Employers rebrand training as apprenticeships to access levy fund

REX/SHUTTERSTOCK
REX/SHUTTERSTOCK

Almost half (46%) of employers plan to repackage their existing training schemes as new apprenticeships in order to access their £15,000 training fund provided by the apprenticeship levy.

A survey of more than 1,000 employers by the CIPD found that more than half (53%) of employers that pay the apprenticeship levy would prefer a more flexible training levy that is more suitable for their training requirements.

More than half of the group that plan to rebadge their existing training schemes expect to create level 2 apprenticeships, equivalent to five GCSEs, to ensure they are able to use the apprenticeship fund, rather than creating an apprenticeship from scratch.

The CIPD’s ‘Assessing the early impact of the apprenticeship levy’ report also suggested that a fifth (19%) of employers subject to the levy do not expect to use their apprenticeship allowance at all, and will simply write off the levy as a tax.

Lizzie Crowley, skills adviser at the CIPD, said the apprenticeship levy was creating extra bureaucracy and cost for employers, rather than creating additional value as intended.

She said: “Apprenticeships are extremely important, but other forms of training are equally valuable and often more flexible and better suited to the needs of organisations.

“A move to a more flexible training levy would have the effect of continuing to prompt greater employer investment in skills, including apprenticeships, but in a way that is much more responsive to employers’ needs.”

Crowley said a consequence of repackaging existing training as apprenticeships was that many of them were being offered to older employees in more senior positions, rather than meeting the levy’s original aim of helping businesses employ younger people.

She said: “The Government needs to seriously review the levy to ensure it is flexible enough to respond to employers’ needs and to drive the greater investment in high quality training and workplace skills needed to boost UK productivity.

“There also needs to be much better support for SMEs, both for those that pay the levy and those that don’t, to help them to design and implement effective apprenticeship schemes.”

The report recommended the Government to run a campaign to promote the levy among SMEs and commission a review into whether apprenticeships are providing quality education.

Employers began paying the levy last April, but between May and July 2017 the number of people starting an apprenticeship decreased to 48,000 from 117,800 in the same period of the previous year.

The CIPD’s survey also found that 22% of employers do not know whether they are paying the levy, which applies to employers with an annual payroll of more than £3m and is charged at 0.5% of their employees’ total salary.

The research echoes similar findings last summer by the CBI and Pearson which found that 63% of employers planned to reconfigure existing training into apprenticeships and 27% expected to cut back on non-apprenticeship training activity to meet levy costs.

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