Abstract
This dissertation critically examines whether United Kingdom apprenticeship programmes effectively address employer needs in shortage occupations or primarily function as mechanisms for cost redistribution within the vocational training system. Employing a literature synthesis methodology, this study analyses peer-reviewed research, government policy documents, and sectoral studies published between 2003 and 2025. The findings reveal a complex and nuanced picture: apprenticeships are increasingly targeted at recognised shortage areas including construction, engineering, social care, and digital technologies, with degree and higher apprenticeships emerging as valuable pathways for developing medium- and high-skill competencies. However, significant evidence demonstrates that the apprenticeship levy incentivises large employers to upskill existing staff rather than expand entry-level training, whilst net training costs create financial barriers that discourage sustained participation. Quality variation across the system enables some providers to exploit funding mechanisms without delivering substantive skill development. The dissertation concludes that whilst apprenticeships partially meet shortage occupation needs, systemic reforms are required to align employer incentives with genuine skill expansion, ensure consistent quality, and prevent the continuation of cost-shifting behaviours that undermine the programme’s strategic objectives.
Introduction
The United Kingdom faces persistent and well-documented skills shortages across multiple sectors of the economy. From construction and engineering to healthcare, social care, and digital technologies, employers consistently report difficulties in recruiting workers with appropriate skills and qualifications. These shortages impose significant costs on businesses, constrain economic growth, and limit productivity improvements. The Migration Advisory Committee regularly identifies shortage occupations for immigration purposes, whilst employer surveys conducted by bodies such as the Confederation of British Industry and the British Chambers of Commerce repeatedly highlight skills gaps as a primary business concern.
Apprenticeships have historically served as the principal mechanism for developing vocational skills within the UK economy. The apprenticeship model, which combines workplace learning with formal education, offers a potentially powerful solution to skills shortages by enabling employers to develop workers with precisely the competencies they require. Recognising this potential, successive governments have implemented significant reforms to the apprenticeship system, most notably through the introduction of the apprenticeship levy in 2017, which requires large employers to contribute funds specifically allocated for training purposes.
The policy rationale underpinning these reforms rests on the assumption that incentivising employer investment in apprenticeships will expand the supply of skilled workers in sectors experiencing shortages. However, growing evidence suggests that the relationship between apprenticeship policy and skills shortage alleviation is considerably more complex than policymakers anticipated. Critics argue that employers, particularly large levy-paying organisations, utilise apprenticeship funding primarily to subsidise training they would otherwise provide themselves, rather than genuinely expanding the pipeline of new skilled entrants to shortage occupations.
This tension between the stated policy objectives of apprenticeship reform and the actual behaviours incentivised by the funding system raises fundamental questions about programme effectiveness. If apprenticeships function primarily as mechanisms for transferring training costs from employers to the public purse, rather than as tools for genuine skill development in shortage areas, then the substantial public investment in the programme may fail to deliver anticipated economic benefits.
This dissertation addresses these concerns through a systematic examination of the available evidence regarding apprenticeship effectiveness in shortage occupations. The analysis considers both the extent to which apprenticeships genuinely contribute to addressing skills shortages and the degree to which the current system enables or encourages cost-shifting behaviours that undermine policy objectives. Understanding these dynamics is essential for informing future policy development and ensuring that apprenticeship investment delivers genuine returns for employers, workers, and the broader economy.
Aim and objectives
Aim
The primary aim of this dissertation is to critically evaluate whether UK apprenticeship programmes effectively meet employer needs in shortage occupations or whether they primarily function as mechanisms for redistributing training costs within the vocational education system.
Objectives
To achieve this aim, the dissertation pursues the following specific objectives:
1. To examine the extent to which current apprenticeship provision is targeted at recognised shortage occupations and sectors experiencing persistent skills gaps.
2. To analyse employer motivations for engaging with apprenticeship programmes and assess whether these motivations align with policy objectives for addressing skills shortages.
3. To evaluate evidence regarding cost-shifting behaviours within the apprenticeship system, including the use of levy funds for upskilling existing employees rather than training new entrants.
4. To assess the quality and consistency of apprenticeship provision across different sectors and providers, identifying factors that enable or prevent effective skill development.
