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Businesses pulling out of apprenticeships

A quarter of firms have taken the decision to absorb the levy as an added cost to their business

apprenticeships training schools vocational training CBI business

A quarter of firms have taken the decision to absorb the levy as an added cost to their business

The number of businesses offering apprenticeships has dropped by 16 per cent in a single year, according to the CBI Education and Skills Annual Report.

The report, in partnership with Pearson and published today, assesses the impact of the apprenticeship levy. It states that 70 per cent of businesses offered an apprenticeship in 2018 – down from 83 per cent in 2017. 

Of those that do offer programmes, more than half experienced difficulty in recruiting apprentices or are expecting to do so within the next three years. More than one in four businesses have taken the decision to absorb the levy as an added cost to their business.

The report renews calls for reform of the levy – which was introduced last year and is paid by all large businesses across the UK – to allow funding to be used for a wider range of training costs, and for greater flexibility around transferring and pooling of funding. About half of businesses would like the bureaucracy involved to be reduced to make the apprenticeship system more user friendly.

Last month, the government announced that employers would be able to share a quarter of their apprenticeship levy pots with their supply chain. And last week, the chancellor of the exchequer announced in his autumn Budget that the amount that non-levy-paying companies had to contribute towards the cost of apprenticeship training would be halved. 

Business and education

Business engagement with young people in education also reduced, said the CBI and Pearson  – from 81 per cent in 2017 to 75 per cent in 2018 – despite two-thirds of respondents saying they wanted to play a greater role in supporting schools and colleges.

There continues to be a lack of awareness of the new T levels, due to be introduced from 2020, with 42 per cent of companies unaware of the new qualifications, and 64 per cent largely or wholly unaware of the 45-day work-placement element of T levels, according to the report. 

John Cope, the CBI's head of education and skills policy, said: “While some companies are benefiting from the apprenticeship levy, big challenges remain. To its credit, the government has listened and is delivering reform: making the system more flexible and slashing the cost for small businesses. But the end goal remains that the apprenticeship levy should evolve into a more accessible skills levy.”

Rod Bristow, Pearson’s president for UK and core markets, said: “We believe that the 16-19 phase should continue to offer young people three quality educational pathways: a purely academic curriculum through the A level; a broad career-focused route through the Applied General; and specialised options that allow students to prepare for a particular occupation through the incoming T-level system. This gives young people a range of options to enable them to go to university, start an apprenticeship or enter skilled employment.”

'Not a moment too soon'

Mark Dawe, chief executive of the Association of Employment and Learning Providers, said: “The Budget showed that the government is now reacting positively to the concerns about how the levy system is working, which comes at a moment not too soon because this survey confirms that the fall in apprenticeship starts has been accompanied by employers pulling out of the programme. We believe that if ministers took a more flexible approach to the off-the-job training rule, then the exodus could be stemmed."

Mr Dawe said that the stalling of engagement between schools and employers on careers guidance was "a deep concern", but that training providers could act as a valuable link between them." 

Next generation

Apprenticeships and skills minister Anne Milton said: “We are working with employers across the country so everyone leaves education ready for work, and so businesses can employ people with the higher skills they need for a rapidly changing world."

She added the government had worked with over 200 employers to design the new T level content "so that students will have the skills that they demand".

“We introduced the apprenticeship levy to create long-term investment in training and make sure large companies are supporting the‎ next generation of workers’ skills. In response to feedback from employers, we are making the levy more flexible but we need businesses to get on board for the full benefits of this to be felt. I’ve seen some amazing programmes kick-started, providing opportunities for people of all ages in a range of exciting industries."

 

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