Varsity Blues · Bridgehead Education · 2014
Varsity Blues:
Time for Apprenticeships
to Graduate
Published in 2014, a landmark report that made the case for elevating apprenticeships to degree-equivalent status. With 76% of starts stuck at Level 2 and the UK trailing Switzerland, Germany and Austria by decades, this report called for the structural reform that would eventually become the Apprenticeship Levy and degree apprenticeship system.
Historical report, data reflects 2013/14 figures
510,000
Apprenticeship starts 2012/13, source figure (p.48)
74
£ returned to Exchequer per £1 invested in apprenticeships, vs £57 for an average degree (p.51)
76%
Of starts were Level 2, lowest rung (BIS data)
28%
Of graduates earned less than the average apprentice over their lifetime (source p.25)
Lifetime earnings: graduates below average apprentice
Using BHPS Wave 12 and LFS data, the report built a four-factor model showing how the proportion of graduates earning less than the average apprentice grows once debt, foregone wages, and university type are factored in.
28%
Baseline, graduates earning less than average apprentice over their lifetime (source p.25)
39%
After debt, foregone wages & new university, nearly 2 in 5 graduates (source p.25)
46%
Vs higher-level apprentice proxy (NVQ L4–5): almost half of new-uni grads (source p.27)
Graduate earnings vs apprentices: lifecycle by age
Graduate earnings rise strongly in the first two decades of a career. But the report shows they then plateau and decline relative to apprentice wages. The earnings gap is at its narrowest around age 45, where 12% of Russell Group and 20% of 'new' university graduates still earn less than the average apprentice annual wage. By retirement, over half of all graduates fall below the apprentice average.
12%
Russell Group graduates still below avg apprentice wage at age 45, peak career (source p.28)
20%
'New' university graduates below avg apprentice wage at age 45, 1 in 5 (source p.28)
50%+
Graduates earning below avg apprentice wage at retirement, over half of all degree holders (source p.28)
Under-25 unemployment: apprentices vs graduates, 2005–2013
The financial crisis pushed under-25 unemployment to an 11% peak for both groups, but the timing and recovery diverged sharply. Apprentice unemployment peaked in 2009 then fell to just over 6% by 2012. Graduate unemployment peaked a year later in 2010 and failed to recover, returning to 11% in 2012 as double-dip recession fears mounted.
11%
Peak under-25 unemployment: apprentices in 2009 AND graduates in 2010, both hit 11% (source p.34)
6%
Apprentice under-25 unemployment in 2012, while graduates climbed back to 11% (source p.34)
7.5%
Apprentice unemployment in 2013, slight rise; graduates subsided but remained well above (source p.34)
Under-25 employment rates: apprentices vs graduates, 2005–2013
Using Labour Force Survey data, the report tracked under-25 employment rates for both groups through the financial crisis. Apprentices hit a low of 84.4% in 2010 but recovered to 90% by 2013, while graduates stalled at 84%, a six-point gap in apprentices' favour.
91% vs 88%
Employment in 2005: apprentices vs graduates under 25, confirmed source p.35
84.4%
Apprentice employment at 2010 low, both groups hit floor together (grad low: 83.8%)
90% vs 84%
Employment in 2013: apprentices recovered; graduates stalled, source p.35
Lifetime earnings by degree subject vs higher apprentice
Subject studied is the single biggest determinant of whether a graduate out-earns a higher apprentice. STEM subjects are largely protected; arts and media graduates from post-1992 universities fare worst, three in four earn less than the average NVQ L4–5 completer.
15%
Medicine, only 15% of medical grads from new universities earn less than higher apprentice
74%
Media & Info Studies, 3 in 4 earn less than the average NVQ L4–5 completer (source p.30)
45%
Business & Finance from 'new' universities, nearly half earn less than a higher apprentice (p.30)
Exchequer return: £ per £1 invested by qualification
The most striking finding of the taxpayer chapter: once the cost of investment is factored in, apprenticeships return £74 to the Exchequer for every £1 spent, versus just £57 for the average degree. Higher-level apprenticeships (NVQ L4–5) return £85. Only medicine and engineering degrees outperform apprenticeships on a per-pound basis.
