CIPD calls for broader skills levy to prevent rebadging of other training scheme
The apprenticeship levy has been criticised for lacking focus by the commons education and business select committees, just a week before it is due to come into effect. MPs on the sub-committee for education, skills and the economy described the levy as a “blunt instrument that risks being unduly focused on simply raising participation”, and warned the target of three million apprenticeship starts by 2020 emphasised quantity of training over quality.
Ministers lack a plan to target the levy at areas of acute skills shortages, and have failed to outline how the increased numbers of apprentices will help fill the country’s skills gaps, MPs said. The apprenticeship levy, which affects employers with a payroll of more than £3m, will come into effect on 6 April. But the committee’s report is just the latest evidence of how divisive it has proved among employers and experts.
While there is an urgent need for technicians in construction, engineering and manufacturing, where training has been shown to boost skills and wages, more than two-thirds of apprenticeship starts have been in other sectors, including education and human health work, that show “no significant wage effect” from training. MPs described this as “undermining” the contribution apprenticeships can make towards solving skills shortages. In addition, certain industries such as pharmaceuticals and the creative arts will still be required to contribute to the £3bn annual charge, but will not benefit from the levy as they tend to recruit graduates, said the committee.
Co-chair of the sub-committee Iain Wright MP added that the government’s flagship apprenticeship policies were “inherently contradictory”. “Ministers have a centrally dictated, top-down three million target – welcome though that focus is – at the same time as insisting that this approach will be bottom-up and address the skills requirements of individual firms, sectors and regional economies,” he said. “These requirements will often be very different, and the government should target those sectors of the economy and regions of the country where skills shortages are particularly acute.”
The committee recommended that the government place a greater emphasis on the outcomes and successes of apprenticeships; a stance supported by the CIPD, which fed into the committee. “As it stands, the levy is a relatively blunt tool – the funds are not targeted and can only be spent in one way, which is problematic given that apprenticeships aren’t the only answer to the skills gap,” said Elizabeth Crowley, skills adviser at the CIPD.
“In the longer term, we would like to see the levy widened to a broader skills levy that reduces the unintended consequences of converting existing development and training into apprenticeships, which is a very expensive rebadging of existing provision.”
The report comes amid ongoing uncertainty among the business community over the levy, with many organisations claiming they have not been adequately prepared. A poll from City & Guilds conducted in February suggested that a third of UK employers that will be eligible to pay the levy were unaware of its existence. Research from the CIPD found that only 9 per cent of organisations planned to use the levy to create new apprenticeships, while more than half of employers in a more recent survey by BPP Professional Education planned to turn graduate schemes into apprenticeships.
A recent investigation from People Management found that some employers and providers may already be ‘fiddling’ apprenticeship levy costs and offering financial ‘kickbacks’ for their services at the expense of the government. But despite the uncertainty, Crowley urged employers to back the apprenticeship levy as it is implemented nationwide. “We do need to get behind the levy and get the best out of it – the CIPD will be working proactively with members to support them, and use it as an opportunity to invest strategically in their workforce,” she said. “With the possibility of reduced access to EU migrants post-Brexit, it’s important that we look at what skills will be needed both now and in the future, and treat the levy as one aspect of a refreshed workforce development strategy, with a strong focus on quality.”
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