The Apprenticeship Levy: Nine months on

It’s now been over nine months since the Apprenticeship Levy came into effect. Has it had the desired effect of increasing employer spending on training? Or have most companies simply shouldered the cost as an additional tax? CIPD have conducted a study of the early impact of the Levy on both apprenticeships and overall employer investment in training. read some of the key points below:

The total number of apprenticeship starts has fallen

When the Apprenticeship Levy introduced the government had hoped that it would help them reach their target of 3 million new apprenticeships starting between 2015 and 2020. However, in the initial aftermath of the Levy’s introduction the complete opposite seems to have happened: Over the period May 2017 to July 2017, there was a huge year-on-year decline in apprenticeship starts of a 59%.

However, the CIPD’s employer survey suggests that 73% of organisations are expecting to use their levy funds to either expand or develop apprenticeship programmes in the future, even if they haven’t done so immediately. This means that in the long run, the Apprenticeship Levy should have a positive net impact on the number of apprenticeship starts in the UK.


Organisations paying the Levy are much more likely to offer official apprenticeships

59% of organisations who are paying the apprenticeship levy are offering official apprenticeships, compared to just 17% of those that do not have to pay. While this may seem like a good thing, the CIPD raise the possibility that the Apprenticeship Levy may be making it less likely for SMEs who aren’t paying the Levy to take on apprentices. If the Government is to reach its target of 3 million apprenticeship starts, the levy payers will have to make up for any potential drop-off in apprenticeships at those organisations that are exempt.


The majority of apprenticeships are still low level

Over 50% of apprenticeships starts are currently level 2, and although there has been significant growth in higher-level starts over the past five years, they still lag behind low-level apprenticeships considerably. CIPD argue that more high-level apprenticeships will be better both for employers, who receive more skilled workers and for the apprentices themselves, who are more likely to receive permanent employment with better pay when they are placed on apprenticeships of level 3 and above.

The CIPD also raise concerns in the report that many of the new apprenticeship standards might be too narrow in scope, leading to apprentices not being equipped with appropriate amounts of transferable skills.


Many companies are still not prepared to take advantage of the Apprenticeship Levy

Shockingly, over a fifth of employers still don’t even know if they are required to pay the Apprenticeship Levy. Even among those who know they are paying, one in eight have not calculated the amount it is going to cost them.

What’s more, 19% of employers say that they intend to simply write off the levy as a tax without spending their funds on apprenticeships at all.  It’s clear that employers still require guidance on the details of the levy and how to use their funds effectively if the new funding system is to be a success.



Read the CIPD’s full report here. Find out more about how AVADO can help you make the most of your Apprenticeship Levy funds.

George Ferguson

Posted January 19, 2018