Apprenticeship levy ‘not fit for purpose’, says CBI

The apprenticeship levy is not fit for purpose in its current form, Confederation of British Industry (CBI) deputy director general Josh Hardie has said.

Speaking this week, Hardie bemoaned the 41% drop in apprenticeship starts over the past year, describing it as a loss of opportunity for young people and those who want to progress in the workplace.

“And it shows that the levy in its current form isn’t fit for purpose,” Hardie (pictured) argued.

As it currently stands, employers with annual wage bills of more than £3 million are liable to pay the apprenticeship levy.

Set at 0.5% of their wage bill, employers must pay the apprenticeship levy into a fund each month. It can then be reinvested in apprenticeship training for their business.

This issue for Hardie and the businesses that he talks to is what is done with the apprenticeship levy once it has been paid. Hardie explained: “Recently, a big investor in R&D (research and development) told me they pay the levy and want to get more apprentices on board. They’re based in the Oxford-Cambridge corridor—so you’d think they’d be spoilt for choice when it comes to local training. But they aren’t, it’s all retail apprenticeships. And the levy doesn’t allow them to fund a local business initiative to change that.”

“Another member, a large insurer, runs a very successful and expanding apprenticeship scheme. Alongside it, they also run internships, traineeships and work placements—all well-established programmes developing talent, but none of it levy-compliant. The levy isn’t flexible enough to pay for any of that extra learning. It’s simply not working as it stands.”

Some respite came from the government’s recent announcement that it will release up to £80 million of apprenticeship levy funding to support small businesses in engaging an apprentice, but Hardie argued that this doesn’t go far enough. “Sounds great. But pouring good money into a bad system is like trying to bail out a sinking ship without plugging the leak.”

“We needed meaningful change. What we got was another missed opportunity—more wasted time when the clock is ticking. And as long as this continues, it will only discourage firms from engaging with formal training programmes.”

Hardie wants more of the apprenticeship levy freed up—more than 50%—so businesses can “work with others to create centres of excellence for training”.

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