5. To identify systemic barriers and funding structures that may discourage apprenticeship provision in sectors where shortages are most acute.
6. To develop evidence-based recommendations for policy reform that would better align employer incentives with genuine skill development in shortage occupations.
Methodology
This dissertation employs a literature synthesis methodology to examine the research question systematically. Literature synthesis represents an appropriate methodological approach for this investigation because it enables the integration of findings from multiple studies, sectors, and methodological traditions to develop a comprehensive understanding of a complex policy issue.
The research proceeded through several distinct phases. Initially, a comprehensive search strategy was developed to identify relevant academic literature, policy documents, and sectoral studies. Database searches encompassed major academic repositories including JSTOR, Web of Science, Scopus, and the British Education Index. Search terms included combinations of “apprenticeship,” “skills shortage,” “shortage occupation,” “apprenticeship levy,” “employer training,” “vocational education,” and “cost-shifting,” alongside sector-specific terms for construction, engineering, healthcare, social care, and digital technologies.
Inclusion criteria specified that sources must address UK apprenticeship policy and practice, be published in English, and derive from peer-reviewed journals, government publications, or recognised research institutions. The search prioritised recent publications to ensure relevance to current policy configurations, whilst including seminal earlier works that provide essential theoretical and historical context. Sources published between 2003 and 2025 formed the primary evidence base.
The quality of included sources was assessed using established criteria for evaluating academic literature. Peer-reviewed journal articles received highest weighting, followed by government statistical publications, parliamentary committee reports, and research from established policy institutes. Blog posts, commercial publications, and sources lacking clear methodological foundations were excluded.
Data extraction focused on identifying findings relevant to the research objectives, including evidence regarding apprenticeship targeting at shortage occupations, employer motivations and behaviours, quality variation, cost implications, and systemic barriers. Extracted findings were organised thematically to enable comparison across studies and identification of areas of consensus and disagreement within the literature.
The synthesis process involved identifying patterns across the included studies, weighing evidence according to methodological quality and sample size, and developing integrated conclusions that account for the full range of available evidence. Particular attention was paid to distinguishing between studies examining policy intent and those examining actual outcomes, and to identifying potential sources of bias or limitation within individual studies.
This methodology acknowledges certain limitations. Literature synthesis necessarily depends upon the quality and scope of available primary research. Where research gaps exist, particularly regarding specific sectors or recent policy changes, conclusions must be appropriately qualified. Additionally, the rapid pace of policy change in this area means that some evidence may reflect superseded policy configurations.
Literature review
The evolution of UK apprenticeship policy
Understanding current apprenticeship effectiveness requires appreciation of the significant policy reforms implemented over recent decades. The modern apprenticeship system emerged from the decline of traditional industrial apprenticeships during the 1980s and subsequent attempts to reconstruct vocational training pathways. Fuller and Unwin (2003) provide essential historical context, critiquing the UK’s multi-sector approach to modern apprenticeships and highlighting tensions between social inclusion objectives and the development of occupational expertise.
The introduction of the apprenticeship levy in April 2017 represented the most significant structural reform in recent history. Large employers with annual pay bills exceeding £3 million became required to contribute 0.5% of their payroll to apprenticeship funding, with these contributions available for drawdown to support approved training programmes. The policy rationale positioned the levy as a mechanism for ensuring employer investment in skills development whilst providing flexibility regarding training priorities (Department for Education, 2021).
Subsequent reforms introduced apprenticeship standards developed by employer-led trailblazer groups, replacing the previous framework system. These standards were intended to ensure that apprenticeship content reflected genuine employer needs rather than provider-determined curricula. The reforms also expanded the scope of apprenticeships to include degree-level qualifications, significantly broadening the skill levels addressed by the programme.
Apprenticeship targeting at shortage occupations
Substantial evidence indicates that apprenticeships are increasingly targeted at recognised shortage areas. Research by Pullen (2025) demonstrates growing emphasis on higher and degree apprenticeships as pathways for addressing skills gaps in sectors including construction, engineering, and digital technologies. This shift towards higher-level qualifications reflects employer recognition that many shortage occupations require advanced technical competencies beyond those traditionally associated with apprenticeship training.
