The amount of people embarking on an apprenticeship has dropped by a worrying 61% year-on-year since the introduction of the Apprenticeship Levy, according to new government data.
Between May and July 2017, apprenticeship starts decreased from 113,000 to 43,600 over the same period in 2016, statistics published by government this week have shown.
May to July is the fourth-quarter of the 2016/17 academic year, and is the first quarter since the Apprenticeship Levy was introduced in April.
There had been a significant increase in the amount of apprenticeship starts from February to April 2017 – 174,100 compared to 118,800, which led the FT to suggest that uptake may have been “distorted by the reforms.”
The Apprenticeship Levy requires all businesses with a wage-bill in excess of £3m to pay 0.5% of that bill towards funding the creation of three-million new apprenticeships.
CBI managing director for people policy, Neil Carberry commented: “This disappointing data will come as no surprise to companies, who have repeatedly made clear that the current design of the Apprenticeship Levy system is not effective.
“Business believe in apprenticeships, but there can be no argument now – reform of the levy system is needed urgently to ensure its success.”
Carberry added: “The government needs to invest in the Department of Educations’ commercial skills, work with firms to build a better understanding of how businesses will react to policies, and empower the Institute of Apprenticeships to challenge underperforming aspects of system design.”
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National chairman of the Federation for Small Businesses, Mike Cherry noted: “Changes to apprenticeship funding may be partly responsible for driving down the number of apprenticeships, which is bad news for everyone.
“It’s early days in the government’s apprenticeship programme, but these figures do coincide with an increase in the compulsory employer contribution and a greater focus on levy-paying businiesses over smaller employers.”
In October, six months after the levy’s introduction, nearly a quarter (23%) of levy-paying firms still had no understanding of it or how their company would respond to it.
The results the survey, conducted by the British Chambers of Commerce, also revealed that more than half of levy-paying businesses weren’t expecting to recover any or only a portion of their payment, compared to 36% who expect to recover all or more of theirs.