EEF response to the apprenticeship levy consultation

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Manufacturers have a proven track record in offering high-quality apprenticeships. Over seven in ten EEF members offer apprenticeships. There is some difference by size with 92% of large manufacturers stating they offer apprenticeships to bring in new skills to the workforce compared to 78% of medium size companies and 62% of small firms.

Apprenticeships give manufacturers the opportunity to shape their training programmes so they are confident that the learner will make every success in the job role offered to them upon completion.  Three-quarters of EEF members saying all their apprentices stay with them after they have finished their apprenticeship, it is an investment that clearly pays off. Manufacturers also see apprenticeships as a way to secure the next generation of workers the industry needs with almost half saying they offer apprenticeships to get more young people into manufacturing.

Manufacturers support the government’s ambitions to create more high quality apprenticeships, such as those in manufacturing. Government’s three million target will be challenging. Manufacturers are nevertheless willing to play their part and support the creation of a number of new quality apprenticeships with government support. Delivering quality apprenticeships must remain the government’s priority, above quantity. Manufacturers see quality as defined by outcomes – likely to be influenced by the length of the apprenticeship, level of qualification attained and career prospects (long-term employment, opportunities for career progression, salary levels) which result from the successful completion of the apprenticeship. It is against this background that EEF is responding to this important consultation.

Manufacturers have a proven track record in offering high-quality apprenticeships. Apprenticeship reform, including the proposed new levy, must then better support the creation of more apprenticeship starts in industries such as manufacturing, which deliver gold-standard apprenticeships. We therefore want to see a commitment from government to better support the manufacturing industry to increase the number of apprenticeships to represent 20% of all starts – up from the current 15% of all starts. If the target for government is to create 600,000 starts per year (to achieve its 3 million target), we would want to see 120,000 of them in engineering and manufacturing technologies. Any proposed levy system must operate in a way that ensures the government meets this target.

The stated objectives of the levy are to increase the level of employer investment and increase the number of quality apprenticeships starts over the Parliament to 3 million. There is a real risk however, that the levy - in its current form - will lead to some employers rebadging training as an apprenticeship or reducing their investment in high-quality, long-term apprenticeships, simply in order to off-set the levy. Some may disengage with apprenticeships altogether.  Neither of these actions will result in meeting the government’s 3 million target or indeed our own target as stated above. The case that a levy, in the form which has been announced, will lead to the creation of 3 million quality apprenticeship has not therefore yet been made.

There is a perception that the levy is a tax, and comes at a time when business costs are set to rise. The potential loss of tax relief on employer pension contributions, the impact for some of the new National Living Wage, and the new skills surcharge on those recruiting non-EEA workers together create a perception that the new government is burdening business unreasonably.  

 

However, given the commitment expressed by the government to pursue an apprenticeship levy, we have made the following recommendations:

  1. The levy contributions from larger firms must not be used to fund non-levy payers. Non-levy payers must continue to be supported directly by government.
  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 apprenticeship provision– 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, of all sizes, 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.

 

Read our full response below.

Author

Head of Education & Skills Policy

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