Sector-specific studies reinforce these findings. Daniel, Oshodi and Gomez (2024) examine apprenticeship utilisation within the engineering sector, finding that employers deliberately employ apprenticeships to develop future skills and secure technician pipelines where shortages are acute. Their research indicates that engineering employers increasingly view apprenticeships as preferable to graduate recruitment, enabling development of firm-specific competencies whilst addressing shortages in intermediate-level technical roles.
Construction represents a sector with longstanding skills shortages and established apprenticeship traditions. Abdel-Wahab (2012) argues for rethinking apprenticeship training in the British construction industry, whilst Daniel et al. (2020) identify strategies for improving construction craftspeople apprenticeship training programmes. Both studies highlight the essential role of apprenticeships in maintaining the skilled workforce necessary for construction sector activity, whilst identifying barriers to effective implementation.
Digital and information technology sectors face particularly acute skills shortages, with employer demand consistently exceeding the supply of qualified workers. Taylor-Smith et al. (2019) examine whether computing degree apprenticeships can bridge digital skills gaps, finding evidence that these programmes effectively develop competencies aligned with employer requirements. Their research suggests that degree apprenticeships offer particular value by combining academic rigour with practical workplace experience.
Lewis (2020) provides detailed analysis of technician skill development in innovative industries, drawing evidence from the UK life sciences sector. This research highlights how apprenticeships can address shortages in technical roles that fall between craft-level and graduate-level positions, an occupational segment that traditional educational pathways often neglect. Lewis argues that effective technician development requires integrated approaches combining workplace experience with structured off-the-job training.
Higher and degree apprenticeships as shortage solutions
The expansion of higher and degree apprenticeships represents a significant development in addressing skills shortages. Crawford-Lee and Moorwood (2019) examine whether degree apprenticeships deliver quality and social mobility, finding that these programmes can provide valuable pathways into professional occupations whilst enabling employers to develop workers with specific competencies.
Nawaz et al. (2022) analyse the impact of degree apprenticeships, offering insights and policy recommendations based on programme outcomes. Their research indicates that degree apprenticeships effectively combine academic attainment with workplace skill development, creating graduates who are immediately productive in professional roles. This finding supports the argument that higher apprenticeships can address shortages in occupations requiring degree-level qualifications.
Laczik and Newton (2025) draw upon experiences of apprentices, employers, and education and training providers to assess degree apprenticeship effectiveness in England. Their findings suggest that whilst degree apprenticeships offer substantial benefits, their implementation varies considerably across sectors and providers, with implications for consistency of skill development.
Research by Brockmann and Smith (2023) emphasises that high-quality apprenticeship programmes require invested partnerships between employers and training providers. Their study identifies on-the-job and off-the-job training integration as critical to programme effectiveness, arguing that genuine skill development depends upon coherent learning experiences rather than fragmented exposure to workplace tasks and classroom instruction.
Employer motivations and levy behaviour
Whilst evidence supports the targeting of apprenticeships at shortage occupations, research also reveals complex employer motivations that do not always align with policy objectives. Pullen (2025) documents how large employers frequently utilise the apprenticeship levy to upskill existing staff and meet internal human resource development goals, rather than expanding entry-level training for new workforce entrants.
Crawford-Lee and Moorwood (2019) identify similar patterns, noting that levy-paying organisations often convert existing training programmes into apprenticeship formats to access levy funding. This behaviour may represent rational response to policy incentives but raises questions about whether levy expenditure genuinely expands skill development or merely subsidises training that employers would otherwise fund themselves.
Laczik and Newton (2025) examine employer perspectives on degree apprenticeships, finding that organisations value these programmes for developing internal talent pipelines and enabling career progression for existing employees. Whilst these applications deliver genuine training benefits, they may not address the entry-level shortages that policy frameworks were designed to tackle.
Reichwald (2020) discusses employer engagement with apprenticeships, highlighting how organisational priorities influence programme utilisation. Large employers, with greater administrative capacity and more sophisticated human resource functions, may prove more adept at aligning levy expenditure with internal development needs than at addressing broader sectoral skills shortages.
Cost structures and financial barriers
The financial dynamics of apprenticeship provision significantly influence employer behaviour and programme effectiveness. Gambin and Hogarth (2017) provide detailed analysis of employer costs, risks, and policy reforms, finding that most employers face net costs at apprenticeship completion. Their research indicates that these costs have risen over time, making apprenticeship participation an increasingly risky financial proposition for employers, particularly smaller organisations not subject to the levy.
