What’s gone wrong with the government’s levy-backed approach to boosting apprenticeships? Nothing, according to Anne Milton, apprenticeships and skills minister. “The last year has been a period of significant change, it will take time for employers to adjust,” she said, putting a heroically optimistic spin on another set of alarming figures.
Thursday’s data, covering the August-October 2017 quarter, showed a 27% drop in the number of apprenticeships on a year ago. That wasn’t as bad as the 59% plunge in the May-July period, but traveling in the wrong direction more slowly is not progress. Most independent observers think the government will miss its five-year target of reaching three million apprenticeship starts in England, from a starting point of May 2015.
The numbers turned south immediately after the government introduced the apprenticeship levy, a 0.5% payroll charge on all big employers, in April last year. You don’t have to be Hercule Poirot to think the levy-funded reforms could be the problem.
That was certainly the view of the Chartered Institute for Personnel Development (CIPD) when it warned of “unintended consequences” a couple of weeks ago. Nearly half of employers were simply re-badging existing training schemes as apprenticeships to claim back their levy allowance. Almost a fifth don’t plan to develop apprenticeships and regard the levy as just another tax. The only real advance has been in degree apprenticeships.
Rather than trust that the numbers will somehow improve, ministers could try listening to employers. Roughly speaking, the view of the CBI and the Institute of Directors is that the scheme is bureaucratic, costly and inflexible. That is why there are calls for a more flexible “training levy” – one that covers all workplace training, not just apprenticeships.
In one regard, you can’t blame ministers for being suspicious of these corporate cries. The danger is that employers would divert allocations from a more loosely defined scheme into general running costs. On the other hand, it’s blindingly obvious that the new scheme doesn’t command confidence. Worse, it’s failing for reasons that were predicted. As long ago as June 2016, the CIPD warned the government it was designing a “blunt instrument” and that a “one size fits all” approach was a mistake.
Ministers should heed the calls for a rethink. Conceived by George Osborne in 2015, the levy-backed scheme was sold at last year’s launch as the way to equip the nation with the skills required for life after Brexit. The plan isn’t working and Brexit approaches.
Asos’s ambition now looks credible
It was stock market news a couple of months ago when the value of Asos, the online fashion retailer, surpassed that of ancient old Marks & Spencer. The position now? Asos has accelerated away. M&S is still worth about £4.9bn but Asos, after a strong run for its shares, is at £5.7bn.
The valuation looks extraordinary when you remember that Asos is on course to achieve profits this year of only about £100m versus roughly £575m from M&S. It’s one hell of premium to put on Asos’s future growth and profit potential. The company is being valued at more than 70 times this year’s earnings.
For that money, you get a retailer that is clearly motoring. Sales in the UK rose by 23% to £301m in the past four months and the international operation achieved 32% to £489m. After the enormous hiccup of three profits warnings in 2014, Asos has become a remarkably consistent machine. If you caught the bottom of the shares that year you paid £20; now the price is a shade above £70.
The big risk is that capital is spent badly. The investment will be close to £220m this year, including the construction of a $40m warehouse in Atlanta in the US. But that life’s when you’re trying to be “the world’s leading fashion destination for twentysomethings”. Come back in 10 years to learn whether the goal was achieved – but the ambition looks increasingly credible.
First seen here.