Warnings over apprenticeships after 27% fall in new starts

Updated: 

The Government has been accused of failing to act on "growing concerns" from industry about the apprenticeship levy after new figures showed a drop in the number of new starts.

There were 114,400 apprenticeship starts for the first quarter of the 2017/18 academic year, compared with 155,600 at this time a year ago, a decrease of 26.5%.

Business leaders have been warning about the complexity of the apprenticeship levy, which came into force in April last year requiring public and private sector companies with a pay bill of more than £3 million to contribute the equivalent of 0.5% of their pay bill to deliver training.

Seamus Nevin of the Institute of Directors said: "We already know from previous statistics that there was a 61% drop following the initial introduction of the Government's levy last April. Clearly the new system has failed to take off.

"The levy can be difficult to navigate and many employers still struggle to comprehend how the system is meant to work.

"13% of levy-paying IoD (Institute of Directors) members cannot recoup all the money they pay in because of glitches in the levy's pricing, while a further 11% of mostly smaller payers are having to write off their payments as a tax because apprenticeships are too expensive for their available funds."

Verity Davidge of the EEF manufacturers' organisation said: "Today's figures should act as a wake-up call to Government which has failed to act on industry's growing concerns around the levy.

"The fact that the drop isn't as huge as the previous quarter is by no means a cause for celebration as the numbers are a snapshot of the time when most apprenticeships begin.

"The only ray of hope we can find is the increase in the number of higher apprenticeships.

"This worrying trend is not just hampering employers' ability to get the skills their business needs, it is taking away invaluable opportunities for the next generation to undertake training and secure a future job.  

"It is clear the levy and wider reforms aren't working and need a radical rethink."

Minister for apprenticeships and skills Anne Milton said:  "The last year has been a period of significant change, it will take time for employers to adjust.

"But we must not lose sight of why we introduced our reforms in the first place - to put quality at the heart of this programme, and putting control in the hands of employers.

"It is right that they are taking their time to plan ahead, with two years to spend their levy funds, and maximise the opportunities an apprenticeship can bring for both the learner and employer.

"Feedback we've had shows employers are doing exactly that."

Petra Wilton of the Chartered Management Institute said: "The latest statistics on new apprenticeship starts are beginning to show some promising increases, and it is still less than a year since the introduction of the levy. "