Is the Apprenticeship Levy to Blame for the Decline in Apprenticeship Starts?

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Is the Apprenticeship Levy to Blame?

Since the government’s apprenticeship levy came into existence in April 2017, apprenticeship starts have dropped significantly, causing many to question whether the government no longer fully funding apprenticeships is the reason behind it. Change is often good, but in this case, statistics are saying otherwise.

It is possible the drop in apprenticeship starts could be a direct impact of the increased costs of the new scheme, or a result of the on-boarding process becoming more complex? Or is it simply that employers are focusing on quality apprenticeships now that it's their money that’s being spent? Perhaps businesses are simply taking the time to plan ahead, in which case, is this really a bad thing? 

Here we consider why the number of ‘apprenticeship starts’ are dropping and whether it’s a direct impact of the levy being implemented.

Why Have ‘Apprenticeship Starts’ Dropped?

There are always two sides to every story, and generally when figures show a significant drop, people jump to conclusions. So, for employers looking to implement training into their business, it’s essential to consider the possibilities of why this drop in apprenticeship starts has occurred and what happens next.

Looking closer at the stats – it shows that the drop in apprenticeship take up is coming from smaller firms i.e. those that are not paying the levy. For many smaller companies that used to take on apprenticeships – or those that were considering it – the extra cost has put them off, whilst for larger firms who are paying the levy, they are at least maintaining apprenticeship numbers.

Will the Levy Work for Businesses Eventually?

Critics say employers are being deterred from creating apprenticeship posts because of the increased costs and complexity of the new scheme. After all, the government’s target to raise £3 billion a year to create three million apprenticeships by 2020 is still a long way off, proving that the apprenticeship levy isn’t working for businesses yet.

Perhaps Employers Just Need Time to Adjust?

The last year has been a period of significant change, and for employers to adjust, time and patience is required. Many are questioning that the system is in need of a further reform, but some say there are signs that things are turning around as the apprenticeship levy settles in, it’s just been a matter of needing time to adjust.

Many Firms Are Simply Planning Ahead

The growth from the larger levy paying companies has plateaued, which is disappointing i.e. those that already engaged with apprenticeships have continued to do so, whilst those who the government have wanted to lure into the programme, are taking their time to consider their options. Indicating that employers are simply focusing on quality apprenticeships now that it's their money at stake, and require that little more time to plan their next move.

After all, there is a lot to consider. For some companies who tend to recruit from a pool of experienced and ready skilled people, it will mean changing their entire HR process. Decisions need to be made only when workforce gaps appear. This is not something that happens overnight.

Minister for Apprenticeships and Skills, Anne Milton says; “It is right that they are taking their time to plan ahead, with two years to spend their levy funds, and maximise the opportunities an apprenticeship can bring for both the learner and employer. Feedback we’ve had shows employers are doing exactly that.”

The Quality of Apprenticeships Should Take Priority

It’s important not to disregard the reasons why the government initially introduced the reforms and levy in the first place; to enhance the quality of apprenticeships and to enable employers better access and control. Let’s also not forget that for businesses expected to pay the levy, i.e., the ones with a wage bill of over £3 million pa, employers can expect to get their money back, plus some, if they commit to training apprenticeships.

There is a strong argument for the government to abandon the starts target and maintain a focus on outcomes and the capability to deliver what learners need today – ie the support they need to undertake training within the work place and the curriculum that will help them develop their career and secure a job.

So, What Happens Now?

Now is the ideal opportunity for employers to fully focus on gaining the access, quality, and control they require to get the skills their business needs. As Anne Milton described, there is a two year window to spend the levy fund, BUT businesses ought to spend their money now because payment on the apprenticeship is collected monthly, not in one go. 

This means for businesses that wait to spend their levy funds, they’re likely to lose out, particularly if they wait for month 24 before spending it. In which case, the figures should really start to grow in the coming months.

Finally, some apprenticeships in certain areas are showing growth. For instance the new Digital Apprenticeship Standards are high quality, and as a result, are proving to be very popular – which indicates that employers want to buy into apprenticeships where they see exceptional added value and a curriculum that fits their workforce skills gaps.

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