The number of people starting an apprenticeship in small businesses has dropped by almost half since the introduction of the apprenticeship levy, according to a report from the CIPD.
The HR body’s “Devolution and evolution in UK skills policy: Finding common ground across the four nations report”, revealed there were 123,800 apprenticeship starts in SMEs in England in 2020-21, compared to 241,000 in 2016-17.
In larger companies with more than 250 employees, the drop has been 14%, while overall the number of people taking up apprenticeships is down by 31% since 2017.
One of the aims of the apprenticeship levy was to support smaller employers to access funding for skills development by enabling them to tap into larger businesses’ contributions to the national training ‘pot’.
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Statistics from the Department for Education released earlier this month found that around two-thirds of all starts in 2023 were funded by the levy, but fewer disadvantaged and younger learners were accessing the funding.
Instead, employers were often using the funding to support higher-level qualifications such as degree apprenticeships and to train existing employees.
The CIPD’s analysis suggests that the apprenticeship levy has failed to reverse a decline in employer training since 2011, with investment in learning and development dropping by 19% since then. UK investment per employee, at around £1,778 per person, is around half the EU average.
Sixty per cent of employers in the UK provided some sort of training in the last 12 months, the CIPD found, but overall employers are investing less in their workforces than 20 years ago.
The HR body has once again called for the government to reform the apprenticeship levy into a flexible “skills levy”, to boost employer investment in training and skills development. It also recommends that the government support “good quality advisory services” for SMEs, particularly on HR and people management.
“Skills and labour shortages continue to be a real problem across the UK and all sectors of the economy, and we need to get apprenticeships and vocational education right if we’re to tackle these challenges,” said Lizzie Crowley, senior policy adviser at the CIPD.
“Investment in training and development is critical in addressing skill gaps and improving workplace productivity, but the apprenticeship levy has failed to reverse the decline in training we’ve seen over the past two decades.”
“Despite the importance of SMEs to the UK economy, there are still major barriers in their engagement with the current skills system, including its complexity, lack of resources, and poor people management capability. Good quality advisory and business support services, aimed at boosting management capability and increasing understanding of skills development, are key to engaging small businesses.
Crowley added that reforming the levy into a more flexible skills levy would enable employers to invest in technical skills development, particularly given that the number of skills shortage vacancies has more than doubled in England between 2017 and 2022.
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