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Apprenticeship levy is "a brick wall"`

28th Nov 2017
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Brick wall

“Just a question for any other finance professionals,” asked an anonymous commenter on Any Answers, “has anybody who is currently paying the Apprenticeship Levy actually managed to use any of the funds for training?”

For the commenter, accessing the much-vaunted fund had proven difficult. “[I’m] on the verge of just giving up and writing off the payments as yet another tax,” they wrote.

It seems like this AccountingWEB poster wasn’t the only one. The post, it turns out, was a bellwether for a pretty damning announcement just three days later. According to the latest data from the Department for Education (DfE), the UK saw a 59.3% decline in apprenticeship starts between May and July 2017 (quarter 4 of the 2016/17 academic year).

The UK wide apprenticeship levy came into force on 6 April 2017. Correlation isn’t causation of course, but such a sharp decline in apprenticeships in the immediate wake of the levy’s introduction is worrying.

The levy requires businesses with a pay bill of more than £3m to put 0.5% of their payroll towards the scheme. The government wants to raise £3bn annually for four years to fund 3m places for apprentices. The scheme requires one day a week of off-site training and employers with 50 or more headcount must contribute 10% of the cost of training.

The DfE’s figures suggest businesses have found the transition difficult.

In its own report, the DfE addressed the possible link between the apprenticeship levy and the steep decline, saying: “It may take time for organisations to adjust to the new funding system, and so it is too early to draw conclusions based on the number of apprenticeship starts recorded since May 2017.”

The manufacturer’s union EEF was less measured in its criticism, however. Verity Davidge, EEF’s head of education and skills policy said the levy has, in some the cases, resulted in manufacturers being unable to offer and deliver apprenticeships.

Davidge added: “[The] figures showing a 59% drop are shocking they are frankly unsurprising as we continue to hear stories from companies who have hit a brick wall in trying to get levy-supported apprenticeships off the ground.

“Accessing the funding has proven complex and difficult to unlock in time and employers have struggled to get their heads down the complex rules and restrictions in accessing funds. As a result some apprentices have been told that their apprenticeship has been put on hold for now which is clearly a huge disappointment for young people who had effectively been offered a job – only to have their hopes dashed.”

AccountingWEB member Della Hudson lamented her own struggles with the levy on Twitter:<script async src="" charset="utf-8"></script>

 ​Last week’s Budget acknowledged the levy, but only in passing. It steered well clear of changing or adapting the process. According the EEF’s Davidge, “The Budget was a missed opportunity for government to make the major changes needed now to ensure that industry can continue to deliver high quality apprenticeships and ensure employers have the skills they need now and in the future.”

The government will definitely hope the decline is just a flash in the pan. Much has been made about the importance of apprenticeships to the creaking UK economy. In the Budget report, the Treasury singled out apprenticeships as a central part of the “plan to address the UK’s productivity challenge”.

Replies (4)

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Hallerud at Easter
28th Nov 2017 21:12

I suspect HMG might have been well served listening to Ella,

"Oh, 'tain't what you do; it's the way that you do it
'Tain't what you do; it's the way that you do it
'Tain't what you do; it's the way that you do it
That's what gets results"

Politicians need to learn that the way to implement change is put in place little regulation, yes, it will likely be abused by some, but it will stop discouraging others and the overall outcome will be larger and more effective.

They need to appreciate the risk reward equation, business usually achieves despite government not because of government.

Maybe MPs and Civil Servants should be made to run a business as part of their training, it could be a qualification for their role.

Thanks (1)
By ChrisKH
30th Nov 2017 10:38

Training providers are way behind the mark in offering suitable courses that can be attended and consequently there is limited availability, which may account for the drop-off whilst people wait for them to catch up.
It's also far too difficult to tap into and a good proportion of professional firms are resigned to just writing it off.

Let's face it, it's just a tax with another name.

Thanks (0)
By LW64
30th Nov 2017 10:52

You have to pay it so if you don't spend it, it IS just another tax.
I think that it is hugely misunderstood.
Yes we have regular apprentices but we also use it for upskilling the existing workforce.
You can use it for HNC/HND even Management training through MBA.
Talk to the Apprentice Levy Board.
Your money is there, use it or lose it.

Thanks (0)
By rememberscarborough
01st Dec 2017 09:32

Suspect the original poster got the government's plan nailed on first time - just another tax....

BTW - wonder what those big construction firms will do about trying to recover the costs from their supply chain like they've illegally done with the CITB levy for so many years?

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