Page 28 - Gi flipbook April 2018

WHAT’S THE

PROBLEM WITH THE

APPRENTICESHIP LEVY?

With reports of the apprenticeship levy failing • Extend the window within which
to deliver, Chris Wood, CEO of construction, firms have to use their levy
utilities and energy sector specialist Develop payments to invest in
Training sets out how the government should apprenticeships beyond the current
two years
tackle the problem • Widen apprenticeship choices
• Unshackle the value caps on
owhere is the UK skills companies do not understand it or apprenticeships, which would also
crisis felt more keenly how to respond to it.” But is that the help training firms such as ours to
than in the construction, whole story? Maybe it is convenient, contribute more to solving the
utilities and energy at least for some firms, to lay the problem
N sector. An ageing blame on arcane regulations, but in • Bring non-apprenticeship schemes
workforce is retiring, but young reality the levy isn’t too complicated into scope
people aren’t being trained in compared with most tax legislation. In • Enhance government contributions
sufficient numbers to replace them or its defence, it provides a secure route (co-investments) to non-levy paying
to deploy new technologies such as for funding and seeks to raise and firms
smart meters. standardise quality. • Do away with the need for the
The apprenticeship levy was It seems some large firms are independent end-point assessor
supposed to change all that, but a series simply choosing not to invest in structures
of reports shows it is falling woefully apprenticeships. So what is the Those are actions that the
short. With newspaper reports government to do? It would surely be government could take, but what can
describing the levy at breaking point, political suicide to abandon or water industry do? I recommend that firms
the Department for Education’s own down the scheme and face get expert help to make the
figures revealed total apprenticeship accusations of failing to invest in the apprenticeship levy work for them.
starts for May, June and July last year future and young people. It was frustrating that the training
fell a staggering 61 per cent compared There have been calls to cut the sector was not consulted during the
to the same period in 2016. cost of the levy on firms. Perhaps formation of the levy, but we have
Almost a year on from its launch, it increasing the payment rate would be made great strides in understanding
is clear that businesses are still more likely to have the desired effect the opportunities, and we are already
wrestling with the implications of the of encouraging more investment in helping customers to make the levy
levy, which essentially taxes large apprentices, but that would probably work for them. There are genuine
firms but allows them to recoup the only come at the expense of losing opportunities here, which go beyond
money if they invest it in other worthwhile initiatives in the traditional ideas of apprenticeships
apprenticeships. While the idea of the construction and engineering sectors. and into a much broader range of
levy may be applauded in principle, it The answer must lie elsewhere. training, compliance and development
was made clear at our recent Industry With only 17 per cent of levy-payers programmes.
Skills Forum on the subject that it saying they support the scheme, we The levy requires all employers with
isn’t a straight choice between training need a more rounded approach to get an annual wage bill of £3 million or
people and paying tax. For example, a buy-in from industry. One solution more to pay 0.5 per cent of their staff
number of delegates pointed out that that has worked for a number of our costs into a fund, which is topped up
the levy money received for training clients is to create or convert training by government, and from which firms
an apprentice does not cover the full programmes for existing staff into can withdraw money to pay for
cost of recruitment and employment. apprenticeships that are recognised by apprenticeships. However, if the
Others said it would be foolish to take the levy. Indeed, there is widespread money is not withdrawn by the
on apprentices to recoup the levy support for extending the scope of deadlines set, it goes into government
payments without capacity to manage the scheme with recent research coffers. Firms have two years from
recruitment and training programmes. showing more than half of employers their initial levy payments, which
What is the real reason for lower who pay it want it to cover a broader started in April last year, to draw
apprenticeship numbers? Clearly some range of training. The answer may be down funds, so many are taking their
firms have yet to get to grips with the to make the scheme more flexible time before making a decision.
levy, as summed up in a recent FT than it currently is. Here are some However, the way the system is
headline: “Apprenticeship levy leaves actions the government might structured means that delay could
businesses baffled – quarter of consider taking to achieve that: mean they will be unable to recoup

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