Apprenticeship starts plummet 31 per cent since introduction of levy, CIPD report reveals
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Association calls for reform of the system, as employers face nationwide talent shortage and rising job vacancies
by Juliette Rowsell and Isabel Jackson 31 October 2023
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The number of people starting apprenticeships has fallen 31 per cent in England since the apprenticeship levy was introduced in 2017, according to the CIPDâs Devolution and evolution in UK skills policy report.
This was particularly acute among small businesses, where the number of apprentices starting declined by 49 per cent, with just 123,800 apprenticeships starting in SMEs in England throughout 2020-21, compared to 241,000 in 2016-17.
Meanwhile, large firms with 250 or more employees saw a drop of 14 per cent.
The levy was introduced to help companies hire more apprentices by giving them greater control over government funding for apprenticeships. But critics have claimed it has led to employers putting existing staff on to professional or managerial apprenticeships rather than taking on new apprentices, as well as being inflexible and complex to navigate.
Ola Kolade, employment and skills director at Business in the Community, said the figures showed that reform is needed to the levy to benefit businesses and those looking to enter the workplace. He told People Management : âIt is essential that the apprenticeship levy works in practice for both businesses and people looking for apprenticeships.
âUnfortunately, this research shows that the levy is not working as effectively as it should be, especially for young people. If research continues to show that the levy is not working, it should be reformed in collaboration with business leaders and training providers to help address why itâs not working on the ground.â
The figures come as workplaces across the country face longstanding talent and labour shortages, with the number of vacancies in England more than doubling between 2017 and 2022, from 193,800 to 460,100.
âSkills and labour shortages continue to be a real problem across the UK and all sectors of the economy, and we need to get apprenticeships and vocational education right if weâre to tackle these challenges,â said Lizzie Crowley, senior policy adviser at the CIPD.
She stressed that investing in training was âcritical in addressing skill gaps and improving workplace productivityâ, adding that the levy âhas failed to reverse the decline in training weâve seen over the past two decadesâ.
The CIPD also found that employers were training and investing less in their workforces than they were 20 years ago, and investment in training per employee has declined by almost 20 per cent since 2011 across the UK.
It called for the apprenticeship levy to be reformed into a âflexible skills levyâ, which Crowley said could âhelp boost employer investment in the technical skills they need and free up more funding to invest in apprenticeshipsâ.
Other recommendations included the introduction of fast-track routes to apprenticeship qualifications and financial incentives for businesses that hire apprentices, as well as government support for advisory services covering HR and people management for SMEs.
Businesses have expressed their concerns over the levy since it was first introduced, with a CIPD poll last April finding that fewer than one in five employers supported the apprenticeship levy.
Read the CIPDâs case for a broader training levy here
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Association calls for reform of the system, as employers face nationwide talent shortage and rising job vacancies. by Juliette Rowsell and Isabel Jackson 31 October 2023. Share article on Twitter. Share article on Facebook. Share article on LinkedIn. The number of people starting apprenticeships has fallen 31 per cent in England since the apprenticeship levy was introduced in 2017, according to the CIPDâs Devolution and evolution in UK skills policy report. This was particularly acute among small businesses, where the number of apprentices starting declined by 49 per cent, with just 123,800 apprenticeships starting in SMEs in England throughout 2020-21, compared to 241,000 in 2016-17. Meanwhile, large firms with 250 or more employees saw a drop of 14 per cent. The levy was introduced to help companies hire more apprentices by giving them greater control over government funding for apprenticeships. But critics have claimed it has led to employers putting existing staff on to professional or managerial apprenticeships rather than taking on new apprentices, as well as being inflexible and complex to navigate. Ola Kolade, employment and skills director at Business in the Community, said the figures showed that reform is needed to the levy to benefit businesses and those looking to enter the workplace. He told People Management : âIt is essential that the apprenticeship levy works in practice for both businesses and people looking for apprenticeships. âUnfortunately, this research shows that the levy is not working as effectively as it should be, especially for young people. If research continues to show that the levy is not working, it should be reformed in collaboration with business leaders and training providers to help address why itâs not working on the ground.â The figures come as workplaces across the country face longstanding talent and labour shortages, with the number of vacancies in England more than doubling between 2017 and 2022, from 193,800 to 460,100. âSkills and labour shortages continue to be a real problem across the UK and all sectors of the economy, and we need to get apprenticeships and vocational education right if weâre to tackle these challenges,â said Lizzie Crowley, senior policy adviser at the CIPD. She stressed that investing in training was âcritical in addressing skill gaps and improving workplace productivityâ, adding that the levy âhas failed to reverse the decline in training weâve seen over the past two decadesâ. The CIPD also found that employers were training and investing less in their workforces than they were 20 years ago, and investment in training per employee has declined by almost 20 per cent since 2011 across the UK. It called for the apprenticeship levy to be reformed into a âflexible skills levyâ, which Crowley said could âhelp boost employer investment in the technical skills they need and free up more funding to invest in apprenticeshipsâ. Other recommendations included the introduction of fast-track routes to apprenticeship qualifications and financial incentives for businesses that hire apprentices, as well as government support for advisory services covering HR and people management for SMEs. Businesses have expressed their concerns over the levy since it was first introduced, with a CIPD poll last April finding that fewer than one in five employers supported the apprenticeship levy. Read the CIPDâs case for a broader training levy here. Related Articles. âItâs quite frankly not fair that social mobility is not a business imperative for allâ 20 October 2023 by Amanda Scott. Compass Groupâs talent, learning and D&I director explores organisationsâ role in recruiting and developing those from different socioeconomic backgrounds â and the benefits of doing so. Revamp apprenticeship levy, reform sick pay and boost paternity rights â key takeaways from the CIPD's Manifesto for Good Work. 21 September 2023 by Mahalia Mayne. People Management focuses on some of the critical points from the document, which urges the government to create a long-term workforce plan. Signifyâs Bren Lumsden: âOur apprenticeships are helping us to address gender imbalanceâ 15 May 2023 by Grace Lewis. The head of HR for UK and Ireland explains how the lighting manufacturer is using apprenticeship-based learning to grow future skills and break down job stereotypes. More on this Topic. People Management poll: should employees get a day off for a relationship breakdown? Government says public sector four-day week should âend immediatelyâ â what do businesses think? Employers âmissing outâ as more than half of UK employees do not get an exit interview, survey finds. ITV says that workplace relationships and friendships must be declared â should other businesses follow suit? âPeople think Gen Z are from Marsâ â why workplaces must reassess their approach to younger workers.