More than half of employers think the apprenticeship levy should be replaced with a broader training levy, as the CIPD says it has not delivered the opportunities for young people it was intended to create.
Research marking five years since the levy was introduced found that three times as many HR professionals and decision makers (51%) would support a wider training levy over the apprenticeship levy in its current form (17%). More than 2,000 took part in the survey, of which around a quarter paid the apprentriceship levy.
Organisations with an annual payroll of more than £3 million are taxed at 0.5% of their pay bill, which they can use to fund apprenticeship training. Any unspent apprenticeship levy funds are used to support existing apprentices to complete their training and to pay for apprenticeship training for smaller employers.
The levy has received widespread criticism from employers and trade bodies, including the CIPD which has found many organisations have used it to fund training for existing employees or management training.
In 2020/21 the three most popular subject areas for apprenticeships were business, administration and law. Two in five of these starts were at management level.
The government promised the levy would increase apprenticeship take up, but Department for Education data shows that apprenticeship participation across all levels fell from 908,700 in 2016/17 to 713,000 in 2020/21.
The number of apprenticeships started by under 19s dropped from 122,750 in 2016/17 to 65,150 in 2020/21, while the number started by 19- to 24-year-olds have declined from 142,200 to 94,600 over the same period.
In his spring statement, the chancellor said the apprenticeship levy will be reviewed as part of wider plans to encourage greater investment in skills and technology, but the CIPD said it is likely that many employers will back on skills investment due to ongoing economic uncertainty.
CIPD senior skills adviser Lizzie Crowley said: “At a time of acute skill shortages and a decline in skills investment, when public funding is tight, we cannot allow this situation to continue; we need to be developing future talent pipelines and making sure any investment in this space is well-targeted.
“Reforming the existing levy and turning it into a broader and more flexible training levy would allow employers to develop existing staff through other forms of accredited, and cost-effective training, focused on tackling technical skills shortages in the economy. This would then also free up more funds to offer apprenticeships to young people who would benefit from them most.”
Apprenticeships
How to improve uptake of apprenticeship schemes
Entry-level apprenticeships down 72% since 2014
Degree apprenticeships: The key to skills and social mobility?
Crowley acknowledged that management training is important, but said there are more flexible and cost-effective ways of developing managers than an apprenticeship.
Two-thirds of HR directors and business leaders surveyed by learning platform Avado admitted they did not use their apprenticeship levy funds well, while another third said their management team were not interested in using the funding at all.
“UK employers spend just half the European average on training employees and just 18 per cent of 25-64 years olds hold vocational qualifications, a third lower than the OECD average,” said Avado CEO Mark Creighton.
“Unfortunately, many businesses across the country lack the inherent capabilities needed to grow and prosper in our ever-evolving economic landscape. The apprenticeship levy could be a significant catalyst to support these capability changes. To do this, the levy will need to evolve to create more flexibility for employers to align apprenticeship delivery to the needs of their business.
Sign up to our weekly round-up of HR news and guidance
Receive the Personnel Today Direct e-newsletter every Wednesday
“Engaging employers in a more active conversation about how apprenticeships can better respond to their business rhythms will ensure that the optimal amount of levy is used to both upskill and reskill current and future employees.”
