Government urged to remove barriers to employer investment in apprenticeships

Government urged to rethink apprenticeship levy

According to new research published today by City & Guilds Group, an overwhelming 92 per cent of levy-paying employers want to see greater flexibility in how they can spend their apprenticeship allowance. The findings are a stark reminder that the Government has a long way to go to create an environment in which businesses can really benefit from increased investment in skills development, with no ‘one-size-fits-all’ solution for apprenticeships.

As we wait to hear from the Government on a date for the employer consultation on apprenticeships announced in October, City & Guilds Group surveyed 765 levy-paying businesses in England for their take on the current system. The research reveals that while, encouragingly, businesses are keen to make the best use of their levy, the rigidity of the current system is holding many back.

If employers had greater freedom with how to spend their levy funds, 55 per cent say they’d like to continue to spend on apprenticeships, while 45 per cent would like to be able to use money to invest in non-apprenticeship training – including professional courses and technical skills training (36 per cent); health, safety and compliance training (33 per cent); work placements and internships (32 per cent); and leadership and management training (31per cent).

Kirstie Donnelly MBE, Managing Director, City & Guilds Group, comments,

The turmoil we are facing, as a result of uncertainty around Brexit as well as the rapidly changing world we live in, means that it’s never been more urgent to improve the skills of our workforce and invest in home-growing the skills that we may no longer be able to import from abroad. Apprenticeships have a huge potential to deliver on this, but the system is still not responsive enough to the needs of employers. Businesses need more flexibility to use the apprenticeship levy in a way that will truly help them fill skills gaps, upskill their workforce and shore up their talent pipeline for the future.

But, flexibility alone isn’t enough. The Government must provide greater clarity on apprenticeship data in order to equip the industry with the holistic view it needs and enable employers to understand its wider impact. Although we welcome the Government’s commitment to introduce reforms, they are yet to set this in motion. We have set out a list of twelve recommendations, eleven of which are for the Government to act on, as we urge them to prioritise apprenticeships, maintain momentum and make better use of data to help all those involved to create the skilled and productive workforce we so desperately need.

When asked about the challenges that prevent them from investing in apprenticeships, almost all (93 per cent) employers cite some form of barrier. The list includes a lack of: suitable apprentices in the area (31per cent), availability of necessary training (30 per cent), information and support (22 per cent), and buy-in from the board (22 per cent); as well as 20 per cent off the job training being unsuitable for the business (29 per cent).

Promisingly, the Government has introduced some new freedoms to flex spend in the last year, including increasing the level of levy funds which can be transferred to other businesses in a supply chain from 10 per cent to 25 per cent, from April 2019. But City & Guilds Group’s research found that this still isn’t enough: if levy-paying employers could invest as much as they liked within their supply chain, they would transfer an average of 35per cent, meaning current plans for increased flexibility still won’t meet employers’ needs.

Amid calls for increased options when it comes to using the apprenticeship levy, the research also reveals the scale of disengagement with the levy, as 95 per cent of employers failed to spend the entirety of their apprenticeship budget in the first 12 months of the new system and businesses say that they only expect to spend an average of 56 per cent of their allotted funds annually in the future. Without transparent reporting of apprenticeship spend, however, industry bodies, training providers and employers are left in the dark about the true extent to which employers have taken up apprenticeships, and where any leftover money will end up.

 

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