• International Workplace
  • 5 June 2018

Evidence of need for apprenticeship reform mounting

The government is being called upon to reconsider the apprenticeship levy, in force since April 2017, after new statistics released by the Department for Education reveal a dramatic drop in apprenticeship starts.

Since the levy’s introduction, all employers with an annual wage bill of more than £3m have been required to pay an apprenticeship levy.

The levy is charged at 0.5% of the amount by which the wage bill exceeds £3m. Employers receive an allowance of £15,000 to offset against the payment of the levy. All employers are able to access funding for apprenticeships, including those not required to pay the levy. They can access funding through a new digital apprenticeship service account, and use this money to pay for training and assessment for apprentices.

Employers who pay the levy are able to use the amount they paid into the levy (plus a 10% government top up) to pay for apprentice training and assessment. Employers who are not required to pay the levy can obtain 90% of their apprenticeship training and assessment costs from the government (with the employer paying the remaining 10%).

However, new statistics reveal that between August 2017 and February 2018 there were 232,700 apprenticeship starts (reported to date) compared to 309,000 apprenticeship starts between August 2016 and February 2017 reported at the same point last year. And in February 2018 there were 21,800 apprenticeship starts, compared to 36,400 starts in February 2017 reported at this point last year.

Commenting on the apprenticeship statistics released by the Department of Education, Jane Gratton, Head of Skills at the British Chambers of Commerce, said:

“Since the introduction of the apprenticeship reforms, the statistics have shown a marked decline in the number of apprenticeship starts and, sadly, the latest numbers are no different.

“Businesses are crying out for skilled workers to fill job vacancies and apprenticeships should be very much part of the solution, but the system just isn’t working. For SMEs in particular, the new rules have added to the barriers, complexity and cost of recruiting and training staff. For larger firms, the inflexibility of the system has made it difficult to spend their levy funds as they see best, making it feel more like a tax, and leaving less money available to pay for the training people need. Businesses want to invest more in upskilling their workforce, and to offer great career opportunities for young people, but this system is holding everyone back.  

“There is consensus across the UK business community that the Levy needs reform, yet our calls continue to go unanswered. We are not asking for a complete overhaul – everyone wants this system to work better. Each month the number of apprenticeships is falling, so now has to be the time for government to work with business and training providers to sort things out.”

The next release of these statistics will be 14 June 2018.