There is a concern that, if the situation continues, social mobility may go backwardsLast year, 117,000 people began apprenticeships between May and July – these numbers have dropped significantly to less than half this year at just 48,000 according to the Department for Education.
The levy was introduced to raise £2.5bn a year for apprenticeship training and is payable by any organisation with a wage bill exceeding £3m. The government estimated that the levy would affect 2 per cent of businesses.
The levy applies to all UK employers; however Scotland, Wales and Northern Ireland manage their own apprenticeship schemes.
The aim is to fund up to three million new apprenticeships and the government has said it will “support productivity growth through the increase in training”.
Most smaller firms are not affected by the levy, however medium-sized firms with wage bills under £3m, that employ between 50 and 200 staff, are also faced with new responsibilities.
These include releasing apprentices for one day a week for off-site training and contributing towards some of the training costs, which has now made apprenticeships less popular.
The DfE says it had expected there would be an initial drop-off in the number of people starting apprenticeships following the introduction of the levy.
An initial decline was expected by the DfE as employers paying the levy have 24 months to spend funds earmarked for apprenticeships, so they are taking time to articulate new schemes.
Robert Halfon, who was apprenticeships and skills minister at the Department for Education until the reshuffle in June, said: “Initially the number of starts has gone down, but I suspect over the coming year they will go back up again.”
However, many industry experts say the scheme has been poorly organised.
“The policy intent was great, the implementation has been diabolical,” says Mark Dawe, chief executive of the Association of Employment and Learning Providers (AELP), whose members include independent trainers, employers and further education colleges.
Although 98 per cent of companies are not large enough to be liable for the levy, The Chartered Institute of Personnel and Development’s (CIPD) skills adviser Lizzie Crowley, said these firms were being put off offering more apprenticeships by the cost of releasing the trainees for one day a week and having to shoulder 10% of their off-site training fees “whereas previously the vast majority would have received this free of charge”.
“There needs to be appropriate flexibility of off-the-job training. In addition, employers without levy funding should not be charged for training 16-24 year old apprentices,” said Mr Dawe.
“Without these actions, we do not believe the government will reach their manifesto commitment.”
Verity Davidge, head of education and skills policy at the manufacturers’ organisation the EEF, said some members had been “left frustrated that the introduction of the levy has in, some cases, resulted in them being unable to offer and deliver apprenticeships”.
Ms Davidge described the 59% drop in apprenticeships as “shocking” but added that it was “frankly unsurprising as we continue to hear stories from companies who have hit a brick wall in trying to get levy-supported apprenticeships off the ground”.
“Accessing the funding has proven complex and difficult to unlock in time, and employers have struggled to get their heads around the complex rules and restrictions in accessing funds,” she said.
“As a result, some apprentices have been told that their apprenticeship has been put on hold for now, which is clearly a huge disappointment for young people who had effectively been offered a job – only to have their hopes dashed.”
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