The government has made an “empty promise” in saying the apprenticeship levy would increase the amount of money employers spend on workplace training, research from the CIPD has found.
The HR body’s report, Addressing employer under-investment in training – the case for a broader training levy, revealed that under a third (31%) of levy-paying employers say the levy will lead them to increase the amount they spend on training.
We need to have a broader training levy that is much less prescriptive and gives employers more flexibility” – Lizzie Crowley, CIPD
Furthermore, confidence in the levy has plummeted. In July 2017, three months after the apprenticeship levy was introduced, the CIPD found that 45% had confidence in the scheme.
Lizzie Crowley, skills adviser at the CIPD, said: “Our research clearly shows the apprenticeship levy has failed to deliver what the government said it would: more investment in workplace training.
“For this to become a reality, we need to have a broader training levy that is much less prescriptive and gives employers more flexibility. This should also help to prevent employers from gaming the system as is currently the case.
“With only 2% of employers required to pay the apprenticeship levy, the money raised from it was never going to be enough to close the gap that’s been left by the long-term decline in training investment. But if we had more employers contributing, we could make up the shortfall and also help to boost regional investment in skills.”
The research, based on survey data from 2,000 employers, showed that 58% of apprenticeship levy-paying employers believe the levy will either have no impact on the amount of money they spend on training (49%) or will lead to a reduction in training spend (9%).
L&D job opportunities on Personnel Today
George Osborne announced the apprenticeship levy scheme in the July 2015 budget, the main objective being to increase apprenticeship numbers and boost investment in workplace training, which were in a 20-year decline when it was introduced in April 2017.
However, the CIPD found that the levy has failed on both these counts. As well as not boosting skills investment in most workplaces, the levy has meant employers have invested in fewer apprenticeships with starts falling by more than a quarter from 509,400 in 2015/16 to 375,800 in 2017/18.
Last month the education secretary Damian Hinds admitted the target of starting three million apprenticeships by 2020 was “not going to be reached”.
Apprenticeship levy failures
Indeed, the CIPD research shows the design of the current apprenticeship levy is incentivising employers to use their funds in counterproductive ways:
- 22% of employers said they use their levy money on training which would’ve happened regardless
- 15% say they use the scheme to accredit skills which staff already have, and
- 14% report that the apprenticeship levy has directed funds away from other forms of more appropriate training.
The CIPD is calling for the apprenticeship levy to be replaced with a broader training levy, enabling employers to fund both apprenticeships and other forms of accredited training which are better suited to their needs. It wants such a levy to cover all employers with a headcount of 50 or more to double the amount raised by the levy to £5 billion, which would help to make up the shortfall from the decline in investment over the last two decades.
Kirstie Donnelly, managing director of City & Guilds Group, said: “The apprenticeship levy was supposed to help stimulate employer interest and investment in apprenticeships. Yet in the first year of its operation, just 8% of the levy was spent.
“City & Guilds’ own research earlier this year – Flex for Success – found that 95% of levy-paying employers were not able to spend their full allowance in the first year, so the CIPD report is further reinforcement of those findings and our report’s call for reform to create greater flexibility in how the levy is used.”
She added that the government shoould apply more “carrot” and less “stick” and give greater flexibility to employers in the apprenticeship system, allowing them to exercise choice – within a clear set of parameters – in how they spend the levy.
“We need a system built on an agreed ‘collective endeavour’ around how apprenticeships are driven but then also apply more trust and freedom in the way employers can operate.”
But Ben Rowland, co-founder of Arch Apprentices said: “The shift demanded of employers and training providers by the apprenticeship levy is huge, not just in terms of delivery but of mindset too. So we look at these stats through a different perspective: in fact we are amazed at just how quickly the levy has been adopted, especially given the dire predictions made by many at the time the levy was introduced.
“In particular, our own analysis of the Government’s data shows that the drops have mainly been in those apprenticeships that were previously criticised for their poor quality and or low relevance to the future economy, and that there has been a 220% rise in high level apprenticeships since the levy was introduced, in future-facing occupations like data analysis and software development. Our view is that such a massive change is having teething problems, but in fact fewer than one would expect – and that the underlying direction of travel is both robust and exciting.”