AoC: 'To levy or not to levy, that is the question'

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Although we at the Association of Colleges support the apprenticeship levy in principle, it is easier to take a dispassionate look at its introduction if the potential alternatives are considered. We are unsure whether any of them would be acceptable in the current climate.

The government currently injects around £1.5 billion each year into apprenticeships. It is hard to gauge the impact of the reforms, but this should be sufficient to fund up to 60 per cent of the government’s 3 million new apprenticeship starts. Currently some employers pay money towards the cost of their apprentices, but it is safe to assume that, when they begin paying the levy, those payments will cease. In very broad terms, another £1 billion needs to be raised by whatever means to bridge the funding gap.

Securing a levy from businesses is one thing, but great consideration must be given to how it is spent. For example, if the levy only covers the delivery of the apprenticeship, and not the admittedly potentially lower wages paid to the apprentice by their employer, then employers could still be out of pocket in paying for the apprentice's training. Employers may also be concerned that once they’ve paid for training, the apprentice will move on to another job outside the company. What we fear is that employers could avoid the extra cost by making existing employees into an apprentice, thus avoiding the need to, and expense of, taking on a new member of staff.

It’s important to remember why an apprenticeship is a good thing. It gives people with the opportunity to study off the job while learning the practical skills required on the job. They are designed to provide the skills, knowledge and conduct to work in a sector such as construction or creative design, rather than specifically for their current employer. In creating a levy drawn down from employers, there is a risk that employers will want to tighten the parameters of what the apprentice is taught, leaving them lacking the transferable skills to move to another employer.

It should also be the case that any apprenticeship providers – and this includes employers and universities – should be treated equally, in that if they are drawing on government funding they should be subject to scrutiny by Ofsted and the Skills Funding Agency to ensure the apprenticeships being provided are of high quality.

The first government consultation on the issue of the levy has created more questions than answers. As with most changes that involve money, feelings appear to be running high. The arguments and concerns seem to generally be around the idea of having a levy at all, which is not surprising as we can’t argue about who is and isn’t in scope to pay, what the income generated can be spent on and other more operational issues, because we don’t yet know what these will look like. However, the AoC supports the levy if it means that apprenticeships remain of a high quality.

But as the government tries to cut spending to reduce the UK deficit, it’s impossible to say where the additional £1 billion needed for the apprenticeships target will come from. If it isn’t funded by employers, then who will provide funding? It could be left to the individual apprentice, as is the case in higher education, but the attempt to set up a loan system to fund apprenticeships for older people failed owing to lack of take-up. It would certainly be interesting to see what would happen if individual 16- to 18-year-olds had to pay for an apprenticeship, against "free" alternative educational paths.

So we are back to the levy. If the UK economy is in such need of highly skilled workers, it seems illogical that employers are reluctant to put their hand in their pocket in order to provide the workforce that is needed. However, it is difficult to imagine them having a change of heart.

The levy is unlikely to go away. There seems to be no alternative and the government’s ambitions and plans have been clearly nailed to the mast. Employers may find they are not given a choice about whether they’re in or out.

Teresa Frith is senior skills policy manager at the Association of Colleges. She tweets at @FrithTeresa

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