£74:£1
Apprenticeship per-pound return to Exchequer, vs £57:£1 for average degree (source p.51)
£85:£1
NVQ L4–5 (higher apprenticeship proxy) per-pound return, best performing qualification (source p.51)
£51:£1
'New' university degree per-pound return, 27% below apprenticeships (source p.52)
Employer attitudes to vocational qualifications
A 2013 Edge Foundation and City & Guilds survey of 1,000 businesses found strong employer demand for vocational pathways, yet a persistent sense that government and schools were failing to make the case. A slim majority even said vocational qualifications are more valuable than academic ones for the workplace.
83%
Of businesses said young people need more awareness of career options, Edge Foundation / City & Guilds 2013
60%
Felt the UK Government was not doing enough to support vocational education (source p.61)
53%
Agreed vocational qualifications are more valuable than academic ones at preparing people for work (source p.62)
Apprenticeship level distribution · 2014
In 2014, 76% of apprenticeship starts were at Level 2, equivalent to GCSE, making England the only country where Level 2 completers outnumbered those at other levels. This report argued urgently for elevation to at least Level 3, and for a serious higher apprenticeship programme.
76%
Level 2, dominant share of all apprenticeship starts (BIS data)
6%
Level 4+, degree-equivalent starts were negligible in 2014
24%
Level 3 or above, the report argued this should be the minimum standard
International apprenticeship participation rates
The UK's 15% participation rate in 2014 placed it far behind Switzerland (70%), Germany (60%), and Austria (52%), countries where vocational training commands genuine parity of esteem. France at 24% still comfortably outpaced UK. Data from Chart 22 (LSE 2010, 2008/09 figures) referenced in source.
70%
Switzerland, 7 in 10 young people take a vocational path, world-leading model
60%
Germany, the Dual System remains the global benchmark for apprenticeships
15%
UK in 2014, one of the lowest participation rates among comparable economies
School leaver perceptions: what each path is associated with
ComRes surveyed 500 school leavers. On practical attributes, low debt (83%), useful skills (85%), and clear career path (66%), apprenticeships lead. But university dominates on social standing: 92% associate it with being 'well respected'; just 27% say the same of apprenticeships.
89% vs 2%
Associate 'practical learning', apprenticeship vs university. Apprentices win overwhelmingly (source p.64)
92% vs 27%
'Well respected', university vs apprenticeship. Social legitimacy gap remains stark (source p.64)
66% vs 53%
'Clear career path', apprenticeship vs university. The one dimension where apprentices lead (source p.64)
School leaver planning and social legitimacy
Despite the earnings evidence, university remains the overwhelming default. Only 6% planned an apprenticeship versus 73% university. 80% had received school guidance on university, fewer than half (46%) on apprenticeships. Social pressure is decisive: three in four say their parents and friends prefer university.
73% vs 6%
Plan university vs apprenticeship, ComRes poll of 500 school leavers (source p.62)
2%
Say majority of peers planning an apprenticeship, vs 78% for university (source p.62)
80% vs 46%
Received school guidance on university vs apprenticeships, structural careers gap (source p.62)
Key Findings
- ↗Under-25 apprentice unemployment fell to 6% in 2012 while graduate unemployment returned to 11%, a stark divergence after both groups peaked at 11% during the crisis.
- ↗28% of graduates earn less than the average apprentice over their lifetime, rising to 39% once debt, foregone wages, and new-university attendance are factored in.
- ↗74% of Media & Information Studies graduates from post-1992 universities earn less than the average higher apprentice completer.
- ↗Apprenticeships return £74 to the Exchequer per £1 invested, versus just £57 for the average degree. Only medicine and engineering degrees outperform apprenticeships on this measure.
- ↗Over half of all graduates earn less than the average apprentice annual wage by retirement, the lifetime earnings advantage fades as graduate pay plateaus after age 45.
- ↗76% of starts were at Level 2, equivalent to GCSE, limiting the economic value of the system. Only 6% were at Level 4+.
- ↗The UK trailed Switzerland (70%), Germany (60%), and Austria (52%) on participation, countries where vocational training has genuine parity of esteem.
- ↗Despite the evidence, only 6% of school leavers planned an apprenticeship versus 73% planning university. 92% associated university with being 'well respected', only 27% said the same of apprenticeships.
This report pre-dates the Apprenticeship Levy (2017), the introduction of degree apprenticeships, and the Institute for Apprenticeships and Technical Education. Many of its recommendations were subsequently adopted as government policy.
