Businesses say apprentice levy not increasing training spend
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Fewer than a third of employers that pay the apprenticeship levy say it will lead them to increase the amount they spend on training, according to a survey by the Chartered Institute of Personnel and Development (CIPD).
Read more: London businesses ‘unaware’ of improvements to apprenticeship levy
The CIPD, an association for the human resources sector, said the figure was down from 45 per cent in July 2017, “showing confidence in the levy has dwindled since it came in”.
The government dramatically altered the apprenticeship system two years ago by introducing a levy on large employers which they can claim back to pay for training. Employers with wage bills over £3m a year must pay the charge.
A number of businesses and employers’ groups have criticised the scheme for not having enough transparency about how the money is spent, and for leaving less money for smaller businesses.
The CIPD today said the government has “failed” to either increase the number of apprentices or the amount of spending on training young people.
It said 375,800 people started apprentices in the 2017/18 financial year, down from 509,400 in 2015/16. The government has conceded it will not hit its target of 3m in apprenticeships by 2020.
Lizzie Crowley, skills adviser at the CIPD, said with only two per cent of employers paying the levy, the money “was never going to be enough to close the gap” left by declining training investment.
Responding to the survey, Edwin Morgan, the director of the Institute of Directors, an organisation for business leaders, said many employers were “frustrated by the bureaucratic system and the lack of the right courses in the right places”.
He said the next government, which could be led by Boris Johnson or Jeremy Hunt, “will have to face up to the widening funding gap”.
“Increasing apprenticeship funding from the Treasury is one of the measures they should consider to boost shaky business confidence.”
Jane Gratton, head of people policy at the British Chambers of Commerce (BCC), said: “The levy feels like a tax, leaving larger firms with less budget to spend on vital forms of workplace training, and preventing smaller firms from accessing training in their local area.”
Her organisation represents over 50 chambers from around the country. She said smaller businesses were “facing pervasive skills gaps” and “need access to apprenticeship funding and a wide range of quality training provision”.
Both the BCC and CIPD called for the apprenticeship levy to be replaced by a broader training levy “that is much less prescriptive and gives employers more flexibility”.
Read more: Minister admits apprentices unlikely to reach 3m by 2020
Gratton said: “We need to get the funding flowing better so that the apprenticeship system works better for everyone.”