The apprenticeship levy will need a “genuine change of direction” to be fit-for-purpose, business body the CBI has said, as a survey by the organisation shows more than a third of businesses expect the policy will force them to make cuts to non-apprenticeship training.

The survey also reveals that only around a third of businesses believe they are likely to offer more apprenticeships under the levy scheme, set up to fund the government’s target of 3 million apprenticeships by 2020. One in five medium-sized businesses say they will decrease the number of apprenticeship places. Almost half of businesses in the survey say the poor design of the levy could cause increased prices or reduced margins.

Businesses are calling for more flexibility on how to spend levy funds and clarity between the UK and the devolved nations as to how the system will work. While large businesses across the UK will have to pay the levy from next year, it is not yet clear how a proportion of the created income will be distributed in Scotland, Wales and Northern Ireland.

‘Big challenge for education secretary’

Josh Hardie, CBI deputy director-general, said a successful future for the whole of the UK rested on the country’s education and skills system. “Following the vote to leave the EU, the UK must carve out a new economic future and this is an area where we must take action to support our competitiveness and prosperity,” he said. “Getting the skills and education system right across the country, particularly in partnership with the devolved nations, will be a big challenge ahead for the new secretary of state.”

He said the recent announcement in the government’s Skills Plan of new high-quality vocational routes to sit alongside A levels was a positive step towards increasing access into skilled careers. “Now the priority is getting the apprenticeship levy fit-for-purpose as it will need a genuine change of direction if it is to work for apprentices, business and the economy,” he added. “Nine months out from the planned start date, businesses still lack vital information - the new administration should take the time to get this right.”

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