Two thirds of employers are either opposed to or in the dark over apprenticeship levy

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Written by Mary Isokariari on 20 June 2016 in News
News

CIPD warns apprenticeship levy is a 'blunt instrument' to tackle workplace skills as only one in four employers currently plan to use levy funding to invest in apprenticeships.

New research reveals that, although the Government's apprenticeship levy is likely to boost the overall number of apprenticeships, it risks undermining overall apprenticeship quality and wider investment in workforce training and development.
 

"For example, taking investment away from other equally valuable forms of training and development and causing organisations to effectively re-badge existing training schemes as apprenticeships simply in order to reclaim levy funding. Many large employers, particularly in low margin sectors and the public sector, will have to make significant cuts to their training budgets as a result of the levy, or will simply write it off as a tax."

The survey is based on two large employer surveys and in-depth interviews with HR leaders and other senior managers. It highlights the high level of ignorance of the policy and opposition towards it less than nine months before its introduction in April 2017.

It also finds that almost three in ten (28 per cent) of employers do not expect to use levy funding to develop or enhance apprenticeship programmes, and almost four in ten (39 per cent) do not know where they stand on it.

In addition, the report suggests that levy funding is unlikely to benefit the majority of smaller businesses that need funding and support for training the most. A worrying number of organisations also have yet to fully understand the impact and financial implications the levy will have on their organisation.

Key findings:

• Over a quarter (26 per cent) of employers do not know whether they are expected to pay the levy when it comes in, and only a third of those who expect to pay it (31 per cent) have calculated how much it will cost them each year.

• Overall, less than one in ten employers (9 per cent) expect to use levy funding to develop a new apprenticeship programme, while almost one in five (18 per cent) say they will use levy funding to enhance their existing apprenticeship programme.

• Just 8 per cent of SMEs report they will utilise levy funding to develop a new apprenticeship programme while 7 per cent plan to use levy funding to enhance an existing programme.

Cheese added: "These findings highlight that the levy is a blunt instrument providing employers with a 'one size fits all approach' to training, forcing many larger employers to make a net contribution to a scheme that our research shows will suit only relatively few.

"We therefore believe a much broader, more flexible Training Levy should be developed to ensure that the system is genuinely employer-owned and meets the skills requirements of organisations. This would enable employers to draw down levy funding, with appropriate criteria, for a wider range of training activities, as well as for apprenticeships."

Peter Cheese continues: "The evidence in our report suggests that the levy could undermine apprenticeship quality by encouraging some employers to invest in intermediate level apprenticeships at the expense of advanced and higher level programmes, as a way of maximising the amount of funding that they can reclaim. This risks further devaluing the apprenticeship brand and preventing young people from regarding apprenticeships as a meaningful alternative to university.

"Another fundamental weakness of the levy, in its current form, is that the vast majority of small businesses do not expect to use levy funding to invest in apprenticeships. This is why we are calling for some levy funding to be given to Local Enterprise Partnership and Business Growth Hubs, so that they can help smaller businesses to use Levy funding to invest in apprenticeships programmes and other forms of training and development, which may be more suitable for them."

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