Levy to create apprenticeships risks being poor value for money, report warns

A Government levy aimed at helping to create three million apprenticeships risks being poor value for money and could damage the public sector, a new report warns.

A study by the Institute for Fiscal Studies (IFS) found that most of the £2.8 billion due to be raised in England by 2020 will not be spent on apprenticeships.

Government spending is only expected to increase by £640 million, said the report, adding there was a risk that the apprentice brand was becoming another term for training.

The target of 600,000 new places every year in this Parliament, a 20% rise on the 2014/15 total, risks increasing quantity over quality, the report added.

The think tank said the Government had failed to make a convincing case for such a rapid expansion.

Neil Amin-Smith, an author of the report, said: "We desperately need an effective system for supporting training of young people in the UK.

"But the new apprenticeship levy, and associated targets, risk repeating the mistakes of recent decades by encouraging employers and training providers to relabel current activity and seek subsidy rather than seek the best training.

"There is a risk that the focus on targets will distort policy and lead to the inefficient use of public money."

Liberal Democrat business spokesman Lord Foster of Bath said: "It's time the Government came clean and called the apprenticeship levy exactly what it is - another payroll tax on business.

"The new tax has nothing to do with ensuring British business gets the best trained, most skilled staff.

"It's simply a way of the Government meeting its own unnecessary targets, at the expense of other forms of training."

Gordon Marsden, shadow skills minister, said: "The IFS are confirming what we have consistently warned the Government about over the past 12 months.

"Rushing to hit a three million target without sorting out the quality or increasing the proportion of apprenticeships under the age of 25 means they risk failing to deliver the long-term skills strategy we need."