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Apprenticeships fall due to levy confusion and costs, say experts

Levy confusion and costs may be behind the decline, but the drop could be temporary while firms clear out old, poor quality apprenticeships

Experts have reacted to a 59% fall in the number of people taking on apprenticeships since the apprenticeship levy was launched in April.

Just 48,000 people started an apprenticeship in the final three months of the educational year to July 2017, compared with 117,800 in the same period a year before, according to government data.

Trade body EEF blamed confusion around the levy for the decline, calling it “complex and time-consuming”.

Verity Davidge, EEF head of education and skills policy, said: “We’ve heard stories from companies who have hit a brick wall trying to get levy-supported apprenticeships off the ground - and not for a lack of trying. The numbers speak for themselves.”

She added: “Companies are having to tell would-be apprentices they can’t take them on because they can’t get support from the levy in time. That sends a dangerous message about apprenticeships when we’re trying to promote them to solve the skills shortage.”

CIPD skills adviser Lizzie Crowley said companies were being put off offering more apprenticeships by the cost of releasing the trainees for one day a week and having to shoulder 10% of their off-site training fees "whereas previously the vast majority would have received this free of charge".

The Association of Employment and Learning Providers (AELP) said it had made clear to the government what needed to change. "There needs to be appropriate flexibility of off-the-job training. In addition, employers without levy funding should not be charged for training 16-24 year old apprentices," said chief executive Mark Dawe. "Without these actions, we do not believe the government will reach their manifesto commitment."

Ben Rowland, co-founder of Arch Apprentices, said part of the drop could be attributed to small companies also now struggling to afford apprenticeships due to changes to the system. “Previously, training providers would receive money from the government to provide apprenticeships, then they would go out and try to engage employers and offer them the spaces on the courses," he told HR magazine. "But with the introduction of the levy, many training providers are receiving much less money than they were before. It's less viable for them to be trying to engage the smaller, non-levy paying firms."

"We are concerned that there isn’t enough funding for non-levy payers to do the programmes they want," he said. "This is also undoubtedly a part of the drop."

Rowland also agreed, however, with a Department of Education statement claiming that the drop was due to an inevitable period of adjustment, with the department stating: “It may take time for organisations to adjust to the new funding system, and so it is too early to draw conclusions based on the number of apprenticeship starts recorded since May 2017. I think the mantra that university is not for everybody is getting through, with more and more candidates seeing people come out with a degree but not a graduate-level job."

"Apprenticeship numbers weren’t supposed to fall, but it’s not a surprise, and not necessarily a bad thing, as it demonstrates that two good things have happened; employers have jettisoned low value programmes which they previously didn’t have to pay for, and have spent time thinking carefully about how to best use their levy,” said Rowland.

Jake Tween, head of apprenticeships at ILM, agreed. “On the surface, this looks like a disappointing start to this new era. But the slow uptake can, for the most part, be attributed to the fact that businesses – and in particular SMEs – don’t yet fully understand what they need to do to take advantage of the new system,” he said. “Let’s not forget that apprenticeship starts for February-April this year were up 47% year-on-year as employers rushed to get apprentices through the old system.

“Whenever any new legislation is introduced, it takes time for those affected to get to grips with what the change means for them. This is especially true when businesses have already such a full agenda. We’ve got to give employers time.”

The levy requires all employers with an annual wage bill of £3 million or more to pay 0.5% of their staff cost into an apprenticeship fund. Businesses can then draw on the fund – which is topped up by the government – to finance training.