Learning & Work is calling for a “flex and match” Skills Levy – Sector Reaction

Young people and the north of England bear the brunt of falls in apprenticeship numbers

“Counterproductive” government reforms to funding have led apprenticeship numbers in England to plummet by 36% for young people and by more than a quarter in Tees Valley, Liverpool City Region and the West Midlands, new analysis has found. 

Learning and Work Institute (L&W), the independent policy and research organisation behind the research, has also found that overall apprenticeship numbers have fallen by one third, that only one in two apprentices completes their studies, and that many employers say they are unable to access the training they need. 

The apprenticeship levy, introduced in 2017, was intended to increase the number of apprentices and get employers more involved in their design. But the Treasury is estimated to be raking in £700 million more through the levy than it is spending on apprenticeships. Many large firms have focused their investment on their more experienced employees, with L&W finding one in four apprentices at levy-paying firms is aged over 25 and studying at higher education level.  

“flex and match” Skills Levy

L&W is calling on the next government to broaden the current levy into a “flex and match” Skills Levy that would widen the number of options available to employers and redirect focus to young people taking their first steps on the career ladder. Under these proposals, firms could spend a proportion of their levy payments on non-apprenticeship training – but only if they invest at least as much in apprenticeships for young people too.  

The amount of flexibility would increase over time, starting at 15% of employer’s levy funds and rising to 50%. A firm paying £2 million of Skills Levy could in time spend up to £1 million on approved training outside apprenticeships, but only if they had spent £1 million on apprenticeships for young people. 

This alternative training would be sourced from a list approved by the Government in consultation with social partners and local leaders in order to tailor to local priorities. This list would be reassessed each year based on national and local economic need and other Government plans, such as the drive to net zero. 

Call for greater focus on apprenticeship completions vs Apprenticeship starts

L&W also calls for greater focus on apprenticeship completions as opposed to just starts, particularly given only one in two apprentices complete their studies. Meeting the Government’s target of a 67% completion rate would mean 20,000 more apprenticeship completions from the same number of starts.  

Stephen Evans, Chief Executive of L&W, said:  

“The way the apprenticeship levy was introduced has been counterproductive. Apprenticeship numbers are down with young people and more deprived areas hit hardest. We need a new Skills Levy that gives more flex for employers to invest in training that makes a difference but demands they increase apprenticeships for young people to unlock that flexibility. We can do that while protecting the apprenticeship budget for England in real terms. Coupled with a laser-like focus on improving quality and increasing poor apprenticeship completion rates, the next government has the chance to revitalise apprenticeships and training opportunities.” 

Sector Reaction:

David Hughes, Chief Executive, Assoication of Colleges, said: 

“The Learning and Work Institute has clearly set out why the apprenticeship levy needs reform. The next government must take their report, our report ‘100% Opportunity: the case for a tertiary system, and the feedback from across the education and skills sectors seriously and change the apprenticeship programme so it delivers for young people, small and medium-sized businesses, new labour market entrants and key sectors of the economy.

“The proposal for a gradual introduction of change is well made, as is the priority that needs to be given to functional literacy, numeracy and digital skills and training in national priorities like net zero. However, we also need to meet local priorities, and colleges must be allowed carry out their own end-point assessment (EPA) to help reduce bureaucracy and costs.

“As well as funding 16 to 18-year-olds wanting to do apprenticeships through the study programme budget, we would want to see levy funding limited to Level 5 and below, leaving degree apprenticeships and above funded from the loans system. Both of those changes would free up funding from the levy to support more young people and training for more adults.”