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Business leaders give damning indictment of failing Apprenticeship Levy

April 11, 2018

By Dominic Browne, 29/03/2018

Business leaders have given a damning indictment of the Apprenticeship Levy just days after Highways revealed that only a fraction of the roughly £2bn raked in by the Government has been recouped for training.

A survey by the Institute of Directors (IoD) with more than 640 responses found that fewer that one in seven think the levy is fit for purpose and fewer than one in five will use it to take on more apprentices than otherwise.

The survey found:

  • Just 14% of employers who pay the Apprenticeship Levy think it is fit for purpose
  • Only around a third understand the system perfectly, and even fewer will reclaim their full Levy entitlement
  • 14% view the Levy simply as a tax
  • A quarter of those who don’t employ apprentices say they can’t because of regulatory or administrative burdens.

The news comes just days after a Highways exclusive revealed that just £108m of the roughly £2bn raised between May 2017 and February 2018 has been paid from employers’ levy accounts.

In addition, the number of apprenticeships has actually fallen since the introduction of the levy.

In the first quarter after the levy was introduced, the number of people signing up for the vocational training suffered a 60% year-on-year collapse to 69,800.

Data seen by the Daily Telegraph reveals that as recently as October, of the 19,150 companies paying into the levy, only 11,900 had registered to claim funding back from it – suggesting around 38% of companies had effectively written off the cash as a cost.

Seamus Nevin, head of policy research at the IoD, said: ‘Across the country, employers in almost every sector are reporting skills shortages, and apprenticeships are a very important part of the solution.

‘As this survey shows, however, the Apprenticeship Levy is not working as intended. The new system was supposed to be employer-driven but the narrow and centrally-controlled design mean this is not happening. It is not helping firms to invest in skills and train in a way that best suits the needs of our economy. Many employers are unable to make the complex and restrictive rules fit their specific training requirements.

‘This has been reflected in official statistics, which reveal a decline in apprenticeship starts since the levy was introduced. While the intention behind the policy is right, employers need to see a change in how it is implemented urgently. We strongly advise that the levy and co-funding system are reviewed in order to give employers the flexibility to develop the skills they need to be competitive, and to avoid any further drop in apprenticeship recruitment and training volumes.’

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