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‘Failed’ apprenticeship levy lost employers £2 billion

Employers have lost £2 billion over the last two years due to the failing apprenticeship levy, according to the CIPD.

In March this year the CIPD said the levy had failed on every measure and needed to be reformed immediately.

Now, the body has found £1.99 billion of employers’ levy funds expired between May 2019 and March 2021 and were returned to the Treasury.

Employers are also spending increasing amounts on generic management apprenticeships.

Seeking ways to spend levy funds, overall employers spent £378 million spent on four generic management apprenticeship standards, to outline the skills needed for specific roles, between 2017 and 2019.

Ben Willmott, head of public policy at the CIPD, said plans expected in the Queen's Speech today (11 Tuesday) as part of the government's levelling up agenda will be undermined unless the apprenticeship levy is made more flexible.

He said: “The government’s ambition to revamp the further education system by boosting employer engagement with local colleges and investment in adult skills is exactly right.

“However, it will be fatally undermined unless the apprenticeship levy is reformed.”

Though employers doubled their expenditure on management apprenticeships, in the same two years, 2017 and 2019, the number of apprenticeships going to young people under the age of 19 fell by 8%.

Overall employer investment in apprenticeships, including for young people, and in skills more widely has fallen since the levy was introduced in 2017.

Willmott said turning the apprenticeship levy into a more flexible training levy would enable firms to invest in other forms of accredited training and development, which would maximise their ability to work with further education colleges and universities.

He said: “Apprenticeships are ideal to help young people develop the skills they need for a career in an occupation, but other forms of training and development are usually more suitable for existing and typically older employees and learners as they are more flexible and provide better value.

“Developing the skills of managers to manage people is an absolute priority for all organisations but there are much more cost effective and flexible forms of training to achieve this than through management apprenticeships.”

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