The apprenticeship levy is failing to deliver on government promises to boost skills and spending on workplace training, according to research from the CIPD.
The key objectives of the levy were to increase apprenticeship numbers and investment in workplace training, which was in a 20-year decline when the levy was introduced in April 2017.
But the CIPD’s new report, Addressing employer under-investment in training: The case for a broader training levy, described this as an ’empty promise’.
It found that fewer than a third (31%) of the 2,000 levy-paying employers surveyed said the scheme will incentivise them to increase the amount of training they offer, down from 45% in 2017.
The report also showed that nearly six in 10 (58%) levy-paying employers either believe the levy will have no impact on the amount they spend on training (49%), or will actually lead to a reduction in training spend (9%).
Employers have invested in fewer apprenticeships since the levy’s introduction,
It also revealed that the way the levy is designed currently is incentivising employers to use their funds in counterproductive ways. A fifth (22%) of employers said they use their levy money on training that would have happened regardless, and 15% said they use the scheme to accredit skills that staff already have. A further 14% reported that the apprenticeship levy directs funds away from other forms of training that are more appropriate for their organisation.
The CIPD is calling on the government to replace the apprenticeship levy with a broader training levy, which would enable organisations to fund both apprenticeships but also other forms of accredited training better suited to their needs.
A portion of the training levy pot could also be used to create a regional skills fund to address skills challenges at a local level, such as by helping smaller non-levy-paying firms invest in skills, the report added.
The CIPD said it also wants the levy to cover all employers with a headcount of 50 or more. This would double the amount raised by the scheme to £5 billion, which would help make up the shortfall from the decline in investment in training over the past two decades, the body said.
Lizzie Crowley, skills adviser at the CIPD, said there is a case for more flexibility around apprenticeships. “Our research clearly shows the apprenticeship levy has failed to deliver what the government said it would: more investment in workplace training. For this to become a reality we need to have a broader training levy that is much less prescriptive and gives employers more flexibility. This should also help to prevent employers from gaming the system, as is currently the case,” she said.
Crowley outlined the case for obliging a larger pool of employers to invest in the levy:
“With only 2% of employers required to pay the apprenticeship levy, the money raised from it was never going to be enough to close the gap that’s been left by the long-term decline in training investment. But if we had more employers contributing we could make up the shortfall and also help to boost regional investment in skills.”