With close to 9 in 10 (86%) of businesses in the capital not currently employing apprentices, the London Chamber of Commerce and Industry (LCCI) and London Councils have called for a fully devolved apprenticeship service for London – something that new research shows business supports.

The research comes from the organisations’ ‘London Business 1000 Survey’, based upon ComRes polling of 1000 London business decision-makers about the skills and recruitment challenges their companies face.

Two years on from the introduction of the Apprenticeship Levy, only 13% of businesses in the capital say that they currently employ apprentices, down from 17% in 2018.

The survey results show that confusion persists within the business community regarding requirements to pay the Apprenticeship Levy and use of apprenticeship funds. 

Nearly a fifth (18%) of those surveyed did not know whether their business is required to pay the levy, whilst over half (55%) of those paying the levy don’t employ any apprentices.

69% of businesses surveyed do not expect to use apprenticeship funding this year, whilst amongst those using funding only 16% said they plan to use more than half available to them (down from 28% in 2018) - clear signs of a system in need of reform.

Peter Bishop, Chief Executive of London Chamber of Commerce and Industry, said:

“Over half of businesses who currently try to recruit in London encounter difficulties finding candidates with the right skills.

"In this climate apprenticeships should play more of a vital role than ever, yet our research with London Councils shows that only 13% of London businesses currently employ apprentices.

"This is a clear sign that the system isn’t working as it should. It’s both too inflexible and confusing for businesses and as a result is failing many London businesses and residents.

“Business believe that a fully devolved system is the solution. And until we get that, the national system needs immediate reform.” 

Cllr Clare Coghill, Executive Member for Business, Europe and Good Growth, London Councils, said:

“This year’s survey continues to show that the apprenticeship levy is not working for London and that businesses overwhelmingly back boroughs having more freedom, which would enable local government and business to work together via a London Apprenticeship Service.

“Across the board, London businesses are also hugely supportive of greater devolution to address a whole range of the city’s most pressing issues such as housing, transport and community safety.  We will continue to work with the LCCI to make our case to government for greater devolution. Business agrees that Whitehall needs to give London and other UK cities the powers, freedoms and budgets to support vibrant, inclusive economies.”

82% of businesses back a stronger role for London’s boroughs in skills and employment provision and the report tells that LCCI and London Council say devolving powers would allow London local government to support a skills system that enables businesses to navigate challenges posed by an increasingly competitive market in a post-Brexit economy.

Devolution of the apprenticeship levy should begin with the capital’s non-levy allocation (levy contributions not spent by the contributing employer). But there are also some immediate steps that the government could take to tackle some of the issues highlighted in the report.

These include:

  • Allowing employers to pool the levy and joint purchase apprenticeships and reducing the administration around transfers of levy funds.
  • Allowing some levy funding to be used for pre-employment training to prepare people for an apprenticeship.
  • Allowing up to 10 per cent of levy funding to cover administration costs, banded so that the smallest businesses and levy payers benefit the most.
  • Establishing a better data system for apprenticeships for both employers and learners, underpinned by accessible provider and course information.
  • Working with London government, employers and the Institute for Apprenticeships (IFA) to identify ways to speed up and increase the development of current and future apprenticeship standards.

Other headlines results from this year’s survey show:

  • Skills shortages and difficulties employing people with the right skills remain a priority concern for London businesses, with 42% citing this as a main barrier to growth. 54% say an increasingly competitive market. 45% say Brexit.
  • 54% of business leaders highlighted that increased business rates are one of the top three issues that would have the most impact on profitability, reflecting the major increases driven by nationally defined revaluation.  70% of businesses indicated that London’s local authorities should have more control over local taxes, such as business rates and council tax.
  • Overall, business leaders are more likely to be satisfied than dissatisfied with London borough services and guidance.  Even in the face of significant funding cuts the quality of these services is seen by the majority of businesses as having remained consistent over the last twelve months.

Methodology: ComRes interviewed 1000 London business decision-makers by telephone between 14 May and 14 June 2019.  Data were weighted to be representative of businesses both in London and in each of the sub-regions by borough, company size and broad industry sector.  Sole traders have been excluded. ComRes is a member of the British Polling Council and abides by its rules.  

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