City & Guilds Group urges Government to remove barriers to employer investment in apprenticeships

As employers wait for a Government consultation, new research reveals 92% say they want to see greater flexibility in how they can spend funds.

According to new research published today (10 Jan) by City & Guilds Group, “Flex for success?” an overwhelming 92% of levy-paying employers want to see greater flexibility in how they can spend their apprenticeship allowance. The findings are a stark reminder that the Government has a long way to go to create an environment in which businesses can really benefit from increased investment in skills development, with no ‘one-size-fits-all’ solution for apprenticeships.

As we wait to hear from the Government on a date for the employer consultation on apprenticeships announced in October, City & Guilds Group surveyed 765 levy-paying businesses for their take on the current system. The research reveals that while, encouragingly, businesses are keen to make the best use of their levy, the rigidity of the current system is holding many back.

If employers had greater freedom with how to spend their levy funds, 55% say they’d like to continue to spend on apprenticeships, while 45% would like to be able to use money to invest in non-apprenticeship training – including professional courses and technical skills training (36%); health, safety and compliance training (33%); work placements and internships (32%); and leadership and management training (31%).

Kirstie Donnelly MBE, Managing Director, City & Guilds Group, comments: 

“The turmoil we are facing, as a result of uncertainty around Brexit as well as the rapidly changing world we live in, means that it’s never been more urgent to improve the skills of our workforce and invest in home-growing the skills that we may no longer be able to import from abroad. Apprenticeships have a huge potential to deliver on this, but the system is still not responsive enough to the needs of employers. Businesses need more flexibility to use the apprenticeship levy in a way that will truly help them fill skills gaps, upskill their workforce and shore up their talent pipeline for the future.

“But, flexibility alone isn’t enough. The Government must provide greater clarity on apprenticeship data in order to equip the industry with the holistic view it needs and enable employers to understand its wider impact. Although we welcome the Government’s commitment to introduce reforms, they are yet to set this in motion. We have set out a list of twelve recommendations, eleven of which are for the Government to act on, as we urge them to prioritise apprenticeships, maintain momentum and make better use of data to help all those involved to create the skilled and productive workforce we so desperately need.”

When asked about the challenges that prevent them from investing in apprenticeships, almost all (93%) employers cite some form of barrier. The list includes a lack of: suitable apprentices in the area (31%), availability of necessary training (30%), information and support (22%), and buy-in from the board (22%); as well as 20% off the job training being unsuitable for the business (29%).

Promisingly, the Government has introduced some new freedoms to flex spend in the last year, including increasing the level of levy funds which can be transferred to other businesses in a supply chain from 10% to 25%, from April 2019. But City & Guilds Group’s research found that this still isn’t enough: if levy-paying employers could invest as much as they liked within their supply chain, they would transfer an average of 35%, meaning current plans for increased flexibility still won’t meet employers’ needs.

Amid calls for increased options when it comes to using the apprenticeship levy, the research also reveals the scale of disengagement with the levy, as 95% of employers failed to spend the entirety of their apprenticeship budget in the first 12 months of the new system and businesses say that they only expect to spend an average of 56% of their allotted funds annually in the future. Without transparent reporting of apprenticeship spend, however, industry bodies, training providers and employers are left in the dark about the true extent to which employers have taken up apprenticeships, and where any leftover money will end up.

About the research

On 16 October 2018 skills development organisations City & Guilds and ILM, part of the City & Guilds Group, in collaboration with the Confederation of British Industry (CBI) and HR network Changeboard, ran a breakfast seminar with a select group of senior HR professionals to discuss the apprenticeship levy. The session investigated whether employers wanted to see greater flexibility in the use of the apprenticeship levy.

In November 2018 City & Guilds and ILM worked together with research agency Censuswide, to carry out a survey of 765 people with decision making responsibility for apprenticeships who were working within businesses in the UK that pay the apprenticeship levy. This was done to gauge their experience of using the apprenticeship system to date and provide input about what could be done to improve it in the future.

The survey asked a series of 20 questions to understand if employers were currently spending their levy, if they planned to spend more or less in the future and if making any changes to the current system would allow them to gain more value from their investment.

About the City & Guilds Group: A world leader in skills development. Working in over 100 countries across the world, our purpose is to enable people and organisations to develop their skills for growth.

From setting the standard for on-the-job training through to supporting skills development around the world, the City & Guilds Group has almost 140 years’ experience in preparing people to contribute to successful businesses and thriving economies.

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