24th November 2017.

Apprenticeship Levy Leads to Trainee Collapse

The introduction of the controversial apprenticeship levy caused a collapse in the number of people starting the training programmes, government figures have confirmed.

Recent data from the Department for Education (DfE) found that in the months following the introduction of the levy in April, the number of people starting apprenticeships fell by 59.3 per cent to 69,800.

The apprenticeship levy requires all employers with an annual wage bill of £3 million or more to pay 0.5 per cent of their staff cost into an apprenticeship fund. Businesses can then draw on the fund,  which is topped up by the Government to finance training.

 Trade body EEF, which represents the UK’s manufacturing industry, blamed confusion around the levy for the decline, calling it “complex and time-consuming”.

The new Autumn Budget released on Wednesday has done little to ease employers’ worries, with Chancellor Philip Hammond saying he would “keep under review the flexibility that levy payers have to spend this money”.

 The Government has set a target of 3 million people starting apprenticeships by 2020 as the country faces a chronic skills shortage. The decline in the final quarter of the 2016/17 academic year will do little to inspire confidence that the goal is reachable.

According to Neil Bentley, chief executive of WorldSkills UK, the major problem is businesses getting their head around how the levy will work.

“The levy is a huge incentive, Bentley added, “but businesses are taking their time to make sure they invest properly in it.

Mr Bentley said he was “confident” that once the levy beds in, industry will embrace it.

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