Apprenticeships plummet following levy introduction

David Parry/PA Wire/PA Images
David Parry/PA Wire/PA Images

The number of people starting apprenticeships in England has fallen by 59% after the introduction of the apprenticeship levy earlier this year.

According to figures from the Department for Education (DfE), 48,000 people began an apprenticeship in England in the final quarter of the academic year (May-July 2017). This is a 59.3% fall compared to the same quarter in 2015-16, when 117,800 apprenticeship starts were recorded.

On 6 April 2017, the Government introduced the apprenticeship levy with the intention of increasing the number of people in workplace training, “putting employers at the centre of the system”. Employers with an annual pay bill of £3 million or more – around 2% of organisations – have to pay a 0.5% tax, designed to raise more than £2.5 billion.

The DfE said it had expected an initial fall in numbers following the apprenticeship levy’s introduction, suggesting that, because employers have two years to spend training funds, many are still formulating new schemes.

Jake Tween, head of apprenticeships at ILM, said: “On the surface, this looks like a disappointing start to this new era. But the slow uptake can, for the most part, be attributed to the fact that businesses – and in particular SMEs – don’t yet fully understand what they need to do to take advantage of the new system.”

Apprenticeship starts in the previous quarter were up 47% year-on-year, as employers rushed to get apprentices through the old system. “Whenever any new legislation is introduced, it takes time for those affected to get to grips with what the change means for them… We’ve got to give employers time,” he added.

In the lowest level training schemes, intermediate apprenticeships, the number of starts fell by 75%.
Tony Burke, assistant general secretary at Unite, said the trade union had concerns about the lowest grade of apprenticeships and whether these were beneficial. He added that there was “a great deal of frustration” with the new scheme.

“Some businesses view this as a disaster. The levy has made things more complex so they are not taking apprentices on,” Burke said.

Verity Davidge, head of education and skills policy at manufacturers’ group the EEF, said the figures were “frankly unsurprising”.

“We continue to hear stories from companies who have hit a brick wall in trying to get levy-supported apprenticeships off the ground,” she said.

“Accessing the funding has proven complex and difficult to unlock in time and employers have struggled to get their heads round the complex rules and restrictions in accessing funds. As a result, some apprentices have been told that their apprenticeship has been put on hold for now which is clearly a huge disappointment for young people who had effectively been offered a job – only to have their hopes dashed.”

Tween added: “We’re confident that we will see an improvement in apprenticeship start over time, as employers start to understand – and harness – the opportunities offered by the new system.

“By keeping an open dialogue between employers, providers, awarding bodies and the government, we can ensure apprenticeships remain a vital tool for equipping the UK workforce will the skills to remain productive – and competitive.”

In his budget earlier this week, Chancellor Philip Hammond said the Government would “keep under review the flexibility that [apprenticeship] levy payers have to spend this money.”

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