One in five paying apprenticeship levy write it off as tax

A fifth of firms currently paying the apprenticeship levy plan to write it off to tax, rather than provide apprenticeships, and more than half want it replaced with a training levy, according to a survey by CIPD which identified widespread dissatisfaction with the way the levy operates

CIPD’s report ‘Assessing the early impact of the apprenticeship levy’, comes after a sharp decline in the number of apprenticeship starts, which are down 59% between May 2017 and July 2017, compared with same period in 2016.

The professional body for HR and people development says the research with more than 1,000 employers show that those currently paying the apprenticeship levy, 53% would prefer a training levy, compared with just 17% supporting the apprenticeship levy in its current form.

In addition, a fifth (19%) of levy paying firms, including 35% of SMEs, do not plan to use the levy at all to develop apprenticeships, but will simply write it off as a tax.

CIPD warns of unintended consequences as nearly half (46%) of employers paying the levy report they expect their organisation to simply rebadge existing training in order to claim back their allowance.

Lizzie Crowley, skills adviser at CIPD, said: ‘Our research shows that the straitjacket of the apprenticeship levy is forcing many firms to re-badge a lot of their existing training as apprenticeships, as they seek to claw back the levy they pay.

‘In many instances this is not adding any additional value and is creating a lot of additional bureaucracy and cost.

‘Another side effect of re-badging is that an increasing proportion of apprenticeships are going to existing and often older employees, including already well-qualified managers, meaning fewer are available to help young people make the transition from education to the workplace – the original purpose of apprenticeships.’

Four in ten (40%) levy-paying employers say it will make little or no difference to the amount of training they offer, while nearly a quarter (22%) of all employers still do not know whether they are liable to pay the levy.

Crowley said: ‘Evidence from our report and the latest official statistics suggest the levy will also continue to drive the creation of far too many level 2 apprenticeships, which offer much poorer returns to individuals in terms of future wages and often provide limited progression opportunities.

‘There also needs to be much better support for SMEs, both for those that pay the levy and those that don’t, to help them to design and implement effective apprenticeship schemes. Our research shows too many SMEs are either not planning to use levy funding to invest in apprenticeships or are planning to write the levy off as a tax.’

CIPD is calling for the government to reform the apprenticeship levy into a more flexible training levy, with an awareness campaign to promote the levy and its benefits to businesses. It also wants an urgent review of apprenticeship standards, carried out by the Institute for Apprenticeships and Technical Education, in order to ensure that they are providing quality learning and education.

Report by Pat Sweet

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