The net cost calculation considers direct training expenditure, apprentice wages, supervision and mentoring requirements, and productivity foregone during the training period. Against these costs, employers weigh the value of the trained worker upon completion, which depends upon retention, skill relevance, and wage expectations. Gambin and Hogarth demonstrate that uncertainty regarding these factors creates significant barriers to apprenticeship investment, particularly in sectors where poaching of trained workers undermines employer returns on training investment.
For levy-paying employers, the incentive structure differs because levy contributions represent sunk costs that will be forfeited if not spent on approved training within the designated period. This creates pressure to utilise levy funds regardless of whether genuine training needs exist, potentially encouraging the conversion of existing training into apprenticeship formats rather than expansion of overall training volume.
Quality variation and system integrity
Significant evidence indicates that apprenticeship quality varies substantially across sectors, employers, and training providers. Brockmann and Smith (2023) identify a fundamental tension within the current English model, which supports both high-quality shortage-driven training and low-quality programmes that exploit funding mechanisms without delivering substantial skill development. Their research characterises some provision as “apprenticeship as income stream,” where providers and employers access apprenticeship funding with minimal genuine training activity.
Fuller and Unwin (2003) provide foundational analysis of quality issues within modern apprenticeships, arguing that the UK’s approach has prioritised expansion over quality assurance. Their influential distinction between expansive and restrictive apprenticeship models highlights how workplace environments shape learning opportunities, with restrictive approaches limiting apprentice development to narrow task performance rather than broader occupational competence.
Quality variation has significant implications for shortage occupation targeting. If substantial proportions of apprenticeship activity deliver limited skill development, then aggregate programme statistics may overstate genuine contributions to addressing skills gaps. The challenge of quality assurance becomes particularly acute given the diversity of employers and providers engaged in apprenticeship delivery.
Systemic barriers and regulatory constraints
Research identifies multiple systemic factors that may discourage effective apprenticeship provision in sectors experiencing acute shortages. Lewis (2020) argues that funding structures and regulatory requirements can actively discourage the forms of apprenticeship that employers in innovative sectors require, contributing to persistent technician shortages in areas such as life sciences.
Rowe (2019) examines broader questions of education system alignment with modern economic requirements, identifying disconnections between policy aspirations and practical implementation. Her analysis suggests that apprenticeship policy, whilst articulating appropriate objectives, often fails to create conditions under which employers can readily translate those objectives into effective training programmes.
Regulatory requirements, including minimum duration specifications, off-the-job training mandates, and assessment processes, create compliance burdens that may discourage employer participation, particularly among smaller organisations lacking dedicated training infrastructure. Whilst these requirements aim to ensure programme quality, their implementation can create barriers that reduce overall training volume.
The sectoral distribution of apprenticeship provision raises additional concerns regarding shortage occupation targeting. Evidence suggests that apprenticeship growth has concentrated in sectors and occupational areas with established training traditions, whilst sectors experiencing emerging shortages may lack the infrastructure and expertise necessary to develop effective programmes.
Discussion
Evaluating apprenticeship effectiveness in shortage occupations
The evidence reviewed demonstrates that UK apprenticeships make genuine contributions to addressing skills shortages in key sectors. Construction, engineering, social care, and digital technologies all show evidence of employers deliberately utilising apprenticeships to develop workers with competencies that the external labour market fails to supply adequately. The expansion of higher and degree apprenticeships has extended this contribution to professional and technical occupations previously served primarily through university education.
However, the evidence equally demonstrates that apprenticeship effectiveness in addressing shortages is partial and uneven. Significant proportions of apprenticeship activity appear directed at upskilling existing employees rather than training new workforce entrants, representing substitution of funding sources rather than genuine training expansion. This pattern is particularly pronounced among levy-paying employers, who face incentives to utilise levy contributions regardless of whether genuine skill shortages motivate their training decisions.
The first objective of this dissertation sought to examine the extent of apprenticeship targeting at shortage occupations. The evidence confirms meaningful targeting, particularly in sectors with established apprenticeship traditions and recognised skills gaps. Degree apprenticeships in engineering, computing, and professional services demonstrate employer willingness to utilise apprenticeship routes for higher-level skill development where shortages exist. Nevertheless, targeting remains imperfect, with substantial apprenticeship activity occurring in occupations without documented shortages.
