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“Just a question for any other finance professionals,” asked an anonymous commenter on UKBF’s sister site AccountingWEB, “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.”
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”.