More than half of the 1,000-plus employers currently paying the apprenticeship levy want it replaced with a more flexible ‘training’ version, according to research published today (11 January).
The CIPD report, Assessing the early impact of the apprenticeship levy, found that 17 per cent of employers that paid the apprenticeship levy surveyed supported the existing system, while more than 53 per cent would instead prefer a training levy.
The CIPD report cited government figures indicating a decline in apprenticeship starts, with 48,000 new apprenticeships started between May and July 2017, a 59 per cent fall on the same period in 2016.
An Institute of Student Employers (ISE) study, also published today, found that in 2016 apprenticeship vacancies grew 13 per cent and rose by nearly 20 per cent in 2017.
The government introduced the apprenticeship levy in April 2017 to boost low productivity in the UK, with a target of three million apprenticeship starts in the public and private sectors by 2020. Organisations with a salary bill of more than £3m must pay an 0.5 per cent tax on their payroll, which is converted into training vouchers supplied by the government to spend on ‘high quality’ apprenticeships.
Nearly half of surveyed levy-payers, however, said they may ‘rebadge’ their current training activity to comply with the new regulations and to reclaim their allowance. Of those, 52 per cent said they would rebadge existing training into level 2 apprenticeships, which the CIPD said equated to five GCSEs, offering “much poorer returns to individuals in terms of future wages and often providing limited progression”.
But the survey also revealed that four in 10 of levy-paying employers said the levy would make little or no difference to the amount of training they offered.
A fifth of levy-paying firms, including a third of those that are SMEs, said they would write off the levy as a tax, rather than use it to develop apprenticeships, the CIPD found. Nearly a quarter of employers surveyed were unaware of whether they were liable to pay the levy, while one in eight had yet to calculate its cost.
Lizzie Crowley, CIPD skills adviser, said the research suggested “the straitjacket of the apprenticeship levy” was “forcing many firms to rebadge a lot of their existing training as apprenticeships, as they seek to claw back the levy they pay”, which she said created “bureaucracy and cost”.
“Apprenticeships are extremely important, but other forms of training are equally valuable and often more flexible and better suited to the needs of organisations,” she added.
A move to a more flexible training levy would continue “to prompt greater employer investment in skills, including apprenticeships” – which was more responsive to the needs of employers, Crowley said.
The survey was conducted in early July 2017, only three months after the launch of the levy. While still too early to assess its full impact on employer behaviour, and overall investment in workforce training, the CIPD research offered “insight into the likely direction of travel”, supported by government data, said Crowley.