The Government has been accused of making an empty promise when it comes to the apprenticeship levy as it comes to light that less than a third of levy paying employers say it will lead to an increase in the amount of money they are spending on training.
The CIPD conducted a report in to the apprenticeship levy called Addressing employer under-investment in training – the case for a broader training levy.
Only 31 per cent believe the levy will result in more being paid in to training. This number has fallen from 45 per cent in July 2017, showing people’s faith in the levy is decreasing over time, it was implemented in April 2017.
It was announced by then Chancellor of the Exchequer, George Osborne in the July 2015 budget.
The Government’s apprenticeship levy, is a compulsory tax on employers to help fund the development and delivery of apprenticeships.
Employers with a paybill of more than £3 million are required to pay the levy, whether they employ an apprentice or not.
The vast majority (58 per cent) of levy paying employers believe the levy will have no impact on the amount of money they spend on training as well as 9 per cent saying it will actually lead to a reduction in training.
Aims of the levy were to increase the amount of apprenticeships and add to the amount of investment in workplace training, which was at a 20-year when it was introduced.
Both of these objectives have failed to hit there mark according to the report as skills investment in the majority of workplaces has fallen as well as fewer apprenticeships being invested in as the number of apprenticeships has fallen from 509,400 in 2015/16 to 375,800 in 2017/18.
Some companies (22 per cent) have also come forward saying that the levy money would have been spent on training irregardless of the levy. Also 15 per cent say that the scheme will give skills to employees they already have.
Certain employers (14 per cent) even said that the levy actually directs money away from other forms of training that are more necessary for their business.
The CIPD has suggested that the levy should cover employers with 50 employees or over in order to double the amount raised by the levy to £5 billion. They feel this will help address the fall in investment in this area.
Another idea the CIPD has put forward is to create a regional skills fund that will deal with skills challenges at a local level, helping smaller non-levy paying firms to invest in skills by providing better business support.
Lizzie Crowley, skills adviser at the CIPD, said:
Our research clearly shows the apprenticeship levy has failed to deliver what the Government said it would: more investment in workplace training.
For this to become a reality, we need to have a broader training levy that is much less prescriptive and gives employers more flexibility. This should also help to prevent employers from gaming the system as is currently the case.
With only 2 per cent of employers required to pay the apprenticeship levy, the money raised from it was never going to be enough to close the gap that’s been left by the long-term decline in training investment. Bu if we had more employers contributing, we could make up the shortfall and also help to boost regional investment in skills.
The CIPD report is based on 2,000 employers.