Company rebrands of existing training cast doubts on apprenticeship levy efficacy

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A majority of firms will use the apprenticeship levy to pay for existing training (Source: Getty)

Almost two-thirds of firms plan to rebrand existing training schemes to fall under the apprenticeship levy rather than introducing new programmes, according to a survey published today by the Confederation of British Industry (CBI) and Pearson Education.

While 58 per cent of firms plan to increase apprenticeship programmes, the proportion looking for ways around the rules – as many as 63 per cent – casts doubt over the ability of the levy to boost UK productivity. More than a quarter of companies plan to cut back on non-apprentice training, the survey found, which could also detract from any boost to the skills of the British workforce.

The apprenticeship levy on employers with a payroll greater than £3m came into effect in April this year, as part of the government’s attempt to boost productivity.

More than four-fifths of eligible businesses now operate an apprenticeship scheme, the CBI/Pearson survey found, but 49 per cent have found difficulty in recruiting apprentices in the face of historically high employment levels.

Read more: One in four UK firms never consider recruiting apprenticeships

The 0.5 per cent charge on company payrolls, announced in 2015 by former chancellor George Osborne, is expected to raise £2.8bn a year when fully implemented, according to the Institute for Fiscal Studies (IFS).

However, the measure proved controversial even before its introduction, with IFS forecasts showing the money raised will not all be used for productivity-boosting investment in skills.

The implementation of the levy risks not addressing the causes of the UK’s productivity problem, the CBI said.

Josh Hardie, CBI deputy director-general, said: “Growing our skills base needs a greater focus on what skills provision actually achieves for a person or business, instead of just the existence of training or apprenticeships being judged a success.”

Steve Hill, external engagement director at the Open University, which also provides training, said: "Faced with a shrinking talent pool, exacerbated by the uncertainties of Brexit, it is important that employers invest in developing their workforce. Organisations need an agile workforce that can embrace change and meet new challenges."

Read more: How businesses can reap the benefits of Britain’s apprenticeship revolution

The introduction of the apprenticeship levy comes at a time employment practices are coming under increased scrutiny.

A long-awaited review of working practices by Matthew Taylor, chief executive of the Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA), is expected to be published as early as this week. The report, commissioned by Prime Minister Theresa May, is expected to make recommendations on workers’ rights and the so-called gig economy.

A survey by accountants PwC showed improved employment rights could make people more likely to consider roles in the gig economy for companies such as Uber and Deliveroo.

Gig economy jobs are generally lower-skilled, lower productivity roles, with workers paid as contractors rather than employees.

Read more: Don't miss out: City apprentices are good for more than just a tea round

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