CBI lays out apprenticeship levy proposals in letter to BIS

Posted on 13 Jan 2016 by Jonny Williamson

Director general of the CBI, Carlyon Fairbairn has set out the four principles that business would like to see embedded within the new apprenticeship levy.

In her letter to the Secretary of State for Business, Innovation and Skills (BIS), Sajid Javid, Fairbairn states that government and business must work together in order to find the answers necessary to fuel opportunity and growth.

Crop - Carolyn Fairbairn, Director General, CBI
Carolyn Fairbairn, director general, CBI.

Given the fundamental shift that a levy signifies, the director general makes it clear that the opportunity exists to create a truly stable, business-led apprenticeship system that offers growth for companies, bridges the skills gap and improves social mobility – but only if the Government gets the detail right.

She writes: “There is a risk that a levy increases business cost without increasing the stock of training overall. Proposed timescales are tight, but the importance of taking time to do this well outweighs any political imperative.”

The levy must ensure training is relevant and valuable for businesses, and that it helps people to build successful careers.

According to Fairbairn, implementing the key principles would create a system with the greatest chance of long-term success.

The system must be driven by economic and business need:

A new system must represent a transition from a government-led system to a truly business-led one to help meet the needs of firms on the ground – especially as businesses are now paying the bill.

The introduction of a new Institute of Apprenticeships is welcome, but it must now establish its credibility and longevity.

For more than a decade, businesses have been promised more influence over the qualifications on offer in the in-work system, but programmes have changed too regularly, and government-inspired red tape has made the system difficult to deal with.

Ensuring the institute has the independence, research capacity and focus to deliver this will help to make it meaningful.

In time, it should have full control over the levy, which must remain solely for funding apprenticeships.

Flexibility in the apprenticeship system by sector and size of firm is essential

The new institute should be empowered to offer flexibility in design of the system to give freedom to different sectors in pursuing the approach that works best for them, with a special focus on SMEs and smaller levy payers.

As far as possible, this should allow for sensible collaboration between firms in supply chains and local clusters.

The Trailblazer programme has begun to develop a similar approach, but progress has been slow and the accreditation system chaotic and overly government-dominated.

The levy should fund quality and reward commitment in the apprenticeship system

The levy system must help drive growth in technician-level skills (levels 3 and 4), as well as offering value for money at level 2.

The institute must use its role to reward – not punish – the most committed firms via an ‘allowable expense’ regime to help firms reclaim spend on administering apprenticeships, such as capital investment and staff time.

Such an approach in the UK would be welcome, and forestall any rush among firms to set up their own training firm.

Similarly giving additional freedom to firms with higher training spend or paying higher levy bills over how they spend levy money would be welcome.

Relevant and simple apprenticeship standards across all parts of the UK will remain key

With so much focus on funding we cannot afford to ignore the need to reform apprenticeship standards, so keeping up the pace on moving to a slimmer, business-led set of standards will be essential.

This is not a reform that only affects England – the levy system must prove coherent and effective over the four different skills system in the UK that the levy covers.

Given the timescales, business is looking for swift progress and clear communication. In particular, reducing unnecessary costs in the standards and addressing operations across the UK nations are essential.