HR · 24 November 2017

In-work training plummets following introduction of Apprenticeship Levy

The Apprenticeship Levy was brought in to help subsidise in-work training schemes at small firms
The Apprenticeship Levy was brought in to help subsidise in-work training schemes at small firms

The number of in-work training placements at UK businesses has plummeted since the introduction of the Apprenticeship Levy in April, government figures have shown.

According to the Department for Education (DfE), apprenticeship enrolments dropped 59 per cent in the final three months of the 2017 academic year. In the three months to July, only 48,000 placements were entered, compared to 117,800 in the same period in 2016.

Since April, employers with a payroll of over £3m have been charged 0.5 per cent on annual bills towards the apprenticeships levy, to fund the government’s target of three million new apprenticeships by 2020.

What smaller employers need to know about the new Apprenticeship Levy

For smaller employers, a new “co-investment” system was introduced in May. This means non-levy paying employers pay ten per cent towards apprenticeship training, with the remaining 90 per cent paid by government up to the maximum funding band.

For business owners with fewer than 50 staff, the Apprenticeship Levy will fund all training for 16 to 18 year olds, and 19 to 24 year olds with an Education Health Care (EHC) plan.

“We know that the last year has been a period of huge change for employers but it is right that employers are taking their time to plan ahead and maximise the opportunities the apprenticeship levy can bring,” the DfE said.

Responding to the decline in in-work training numbers, Mike Cherry, chairman of the Federation of Small Businesses (FSB), said questions regarding the Apprenticeship Levy should not detract from the flaws in the wider system.

He said: “Today’s figures have confirmed our fears over a significant drop in apprenticeships. Getting more people doing apprenticeships is critical, especially if we are to tackle the skills shortage biting many small firms.

“The apprenticeship levy isn’t solely to blame for this drop. The reality is that 98 per cent of firms don’t pay the levy, and these small businesses will be essential to the government reaching its target of three million apprenticeships by 2020.

“While many small firms are committed to apprenticeships, many are still overwhelmed by the complexities in the system. The government should make sure that when levy payers are able to share their digital vouchers they do so with small firms in their supply chain. Small firms should also be involved in the design of the new apprenticeship standards.”

The Apprenticeship Levy could help bring disabled talent into the workforce

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ABOUT THE EXPERT

Simon Caldwell is a reporter for Business Advice. He has a BA in politics and communications from the University of Liverpool, and previously worked as a content editor in the ecommerce industry.

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