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Apprenticeship levy divides opinion

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The planned apprenticeship levy has divided opinion, according to a survey of large employers by the CIPD

Two-fifths (39%) of employers are in favour of the levy, 31% said they are opposed and a further 30% are undecided. The levy, scheduled to be introduced in 2017, is designed to increase investment in training and apprenticeships. The consultation on the implementation of the levy closed October 2.

Under one-third (30%) of organisations believe the levy will encourage them to develop an apprenticeship programme to help build key skills, but the same number (30%) think the levy will help increase the quantity of apprenticeships.

Some respondents do not believe the levy will have a beneficial impact on the UK workforce. Almost a third (31%) of organisations think the levy will cause them to reduce their investment in other areas of workforce training and development, and a further 22% believe the levy could encourage employers to accredit training they would be running anyway as apprenticeship schemes. Just one in five (20%) said the levy will drive up the quality of apprenticeship schemes.

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

“If the government is serious about raising the quality of our apprenticeship system it is important the levy is weighted towards increasing the number of apprenticeships at or above level three,” he said.

“It’s also important the apprenticeships levy is not regarded as a solution in itself to the skills and productivity challenges facing the UK. Apprenticeships are important, but to ensure that people’s skills are developed and used effectively in the workplace we also need to prioritise investment in organisations’ leadership and people management capability.”

The CIPD suggested that the government should consider weighting the levy funding to encourage organisations to invest more in level three and above apprenticeships. It said this would still enable businesses to use an agreed maximum proportion of their levy funding for level two apprenticeships, but would require them to use the remaining balance for level three and above apprenticeships.

It also recommended an increased focus on encouraging more universities and further education institutes to work with local employers to develop higher-level apprenticeships.

Katja Hall, CBI deputy director-general warned that the levy may not be effective at raising quality. “Levies tend to drive a compliance culture rather than deliver the skills needed on the ground," she said. "Firms must and do pay their way, but plans on how to fund apprenticeships must go hand-in-hand with raising the quality of schemes.

“Businesses need to be reassured that a levy is not just a new tax, so all funds must be ring-fenced and protected. We must ensure this does not become a box-ticking exercise aimed at simply boosting numbers, without any real thought to the quality of experience for apprentices and firms.

“Employers have a critical role in boosting UK skills, but to do this they need real control. If business is paying politicians must let go of the reins."

The CBI is calling for the rate to be set by a new Levy Board – independent of government and providers – at a level that is reasonable to achieve the government’s aim. It also wants to ensure that a share of the funding raised by the levy directly supports vocational training and apprenticeships that deliver the higher level skills businesses and the economy need.