UK Edition
New fall in apprenticeship numbers strengthens calls for rejig of system
The number of apprenticeships being started has suffered its biggest fall yet, plunging 52pc, boosting industry’s demands for the newly introduced levy system which funds the training to be reformed.
New data from the Department for Education showed 23,900 apprenticeships were started in March, less than half the 50,000 the same month a year ago.
Starts for the year-to-date were 261,200, down from 362,400 for the same period in 2016/17 – a 28pc fall.
The decline is being blamed on the apprenticeship levy introduced last April. This requires employers with an annual wage bill of £3m or more to pay 0.5pc of payroll into a fund to invest in jobs and training.
Employers can claim from the fund to pay for apprentice training but companies say the system is inflexible and too complex to navigate. Many see it as another tax on industry, as the Government takes any funds not spent within two years.
Problems faced by companies paying the levy have driven Chancellor Philip Hammond to funnel £80m to smaller businesses to help navigate the complex system.
Trade groups and training bodies have been campaigning for the a rejig of the levy to make it more workable.
Responding to the latest decline, the British Chambers of Commerce called it a “clear sign something has gone wrong with the levy”.
“Businesses want to make the system work but the system needs reform,” said BCC head of skills Jane Gratton. “Government needs to listen to the business community, and work with us to make the levy system work better for everyone.”
The British Retail Consortium – whose supermarket members are likely to be some of the biggest contributors to the fund – said the system must be made more flexible. It wants to be able to use the fund to “backfill” positions on the shop floor while apprentices are away training.
City & Guilds said the new system “must not be written off”, but the training body added it “could not ignore signs the system as it is currently structured isn’t working”.
Earlier this week Tesco and Barratt chairman John Allan said ministers could “fix the levy in three months if they put their minds to it”.
Mr Allan added: “If you don’t want business to give up on this and treat it as just a tax you have got to make these simple changes. I think most business would agree with it.”
Skills Minister Anne Milton defended the levy, signing an open letter calling for support for “employers making use of the levy”.
“We believe that the apprenticeship levy gives employers a real opportunity to invest in training, bringing the well-recognised enthusiasm and new ideas of apprentices to their business,” the letter continued.
However, the latest fall puts the Government’s target of 3m people starting apprenticeships by 2020 in further danger.
Ms Milton has previously warned that ministers do not want to see people "sacrificing quality for quantity" when it came to apprenticeships, and said that it is wrong to focus on the declines in the number of training programmes being started.