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A survey by EEF, the manufacturer’s organisation, found 95% of manufacturers want changes to the levy in some form, and only 7% of companies have had no issues with it.
The levy is a 0.5% tax charged on companies with an annual wage bill of more than £3m a year. The money goes into a central pot, where it is supposed to be doled back out to employers to fund apprenticeships.
The scheme was designed to address the UK’s skills crisis, and provide more options for school leavers beyond university. However, according to EEF data, it seems to have had the opposite effect.
More than one in 10 manufacturers surveyed said they have delayed starting new apprenticeships specifically because of the levy, and 8% said they have cancelled or delayed engineering apprenticeships because of the levy.
Verity Davidge, head of education and skills policy at EEF, said that although the apprenticeship levy had laudable aims, “its impact has been highly damaging for employers and apprentices, and what should have been a win-win situation has turned into a lose-lose.”
EEF is calling on the government to urgently sit down with industry to discuss the levy, and has suggested a series of seven measures to improve the levy, including changes to how the money can be spent.
Lizzie Crowley, skills policy adviser at the CIPD, told Professional Engineering that the levy needs “urgent reform”. “Apprenticeships are a great way for organisations to grow their talent base yet they are not the only solution to the UK’s skills crisis, that’s why we are calling on the Government to reform the levy into a broader skills levy,” she said.
“Alongside this, it is clear from this research that more work needs to be done to ensure that the apprenticeship system works for businesses, this includes reducing the level of bureaucracy and speeding up the development of new standards.”
According to Julie Feest, CEO of charity EDT, which links education and business, the levy is not the only challenge facing apprenticeships. “EEF are highlighting serious issues in their recent research and in our many conversations with manufacturing employers we can confirm the conclusions they have reached,” she said.
However, she added that drawing the right candidates into apprenticeships in the first place is another pressing issue. “Any new flexibility in the levy system resulting from discussions with government should allow unused funds to be invested by employers, in programmes such as Industrial Cadets, which ensures high quality pull-through of candidates into apprenticeships from education, thus providing employers with a diverse pool of STEM talent to draw from,” she said.
Content published by Professional Engineering does not necessarily represent the views of the Institution of Mechanical Engineers.