From education to employment

Time to reform the Apprenticeship #Levy – 4 urgent steps Government must take


Urgent steps must be taken by Government to reform the Apprenticeship Levy in England, so firms can offer more of the high-quality training they need to succeed.  That’s according to a new CBI report, Learning on the job: Improving the Apprenticeship Levy.

Employers invest over £44 billion a year in skills training and are passionate supporters of apprenticeships. Firms have welcomed recent Government efforts to evolve the Apprenticeship Levy. Yet two years on from system’s introduction, the overall number of apprenticeships starts remains significantly down.

With growing financial pressure raising questions about the sustainability of the Apprenticeship Levy, the Government must now urgently launch its promised public consultation on Levy plans after 2020 – which is only three months away.

Matthew Fell, CBI Chief UK Policy Director, said:

“With apprenticeship starts significantly down, it’s clear that the Levy is not working as intended – especially for smaller firms. Despite its rocky start, employers want to support the Government’s efforts to evolve the system and play their part in making the Apprenticeship Levy work.

“Without urgent action, the Apprenticeship Levy risks becoming a roadblock to the Government’s wider and welcome efforts to modernise the skills system.

“Businesses are confused and crying out for clarity on how their Levy funds are being used.  They read speculation in the papers that the Levy is overspent but are themselves struggling to utilise their Levy funds for training.

“The Government must do as it has previously promised and urgently consult businesses about the Levy’s future well before the end of the year.  Many companies want the Apprenticeship Levy to broaden into a Flexible Skills Levy, so they can deliver more high-quality training that helps grow their business and gives people successful careers.”

Mark Dawe AELP 100x100Association of Employment and Learning Providers chief executive Mark Dawe said:

“There’s much to commend in this report on how the debate on the levy gets taken forward under a new team of ministers.  Certainly much greater transparency around levy expenditure would mean that discussions with the relevant stakeholders were better informed.

“AELP has consistently maintained that it is far too soon for any debate to seriously consider the levy being used for anything other than apprenticeships and the fact that employer demand now means it’s being overspent on apprenticeships should be a reason in itself not to go down a skills levy path.  Therefore we are encouraged that CBI is referring to the idea as a long-term project.  

“We’re also pleased that CBI has described the 20% off-the-job training rule as a ‘blunt and inflexible policy tool’ to add to Ofsted’s previous statements that the rule tells you nothing about the quality of training being delivered.  In AELP’s view, the rule needs to be flexed up according to the standard and/or level.

“Sadly a £100m annual government top-up to the levy will only represent a drop in the ocean in terms of addressing the problems we are now facing with funding non-levy paying SMEs.  Having been the backbone of the programme, smaller businesses are only gaining access to half the apprenticeship funding they were getting before the levy so if we are to realise the CBI’s correct ambition that apprenticeships should be available at all ages and all levels, at least ten times the proposed amount is urgently needed.  We can’t have the government’s flagship skills programme just being reserved for the 2% of employers who pay the levy.”  

 4 Recommendations For Reform

Step One: Increase transparency around Levy receipts and expenditure – Enabling firms to better understand how the Levy system is working, what’s being funded by the Government and how their contributions are being spent

Step Two: Make the Levy system more user-friendly – Engage smaller firms with practical, online support and locally-led ‘matching services’ which allow large firms to pass on unused funds 

Step Three: Creating a sustainable financial plan for the Levy budget – Introduce a £100 million annual Government top-up to the Levy budget – so that Levy payers and SME non-Levy payers can continue using the scheme to spend on apprentices of all ages and skill levels

Step Four: Opening up conversations about the future of the Levy – Government should urgently fulfil its commitment to publicly consult on options after 2020 – including broadening the Apprenticeship Levy into a ‘Flexible Skills Levy’, which would cover a wider range of high-quality, relevant training.

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