IoD: ‘New business survey shows need for Apprenticeship Levy reform’

  • Just 14% of employers who pay the Apprenticeship Levy think it is fit for purpose
  • Only around a third understand the system perfectly, and even fewer will reclaim their full Levy entitlement
  • 14% view the Levy simply as a tax
  • A quarter of those who don’t employ apprentices say they can’t because of regulatory or administrative burdens

Almost one year on since the introduction of the Apprenticeship Levy, only 14% of business leaders who pay it think it is fit for purpose, a new poll by the Institute of Directors reveals today. As it stands, fewer than one in five will use Levy contributions to take on more apprentices than otherwise. The business group said the figures showed that reform was needed.

For directors, the skills gap remains one of the biggest factors having a negative impact on their firms. A majority of companies who use apprenticeships thought they were an important part of the mix for training. This form of training could be playing more of a role, the survey suggested, with a third of employers who don’t use  the scheme saying they are being prevented from doing so by the administrative burden or cost.

Business leaders nevertheless have a strong commitment to training staff, with 7 in 10 members of the IoD saying they offer training to keep up with industry trends, and a third specifically providing it to help prepare staff for promotion.

Seamus Nevin, Head of Policy Research at the Institute of Directors, said:

“Business leaders support the Government’s drive to raise the quality and quantity of apprenticeships and to improve the prestige of vocational education. Across the country, employers in almost every sector are reporting skills shortages, and apprenticeships are a very important part of the solution.

“As this survey shows, however, the Apprenticeship Levy is not working as intended.  The new system was supposed to be employer-driven but the narrow and centrally-controlled design mean this is not happening. It is not helping firms to invest in skills and train in a way that best suits the needs of our economy. Many employers are unable to make the complex and restrictive rules fit their specific training requirements.

“This has been reflected in official statistics, which reveal a decline in apprenticeship starts since the Levy was introduced. While the intention behind the policy is right, employers need to see a change in how it is implemented urgently.  We strongly advise that the Levy and co-funding system are reviewed in order to give employers the flexibility to develop the skills they need to be competitive, and to avoid any further drop in apprenticeship recruitment and training volumes.”