It’s productivity, not the Apprenticeship Levy, that’s the real problem

09 January 2018 -

CMI’s Petra Wilton says the Apprenticeship Levy should be embraced for its efforts to boost productivity, not criticised for some early teething issues

Matt Scott

The recently introduced Apprenticeship Levy has come in for criticism from certain sectors of UK Plc, the Telegraph has reported, with businesses complaining that “the funds raised do not cover training costs and the levy has, in effect, become just another business tax”.

The Telegraph’s Alan Tovey continued by saying that “some companies say the maximum allowance of £27,000 per apprentice does not cover the cost of complex or high-level apprenticeships, while others say they will never get out as much as they pay in”.

But, Petra Wilton, CMI’s director of strategy, said this assessment was unfair and pointed to the much greater cost to the UK’s economy of poor management and leadership.

“The Apprenticeship Levy is not the real tax on business  – low productivity is a far greater burden with poor management and leadership costing businesses £84bn each year,” she said. “The Apprenticeship Levy addresses a key market failure: businesses' systemic under investment in the world-class skills needed to compete internationally.

“It’s true - the extent of change and the skills transformation being ushered in by the Apprenticeship Levy will take time to embed.  And only eight months in, it’s far too early to call time on a much-needed intervention in the skills system.”

READ MORE: THREE CASE STUDIES OF HOW THE APPRENTICESHIP LEVY WILL HELP EMPLOYERS

Wilton did concede, however, that more needed to be done to make the Levy a greater success, and urged employers to make the most of the opportunities presented to them by the Apprenticeship Levy.

“The number of new starts is disappointing and there are clearly teething issues in developing the new Standards and simplifying new quality assurance processes,” she said. “But this should not be used to disguise the real progress we’ve already started seeing. Many employers are now identifying key higher level skills gaps in management, digital and engineering, and as a result the fastest growing new degree apprenticeships are across these areas.

“Since the introduction of the Levy, more than 18,500 people have started an apprenticeship – nearly half of which have been at intermediate or higher levels. The slow start reflects the need to do far more to raise awareness of the benefits of professional apprenticeship pathways and celebrate the early adopters.”

“Employers should now use the Levy to invest in both up-skilling existing employees, as well as bringing on the next generation, to ensure that we finally call time on the UK’s productivity gap that taxes us all,” she added.