Employer motivations and policy alignment
The second and third objectives addressed employer motivations and cost-shifting behaviours. Research consistently indicates that employer motivations for apprenticeship engagement extend well beyond shortage occupation recruitment. Large employers frequently view apprenticeships as mechanisms for career development of existing staff, succession planning, and talent management. Whilst these applications deliver genuine training value, they may not address the entry-level pipeline gaps that shortage occupation policies aim to resolve.
The apprenticeship levy creates particular incentive distortions. Levy contributions function as hypothecated taxes that employers forfeit if not utilised within designated timeframes. This creates pressure to spend levy funds regardless of genuine training requirements, encouraging conversion of existing training programmes into apprenticeship formats. Employers rationally pursue this strategy to recover levy contributions, but the aggregate effect may be substitution of funding sources rather than training expansion.
Evidence from Gambin and Hogarth (2017) regarding net training costs illuminates additional motivational dynamics. Employers facing positive net costs at apprenticeship completion require confidence in return on investment, typically through retention of trained workers. Where labour market conditions enable trained workers to capture returns through wage increases or movement to other employers, investment incentives diminish. This dynamic may particularly affect shortage occupations, where qualified workers command wage premiums and experience strong external demand.
Quality assurance and programme integrity
The fourth objective addressed quality variation across the apprenticeship system. Evidence from Brockmann and Smith (2023) and Fuller and Unwin (2003) demonstrates substantial quality variation, with implications for genuine skill development. High-quality programmes featuring invested partnerships between employers and training providers deliver meaningful competence development aligned with shortage occupation needs. However, low-quality programmes that exploit funding mechanisms without substantive training activity undermine system integrity and overstate genuine skill production.
Quality variation complicates assessment of shortage occupation contributions. Aggregate statistics regarding apprenticeship starts and completions in shortage sectors may conceal significant heterogeneity in actual skill development. Without robust quality assurance mechanisms, the system risks channelling public funding towards provision that delivers limited economic value whilst appearing to address documented shortages.
The factors distinguishing high-quality from low-quality provision appear consistent across the literature. Genuine employer commitment to apprentice development, integration of on-the-job and off-the-job learning, appropriate supervision and mentoring, and structured progression through increasingly complex work activities characterise effective programmes. Conversely, programmes lacking these features tend to produce workers without meaningful occupational competence, regardless of formal completion and certification.
Systemic barriers to shortage occupation provision
The fifth objective examined systemic barriers discouraging apprenticeship provision where shortages are most acute. Lewis (2020) provides compelling evidence that regulatory and funding structures may actively impede provision in innovative sectors experiencing emerging skills gaps. Where shortage occupations differ from established training patterns, employers may find existing apprenticeship frameworks unsuitable and face substantial costs in developing appropriate alternatives.
The administrative burden of apprenticeship participation creates particular challenges for smaller employers, who constitute the majority of organisations in many shortage occupation sectors. Developing training plans, negotiating with providers, managing assessment processes, and ensuring regulatory compliance all impose costs that larger organisations can absorb more readily. This dynamic may concentrate apprenticeship activity among large employers, potentially in applications prioritising internal development over shortage occupation recruitment.
Sectoral variation in training infrastructure creates additional barriers. Sectors with established apprenticeship traditions possess networks of experienced training providers, employer groups with collective knowledge, and standardised approaches to programme design. Sectors lacking this infrastructure face significant start-up costs in developing effective provision, which may deter engagement despite documented skill shortages.
Implications for policy reform
The sixth objective sought evidence-based recommendations for policy reform. The analysis suggests several directions that might better align employer incentives with genuine shortage occupation skill development.
First, differentiation of levy utilisation rules could direct funding more effectively towards shortage occupations. Permitting unrestricted levy utilisation for apprenticeships in designated shortage occupations, whilst imposing tighter requirements for other applications, would create incentives favouring shortage-focused provision. The Migration Advisory Committee’s Shortage Occupation List provides an established mechanism for identifying eligible occupations, though extension to domestic training policy would require careful consideration of scope and criteria.
