It’s nine months since the introduction of an employer’s levy – designed to raise an additional £3 million for the apprenticeships programme and help government reach its total of 3 million more apprenticeship starts by 2020.
But the apprenticeship levy only applies to large employers with a wage bill of more than £3 million (approximately 2% of all employers) who are required to pay 0.5% of this. This money will be paid into an account and can only be spent on approved apprenticeship training – with the government adding 10%.
Research from the influential CIPD shows that while these employers are more likely to offer apprenticeships than their smaller counterparts, almost 1 in 4 still plan to ‘write off’ this expenditure as a tax. According to CIPD levy payers are also likely to spend some the funds the on ‘rebadging’ existing employees as apprentices – a major problem with the old system of apprenticeship finance.
The CIPD report also shows that rather than being required to spend funds on apprenticeships, many levy paying employers would rather pay a more general ‘training levy’ – training levies exist in other European countries and still exist in some UK economic sectors like building and construction.
Non-levy paying employers must pay at least 10% of the cost of apprenticeships and organise their own training (though all employers receive extra funds for employing a 16-18-year-old) and it’s the lack of take up by smaller employers that may well mean the government’s 3 million target isn’t met. For this to happen, the number of starts will have to significantly increase – but figures for 2016/17 show a fall on previous years and worryingly the period May to June 2017 saw a 60% reduction (this period coincided with the introduction of the levy!)
Most apprenticeships, despite new standards designed to improve quality (20% of training must now be ‘off the job’) are also still more likely to be offered at Level 2 (GCSE) without clear routes of progression and there are very few at Higher Level. Just a quarter of all starts are by under 19-year olds.