Apprenticeships are qualifications where the learner is in a paid job that includes on-the-job and off-the-job training. The training costs for apprenticeships are primarily funded through the apprenticeship levy (75% of starts in London in 2021/22)[1], and the levy forms the apprenticeship budget for the Department for Education. Apprenticeships are an important part of the further education sector in London, complementing other classroom-based provision (which are funded through London’s Adult Education Budget). Evidence has shown that apprenticeships are an important policy tool for supporting inclusive growth, by supporting employment and earnings[2] as well as having potential for producing social mobility.[3]

The number of apprenticeships in London is low compared to the rest of England. Since 2010/11, apprenticeship starts[4] relative to the population size have been lowest in London compared to all other English regions. Additionally, starts have fallen since 2017, which may be related to the introduction of the apprenticeship levy in 2017 and the pandemic. In contrast, classroom-based adult skills qualifications have seen a rise in enrolments since 2019/20 (since the Adult Education Budget was devolved to London).[5]

But why are apprenticeships less common in London? This blog investigates the factors that could be driving the trends for London.

The number of apprenticeships is determined by both how many learners want to do an apprenticeship (known as demand for apprenticeships) and how many businesses want to hire an apprentice (known as the supply for apprenticeships). Therefore, to understand apprenticeship trends fully, evidence around demand and supply is needed. There are many reasons why the demand for apprenticeships may be lower in London, for instance a higher share of young Londoners continuing onto higher education, or apprenticeship wages being insufficient to cover the high cost of living in London. This note focuses on the supply of apprenticeships in London: are businesses offering apprenticeships in London, what are their perceptions of apprenticeships, and why they might not offer apprenticeships. Understanding the supply of apprenticeships can help us to recognise if businesses are not offering apprenticeships that learners want to do.

1. Most employers in London don’t think apprenticeships can address their skill needs

As the economy recovered from the pandemic, businesses in London had the highest level of vacancies in the last decade with a peak in 2022. Data from the Employer Skills Survey showed that the number of hard to fill vacancies in London rose from 53,000 in 2019 to 140,000 in 2022.

Figure 1: Hard to fill vacancies in London, 2011-2022

Source: DfE Employer Skills Survey. Base: All establishments in London 9,925 in 2011, 10,371 in 2013, 10,630 in 2015, 10,269 in 2017, 10,111 in 2019, 7,428 in 2022.

However, despite this increase in hard to fill vacancies, the data suggest that businesses did not see apprenticeships as the solution. Of businesses in London with hard to fill vacancies, only 3% responded to the problem by increasing or expanding an apprenticeship programme. This is not due to a lack of awareness; 71% of employers in London have either some or a good knowledge of what is involved in an apprenticeship. Instead, many spent more on recruitment or utilised new recruitment methods. This potentially suggests that businesses do not see apprenticeships as a short-term solution to skills needs and instead respond by recruiting experienced candidates externally.

Moreover, business’ barriers in hiring apprenticeships also shows that businesses do not believe apprenticeships would fill their skill demands.[6] The primary reasons are businesses not seeing the need for apprenticeships or not seeing them as suitable for their business: 15% were not looking to recruit new staff, 14% did not think apprenticeships were suitable due to the size of their establishment. Strikingly, the apprenticeship levy reform, which is often cited as a key factor in the fall in apprenticeships in London, was a (explicit) barrier for only 0.7% of establishments in London.   

Figure 2: Barriers to offering apprenticeships, 2019 & 2022 London

Source: DfE Employer Skills Survey. Base (Module A): All establishments not offering apprenticeships in London 1,505 in 2019, 962 in 2022. Note the following answers have not been shown as the percentage was less than 5%: We were not able to offer placements during lockdowns / COVID, Regulatory or bureaucratic restrictions or requirements, Don’t know enough about them, Past apprentices have not been of a good standard, Prefer other forms of training, Decision made by Head Office / someone else, We have struggled to find a suitable applicant, No one has enquired about doing one lately, Not relevant to business, Specialist job roles / niche business, Currently looking into offering them in the future, Bad experience with training providers in the past, Because of recent reforms (minimum 20% of apprentices’ hours being off-the-job training), Because of recent reforms (needing to make a 5% contribution to the costs), COVID-19 had affected availability of apprentices, An apprentice is due to start soon.

