Growing concern about apprenticeship levy

There is growing concern at how the apprenticeship levy is operating as the number of starts continues to fall compared to pre-levy funding. In November 2017 there were 27,000 apprenticeship starts, compared to 41,600 starts at the same point in 2016/17.

Preliminary government figures released at the end of March showed a 25% drop in the number of people starting apprenticeships in the first two quarters of 2017/18. This led to employer organisations, including the Engineering Employers Federation and the CBI, to renew calls for an overhaul.

Government has set a target of 3m people starting apprenticeships by 2020. It brought in the levy to fund the policy last year. Under the system, all employers with an annual wage bill of £3m or more have to pay 0.5% of their staff costs into a fund topped up by government to finance training. The system covers almost 20,000 companies and is expected to collect close to £3bn a year.

A CIPD survey of employers warned of unintended consequences as nearly half (46%) of employers paying the levy expect their organisation to simply rebadge existing training

  • Among employers who currently pay the apprenticeship levy, 53% would prefer a training levy, compared with just 17% supporting the apprenticeship levy in its current form.
  • Four in ten (40%) levy-paying employers say it will make little or no difference to the amount of training they offer.
  • Nearly half (46%) of levy-paying employers think that the levy will encourage their organisation to rebadge current training activity in order to claim back their allowance.
  • More than a fifth (22%) of all employers still don’t know whether they are liable to pay the levy.