CIPD Voice: Issue 16

The latest set of apprenticeship figures underline ongoing problems with the structure of the apprenticeship levy. Government statistics released in October this year for show a fall of 27% in apprenticeship starts compared with pre-levy figures from 2016 – a drop of 134,000. Given the ambition of the levy - to deliver 3 million apprenticeship and to boost overall investment in training – it is clear that the current approach requires a serious rethink.

The Government is clearly considering ways to improve the operation of the levy and boost apprenticeship starts. The first set of changes were announced by the Chancellor during the Conservative party conference where he stated that “we have heard the concerns about how the apprenticeship levy is working … so today we’ve set out a series of measures to allow firms more flexibility in how the levy is spent.” A further set of measures were outlined as part of the budget announcements, these are summarised below:

  • The proportion of a business’s apprenticeship levy that can be transferred to their supply chain has been increased. From April 2019 large employers can transfer up to 25% of their funds, up from the 10% initially set out;
  • A cut in the contribution to training costs small businesses must pay when they take on apprentices: SMEs will now only have to contribute 5%, halving the amount that they need to co-invest.
  • Additional investment of up to £5 million for the Institute for Apprenticeships and National Apprenticeship Service in 2019-20, to “identify gaps in the training provider market and increase the number of employer-designed apprenticeship standards available to employers”.

The Chancellor also announced that a process to seek views of the operation of the levy after 2020 would be put in place, to ensure that it is fit for purpose and delivering the skills the businesses want. It’s great to see that government is finally listening to business, seeking ways to improve the flexibility of the levy, and setting up a process to engage around longer term reforms to the system.

Yet, it the latest rounds of announcements are anything to go by, the scale of ambition for change is clearly limited. The latest announcements amount to little more than tinkering at the edges of the levy, and alone they will certainly not address the real underlying weaknesses in the system or to counteract the long term fall in employer investment in training in the UK.

That's why we are calling on the Government to reform the apprenticeship levy into a more flexible training levy. While more high quality apprenticeships are part of the solution to the UK's skills crisis they are not the only answer, and other forms of training and development are equally important. By continuing to focus on apprenticeships alone, the levy will remain inflexible and ultimately won’t provide the best outcomes for businesses or for individuals looking to achieve their full potential at work.

We will be working over the next few months to develop a proposal for a flexible training levy, which we will use in our ongoing lobbying and engagement work with Government. If you would like to learn more, or have view you would like to share please get in touch.

Elizabeth Crowley

Lizzie Crowley, Policy Adviser - Skills

Elizabeth has recently joined the CIPD as a Policy Adviser. Elizabeth is a policy and research professional with over 13 years’ experience in the employment and skills arena, having worked with both the public and private sector to develop high-quality research to inform organisational practice, public policy and shape the public debate.

Prior to joining the CIPD Elizabeth led The Work Foundation's research and policy development on the youth labour market – and has published a number of influential reports on youth unemployment. She has regularly appeared on national and regional TV and radio, including BBC Breakfast, BBC the One Show, the Today Programme and Channel 4 news. Elizabeth graduated in Sociology and has a master's degree in Social Science Research Methods, both from the University of Glasgow.