Employer concerns about the apprenticeship levy


Many employers have not responded well to the levy proposal. In January 2016, Carolyn Fairbairn, director-general of the CBI employers’ organisation wrote to the business secretary Sajid Javid to warn that the apprenticeship levy could impose huge costs on employers without any improvement in the training they provide, and urged the government to reconsider the rules on the levy to reduce the costs for employers.


She said: “For over a decade, businesses have been promised more influence over the qualifications on offer in the in-work education system — but programmes have changed too regularly, and government-inspired red tape has made the system difficult to deal with.”


The CBI has called for an “allowable expense” system so that companies can claw back some of the costs involved in running apprenticeships.


The CBI represents 190,000 businesses of all sizes and sectors which together employ nearly seven million people, about one third of the private sector-employed workforce.


In its response to the levy consultation, the EEF manufacturers’ organisation described the levy as “little more than a tax on business”. The industry body for engineering and manufacturing employers is sceptical about the government achieving its three million target which would require 600,000 new apprenticeship starts every year. “Companies have serious concerns as to how the scheme will work in practice,” said Tim Thomas, EEF head of employment and skills policy.


Employers have also raised concerns that the levy could divert funds away from other forms of training. A survey of large employers by the Chartered Institute of Personnel and Development (CIPD), the professional body for the human resources sector, showed that almost a third (31%) believed the levy would cause them to reduce their investment in other areas of workforce training and development.


A further 22% said the levy could encourage employers to accredit training they would be running anyway as apprenticeship schemes, while just 20% believed the levy would drive up quality of apprenticeship schemes.


The poll of 275 employers, conducted to inform CIPD’s response to the consultation, found employers were divided over the levy plans, with 39% in favour in principle, 31% opposed and a further 30% undecided.


“Our survey suggests that boosting both numbers and quality at the same time will be a significant challenge,” said CIPD chief executive Peter Cheese.


Vocational education organisation City & Guilds group chief executive Chris Jones said that employers must consider the quality of the apprenticeships they provide. “With annual productivity gains from training an apprentice averaging £10,280 per year, continued investment in apprenticeships makes sense. But the real challenge is increasing the number of high-quality apprenticeship placements and for that we need a sustainable, long-term funding solution," he said.


He added that the levy could be that solution, but it will only be successful if businesses support it. “The government needs to get the right balance between rigour and bureaucracy to make sure employers create quality apprenticeship places.”