CIPD research released in January 2018 found that almost a fifth (19%) of levy-paying firms don't plan to use it all to develop apprenticeships but will simply write it off as a tax. This was clearly not the Chancellor's intention when this was first announced in July 2015. In fact the goal was to have 3 million apprenticeships by 2020, a number that seems highly unlikely as we sit here today.
There is also a direct link to Brexit as well, we will see fewer workers from abroad in the near future and we need to improve the training on offer to its youngsters to address the pressing skills gap.
Employers are not happy, they think the system is bureaucratic and expensive. The same CIPD research found that 53% of employers paying the levy would prefer a training levy with only 17% supporting the current model.
Another worrying issue is that in industries where apprenticeships have been well established and a core route for talent to be trained and developed the sense is that the levy is damaging the image of the apprenticeships that have existed for years.
I have read quotes from senior HR professional who are reducing their L&D expenditure to offset the levy to remain cost neutral which was clearly not the government's intention.
It is early days but the data and feedback are suggesting some changes are required.
The early signs suggest things are not going to plan. The number of apprenticeships has fallen—down 40% in the six months after the introduction of the levy. Some of this may be because the system is still bedding in, and because the tougher provisions have made apprenticeships a costlier option for employers. But excessive bureaucracy has put off many firms, as has a reduced subsidy for small businesses, which do not pay the levy. And although higher standards have helped in some places, other training providers are simply rejigging existing courses to meet apprenticeship requirements. Several universities have relabelled their MBAs as apprenticeships, attracting a subsidy of up to 90%.
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