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Promising to boost apprenticeship numbers by 2020, the apprenticeship levy has come under fire, with many calling for a complete reform of the system – but, as HomeServe director Helen Booth asks, should we not be using what we have in a more effective way?
The apprenticeship levy, which came into effect in April 2017, represented a major shake-up of the apprenticeship system, heralding three million new apprenticeships in England by 2020.
[pullquote]It’s important the government is more transparent about where unspent levy funds are being used and that they find ways to make it easier to navigate"[/pullquote]
Four years on, apprenticeship numbers are dropping, youth unemployment is at an all-time high and we’re facing a critical skills shortage across an array of sectors.
Of course, we can’t ignore the pandemic, which has significantly impacted apprenticeships in the UK, but commentary around the system was turning against the levy long before the onset of the Covid crisis.
It all contributes to a perfect storm that, without action, threatens to derail the country’s post-pandemic recovery. We should be investing in the future skills this country needs right now. And we need government to shape a workable funding system for training and apprenticeships that can deliver not only the numbers, but the genuine impact we need.
What you need to know about the levy
The levy currently only applies to employers with an annual wage bill of over £3m, which equates to about 2% of employers in the UK. These businesses are required to pay 0.5% of their total pay bill each month, to fund apprenticeship training within their organisation.
The aim was to put apprenticeship training in the hands of employers and, as a way of encouraging organisations to utilise these funds, the government set an expiration date on them. If levy funds aren’t used within 24 months, they are passed back to the Treasury.