Prime Minister Rishi Sunak’s package of measures to boost the number of UK apprenticeships is not enough to fix the failing apprenticeships levy, the CIPD has said.
From April 1st, the government will fully fund apprenticeships in small businesses by paying the full cost of training for anyone up to the age of 21, Sunak said yesterday, as he unveiled £60 million of new investment to support up to 20,000 more apprenticeships.
The money will “guarantee” that employers who want to offer apprenticeships will have access to the funding to deliver them, the government said.
From the start of April, the government will also increase the amount of funding that employers who are paying the apprenticeship levy can pass onto other businesses. Apprenticeships can currently be funded by a levy paying employer transferring up to 25 percent of their unused levy to a different employer.
As a result of the changes large employers who pay the apprenticeship levy will be able to transfer up to 50 percent of their funds to support other businesses, including smaller firms, to take on apprentices. The government said this will help SMEs hire more apprentices by reducing costs and enabling more employers to get the skilled workers they need while unlocking more opportunities for young people in a huge range of sectors, industries, and professions.
“Hundreds of large levy-paying employers have already taken advantage of the opportunity to transfer their unused levy funds to other businesses. As of [December 2023], 530 employers including ASDA, HomeServe and BT Group have pledged to transfer over £35.39 million to support apprenticeships in businesses of all sizes since September 2021,” the government said.
Ben Willmott, head of public policy at the CIPD, welcomed the plans to fully fund apprenticeship training in small firms, saying it would go some way to encouraging more smaller businesses to take on apprentices and ensuring that it is younger people that benefit from these opportunities.
“However, the additional 20,000 apprenticeships it’s hoped these changes will help create isn’t nearly sufficient to address the collapse in the use of apprenticeships we’ve seen among SMEs and young people since 2017,” he said. “This gap in apprenticeship provision will largely remain.
“Likewise, increasing the proportion of levy funding larger employers can transfer to smaller firms to help them take on apprentices is also unlikely to have a big impact as to-date few levy paying firms have used the levy transfer mechanism at all.
“Tackling these issues and the ongoing fall in investment in workplace training requires more fundamental reform of the apprenticeship levy to make it more flexible and responsive to employer and learner needs.
“A more flexible skills levy would mean employers could use levy funding to develop existing staff through other forms of accredited training and skills development which are cheaper and usually much more suitable for employees aged 25 and over. This would at the same time leave more money to invest in apprenticeships for young people who most need and benefit from them.”
