Manufacturers call for summit with Govt to save Apprenticeship Levy

Posted on 2 May 2018 by Jonny Williamson

Industry is calling for an urgent summit with government to discuss fundamental reforms to make the Apprenticeship Levy work, and to ensure the creation of additional numbers of high-value manufacturing and engineering apprenticeships.

Apprenticeship Levy Woodwork Apprenticeship Levy Apprenticeships Figures Skills - image courtesy of Depositphotos.
According to a survey by EEF, just 5% of companies want to leave the Apprenticeship Levy as it is.

The latest figures for overall Apprenticeship Starts reportedly show a 31% fall in starts for January 2018 compared to the same period last year, with a recent survey by EEF showing overwhelming support for sweeping reforms to the operation of the Apprenticeship Levy.

EEF’s head of Education & Skills Policy, Verity Davidge, explained: “Everyone shares the ambition of creating high quality apprenticeships which are essential if industry is going to access the skills it will need in the future, especially in a post-Brexit world where fewer skilled workers will come to the UK.

“But, while the Apprenticeship Levy had laudable aims, its impact has been highly damaging for employers and apprentices, and what should have been a win-win situation has turned into a lose-lose.

“We have to address the alarming drop in starts initially and then look at positive solutions which are on the table to make the levy work for employers and learners in the long term.

“Government must now sit down with business and find a way to rescue the levy so that it meets the original pledges made to companies when it was introduced.”

According to the survey just 5% of companies want to leave the Apprenticeship Levy as it is. The majority (52%) want to keep the levy but see improvements made to current system, and a quarter (26%) want the levy to turn into a training levy.

Furthermore, 8% of companies have cancelled or delayed engineering apprenticeships for a new recruit specifically because of the levy; while 11% of companies looking to start an engineering apprenticeship for an existing employee have cancelled or delayed it specifically because of the levy.

The survey also backs criticism that the levy was rushed in as more than half of companies (54%) said apprenticeship standards have not been ready for delivery, while two-fifths of companies say colleges and training providers are either unable or unwilling to deliver the apprenticeships that manufacturers need.

In response, EEF has proposed the following reforms to make the Apprenticeship Levy work:

  1. Move the Apprenticeship (Levy) Budget from Department Expenditure Limit (DEL) to Annually Managed Expenditure (AME). This would mean that the budget for apprenticeships is based on demand and would allow the government to spend more on high-quality apprenticeships where there was demand from employers to deliver them.
  2. Increase the lifetime of funds that employers have to spend their levy to at least 48 months, the length of an engineering apprenticeship. In particular, this would help SMEs who tend to recruit every two to three years to meet their skills needs.
  3. Review the funding band structure by removing the upper limit of a maximum of £27,000. This would honour one of the key pledges government made to employers on the introduction of the levy to cover the true cost of training and assessment.
  4. Expand incentive payments to employers, providers and learners for STEM apprenticeships, an area of consistently reported skills gaps. This would align with Government ambitions to meet increasing demand for technicians.
  5. Increase the amount of unused funds employers can transfer to more than 50% and remove restrictions on transferring to a single employer. Increasing the amount to over 50% would persuade more employers to buy into transfers and create more apprenticeships.
  6. Allow employers to agree a payment schedule with their provider. This would support the delivery of apprenticeships in higher cost subjects such as engineering where there is currently a disincentive for colleges and training providers due to the high up-front cost.
  7. The process of signing off standards for apprenticeships must become quicker and more transparent to empower the role of employers further to drive standards for delivery.