (EIF) which looks to really get to grips with what is the impact on the learners of everything the training provider is looking to do. By focusing on speaking to more stakeholders as well as looking at data we feel this is a really welcome development. There have been hundreds of new training providers set up in the last 2 years and ensuring quality across all of these is a massive undertaking but one that is really important for our industry.
Accountancy Apprenticeships: The Bad
A funding cap reduction on the Level 4 programme was announced in November 2018, reducing the cap from £9000 to £8000 for all new starts from April 2019. There are so many implications of a change like this but these two are key:
- We know of at least three training providers who have removed the Level 4 programme from their suite of programmes and now refer clients to us instead. We are not convinced this was an objective the government had in mind, there are other “unforeseen consequences” as well…
- Postponing investment. The Level 4 standard started before Level 7, back in 2016. Many training providers, including FI, began delivering the Level 4 standard in 2017. By 2018 we had enough feedback from the early cohorts to begin planning for enhancements and to further invest; the announcement of a cap reduction makes us and every other provider consider any investment in a new light.
Cutting funding only serves to damage quality for employers and apprentices rather than creating a competitive environment. We feel it would be better to have an expectation of the cost based on what training providers say and then set a percentage of funding the government are willing to contribute. When Ofsted now inspect providers on the process of “what was the intent, how was it implemented and what was the impact” these cap reductions have wide-ranging impacts that need to be considered holistically.
20% Off The Job Training (OTJT) is still causing confusion about what exactly can be included and what can’t. Considering this concept came in decades ago when apprentices went to college on day release programmes the language doesn’t make as much sense now. We prefer to talk about this as 20% development time, doing tasks that are new to the role and therefore involve new learning. A line manager delegating items on their own to-do lists is a great example of giving an apprentice new learning and development opportunities. So long as these are supported, reflections recorded and feedback given these are a great demonstration of learner development. Development can occur “off the job” eg at a college like FI, or “on the job” with their line manager, doing business-related tasks. It would be a wonderful step forward for all employers if the language used in this area was brought up to date.
Accountancy Apprenticeships: The Ugly
I am going to state upfront on the next point that I am a qualified accountant, who has been educating and training accountants for the last 20 years, so I am definitely biased here. But I also flunked my A levels, did retakes part-time, and went to a polytechnic for my degree (which included a 12-month placement in the industry).
There is a lot of noise, in certain parts of the press, in certain circles and reports that Level 6 and Level 7 programmes shouldn’t be funded by apprenticeships. There are different reasons given for this:
- Funds should go to Level 2 and Level 3 roles
- Certain jobs (e.g. accountants) shouldn’t be allowed an apprenticeship programme
- Funding is already provided to universities for this level of training
The above list are all examples of what I have heard. However, to remove Level 6 and Level 7 programmes from apprenticeship funding, and leave behind only higher education (university) programmes would be a huge mistake (in the author’s opinion!).
There are approximately 12,000 Level 7 apprentices on programmes at an average price of £18,000 for a three-year programme (whilst the programme cap is £21,000 that is a cap, not a price and prices are planned out for every individual learner based on prior knowledge). On this basis, these programmes are costing £72m per annum to fund.
These 12,000 are all employed, learning a profession on the job, they pay approximately £40m in taxes. A net requirement of £32m. They will also be contributing to the company’s profits and therefore corporation tax payments.
Now take the approximately 30,000 students currently at UK universities studying accountancy degrees. With both teaching and maintenance grants, this is costing the taxpayer £500m per yr, without any tax receipts, 16 times more than the apprenticeship situation. Institute for Fiscal Studies forecasts only 17% of students to pay off their loans in full, even if this is higher for accountancy students there is a huge difference between the funding model of HE accountancy programmes by the government and apprenticeship programmes.
From a financial and a quality perspective supporting the apprenticeship programme makes sense.
What I think would be a far more interesting question to pose is: Can an individual only access government funding for a Level 6/7 programme once (irrespective of subject area)? This position would create a new dynamic for 18 year old school leavers to really consider the value of the programme they are choosing. It would also direct far more employers to look for school leavers to join them rather than graduates.
Looking at the apprenticeship piece on its own doesn’t make sense, and we hope that elements of the Augar report and a holistic review of post 18 education will offer up the right solution.
I’ve shared my views on apprenticeship developments over the last 12 months, and we’ll be sharing views from our employers, apprentices and our network all week in support of National Apprenticeship Week – so make sure you’re following us in all the usual places and get in touch with your local FI centre if you’d like to find out more about how apprenticeships can benefit you.
Chairman, FI Ltd