Apprenticeship Levy currently ‘lose lose’ scenario

Posted on 5 Mar 2018 by Jonny Williamson

The Apprenticeship Levy needs urgent radical reforms to reverse the ‘collapse’ of new start apprenticeships, according to Dame Judith Hackitt.

Dame Judith Hackitt CBE, chair, EEF.
Dame Judith Hackitt CBE, chair, EEF and Semta.

Dame Judith Hackitt, chair of both the not-for-profit skills body Semta, and trade body EEF, has called on government to rethink the Apprenticeship Levy.

The levy was introduced in April 2017 and obliges UK businesses with wage bills in excess of £3m to pay 0.5% of that bill towards funding the creation of three million new apprenticeships.

There was an almost 60% drop in the number of people starting an apprenticeship in the three immediately following the introduction of the levy, and a further 27% year-on-year drop in August, September and October.

Dame Hackitt explained: “We are not asking for the Apprenticeship Levy to be scrapped, but it does need a rethink if it is to achieve what we all want and what the UK needs for the future.

“We have seen the number of new starts collapse with many companies postponing or halting apprenticeships. What should have been a win-win has become a lose-lose.

“To train the talented individuals we are going to see here tonight costs more that £27,000. Providers are reluctant to offer courses, which cost more than the cap, so there is a need to recognise the true cost of different types of apprenticeship not have one simple cap.

“There needs to be greater flexibility for employers and providers to agree payment schedules especially in sectors like ours where upfront costs are high.

She continued: “The expiry date of funds needs to increase – an average engineering apprenticeship takes 48 months.

“The rules on transfer of unused levy need to be relaxed – moving the current cap at 10% to 50% would stimulate levy funds being used across supply chains.

“The levy should be used for what is says on the tin- Apprenticeships, without dilution to fund other training schemes.

“And the process of approval of apprenticeship standards must be streamlined. We know that the IFA has taken time to set up, but if we are to achieve the momentum we need on apprenticeships we cannot have the delays and deferrals, which we have been seeing.

Dame Hackitt concluded: “We all need to work together to make this as easy to implement as possible, not create unnecessary obstacles when we all want the same thing – more and more young people taking up apprenticeships.

“These conversations need to continue elsewhere – and urgently.”

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