Apprenticeships down as levy system loses support

More than half of those employers who pay the apprenticeship levy are unhappy with the current system and want to see it replaced with a training levy, according to new research.

A survey of more than 1,000 employers by the CIPD, the professional body for HR and people development, has found that only one in five (17%) of those paying the levy actually support the existing system in its current form.

The findings show that many employers would prefer a training levy instead of an apprenticeship levy. In fact, nearly half (46%) of employers paying the levy expect their organisation to simply rebadge existing training. In addition, a fifth (19%) of levy-paying firms, including 35% of SMEs, don't plan to use the levy to develop apprenticeships, but will simply write it off as a tax.

The results of the survey show that:

  • 53% of employers who pay the apprenticeship levy want to see it replaced with a training levy;
  • 40% of levy-paying employers say it will make little or no difference to the amount of training they offer;
  • 46% of levy-paying employers think that the levy will encourage their organisation to rebadge current training activity in order to claim back their allowance;
  • 22% of all employers still don't know whether they are liable to pay the levy.

Publication of the report comes after a sharp decline in the number of apprenticeship starts; there were 48,000 new apprenticeship starts between May 2017 and July 2017, a 59% drop on the same period in 2016.

Lizzie Crowley, skills adviser at the CIPD, said: "Our research shows that the straitjacket of the apprenticeship levy is forcing many firms to re-badge a lot of their existing training as apprenticeships, as they seek to claw back the levy they pay. In many instances this is not adding any additional value and is creating a lot of additional bureaucracy and cost."

The CIPD is promoting a move to a more flexible training levy that would "prompt greater employer investment in skills, including apprenticeships, but in a way that is much more responsive to employers' needs".

It is also calling for better support for SMEs (both those that pay the levy and those that don't) to help them implement effective apprenticeship schemes. Crowley said: "Our research shows too many SMEs are either not planning to use levy funding to invest in apprenticeships or are planning to write the levy off as a tax."

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