Employers call for transparency over apprenticeship levy spend

17 Sep 2019 By Francis Churchill

CBI says businesses are ‘crying out for clarity’ on how their contributions are being used

The apprenticeship levy system needs to become more transparent and ‘user friendly’ to allow employers to access the right training, the CBI has said, in a report that echoes calls for the scheme to be broadened into a wider skills levy.

The business body said employers were “passionate supporters” of apprenticeships but that many were still struggling to engage with the system and were not clear about where their money was being spent.

The report – released the week after it emerged that £133m had already expired from the fund – called for greater transparency over the performance of the levy system and more clarity on how contributions were being used and spent.

It also said £100m of additional funding was needed to prevent a shortfall in the apprenticeship budget despite this underspend.

Lizzie Crowley, skills policy adviser at the CIPD, endorsed the need for more information around the use of funds. “We’re not actually sure where [the unspent levy funds] are going and we need transparency from government around where the levy pot is ending up,” she said.

“There is money that is disappearing out of the system and we need greater clarity around where that’s going to ensure it is being spent on skills.”

She added that there were also long-term issues around the financial sustainability of the system – driven by a higher than expected growth in more expensive higher-level apprenticeship courses – that even the £100m being called for was unlikely to solve.

Crowley also highlighted a number of long-standing issues around the take-up of apprenticeships, particularly among smaller businesses that often lack the leadership and people management skills to plan far enough in advance to recruit and retain apprentices.

“There is certainly the need for more local-level support for small firms to ensure they are actually able to take advantage of apprenticeships,” she said.

As well as additional calls for funding, the CBI report suggested greater support for employers, including digital and online resources to help smaller companies engage with the levy, and the creation of a ‘matching service’ to help levy-paying organisations pass on unspent funds to non-levy paying employers.

It also called for the Institute for Apprenticeships and Technical Education, the body responsible for monitoring apprenticeship standards, to be better resourced to allow it to speed up the approval of new standards.

Lady Cobham, director general of The 5% Club, welcomed the recommendations set out by the report, and called the low take-up of apprenticeships by SMEs “a great shame and a wasted opportunity”.

“We agree that the government must urgently reform the apprenticeship levy to allow employers to use it for a broader range of quality training,” she said.

“We have found that some small businesses do not take on apprentices because of the complexities of the levy, which is a great shame and a wasted opportunity... and would welcome the government simplifying the process as soon as possible to help British business prosper.”

Matthew Fell, CBI chief UK policy director, said employers were “confused and crying out for clarity” on how levy funds were being spent. “The government must do as it has previously promised and urgently consult businesses about the levy’s future well before the end of the year,” he said. 

“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.”

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