Could the apprenticeship levy face the axe?

The introduction of the apprenticeship levy has been badly handled, says Stephen Exley. But could it be at risk?

Could the apprenticeship levy face the axe?

When finalising its manifesto for the general election, the Conservative Party has quite the job on its hands to if the resulting headlines will focus on anything but Brexit. It’s likely, though, that further education will have a role to play. But beyond the old favourites of recent years like T levels and institutes of technology, could there be any surprises on the way?

There’s one wildcard suggestion that I’ve heard floated by some well-informed observers. And, were it to raise its head, it would certainly be a highly controversial move. Could the Conservatives be about to abolish the apprenticeship levy?

My initial reaction to this idea was that it sounded bonkers. Why would the party trash one of its own policies? Not least when it is arguably the government’s boldest move of the last few years when it comes to driving up skills levels needed to power up the UK’s stuttering post-Brexit economy.


Background: Apprenticeships: Providers face cash shortage for SMEs

More: Apprenticeship levy needs reform, UCU urges

Opinion: 'The apprenticeship levy is set to run out. Changes are needed'


One might assume that some policies were so significant to the Tories that they could be untouchable. But there’s a growing sense that the future of the levy could well be up for genuine debate. And there are three main reasons for this.

Apprenticeships: starts down, levy running out

“It's a huge reform to raise the skills of the nation and address one of the enduring weaknesses of the British economy.” This was how the levy was announced by then-chancellor George Osborne back in November 2015. It was pitched as a levy of 0.5 per cent on large company’s payrolls which would raise £3 billion a year and fund 3 million apprenticeships. Of course, the 3 million target ended up being quietly ditched due to the pronounced drop off in starts – the slow move from frameworks to standards playing a key role in that, along with employers’ initial nervousness about the new system. But another issue that has emerged is that employers, keen to extract maximum value from the programme, have opted for higher-level, more expensive apprenticeships. As a report published by the Learning and Work Institute this week put it, current trends suggest that the levy could be overspent by £1 billion in the next year – despite apprenticeship starts falling by a fifth since the introduction of the levy. Costs to businesses going up, apprenticeships going down: whichever way you cut it, it looks like a pretty poor return for a policy hailed as a game-changer.

A new broom sweeps clean

George Osborne, the chancellor behind the levy’s introduction, is long gone from Westminster. Nick Boles, the scheme’s architect, is ancient history as far as today’s Conservative Party is concerned, having already resigned the whip and announced plans to step down as an MP. Those politicians most closely associated with the flailing programme will not be returning to the House of Commons after 12 December. While it would be embarrassing for the government to scrap a policy it introduced just two years ago, none of the big players in the current administration has that much skin in the game. Could there be more to gain from scrapping – or, at least, overhauling – it than keeping it?

Cosying up to business

It’s fair to say that while many employers value the goals behind the levy, its implementation has left a lot to be desired. Business lobby organisations argue that many employers have made the decision to write off the levy as a tax, rather than bother engaging with apprenticeship policy. The CBI has repeatedly called for the levy to be made available for different types of training, not just apprenticeships. So, if the government were looking to offer a policy for employers to rally behind, how about cutting their costs and scrapping the levy completely?

I’ve heard some well-informed sources suggesting they think this could happen. Personally, I’m not completely convinced. Even the CBI wants to see the levy reformed rather than removed. John Cope, the body’s head of education and skills, told the Association of Employment and Learning Providers’ (AELP) Autumn Conference this week that its members would even be willing to contribute more towards the levy if the training that came out of it met their needs better. Don’t forget that the leading figure whose firm nudge managed to push the levy into existence was political influencer extraordinaire, Baroness Wolf of Dulwich (coincidentally, the mother of Rachel Wolf, who is writing the Tory manifesto).

In several respects, the introduction of the levy has been appallingly managed. But would it be more politically expedient to overhaul it or scrap it?

In any case, given the looming overspend there will be some difficult decisions to be made which cannot be put off for much longer. But there is at least one thing that should be clearer come 13th December: who it will be that has to make them.

Stephen Exley is FE editor at Tes

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