Third of employers unaware of apprenticeship levy

14 Feb 2017 By Emily Burt

As registration website opens, research reveals significant number of companies aren’t ready for the levy’s launch

Skills minister Robert Halfon has urged organisations to register early in preparation for the forthcoming apprenticeship levy, but new research suggests a lack of awareness about the levy remains widespread.

A recent poll of senior decision-makers by City & Guilds revealed a third (33 per cent) of UK employers that will be eligible to pay the levy are not aware of its existence. Worryingly, nearly a quarter (23 per cent) of heads of apprenticeships are not aware of the new apprenticeship system.

“The lack of awareness is a cause for concern and shows that we still have a hill to climb in convincing people about the benefits apprentices can bring to business,” said Kirstie Donnelly, managing director of City & Guilds.

“With just two months to go until the levy begins, it’s vital that everyone in the skills sector and the government gets out there and communicates with these less enlightened businesses to help them see the huge potential benefits apprenticeships can bring.”

Organisations’ unpreparedness for the levy’s introduction could be partly attributed to the late confirmation of some aspects of its administration. The online registration process employers will use to manage apprenticeship funds was launched yesterday (13 February). All levy-paying companies must register online and pay the levy funds from May this year.

Last week, the levy scheme’s name was officially changed from the ‘digital apprenticeship service’ to ‘apprenticeship service’. And it was revealed that, when the levy comes into effect, businesses will have to sign contracts with the Skills Funding Agency (SFA) to run new apprenticeships, rather than simply with apprenticeship providers. According to the contract, the SFA will also reserve the right to recover any funds paid by an employer to a training provider under the levy, if the payment of funding does not comply with the levy rules.

“While the overarching principles of the levy and delivering apprenticeships are relatively straightforward, the contractual relationship between the SFA, employer, provider and learner is significant,” said Mark Dawe, chief executive of the Association of Employment and Learning Providers. “This guidance makes clear that the funding is government money with government requirements.”

City & Guilds’ report also found that two-thirds of employers would not be employing a larger number of apprentices because of the levy, despite the government campaign to ensure three million apprenticeship starts by 2020. And 15 per cent of respondents said they would cut other recruitment schemes to pay for it.

“There’s a real concern about how organisations will fund apprenticeship salaries and training,” said Sue Evans, head of HR and OD at Warwickshire County Council. “The government has taken a slice of our budgets in order to pay the apprenticeships levy, but many will not be able to recoup it because they can’t hit the targets that have set. So organisations will simply create apprenticeships out of their existing workforce, which is a dodge to get the money back, and not in the spirit of apprenticeships.

“Ultimately, the apprenticeship levy is badly thought through and, although the mechanism to remove money from employers is now in place, the mechanism for us to recoup it is still not ready. The demoralising thing is that we have been talking to the government for a long time about our concerns and the unintended consequences of the levy, and they have not listened.”

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