Businesses ‘crying out’ for apprenticeship levy clarity

The apprenticeship levy system needs to be more accessible and transparent and standards need to be reviewed regularly if the scheme is to have a future beyond 2020, the CBI has suggested.

Two years after its introduction, many employers are still struggling with the complexity of the apprenticeship levy system and do not understand how their levy payments are being spent.

The CBI claimed many organisations still have unspent funds in their levy accounts despite reports that the government’s apprenticeships budget is at risk of being overspent. According to its 2018 Education and Skills Survey, 26% of levy-paying organisations said they were not using their levy and treating it as a tax.

Chief UK policy director Matthew Fell said: “Businesses are confused and crying out for clarity on how their levy funds are being used. They read speculation in the papers that the levy is overspent but are themselves struggling to utilise their levy funds for training.”

The CBI urged the government to “do as it has previously promised” and launch its consultation on the levy’s future “well before the end of next year”.

“Many companies want the apprenticeship levy to broaden into a ‘flexible skills levy’, so they can deliver more high-quality training that helps grow their business and gives people successful careers,” added Fell.

The CBI’s Learning on the job report makes several recommendations to increase employers’ confidence in the apprenticeship system’s ability to address skills gaps. These include:

• Improving publicly-available data around age, level, business size, region and sector to assist organisations’ and policy-makers’ understanding of how apprenticeship reforms are progressing
• Introducing regular communications around levy receipts and expenditure
• Ensuring the availability to “quality” apprenticeship provision
• Making the apprenticeship system more accessible by clarifying end-point assessment and quality assurance processes
• The government providing a £100 million annual “top-up” in the next Budget so that organisations can continue to use the levy to spend on apprenticeships
• Examining the purpose of the apprenticeships system in any review of the levy.

However, any £100 million in additional funding would represent a “drop in the ocean” in terms of addressing funding problems, said Mark Dawe, the Association of Employment and Learning Providers’ chief executive .

“Having been the backbone of the programme, smaller businesses are only gaining access to half the apprenticeship funding they were getting before the levy so if we are to realise the CBI’s correct ambition that apprenticeships should be available at all ages and all levels, at least ten times the proposed amount is urgently needed.  We can’t have the government’s flagship skills programme just being reserved for the 2% of employers who pay the levy,” he said.

Dawe was also critical of the idea of a flexible skills levy and stated that it was “far too soon for any debate to seriously consider the levy being used for anything other than apprenticeships” because of the fact that the levy was being overspent on apprenticeships alone.

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The report notes that there would need to be “trade-offs” for both employers and training providers if the scheme evolves into a broader skills levy.

It asks: “For example, would employers be willing to pay into the levy at a higher rate in return for greater flexibility? Should the threshold at which firms pay the levy be lowered to bring more firms in scope? Should non-levy payers be removed from the levy pot and return to government directly funding them?”