EEF has responded to the government's consultation on the new apprenticeship levy funding guidance.
Key findings from EEF's recent apprenticeship levy funding survey
The guidance has not filled manufacturers with confidence
- Two in five (41%) said the guidance leaves too many questions unanswered.
- Over a quarter (28%) said the guidance has made their company more concerned about the levy.
- Only 25% said the government has answered their company’s outstanding questions on the levy.
- Some 13% said the guidance is too complicated for their business to understand how the levy will work.
- Only 3% said their company now feels fully prepared for the Apprenticeship Levy.
The delay to the guidance has had some, but limited, impact on companies’ apprenticeship recruitment
- Two-thirds (66%) said the delay hasn’t affected their recruitment plans.
- Over one in five (21%) however have deferred recruitment of apprentices.
- A handful (6%) have increased recruitment this year to be funded under the current model and 5% have decided against recruiting apprentices in the foreseeable future.
Greater flexibility will allow levy-payers to spend their vouchers
- Only 4% of respondents said their company is confident they will be able to use up all their levy vouchers.
- Seven in ten (69%) said that extending the use of vouchers to other training will give their company more confidence that they will be able to spend their levy vouchers.
- Two-thirds (66%) said allowing employers to use their vouchers on the wider costs associated with recruiting and training apprentices would allow them to do so and 25% said the government should extend their use to traineeships also.
- Over half (54%) said that extending the lifetime of the vouchers will enable employers to spend their vouchers and 33% said allowing the employer to agree their payment schedules with provider.
The levy won’t result in a large amount of new training
- Two in five (41%) of respondents will take no action in response to the apprenticeship levy.
- Almost half (45%) will look to turn existing training into apprenticeships.
- Just under one in five (19%) will increase manufacturing and engineering apprenticeship recruitment with one in five (20%) will increase apprentice recruitment in other disciplines.
Manufacturers maintain that a delay is needed
- Over half of respondents (57%) agreed the levy should be delayed until the system is fit for purpose.
- A quarter (24%) agree it should be delayed in light of economic uncertainty and one in five said it should be delayed until after the Government has identified its Industrial Strategy.
- Nearly one in five (18%) said it should be scrapped entirely.
EEF's key recommendations
1) Delay the apprenticeship levy – there remain major question marks over the design of the new levy and digital system. It lacks flexibility and does not give employers control of their own funds. Delaying its introduction would buy the Government some much-needed additional time to work with industry on ironing out some of the major wrinkles. The levy should also align with the academic cycle.
2) Extend the lifetime of vouchers for levy-vouchers – the average EEF member apprenticeship lasts up to 4 years, yet their levy vouchers will only last 18 months. Moreover, some companies (particularly mid-size companies) recruit every other year. This will make it increasingly difficult for levy paying employers to use their vouchers.
3) Give employers greater flexibility to spend their vouchers on training and training costs – Manufacturers are clearly not confident in spending their vouchers. Employers want to see greater flexibility on what they can spend their levy vouchers on to wider training as well as costs associated with apprentice recruitment and traineeships.
4) SMEs need further support to get involved in the design of new standards – the new funding model incentivises employers to deliver apprenticeship standards, which in general attract more funding. However, SMEs are not as engaged in this process as larger firms, particularly those in niche sectors. Government should work closely with trade bodies to increase SME involvement in this process, without burdening small employers.
Download our full response below.