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Businesses want a shake-up to the controversial apprenticeships levy

The Government’s plan to encourage three million young people to take up apprenticeships by the year 2020 seems to be in jeopardy

According to a preliminary report by the Department of Education, the number of people accessing the apprenticeship program has shown a marked decline over recent months, with initial figures revealing a drop of around 25% over the previous year.

More than 250,000 people started vocational training on the apprenticeship scheme during the first half of the 2016/17 academic year, but recently released figures from the Department of Education show that just over 190,000 trainees have commenced their training during the same period in 2017/18.

This drop in numbers coincides with the first anniversary of the introduction of the Government’s controversial apprenticeship levy scheme, which has alienated many businesses, as well as trade unions, who have called it a ‘tax on business’.

The levy requires every employer facing an annual wage bill of more than £3 million to pay an amount equivalent to 0.5% of their total labour costs into a Government fund which finances training. Although the Government also contributes to the fund, businesses complain that the system is costing them time and money to implement.

The aim of the controversial apprenticeship levy is to raise around £3 billion annually, in order to fund training. The levy affects around 20,000 companies, but many of them complain that the system is impractical, with an abundance of red tape to negotiate.

Smaller companies find the scheme too complex to navigate and also impractical, as the money cannot be put towards a trainee’s accommodation and travel costs.

One of the loudest critics of the apprenticeship levy is EEF, the manufacturers’ organisation, which is calling for an urgent shake-up of the scheme on the back of the latest figures.

The organisation is very keen to promote apprenticeships, but considers the levy to be unworkable, and is urging the Government to review the scheme and implement changes as a matter of urgency.

It points out that there has been a rise in the number of trainees commencing higher level apprenticeships, and urges the Government to capitalise on this aspect of the training program, which would allow employers to access the skills that are so desperately needed.

Both the Confederation of British Industry (CBI) and the Chartered Management Institute (CMI) have voiced their concerns about the recent drop in the number of people accessing the apprenticeship program, urging the Government to reassess the apprenticeship levy.

The CMI points out that around 50% of business managers support apprentice training and suggest that the Government should make the system more workable, to encourage take up numbers.

Meanwhile, the Department for Education has pointed out that the recently-released figures are only preliminary, and that the numbers of apprenticeships taken up the previous year turned out be higher than initial reports suggested.

The Government has also stated that it intends to make £80 million available to smaller businesses in an attempt to provide additional support for them.

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