Analysis of the early impact of the levy on both apprenticeships and overall employer investment in workforce training and development
More than half of employers who pay the apprenticeship levy want an overhaul
A CIPD survey of more than a 1000 employers reveals that 53% would rather see a more generalised training levy
A new report by the CIPD has revealed 53% of employers paying the apprenticeship levy would prefer to see it replaced with a more flexible training levy. This is compared to just 17% of employers who support the levy in its current form. Introduced in April 2017, the levy was designed by the government to increase employer investment in new apprentices and help tackle the long-term decline in employer investment in workforce skills. The levy requires public and private sector companies with a pay bill of more than £3 million to contribute the equivalent of 0.5% of their pay bill to deliver training. In theory organisations are then able to draw upon these funds and use them to pay for the training and assessment of new apprentices.
However, new findings from ‘Assessing the early impact of the apprenticeship levy’ have raised concerns over the potential impact of the levy. According to the report, 46% of levy paying employer report that they will be encouraged to re-badge current training activities as apprenticeships in order to meet new regulations. In addition to this, a fifth of levy paying employers, including 35% of small and medium sized enterprises don’t intend to use the levy at all to develop apprenticeships, simply writing it off as tax instead. These findings suggest that the levy is at risk of not achieving its original purpose of encouraging the creation of new apprenticeship positions and increasing investment in workforce skills.
Apprenticeships are not acting as a strong enough route into the labour market for young people, with most apprenticeship places going to existing employees and those older than 19. The report’s findings suggest that the levy in its current form is likely to exacerbate these underlying weaknesses. 35% of employers are more likely to provide apprenticeships to existing employees, compared to the 25% that would offer positions to new recruits. Lizzie Crowley, skills adviser at the CIPD states that with an “increasing proportion of apprenticeships going to existing and often older employees, fewer [places] are available to help young people make the transition from education to the workplace – the original purpose of apprenticeships”.
Furthermore, findings from CIPD’s report reveal that the levy is unlikely to lead to the uplift in the number of higher level apprenticeships needed. From the 46% of levy-paying employers that will be encouraged to re-label current training activities in order to meet the new regulations, 52% will re-badge these existing training activities into level 2 apprenticeships, the equivalent of five GCSEs. Although there has been recent increases in the number of advanced and higher level apprenticeships, the survey suggests provision in the UK is likely to remain weighted towards Level 2, leaving us languishing behind the best apprenticeship systems of Europe where Level 3, or higher, is the norm. The report also highlights concerns that many of the new employer led apprenticeship standards are far too narrow and overlapping, therefore limiting the transferable skills available to new starters.
While one of the levy’s primary aims was to increase the number of apprenticeship positions to three million by 2020, its introduction has in fact brought about a decline in the number of individuals starting new apprenticeships. According to statistics released by the Department for Education, only 48,000 apprentices began their training between May and July 2017, compared to the 117,800 in the same period during 2016.
These findings demonstrate that the levy in its existing form is at risk of not delivering on its original objectives: to tackle employer under investment in skills and to rapidly increase the number of apprenticeships. The report makes a number of key recommendations to ensure that the apprenticeship levy increases both the quality and quantity of apprenticeship starts and raise overall investment in workforce skills. Firstly, reforming the levy into a wider and more flexible training levy would allow employers to more effectively meet their own specific requirements and tackle skills gaps and shortages. As Crowley states, a broader training levy would encourage “employers to drive the greater investment in high quality training and workplace skills needed to boost UK productivity”. More specifically, the government needs to engage more with small and medium sized businesses. While smaller businesses account for almost half of all UK business employment, they are less likely to offer apprenticeships. The CIPD is calling for the Government to invest £13 million a year to provide effective HR support to these businesses, increasing their capability to offer apprenticeships. The report also recommends that an urgent review of apprenticeship standards is carried out by the Institute for Apprenticeships and Technical Education. In conducting a review, the Institute can ensure that quality learning and education is being delivered to an appropriate level during apprenticeships. Furthermore, a review can be used to remove any narrow and job specific standards within particular apprenticeships.
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