Robert Lea, Industrial Editor
The Times
Josh Hardie CBI deputy director-general, said that the apprenticeship levy needed to refocus on quality rather than quantity and to introduce flexibility as to which companies can take advantage of it
Josh Hardie CBI deputy director-general, said that the apprenticeship levy needed to refocus on quality rather than quantity and to introduce flexibility as to which companies can take advantage of itCBI
The apprenticeship levy is broken and ministerial tinkering with the initiative is not fixing it, the CBI has said.
With the numbers going into apprenticeships plummeting year-on-year, and a chorus of angry voices from across business and industry saying the system introduced last April is not working, the employers’ trade body says the government must go back to the drawing board.
The CBI speaks for 190,000 business people and their companies. It has been a long-time critic of the scheme thought up by George Osborne, the former chancellor. The apprenticeship levy is a tax on companies to promote the take-up of more company training programmes for young workers.
Companies that want to train apprentices must pay the levy but then claim back funds to help with training. The scheme affects all companies with an annual pay bill above £3 million. The tax is levied at 0.5 per cent of payroll. Companies get back 100 per cent of funding for 16-to-18 year old apprenticeships on an approved scheme. For 19s and over, companies are expected to foot 10 per cent of the bill. It is operated by the Department for Education and HM Revenue and Customs.
Mr Osborne, now the editor of the London Evening Standard, unveiled the levy in 2015 with plans to raise £3 billion a year and with the promise of three million new apprentices by 2020.
In its first six months in operation from May to October 2017, the 162,000 new apprenticeships represented a 41 per cent plunge in numbers from 273,000 in the comparable 2016 period.
Latest official data show that in the first quarter of the current academic year, the number of new apprenticeships dived to 114,000 from 155,000 in the same period. of the previous year.
In a speech to a further education conference in Birmingham today, Josh Hardie, deputy director general of the CBI, said the apprenticeship levy needs to be recalibrated, focusing on quality not quantity and introducing flexibility so that it does not exclude companies.
He called for the “empowerment” of the Institute for Apprenticeships, set up by the education department to produce high-quality schemes.
Mr Hardie said the theory was fine but the execution was poor. “The apprenticeship levy could be a vital part of the skills system by rewarding those who do their bit and taxing those who do not, encouraging more investment.
“But the levy doesn’t do that. There’s been a 41 per cent drop in starts over the past year. That is a 41 per cent drop in opportunities for young people and those who want to progress in the workplace. And it shows that the levy in its current form isn’t fit for purpose.
“We need meaningful change. The levy’s design faults are serious but not insurmountable,” Mr Hardie said
The CBI wants flexibility on funding and for providers to produce schemes that businesses actually want. “The institute needs proper teeth as an independent skills regulator,” he said. “We need a system where business and people are able to influence changes and a real focus on the commercial understanding that companies are customers, and providers are suppliers.”
Neither the education department nor the Institute for Apprenticeships responded to the CBI’s criticisms.