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Apprenticeships have plummeted since levy introduced

SMEs have been worst affected, with a 49% drop in apprenticeship starts between 2017 and 2021

Apprenticeship starts have fallen by 31% in England since the apprenticeship levy was introduced, according to the CIPD.

Employer training has also continued to decline more widely.

The study found 60% of UK employers undertook some training over the last 12 months compared with 66% in 2017.

Meanwhile, the number of skills shortage vacancies has more than doubled in England, from 193,800 in 2017 to 460,100 in 2022.

Lizzie Crowley, senior policy adviser at the CIPD, said the apprenticeship levy needs to be reformed to address skills shortages.

“Skills and labour shortages continue to be a real problem across the UK and all sectors of the economy, and we need to get apprenticeships and vocational education right if we’re to tackle these challenges. 

“Investment in training and development is critical in addressing skill gaps and improving workplace productivity, but the apprenticeship levy has failed to reverse the decline in training we’ve seen over the past two decades.”

Read more: Apprenticeship levy: where next in its evolution?

In its report, the CIPD recommended that the apprenticeship levy should be reformed to become more flexible, so that it can be used for different kinds of training.

Other recommendations were to introduce fast-track routes to apprenticeship qualifications for adults with existing workplace skills and tightened control on apprenticeship quality.

It also said policymakers should consider financial incentives for hiring apprentices, particularly for SMEs.

SMEs have been worst affected by the decline in training as apprenticeship starts fell by 49% between 2017 and 2021. There was a 14% fall in apprenticeship starts in large firms (250 or more staff).

Read more: Small businesses miss out on millions in apprenticeship levy funding

Crowley said SMEs need more support and guidance on how to develop and train talent.

She said: “Despite the importance of SMEs to the UK economy, there are still major barriers in their engagement with the current skills system, including its complexity, lack of resources, and poor people management capability. 

“Good quality advisory and business support services, aimed at boosting management capability and increasing understanding of skills development, are key to engaging small businesses

“Reforming the levy into a flexible skills levy will also help boost employer investment in the technical skills they need and free up more funding to invest in apprenticeships.”