Further to a previous article, both the CIPD and businesses have called for reform of the apprenticeship levy.
Apprenticeship Levy
Funding for apprenticeships from the apprenticeship levy began on the 6th April 2017. Under the scheme, employers with annual wage bills above £3 million set aside the equivalent of 0.5 per of their payroll. Nevertheless, the apprenticeship levy has been the subject of extensive criticism from the get-go.
Criticism of Levy
The latest statistics, critics point out, show that the numbers starting apprenticeships between August 2022 and April 2023 dropped by 4.6% compared to the same period during the previous year. Also, the number completing an apprenticeship has fallen from 14,000 in 2017/18 to just 11,600 in 2021/22.
Moreover, research conducted by the Chartered Institute of Personnel and Development (CIPD) back in April 2022 to mark the 5th anniversary of the apprenticeship levy, found that 51% of employers wanted to see the monies raised used to fund a broader range of workplace training. Just 17% of employers wanted to maintain the status quo.
Furthermore, research carried out by the City & Guilds / the 5% Club back in February 2023 found that:-
- Just 4% of levy-paying employers (i.e. 1 in 25) make use of the full amount of funding available to them
- On average, only 55.5% of available funds are used by levy-paying employers
- Just 15% of employers have been able to recruit workers with the right skill set
- 94% reported barriers to accessing levy funds, such as excessive bureauracy (18%), that the apprenticeships were too long (19%), and that there was a “lack of time to invest” (17%)
- 96% believe that the apprenticeship levy system requires reform
- 43% assert that the option to use at least 50% of levy funds more flexibly
- That a "FOI found that £3.5billion funding notionally allocated to levy paying employers has expired between FY 2017-18 and FY 2012-22"
Failed Policy
Hence, what these findings demonstrably show, critics argue, is that the apprenticeship levy system is not working and is not fit for purpose.
New Calls For Reform
Given the above, the CIPD has called for extensive reform of the apprenticeship levy in its "Manifesto for Good Work", just published this month
In its manifesto, the CIPD state that the apprenticeship levy should be converted into a "more flexible skills levy [that] would enable employers to use levy funds to develop existing staff through other forms of accredited training that are typically more cost-effective and suitable for employees aged 25 and over. This would leave more funding to invest in apprenticeships to tackle technical skills shortages and for young people who need and benefit from them most."
The call for reform and greater flexibility in relation to the apprenticeship levy has been echoed and endorsed by business laeders. For instance, the managing director of Tees Components, Sarah Lane, speaking at the Great Northern Conference, stated: "We desperately need more flexibility, we need a reform of the Apprenticeship Levy. I think it is more difficult now than it has ever been [to fund apprenticeships]. There are so many obstacles [and the] funding streams are so complicated with the qualifications and they change all the time."
Apprenticeship Levy A "£3.5bn Mistake"
Moreover, back in February 2023, the chief executive of the British Retail Consortium, Helen Dickinson, provided a damning assessment of the apprentice levy, calling it a "£3.5bn mistake."
Dickinson told the Guardian: "The government must urgently fix this £3.5bn mistake, or it risks letting the UK’s anaemic productivity trail further behind its international counterparts. Retailers want to invest more in training a higher skilled, more productive and better-paid workforce. They want to create more opportunities for people up and down the country. They want to contribute more to growth. But the broken apprenticeship system is a ball and chain around their efforts."
Furthermore, in a letter to the Government, Dickinson stated: "A well-skilled workforce means higher productivity, stronger economic growth, and better wages for employees. This is why the Apprenticeship Levy and the opportunities it funds are vital for businesses and the country. However, the scheme as currently set up, is holding back investment in equally valuable non-apprenticeship training. On behalf of our members, we are calling for the Apprenticeship Levy to be widened into a broader Skills Levy and for businesses to be allowed to spend their funds on a wider range of high quality, accredited courses."
