provide an insight into why, as 27% of respondents questioned how beneficial an apprentice would be to their organisation, viewing the levy as a tax rather than as an incentive to train their staff.
Where an employer’s wage bill exceeds £3 million per year, they are required to pay the equivalent of 0.5% of their annual pay bill into the apprenticeship levy pot. These funds can then be invested into the training and development of staff. If the money isn’t spent after two years, or 24 months, then the organisation will forfeit the funds and the money will be offered to smaller businesses to help with the training and development of their staff.
People Management spoke to the Managing director of City & Guilds group, Kirstie Donnelly, who was not surprised by the findings of the research, and she commented:
“Post-election, the new government should apply more ‘carrot’ and less ‘stick’ and give greater flexibility to employers in the apprenticeship system, allowing them to exercise choice – within a clear set of parameters – in how they spend the levy.” She also addressed the fact that City & Guilds research highlighted the fact that 95% of levy-paying employers did not use their whole allowance in the first year, which shows that the latest research demonstrates a continuing trend. There have been worries that the levy funding is being used to train employees who are already well established, with extensive knowledge in their fields, and not on assisting with those who need more junior level training. This was not the intention when the apprenticeship levy was originally introduced. It is also of note that the funds within the apprenticeship levy pot are currently running low because smaller businesses now have the option to access the funds forfeited from larger organisations who did not utilise their allowance. Ahead of the general election on 12 December 2019, the Conservatives, Labour and the Liberal Democrats have pledged to review and amend the apprenticeship levy considering the concerns around how it is being used.
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Apprenticeship levy is being spent on ‘false apprenticeships’, according to thinktank report 6 January 2020
A report published by EDSK, an independent thinktank, has suggested that half of apprenticeship courses that have started since the introduction of the levy back in April 2017 are ‘fake’.
Up to £1.2 billion has been spent by employers and universities who are “inappropriately labelling” training courses as apprenticeships in order to gain access to the funds of the levy “when they are nothing of the sort”. Tom Richmond, director of EDSK, said: “Instead of supporting the government’s efforts to improve technical education for young people, the evidence shows that some employers and universities are abusing the levy by rebadging existing training courses and degrees as ‘apprenticeships’ for their own financial gain.”
He also commented that the apprenticeship levy had become a “farce”.
The report, written by Mr. Richmond, identified three different types of ‘fake apprenticeship.’ It suggested that £235 million of levy funding had been spent on what it deemed as low-skilled and generic roles which did not require training, such as working in a shop, serving behind a bar or playing football. A further £551 million was spent on management training and professional development courses, e.g. retail management. The third category related to bachelor’s degrees and master’s level programmes and therefore would be classed as advanced and involve highly technical training - they would be worlds apart from the junior and entry level courses that the levy was intended to fund. There was no concrete spending figure provided for the third type of ‘fake apprenticeship’ included in the report. The study also found that the most frequent use of apprenticeship funding was for “team leader / supervisor” training, which accounted for nearly one in ten of apprenticeships. This suggests, again, that a substantial number of courses are being aimed at more experienced staff and alludes to the notion that the levy is not being utilised correctly. Statistics show that since the levy’s introduction, the proportion of younger people embarking on apprenticeships has reduced, particularly at entry-level, but conversely, there has been a rise in the number of existing adult employees who have been labelled as apprentices since April 2017.
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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