Apprenticeships fall by 59% after levy introduced

The number of workers starting apprenticeships has fallen by 59% since the government introduced an apprenticeship levy earlier this year.

Companies have to pay a 0.5% levy on their annual pay bill, but only if it’s over £3m, with the money going into a digital account that can be spent on training and assessing apprentices. For levy-paying firms, the government will top up this fund by 10%, while for non-levy paying firms, it covers 90% of the cost of training.

The levy was supposed to raise £2.5bn a year for training, and increase the number of people training at work. However, new figures from the Department of Education have revealed that only 48,000 people started an apprenticeship in the last three months of the 2017 academic year, compared to 117,000 for the same period in 2016.

The levy was part of a raft of new rules around apprenticeships, including stricter rules such as a requirement to release apprentices for one day a week of off-site training. This has added to costs, and is thought to be one of the reasons for the fall.

The government wants 3m people a year to be starting apprenticeships by 2020 to address the country’s skills shortage. The total for 2017 was 494,000, a 2.8% fall. “It may take time for organisations to adjust to the new funding system, and so it is too early to draw conclusions based on apprenticeship starts since May,” said a DfE statement released alongside the new data.

A spokesperson for EEF, the manufacturer’s organization, said confusion around the levy was to blame, and called it “complex and time-consuming”.

“We’ve heard stories from companies who have hit a brick wall trying to get levy-supported apprenticeships off the ground - and not for a lack of trying,” said Verity Davidge, EEF head of education and skills policy. “The numbers speak for themselves. Companies are having to tell would-be apprentices they can’t take them on because they can’t get support from the levy in time. That sends a dangerous message about apprenticeships when we’re trying to promote them to solve the skills shortage.”

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