2. However, there are many establishments who would be willing to have an apprentice

In London, many establishments offer apprenticeships, but this doesn’t necessarily translate to having an apprentice. In 2022, around 45% of establishments offering apprenticeships did not have apprentices at the time of the survey.

As with all job vacancies, we would expect some gaps between the number of apprenticeships offered and the take-up. Moreover, the survey is a snapshot in time, and it could be many establishments had an apprentice who had just finished their apprenticeship or were about to start. However, the large difference suggests that there are also key demand side factors which means that individuals are not able to take up the offer of apprenticeships. Experiential evidence from London’s Career Hubs suggests that this is not due to lack of interest from young people, but young people struggling to demonstrate they have the required skills.

Figure 3: Proportion of establishments offering apprenticeships 2012-2022

Source: DfE Employer Skills Survey. Base: All establishments (2012: England: 10,003. London: 1,345, 2014: England: 10,032, London: 1,619, 2016: England: 10,015, London: 1,540, 2019: England (Module A): 13,358, London (Module A):  1,936, 2022: England: 10,134, London: 1,264).

A key way in which establishments recruit apprentices is via work experience, 35% of establishments who recruited external individuals to apprenticeships used work experience placements to determine their suitability. Therefore, a key role that schools can take is ensuring that students are offered both work experience and apprenticeship opportunities.

The evidence does not appear to show that apprenticeships are being exclusively offered to existing older employees. As shown by Figure 4, a small minority of apprenticeships are only offered to existing employees (12%- although a further 41% are offered to new or existing employees), and only 5% are exclusively offered to those over 25. However, the latest DfE data on apprenticeship starts shows that in London 55% of starts are for over 25s.[7] Therefore, further analysis is needed to explain whether this is due to younger learners not taking up the offer of apprenticeships, or businesses offering apprenticeships to different learners but choosing predominantly older candidates.

Figure 4: Demographics and employee type of apprenticeships offered, London 2022

Source: DfE Employer Skills Survey. Base those who have or offer apprenticeships: 264. Note: 19-24 or 25+ includes only establishments who offer apprenticeships to both 19-24 and 25+.

3. Businesses are less likely to offer apprenticeships in London than in England (especially for larger firms)

The share of establishments offering apprenticeships varies by establishment size and sector. This is expected given only large employees pay the apprenticeship levy, so they have greater incentive to offer apprentices. Additionally, larger employees are likely to have greater capacity to provide support for apprentices.

As shown by Figure 5, the reason why London offers and has less apprenticeships than England seems primarily because medium and large employers are less likely to offer apprenticeships. In 2022, there was a 16 percentage point difference for establishments with 50 or more employees offering or having apprenticeships between London and England. Similarly, there was an 18 percentage point difference for establishments with 25 to 49 employees.

The reason for not offering apprenticeships varies by size. Establishments with less than 50 employees have the size of their establishment and that their staff are fully skilled as key reasons for not offering apprenticeships. Establishments with 2-4 employees were less likely to cite their preference for recruiting experienced staff instead of apprentices. However, a large blocker across all sizes is firms not looking to recruit new staff and apprenticeships not being offered in their industry.

Figure 5: Proportion of establishments offering apprenticeships by size, 2022

Source: DfE Employer Skills Survey. Base All establishments (Module A). London: 2 to 4: 387, 5 to 9: 320, 10 to 24: 277, 25 to 49: 147, 50+: 133. England: 2 to 4: 2,808, 5 to 9: 2,454, 10 to 24: 2,424, 25 to 49: 1,329, 50+: 1,119.

Likewise, some industries may be better suited to have apprentices than others. Across most sectors relatively more establishments are offering apprenticeships in England than in London. Construction establishments are 7 percentage points less likely to offer or have apprentices in London than in England. Arts & Other Services stands out with having a higher proportion of apprenticeship offers in London than in England. As shown by Figure 6, some sectors have seen a large rise in demand since the pandemic: Education, Health & Social Work, Arts & Other Services, Construction.

Figure 6: Proportion of establishments offering or have apprenticeships by sector, England & London and 2019 & 2022

Source: DfE Employer Skills Survey. Note only sectors with a sample size of at least 75 establishments have been included.  Base All establishments (Module A). London range 2019: Construction: 97; Business Services: 541. London range 2022: Information & Communications 78; Business Services 339.

