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Reasons to be cautious about the apprenticeship levy

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The response from the Association of Employment and Learning Providers (AELP) to the apprenticeship levy announcement in the Summer Budget has been cautious and reserved. Some might say we are ‘on the fence’. We make no apology for this response.

Our responses to policy proposals have always been based on two major principles:

  1. Is it evidence based? 
  2. Does it give our customer employers and apprentices more choice and quality options?

At this time without any detail, it is impossible to judge whether the proposals will work. However with a newly elected majority government, the proposals must be given a chance.

The devil will be in the detail and the manner of implementation will be key to whether the levy will drive productivity in businesses of all sizes.

AELP has a number of questions and we need to look first at what impact a levy might have on the uptake of apprenticeships.

We are told that only 15% of employers are involved in the apprenticeship programme at any one time.

AELP has always disputed this number because it depends on the assumptions you make.

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However what we do know is that more large employers are involved and their engagement is now likely to exceed 50%. The definition of large businesses in this context is those with over 250 employees.

The other large employers that do not currently employ apprentices will also have to pay a levy and once those employers are paying, they will want to get some (or all) of that money back by employing apprentices.

On the face of it, that might be a very good thing. However we have to see the dangers of the programme becoming focused on the payment of the levy and the opportunity to get money back. For those already involved in the programme, they currently make a lot of non-cash, but very valuable, contributions to the programme. Once they have to pay a levy, they will review their other cost of delivery and try and reduce their expenditure on the programme. This might include reducing wages back to the national minimum apprentice wage because currently many pay more than the minimum.

From a provider’s perspective, the levy takes the issue of employer contributions out of their responsibility and there is no doubt that the programme might expand. So why isn’t AELP jumping on the levy bandwagon? It is because our only concern is the long-term health of the programme which we believe should be based on a willing employer, a willing apprentices and an effective training provider.

Our view is that the levy could change this dynamic, so we believe that we should look at this proposal over a long period of time. We need to grow the programme now building on what works today while we take a long-term view of whether a levy would be the answer to increasing employer commitment. We have already put forward proposals for growth in our recent paper. The discussions on levies must include all political parties and stakeholders because we should not rush the introduction. At the very least, the proposals will prompt considerable debate about the future of apprenticeships and that has to be positive.

Stewart Segal is chief executive of the Association of Employment and Learning Providers

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