Second, strengthened quality assurance mechanisms could address low-quality provision that exploits funding without delivering genuine skill development. Enhanced inspection regimes, outcome-based funding elements, and employer accountability measures might discourage superficial compliance whilst supporting high-quality provision. However, such mechanisms require careful design to avoid creating additional administrative burdens that discourage smaller employer participation.
Third, specific support for smaller employers might broaden apprenticeship participation beyond large levy-paying organisations. Reduced bureaucratic requirements, shared training arrangements enabling cost distribution across multiple employers, and enhanced funding rates for shortage occupation provision could encourage engagement among organisations currently excluded by administrative complexity.
Fourth, addressing net training costs and retention risks could enhance employer investment incentives. Training levies extending beyond the current threshold, with proceeds supporting enhanced wage subsidies during training periods, might reduce employer cost barriers. Alternatively, mechanisms discouraging poaching of trained workers, such as training cost recovery provisions, could improve employer confidence in return on investment.
Conclusions
This dissertation has examined whether UK apprenticeship programmes effectively meet employer needs in shortage occupations or primarily function as cost-shifting mechanisms within the vocational training system. The analysis, based upon systematic review of available research evidence, supports a nuanced conclusion: apprenticeships partly meet shortage occupation needs whilst simultaneously enabling significant cost redistribution that undermines policy effectiveness.
The first two objectives, examining targeting at shortage occupations and employer motivations, are substantially achieved. Evidence demonstrates meaningful apprenticeship targeting at sectors including construction, engineering, social care, and digital technologies, where skills shortages are well documented. Higher and degree apprenticeships increasingly address professional and technical shortages previously served through traditional higher education. However, employer motivations frequently prioritise internal development and levy utilisation over genuine shortage occupation recruitment, limiting the extent to which provision addresses pipeline gaps.
The third objective, regarding cost-shifting behaviours, is convincingly demonstrated by the evidence. Large levy-paying employers routinely convert existing training into apprenticeship formats to recover levy contributions, representing substitution of funding sources rather than training expansion. Rising net training costs discourage genuine investment, particularly among smaller employers and in contexts where trained workers can readily secure external opportunities.
The fourth objective, addressing quality variation, identifies significant concerns. The current system supports both high-quality shortage-driven training and low-quality provision that exploits funding mechanisms without substantive skill development. This variation undermines confidence in aggregate statistics and complicates assessment of genuine shortage occupation contributions.
The fifth objective, examining systemic barriers, reveals how funding structures and regulatory requirements may actively discourage provision in sectors experiencing acute shortages, particularly where established training infrastructure is absent. Administrative complexity disproportionately burdens smaller employers, potentially concentrating provision among large organisations with different priorities.
The sixth objective, developing policy recommendations, is addressed through proposals for differentiated levy rules favouring shortage occupations, strengthened quality assurance, enhanced support for smaller employers, and mechanisms addressing cost barriers and retention risks.
The significance of these findings extends beyond apprenticeship policy specifically. They illustrate how well-intentioned policy interventions may produce unintended consequences when implementation creates incentives misaligned with stated objectives. The apprenticeship levy aimed to expand employer investment in skill development but created incentives favouring cost substitution over genuine expansion. Understanding these dynamics is essential for effective policy design across multiple domains.
Future research should address several gaps identified through this analysis. Longitudinal studies tracking apprenticeship completers in shortage occupations would illuminate genuine employment outcomes and skill utilisation. Comparative analysis of levy-paying and non-levy employer behaviours could clarify the specific effects of the levy mechanism. Sector-specific studies in emerging shortage areas would inform understanding of infrastructure requirements for effective provision. Finally, evaluation of potential reform mechanisms, drawing upon international experience with alternative funding and quality assurance approaches, could inform evidence-based policy development.
In conclusion, UK apprenticeships make genuine but partial contributions to addressing skills shortages in key sectors. Realising their full potential requires policy reform that better aligns employer incentives with shortage occupation needs, ensures consistent quality across the system, and addresses barriers discouraging participation among employers best positioned to address documented skill gaps. Without such reforms, the apprenticeship system will continue delivering mixed results, partly meeting employer needs whilst substantially shifting training costs without corresponding skill production.
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