From education to employment

Businesses in the dark over Government reforms of #Apprenticeship Levy

Roxanne Stockwell, Principal, Pearson Business School

Poll of over 1000 senior business leaders on the apprenticeship levy.

New research into business attitudes towards the apprenticeship levy system found that almost 1 in 5 businesses (18%) surveyed are aware of the Government changes that came into force on 1 April 2019; the changes were implemented to improve the apprenticeship levy and increase the take up of apprenticeships.

The findings come from a YouGov poll of 1120 senior decision makers from businesses of all sizes conducted on behalf of Pearson Business School.

Pearson Business School is part of Pearson College London – the UK’s first higher education institution to be founded by a FTSE 100 company. 

In the Spring Statement, the Government announced that from 1 April 2019 employers will see the co-investment rate they pay for apprentices cut from 10% to 5%.

The Government also announced that levy-paying employers are able to share more levy funds across their supply chains, with the maximum rising from 10% to 25%. The measures form a key part of the Government’s £700 million apprenticeship reform package.

However, over 4 in 5 (81%) businesses surveyed were unaware of changes to the co-investment rate, with a similar number (82%) unaware of changes to supply chain funding.

Even among senior decision makers at large businesses, almost three quarters were unaware of the Government’s changes to the levy, with 72% unaware of changes to the co-investment rate, and 73% unaware of changes to supply chain funding.

This suggests much more needs to be done to engage with businesses to communicate these changes more effectively.

Businesses want to take on more apprentices but need more information and greater flexibility

Over half of businesses (53%) say they could be encouraged to take on more apprentices, rising to 78% for large businesses.

Of those businesses that could be encouraged to take on more apprentices, the top factor that would encourage them was greater flexibility on apprenticeship funding (38%) closely followed by more information on accessing funding (36%), while 28% of them highlighted the ability to work more closely with higher education institutions (HEIs) to identify suitable candidates for the business.

Pearson Business School is calling for the Government to listen to businesses and make the levy more flexible and less bureaucratic.

Practical measures the Government could consider include:  

  • Greater flexibility to spend the money where it is needed, including HR and administrative fees, training for managers, learning and development support and back to study schemes.
  • Allowing businesses, particularly smaller organisations, to pay their apprentices in proportion to the hours they are working.
  • Apprentices to spend their mandatory one study day each week on work-based projects that are of strategic benefit to the company, where possible.
  • Encouraging apprenticeships of different lengths, to ensure that they continue to meet the ever-changing skills needed for businesses in fast changing industries.
  • Simplifying the End-Point Assessment (EPA) to make it more flexible so that employers can adjust it to their needs.  

Businesses spending funding on higher qualified apprentices

A significant portion of businesses who are spending their levy funding, are doing so on higher qualification apprenticeships, with 30% of those receiving levy funding spending it on level 4 and above qualifications, and 30% for GCSE equivalent qualifications, compared to 28% for A-level equivalent qualifications.

The figure rises to 32% for higher apprenticeships in larger businesses (businesses with more than 250 employers), with larger businesses only spending 30% of the levy funding for GCSE equivalent qualifications and 27% for A-level equivalent qualifications.

This is reflected in the latest figures released by the Department for Education, which show how spending on apprenticeships has shifted from lower level, school leaver training to higher level degree and postgraduate programmes, which the levy allows employers to fund.

This is in light of the recent National Audit Office’s report which found that while the overall number of apprenticeships has fallen by 26% from before the Levy was introduced to last year. The number of higher-level apprenticeships starts (at Level 4 or above) has increased substantially by 56% over the same period.

“The Apprenticeship Levy has its issues, but it is not beyond redemption – there are practical measures that the Government could take to make it more of a success, such as listening to employers about the barriers they face.

“In particular, they should consider allowing businesses to pay their apprentices in proportion to the hours they are working, encourage different lengths of apprenticeships, and allow flexibility to spend the money where it is needed, including HR and administrative fees.

“The reforms announced and introduced during April, are a welcome first step; these changes need to be much more clearly communicated, and we must go further to give businesses more control over how they spend the money.”

Roxanne Stockwell, Principal of Pearson College London

About the survey: All figures, unless otherwise stated, are from YouGov Plc.  Total sample size was 1120 senior decision makers in all business sizes. Fieldwork was undertaken between 8th – 16th April 2019.  The survey was carried out online. The figures have been weighted and are representative of British business size

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