Apprenticeship levy reform brought into sharp focus

The apprenticeship levy has had its problems and more than its fair share of critics, but it has also resulted in a step-change in both employer and public awareness of apprenticeships and that’s no bad thing.

There are still many parents, teachers, and others who continue to have outdated or misguided views as to what apprenticeships are, and this, in turn, has limited the ability of tens of thousands of young people to make an informed choice about their next steps after school or college.

Opening up a variety of sectors

Careers in accountancy, banking, law, architecture, engineering, pharmaceuticals, the civil service, digital, almost every imaginable sector of the economy, are now available through high-quality apprenticeships.

Given there are no tuition fees and thus no debt; that apprentices are paid (many well above the minimum apprenticeship wage); and that practical on the job skills and experience is gained from day one; the alternative of higher education appears less and less attractive to large numbers of students.

To many employers, the increased loyalty, higher productivity, lower staff turnover, commitment to learning, and the ability to directly mould candidates to meet specific business needs, not to mention the help with costs via the levy, make apprentices increasingly more attractive than graduates.

Over 16,000 AAT apprentices

AAT has over 90,000 students of which approximately 16,000 are apprentices. Since 2016, AAT has campaigned for the apprenticeship levy to be renamed the “Skills Levy” and broadened to include traineeships and other forms of high-quality training.

Widening the remit of the levy would help address the fall in apprenticeship starts since the levy was introduced (because more people would gain the skills, confidence, and knowledge to start an apprenticeship), the frustrations of many employers (because of the restrictive nature of the levy as it stands) and the future skills needs of UK plc.

Small and medium businesses could be doing more

Whilst big employers like Rolls Royce, BAE Systems, and of course, “the big four” accountancy firms, rightly draw attention for their large and successful apprenticeship programs, most companies in the UK are much smaller. It is frequently argued that these small and medium-sized organisations could be doing more to take on apprentices.

But it must be remembered that whilst the figure of 5m+ SMEs is frequently promoted by politicians, the media and other commentators, 76% of these SMEs do not employ anyone. It is unrealistic to expect one person entities, that currently have no employees, to take on an army of apprentices or indeed even a single apprentice – not least in the aftermath of the Coronavirus crises. 

Removing barriers to entry

For the remaining quarter that does have staff, there is certainly a need to reduce the amount of management time and bureaucracy involved in the apprenticeship system and whilst the co-investment fee that small businesses are obliged to pay towards the cost of apprenticeships has recently been reduced from 10% to 5%, some will still find this a significant barrier.

In summary

Irrespective of sector, irrespective of company size, it’s clear that the effectiveness of the apprenticeship levy could be improved. AAT has made numerous proposals as to how this could be achieved through an evolutionary rather than a revolutionary process and will keep fighting for positive change.

In light of the job losses and economic pressures about to be wrought upon us by the coronavirus outbreak, levy reform will be brought into even sharper focus and would certainly be in the best interests of Government, employers, the economy, and of course, most importantly, students.

Further reading:

Phil Hall is AAT's Head of Public Affairs and Public Policy.

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