The MEAN view: The Apprenticeship Levy isn’t working

Ian Mean

In our July issue, columnist Ian Mean, Business West Director for Gloucestershire, aired his views on the critical importance of skills to business. In our November issue he puts the government’s Apprenticeship Levy, first introduced last year, under the spotlight

“While the government is fully energised over Brexit, I am afraid they are seeing what I regard as one of their most important early pledges, three million apprentice starts by 2020, beginning to flounder.

“I don’t think I am being too critical when I say that with apprentice starts down more than 50 per cent in the last year, this flagship programme for our young people appears to be falling off a cliff.

“As a result of this farce, I can see the government seeking to reduce those promised figures by the end of this Parliament. They’ll try to do this to avoid embarrassment on what is, after all, a flagship policy of great importance for business as it grapples with the demand for an increasing number of skilled people.

“It is a sorry state of affairs, because here in Gloucestershire our further education colleges are some of the best in the country at developing apprenticeships.

“You may remember that the target of three million people starting apprenticeships by 2020 was set by the government three years ago as part of a big campaign to promote them as an alternative to university. It would also help to boost the economy by training people in the skills employers needed.

“But it all started to fall apart last April when the government introduced the Apprenticeship Levy. This meant that businesses with an average wage bill of at least £3 million had to pay 0.5 per cent of their payroll costs into a fund to pay for training.

“The levy must now be reviewed: that is the conclusion of the heads of the further education colleges I have talked to.

“It is an overly bureaucratic, ill thought- out policy that is patently not working. In fact, the levy is actually proving a deterrent to recruiting apprentices which our colleges have not seen before.

“I am afraid that many companies now see the levy as a tax.

“And due to a lack clarity from government, some companies are just using the levy money for their own management training.

“So nationally, we are seeing something like a 500 per cent increase in management programmes. This is not going to encourage our young people and help to keep them in the region, which is the subject of the current Gloucestershire 2050 debate.

“It is also staggering that 77 per cent of companies in the county have an annual training budget of less than £5,000.

“This is very poor and hardly helps Gloucestershire’s dire productivity rate – eight per cent down on the national figure for companies and very worrying. Investment in consistent programmed training is vital for businesses to grow and increase their productivity.

“The government must now review the levy as a matter of urgency to make it simple and more accessible, particularly for SMEs if they are to stand any chance of honouring their apprenticeship pledge.

“We will be watching.”

 

Ian Mean is Gloucestershire Director of Business West, and a former regional newspaper editor.

He is former vice chairman of the Gloucester Heritage Urban Regeneration Company and a Freeman of the City of Gloucester for that work.

He is an honorary vice-president of Gloucestershire College and has an honorary doctorate of philosophy from the University of Gloucestershire for supporting business in the county.

Ian is chairman of the Gloucestershire Hospitals Trust
Organ Donation Committee and has just been appointed a board member of Gloucestershire’s Local Enterprise Partnership, championing small and medium-sized businesses.