4. More businesses intend to offer apprenticeships in the future

The ESS also asks whether establishments intend to offer apprenticeships in the future. In 2022, 37% of establishments in London intend to offer apprenticeships in the future, compared to 15% who currently have or offer. If this was fully realised, it would dramatically increase the provision of apprenticeships in London.[8] However, in 2019 28% of establishments in London intended to offer apprenticeships in the future (when 13% currently offered), so we have not seen an increase since 2019 in line with these future intentions.

For those who currently offer apprenticeships, 90% intend to continue in the future, whereas for those who are not currently offering apprenticeships 28% intend to offer in the future. Therefore, a key aim would be to ensure those who plan to offer apprenticeships in the future follow through in this provision. This is particularly the case given that the data suggests that once employers start having apprentices, they are likely to continue.  Positively, the data suggests that new establishments are moving into apprenticeships, with 17% of establishments having offered apprenticeships for a year or less.[9]

Across business sizes, there is around a 20 percentage point gap between the percentage of establishments currently offering apprenticeships and those hoping to in the future. Across sectors, there is a wider range of differences from 11 percentage points for Wholesale & Retail and Health & Social Work to 27 percentage points for Information & Communication.

Figure 7: Proportion of establishments currently offering or planning to offer apprenticeships in the future by Size and Sector, 2022

Source: DfE Employer Skills Survey. Base: All establishments London (Module A): 1,264

The main reason why many establishments plan to offer apprenticeships in the future is to help expand and upskill or to provide opportunities for young people. One quarter of establishments intending to offer apprenticeships in the future saw it as a key way of ensuring young people to enter the industry/company, and nearly one fifth (17%) saw apprenticeships as a way of giving young people employment. Hence, it appears the key policy question is how you shift more establishments from thinking apprenticeships won’t suit their business to wanting to offer apprenticeships in future to fill skills gaps and give opportunities to young people.

Figure 8: Reasons for establishments intending to start offering apprenticeships in the future London, 2019 & 2022

Source: DfE Employer Skills Survey. Base: Establishments intending to start offering Apprenticeships in the future (Module A). 2019: 327 2022: 289.

What are the key takeaways?

• Many establishments in London do not think the benefits of apprenticeships outweigh the costs or apprenticeships as being the solution in periods of high skill demands. It may be that businesses do not think that an apprenticeship will solve the vacancies issue in the short term, so are more likely to get an experienced hire. Therefore, it may be helpful to use apprenticeships in terms of longer-term work force planning.

• Despite this, there are many establishments who offer apprentices but do not have them, which suggests that there could be an issue of learners not being able to show they have the suitable skills for apprenticeships.

• To increase the number of apprenticeships offered, the focus should be on increasing the proportion of larger firms offering in London. For smaller firms findings ways (such as apprentices being across different organisations) to make apprenticeships feel suitable for the size of their business should help more establishments to offer apprenticeships. Additionally, businesses may need additional support given the time and cost needed to invest in apprentices. Across sector, most sectors have a low share of apprenticeships being offered in London than in England.

• More businesses intend to offer apprenticeships in the future and give opportunities to young people. A key question is how to ensure this desire is followed through.

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With thanks for the Department for Education sharing data from the ESS 2022 which allows us to do bespoke analysis. Any errors in the analysis are due to Greater London Authority, rather than DfE. 

This work was undertaken in the Office for National Statistics Secure Research Service using data from ONS and other owners and does not imply the endorsement of the ONS or other data owners.

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[1] Department for Education: Apprenticeships in England by industry characteristics 2021/22, 75% of starts in London are supported by ASA levy funds. A small proportion of funding is either from the ESFA or directly from the employer.

[2] For further information see: Cavaglia and others (2020), Do Apprenticeships Pay? Evidence for England.

[3] Social Mobility Commission: Apprenticeships and social mobility: fulfilling potential (2020).

[4] Starts are the number of apprenticeship programmes that begin in a given academic year. One learner could have multiple apprenticeship starts over an academic year.

[5] For further information see the AEB Data Publication 2022/23 R14 on London Datastore.

[6] Note that the percentages for each barrier are similar for London and the Rest of England.

[7] For more information see GLA’s latest full-year apprenticeship data: London Apprenticeship Full-Year Update 2022/23

[8] If the 36,120 apprenticeship starts in 2022/23 increased by the same ratio (ie 37/15), this would lead to around 88,000 apprenticeship starts in London.

[9] 18% have been doing in for more than a year or up to 3 years, 13% for 3 to 5 years, 17% 5 to 10 years, and 25% more than 10 years.