New training levy under fire as number of new apprenticeships plunges by 35 per cent

The number of people starting new apprenticeships has fallen by a third, igniting worries that the government’s new apprenticeship levy is having an adverse effect on companies taking on apprentices.

According to Department for Education figures, apprenticeship starts in November 2017 were down by 35 per cent, when compared with November 2016.

The latest decline follows an even more dramatic fall recorded for the May to June 2017 quarter, when the number of young people starting apprenticeships fell by 59 per cent.

The apprenticeship levy, which came into force in April 2017, requires all employers in the UK with an annual wage bill of more than £3m to pay 0.5 per cent of their payroll towards funding apprenticeships.

The money can then be claimed back to fund training for new or existing employees.

The levy was introduced as part of the government’s “biggest shake-up of skills for a generation” and is at the centre of the government’s plans to double investment in apprenticeships from £1.25bn (in 2010) to £2.5bn by 2020.

Dame Judith Hackitt, chair of the manufacturer’s body EEF, says the levy is working against the aims it is trying to achieve.

“While the levy has laudable aims, its impact on employers has been disastrous,” she says.

“It is complex, companies are unable to access their funds, and many view it as another tax on business. As a result, we have seen new starts collapse, with many companies postponing or halting apprenticeships.”

Neil Carberry, director of the Confederation of British Industry (CBI) added that the levy’s focus on quantity is misguided.

“For the Levy to be a success, it must deliver long-lasting careers and close skills gaps, not just create more apprenticeships,” Carberry says.

“Shifting the focus onto quality is essential to delivering much needed stability to England’s skills system, that’s why business is focused on helping the Institute for Apprenticeships get this right.”

Sue Husband, director of the National Apprenticeship Service, however, insists the levy will transform the way on-the-job learning is delivered.

“The levy will dramatically improve the quantity and quality of apprenticeships, benefiting people, businesses, communities and our economy,” she said.

“Through the levy, £2.5bn will be invested to support the delivery of an additional three million apprenticeship starts in England by 2020.

“The levy offers employers more control over apprenticeships to boost skills gaps within their organisation and tailor training opportunities to suit their needs.”