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Richard Leese: Making the apprenticeship levy a success

The government must listen to council proposals to improve the apprenticeship levy in order to maximise its potential, argues Cllr Sir Richard Leese, chair of the LGA’s City Regions Board and deputy mayor of Greater Manchester.

When the apprenticeship levy was announced in April 2017, the LGA, which represents over 370 councils in England and Wales, welcomed the ambitious target of creating three million apprenticeships by 2020. The LGA has long called for drastic action to drive up the number of apprenticeships in the UK.

Good apprenticeships can give people the experience, skills and understanding that can often lead straight into a full-time job. However, after nearly a year, it is clear that the apprenticeship levy must be improved in order to reach its potential.

As it stands, there are a myriad of employment and skills funding streams managed by eight departments or agencies, totalling more than £10bn a year (2016-17). Despite the magnitude of this spend, they often fail to meet local needs, address economic and social challenges, or make a decisive impact on outcomes.

Currently the apprenticeship levy costs around £207m a year to local government, with a commitment that the money returned be spent within two years and against standards outlined by the government. However, as the government is aware, key standards – such as teaching and social care – for local authority workforces will not be accessible until September 2018, so it is vital that councils have sufficient time beyond the two years deadline to spend the levy against these standards to promote apprenticeships at a local level.

The 2017 Autumn Budget contained an announcement that the government will continue to work with employers on how the levy can be spent so that it works effectively and supports productivity across the country. We need to make sure this results in actual changes on the ground.

This is why the LGA is putting forward a positive proposal for change, ‘Work Local: our vision for an integrated and devolved employment and skills service.’ Led by combined authorities where they exist and groups of councils in other areas, they would work together with other local partners to plan, commission and have oversight of joined-up information, advice and guidance alongside the delivery of employment, skills, apprenticeships and wider support for individuals and employers. A more coordinated and targeted service would better serve young people and adults who are either unemployed, low-skilled or have complex needs. It would also support local economic growth by bringing training providers and businesses together.

By 2024 there will be more than four million too few high-skilled people to take up available jobs and more than six million too many low-skilled workers. Failure to address these gaps, especially in light of the uncertainty created by Brexit, could put at risk up to 4% of future economic growth. The apprenticeship levy, as it currently functions, is not equipped to address this imbalance.

To ensure that apprenticeship provision matches the needs of employers and the skills of the population, the government should:

• Use the apprenticeship levy review to enable local areas to pool levy contributions, and loosen levy restrictions including its use;
• Ensure all levy underspend goes back to local areas where it is raised, rather than directed from Whitehall;
• Fully devolve the apprenticeship system to combined authorities and devolve all non-levy funding to local areas.

Devolving apprenticeships and funding to the local areas in which they are used will allow better coordination of services to help people get the skills they need to progress in work, and supply businesses with the right skills at the right time to help local economies grow, rather than training people for a role that may not exist.

Local areas are ready to ensure that as many people and businesses as possible can benefit from a successful apprenticeship, but they must be given the power and funds to ensure the scheme can thrive in their places. We are calling on the government to listen to our proposals and work with us to make the apprenticeship levy a real success.

(Top image c. Daniel Kay)

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