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Government urged to overhaul or postpone apprenticeship levy

The government has been urged to postpone introducing the apprenticeship levy by the Chartered Institute for Professional Development (CIPD) after new research showed that the majority of employers oppose it.

A CIPD survey shows that, while 35% of employers said they supported the principles of the levy, 27% opposed it and 38% didn’t know.

The report also found that 26% of employers did not know if they were expected to pay the levy, and only 31% of those who expected to pay it had calculated how much it would cost them. Among employers who expected to pay the levy and had calculated the cost, the number opposed rose to 47%.

Peter Cheese, chief executive of the CIPD, said: “If the government is serious about improving the quality of apprenticeships as well as the quantity, it needs to completely overhaul the Apprenticeship Levy, even if it means postponing the planned introduction.

“These issues could have been foreseen if there had been proper consultation with businesses at all before the introduction of the levy which, as currently framed, is in significant danger of failing on the objectives of improving investment in skills either among large organisations that will pay the levy or among small non-levy paying organisations.”

Only 9% of employers said they would use the levy funding to develop a new apprenticeship programme and 18% said they would use it to enhance their existing programme.

This raises concerns that the new apprenticeships offered will be lower-ranking or of poor quality, especially since 29% of employers who had calculated the cost of the levy said it would require them to adapt existing programmes into accredited apprenticeships.

In addition, 21% said they would increase the proportion of Level 2 apprenticeships while decreasing the proportion of Level 3 and above, whereas just 11% said they would do the opposite, and 36% said they would have to cut costs in other areas of workforce development.

Cheese said: “The evidence in our report suggests that the levy could undermine apprenticeship quality by encouraging some employers to invest in intermediate level apprenticeships at the expense of advanced and higher level programmes, as a way of maximising the amount of funding that they can reclaim.

“This risks further devaluing the apprenticeship brand and preventing young people from regarding apprenticeships as a meaningful alternative to university.”

The CIPD also recommended that the apprenticeship levy is replaced with a broader training levy, with funding weighted towards Level 3 apprenticeships.

It said a portion should be allocated to LEPs and business growth hubs to help them support smaller, non-levy paying businesses in developing apprenticeship programmes.

The Strategic Development Network has said that councils in particular could be confronted with unexpected costs as a consequence of the levy.

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