Industry highly sceptical about proposed apprenticeship levy

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Employers fear quality will be compromised in favour of quantity.

Britain’s manufacturers are sceptical about the proposed apprenticeship levy perceiving it is little more than a tax on business that will, as currently proposed, do little to raise the quality of Apprenticeships and could have the opposite effect.

The concerns were expressed by EEF, the manufacturers’ organisation, in its response to the Government’s consultation on the levy which closes today. The proposal was announced by the Chancellor of the Exchequer in the summer Budget.

Commenting, Tim Thomas, EEF Head of Employment & Skills Policy, said:

“Companies have serious concerns as to how the scheme will work in practice and perceive it is simply a tax on business which will do little to improve the quality and quantity of apprentices we urgently need.

“If this proposal is to avoid being a pile them high, sell them cheap approach and actually increase the quality of apprenticeships as well as hitting the government’s 3 million target, then the government must sit down with employers as a matter of urgency to design a workable scheme.”

According to EEF, manufacturers are already investing heavily in Apprenticeships with three quarters of large and medium size companies and half of small companies planning to recruit in the next twelve months. If the target for government is to create 600,000 starts per year towards the overall target of 3 million EEF believes 120,000 should enter engineering and manufacturing. Any proposed levy system should operate in way that ensures government meets this target.

However,  as the scheme is currently designed employers fear losing out financially as there is little evidence to suggest that one of the main aims of the new scheme, “that employers offering Apprenticeships will get back more than they put in”, will be met. On the assumption the levy is 0.5% of payroll, companies over 250 employees would have to double the number of apprentices they recruit with one company saying to ensure they don’t lose out financially they would have to increase their intake from 16 to 112 a year.

Given the cost of a 4 year Apprenticeship companies only recruit and invest in Apprenticeships when there is a clear business case for doing so and are unlikely to offer more than they need.

Furthermore, manufacturers do not think the proposed levy will increase the quality of apprenticeships or, apprenticeship provision. Instead, the levy has the potential to have a detrimental impact on quality as, outside of manufacturing, there are fears that in order to claim back the levy companies in other sectors will rebadge any training as an apprenticeship.

According to EEF, this will have a damaging impact on quality, the apprenticeship brand and undo the good work that had been done under the last Parliament to increase quality in apprenticeships.

In its response EEF has made the following recommendations for re-designing the scheme to address employers’ concerns:

  1. The levy contributions from larger firms must not be used to fund non-levy payers.

  2. Government must meet all the training costs needed for level 2 English and maths and other functional skills.

  3. Every £1 paid into the levy must be spent on training – with Government funding any administration costs and no quango intermediaries involved.

  4. The levy must deliver the announced policy commitment that employers can get back more from the levy than they pay in. Should this result in the levy being overspent, then Government must subsidise the overall funding pot to ensure employers can continue to recruit apprentices as their business needs.

  5. Those employers paying into the levy must have flexibility on what it is used for, including costs associated with training apprentices.

  6. Government must not take this policy is isolation. There is an immediate need to address issues such as increasing the quality and quantity of the candidate pool and access to quality, relevant provision.

  7. The levy, and the vouchers, must be simple for employers to operate.

  8. The levy, and its rate, must remain predictable and stable over time.

  9. Employers should be involved in setting the levy rate, and deciding upon its distribution, which could include all forms of vocational training, and be free to allow greater support for employers providing higher quality apprenticeships.

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