Most employers have cut training under apprentice levy, report finds

Most employers have either cut or frozen workplace training funded by the government’s contentious apprenticeship levy because they do not think the arrangements fit with their operations, according to new research.

The government predicted greater spending on workplace training and a rise in the number of apprenticeships when it first introduced the levy on employers in England with annual payrolls of more than £3m in April 2017.

A boost to UK workplace training was essential because of the decline in spending in this area by employers over the last 20 years, said the Chartered Institute of Personnel and Development, the association for human resources professionals.

But in a survey of 2,000 levy-paying employers by the CIPD, 58 per cent said spending on workplace training in their organisation had either flatlined or declined since the levy scheme was introduced.

A fifth of those asked said they used their levy money on training that would have happened regardless and 14 per cent said the levy had directed funds away from other spending on training more appropriate to their organisation.

The CIPD report recommended widening the definition of the type of training that levy-payers can spend the funds on beyond just apprenticeships.

It also called for the levy to be widened to employers with 50 members of staff or more even their wage bill is below the £3m minimum threshold, while doubling the amount existing levy-payers must set aside to 1 per cent of the wage bill.

This would not only encourage more spending on training, but would help avoid a key risk under the existing system that spending on the more expensive degree-level apprenticeship programmes would bust the levy budget, according to the report.

Many other countries, notably France and Denmark, have better functioning apprenticeship levy systems, according to Lizzie Crowley, CIPD skills adviser.

“Our research clearly shows the [UK] apprenticeship levy has failed to deliver what the government said it would,” Ms Crowley said. “To make it better for employers we need more flexibility in how they can spend their money.”

Broadening the definition of workplace training beyond apprenticeships could also encourage employers to fund shorter executive-education classes to cover key skills in management and leadership rather than spending money on MBA degree courses, Ms Crowley added.

“With only 2 per cent of employers [currently] required to pay the apprenticeship levy, the money raised from it was never going to be enough to close the gap that’s been left by the long-term decline in training development,” Ms Crowley said.

“If we had more employers contributing we could make up the shortfall and also help boost regional investment in skills.”

In response to the CIPD’s report, the government declined to address the specific issues raised but in a statement Anne Milton, the apprenticeships and skills minister, said: “We have listened to employers and provided them with more flexibility about how they can use their levy funds. Employers now have up to 24 months to spend their funds and can transfer up to 25 per cent of their funds to other employers.

“We will continue to work closely with employers to help them take advantage of the levy and wider funding changes, to invest in the long-term skills needs of their business.”