Whitehall’s attempts to overhaul the apprenticeships system have so far lowered the number of apprentices starting schemes in the UK by one-quarter, according to the National Audit Office (NAO).
The number of starts in the academic year 2017/18 was 375,800, 26 per cent lower than the 509,400 starts in 2015/16 before the introduction of the so-called apprenticeship levy in April 2017, according to a report by the watchdog.
The apprenticeship levy charges all employers with an annual pay bill of more than £3m at a rate of 0.5 per cent of their total pay bill. The proceeds then go towards paying for more people to start apprenticeships at those companies.
The rate of starts would need to double for the government to meet its target of 3m new starts by March 2020, which is “very unlikely”, according to the NAO.
The take-up of levy funds is below what the Department for Education expected, the report added. In the financial year starting April 2017, levy-paying employers used nine per cent of the funds available to them to support new apprenticeships, equating to £170m of almost £2.2bn available.
Partly because of this, the department spent less on the programme than it budgeted. In the same financial year it spent £1.6bn, which was £4m less than its budget.
Amyas Morse, the head of the NAO, said today: “Despite making changes to the apprenticeships programme, the department has not enticed employers to use available funds or encouraged enough potential recruits to start an apprenticeship.
“It has much more to do to meet its ambitions. If the department is serious about boosting the country’s productivity, it needs to set out clearly whether its efforts are on track to meet that aim.”
Apprenticeships minister Anne Milton said: “The apprenticeship programme gives employers the opportunity to provide new and existing staff with a range of opportunities to gain skills in the workplace and makes sure we have long term investment in apprenticeships.
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“The number of people starting training on our new employer designed standards is rising year on year and we will continue to work with employers to help them develop their apprenticeship programmes. Apprenticeships enable people to get a great job and career, and give employers the skilled workforce they need.
“We have increased flexibility for levy paying employers so they can transfer 10 per cent of their levy funds to other employers and we will increase this to 25 per cent from April.”
Matthew Fell, chief UK policy director at the Confederation of British Industry, said: ‘‘Today’s report confirms what employers already know – that the Apprenticeship Levy is not yet working as intended and is holding back the Government’s welcome efforts to modernise the skills system.