Skills minister 'flabbergasted' at the lack of understanding of apprenticeship levy

4 Oct 2017 By Emily Burt

Younger people and smaller businesses could suffer under current system, experts warn

The skills minister yesterday revealed she was “quite flabbergasted” to discover many businesses were unaware of the apprenticeship levy, despite having already paid large amounts under the measure.

Speaking an at apprenticeships forum at the Conservative Party Conference, FE Week reported that Anne Milton recalled meeting several senior business people who “didn’t know anything about [the levy]”.  

“[I met a] local business, big business, [that is] paying the levy,” she is quoted as saying. “Certainly the managing director didn’t know anything about it. Finance director knew vaguely about it.”

Her comments reflect recent research on the levy. A report published last week by the British Chambers of Commerce found that 23 per cent of levy-paying organisations did not understand how the levy worked, while more than half (56 per cent) did not expect to recover their apprenticeship levy payments in full and are treating the fees as an ‘extra cost’.

Meanwhile, FE Week also reported that Robert Halfon, chair of the Education Select Committee and former skills minister, told the forum that the levy system needed further adjustments, particularly in making sure it better supported young people with disadvantaged backgrounds.

“I would use that levy, part of the levy, to incentivise people to acquire apprentices with disadvantaged backgrounds,” Halfon said. “Because I think that will be a really good financial incentive to the companies, and I think it will also help in the long term.”

Mark Dawe, head of the Association of Employment and Learning Providers, later told People Management that he agreed with Halfon’s sentiments. “The current incentives for taking young people or someone who will take a bit more effort to support are far lower than they used to be. Our worry is that the whole agenda is moving towards higher-level and higher-ability individuals,” he said.  

Milton also told the forum that issues regarding the involvement of small and medium-sized employers (SMEs) in the levy system needed to be addressed. Dawe noted that, in its current state, the apprenticeship levy risked harming SMEs.

“My big concern is the danger of knocking out small businesses that have been investing in lower-level apprenticeships for years – SMEs could really suffer here,” he said. “There needs to be a guaranteed pot of money for the non-levy payers.”

Elizabeth Crowley, skills adviser at the CIPD, added that the levy should act as a key step in engaging SMEs with skills programmes and talent development. “There is a clear need to increase awareness of the levy and reforms to apprenticeships across the whole business community but, in particular, to find more effective ways to engage with SMEs,” she said. “Our own research has highlighted the challenge of engaging SMEs in skills initiatives and the important role of developing people management competencies in firms to overcome these barriers.”​

But while confusion around the levy persists, Crowley said it was encouraging to see Milton engaging with businesses. “It’s great to see that the new skills minister is listening to the concerns from employers about the inflexible nature of the apprenticeship levy and bureaucratic process of developing new apprenticeship standards, which has placed a considerable burden on business,” she said.

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