CIPD: Apprenticeship levy requires reform

More than half of employers currently paying the apprenticeship levy want it replaced with a training levy, according to a new Chartered Institute of Personnel and Development (CIPD) survey.

Among employers that currently pay the apprenticeship levy, 53% of respondents to CIPD’s survey said they would prefer a training levy.

Just 17% supported the apprenticeship levy in its current form.

Employers with annual pay bills of more than £3 million must spend 0.5% of the total on the apprenticeship levy, which is being used to train millions of new apprentices by 2020.

The CIPD survey of more than 1,000 employers showed that nearly half (46%) of levy payers will be encouraged to simply re-badge current training activity in order to comply with the new regulations.

Among that group, more than half (52%) will re-badge existing training activity into level 2 apprenticeships, equivalent to five GCSEs.

Commenting, Lizzie Crowley, skills adviser at the CIPD, said: “Our research shows that the straitjacket of the apprenticeship levy is forcing many firms to re-badge a lot of their existing training as apprenticeships, as they seek to claw back the levy they pay. In many instances this is not adding any additional value and is creating a lot of additional bureaucracy and cost.”

“Apprenticeships are extremely important, but other forms of training are equally valuable and often more flexible and better suited to the needs of organisations. A move to a more flexible training levy would have the effect of continuing to prompt greater employer investment in skills, including apprenticeships, but in a way that is much more responsive to employers’ needs.”

The findings, from the CIPD’s report, Assessing the early impact of the apprenticeship levy, come after a sharp decline in the number of apprenticeship starts, with just 48,000 new apprenticeship starts between May 2017 and July 2017, a 59% drop on the same period in 2016.

Crowley continued: “Evidence from our report and the latest official statistics suggest the levy will also continue to drive the creation of far too many level 2 apprenticeships, which offer much poorer returns to individuals in terms of future wages and often provide limited progression opportunities.”

“The government needs to seriously review the levy to ensure it is flexible enough to respond to employers’ needs and to drive the greater investment in high quality training and workplace skills needed to boost UK productivity.”

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