CIPD: UK’s ‘failed’ Apprenticeship Levy needs significant reform

The UK’s Apprenticeship Levy has failed on every measure; and will undermine investment in skills and economic recovery without significant reform, reported the CIPD today.

Analysis by the professional body for HR and people development has shown that since its inception four years ago, employer investment in training has declined. Overall apprenticeship starts have also fallen; and far fewer apprenticeships have gone to young people. 

FALLING APPRENTICESHIPS

The findings, described as ‘damning’ by the CIPD, reveal that to date total apprenticeship starts have fallen from 494,900 in 2016/17 to just 322,500 in 2019/20. The number of apprenticeships going to under 19s has fallen from 122,800 in 2016/17 to just 76,300 in 2019/20; and the number going to 19-24 year-olds has also declined from 142,200 to 95,300 per year over the same period. 

Overall employer investment in training which the levy was supposed to boost, has also declined; with employer funded off-the-job training in England falling by £2.3bn between 2017 and 2019. The current funding arrangements are also failing smaller organisations. In 2016, 11% of small businesses (less than 50 employees) had apprentices in their organisations, but by 2019 this had fallen to just 9%. 

URGENT REFORM NEEDED

“On all key measures the Apprenticeship Levy has failed and is even acting to constrain firms’ investment in apprenticeships and skills more broadly,” stated CIPD Chief Executive, Peter Cheese. “It appears to have achieved the opposite of its policy objectives. Without reform it will act as handbrake on employer investment in skills, damaging firms’ ability to recover from the pandemic.” 

Looking ahead, the CIPD believes that without reform, the levy will have further damaging effects on investment in skills by:   

• Further restricting apprenticeship opportunities for young people at a time they are most needed. 
• Undermining the Government’s Skills for Jobs further education reforms and the plan to boost employer engagement with colleges. 
• Reducing employers’ ability to invest in the skills their business needs for the recovery. 

FLEXIBLE SKILLS LEVY

“A more flexible skills levy would mean employers could use it to develop existing staff through other forms of accredited training and skills development which are cheaper and usually much more suitable for employees aged 25 and over, leaving more money to invest in apprenticeships for young people who most need them,” concluded Cheese.  “Levy flexibility would also help employers fund their employees through training in further education colleges as many technical and vocational courses are not apprenticeships. This key change would provide a big boost to meeting the ambition of the Government Skills for Jobs white paper and boost employer engagement with their local colleges.”