Apprenticeship system not responding to employers’ needs, says report

Firms are being held back from attempts to increase apprenticeships because of the system’s “rigidity”, according to a new report.

A survey of 765 firms in England paying the apprenticeship levy found that almost half wanted to use money to invest in other forms of training such as professional courses.

Skills development organisation City & Guilds said its research suggested that nine out of 10 levy-paying employers want greater flexibility in how they spend their apprenticeship allowance.

The apprenticeship levy was introduced in April 2017. It requires businesses with an annual wage bill of £3 million or more to pay 0.5% of this amount into a fund which can be spent on apprenticeships and other eligible training.

Kirstie Donnelly, managing director of City & Guilds Group, said: “The turmoil we are facing, as a result of uncertainty around Brexit as well as the rapidly changing world we live in, means that it’s never been more urgent to improve the skills of our workforce and invest in home-growing the skills that we may no longer be able to import from abroad.

“Apprenticeships have a huge potential to deliver on this, but the system is still not responsive enough to the needs of employers.

“Businesses need more flexibility to use the apprenticeship levy in a way that will truly help them fill skills gaps, upskill their workforce and shore up their talent pipeline for the future.

“Although we welcome the Government’s commitment to introduce reforms, they are yet to set this in motion.”

The survey suggested that 95% of employers did not spend all their apprenticeship budget in the first year of the new system.

A Department for Education spokesman said: “The apprenticeship levy gives employers flexibility to provide their staff with a huge range of apprenticeship training opportunities.

“It helps them to get the skills their business needs in occupations from accountancy through to bricklaying, and at levels from GCSE-equivalent all the way up to degree apprenticeships.

“We are continuing to work with employers to build awareness on how businesses can use their apprenticeship levy fund.

“Businesses can now transfer up to 10% of their levy funds to other employers – this will be increasing to 25% from April 2019.

“We continue to work with business to make sure they make best use of the levy transfer and their own levy funds.”