Apprenticeship levy ‘car crash’ in its current guise

Posted on 4 May 2016 by Jonny Williamson

EEF is calling on the Government to delay the start of the apprenticeship levy until at least September 2017 to allow time to tackle serious flaws and avoid a ‘looming car crash'.

The call follows new research showing that just 1% of manufacturers support the apprenticeship levy rolling out in its current guise, while almost three quarters (72%) want it to be delayed until business and government are satisfied that it’s fit-for-purpose.

Two AMRC Training Centre apprentices on the workshop floor.
At the moment, less than a third of companies (31%) think that the levy will prove to be a game changer for apprenticeships in the UK.

The findings show widespread support among business (70%) for the Government’s drive to deliver a greater number of apprenticeships for the UK. At the same time, however, less than two in ten firms (18%) think that the apprenticeship levy as it currently stands will help deliver this.

This suggests that the present rush towards an April 2017 rollout could prove detrimental for both industry and government, ushering in a policy doomed to fail and potentially causing long-term damage to the drive to boost apprenticeships in the UK.

For the scheme to work, business says the levy must be simple to administer (92%), easy to understand (89%), and offer easy access to the funding (79%).

Instead firms find it confusing (53%), overly complicated (49%), and think it will simply become another cost burden on business (54%).

The findings also show that fairness and transparency should be fundamental to how the scheme is set up – almost three quarters of firms (73%) say it needs to be fair in order to work, while half (50%) say it must be open to public scrutiny.

Worryingly, the Government has claimed that firms will be able to get more out of the scheme than they put in. However, little over one in ten (11%) companies currently have faith in that claim, while just 13% believe the scheme will level the playing field and enable smaller businesses to offer apprenticeships too.

At the moment, less than a third of companies (31%) think that the levy will prove to be a game changer for apprenticeships in the UK.

EEF says that officials responsible for implementing the scheme have engaged fully with business, but the policy itself is flawed.

It is now urging the Government to take stock of the feedback and delay roll-out of the scheme, including the charge on business, until September 2017 at the earliest. This will allow time for industry and government to jointly tackle concerns and will enable the launch of an end-product that is fit-for-purpose and has better industry buy-in.

A delay will also mean avoiding a clash with the amalgamation of the annual rise in the national living wage and national minimum wage – due in April next year – plus it would allow for better matching with businesses’ recruitment cycles.

EEF comment:

Director of employment and skills policy at EEF, Tim Thomas commented: “The headlong rush to bring this levy to market has left little time to iron out some significant wrinkles and get responses to industry’s unanswered questions.

Tim Thomas, head of employment and skills at EEF, the manufacturers’ organisation
Tim Thomas, head of employment & skills, EEF.

“As a result, firms can see serious flaws that could sink this policy at launch. This is in nobody’s interests, which is why we’re recommending a delay to buy us all enough time to avoid the looming car crash.

He continued: “Manufacturers are highly committed to providing quality apprenticeships. They are supportive of the principles behind the apprenticeship levy, but are clearly dismayed at the way it is being put into practice.

“EEF supports this view – apprenticeships are vital for our sector and the UK economy and it’s important that we get this scheme right. That means taking the time to build a swift, sturdy and simple system that businesses can rely on and trust.

“While government has made every step to engage employers in the process, the levy simply isn’t ready to roll out – half a year more in development could make all the difference between whether it succeeds or fails.”