New Apprentices Have Dropped Since Introduction of Apprenticeship Levy 

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31 October 2023

CIPD research shows that the number of apprentices starting in SMEs has dropped by 49 per cent, since the introduction of the Apprenticeship Levy in 2017.

There were 241,000 new apprenticeship starts in SMEs in England in 2016/17, compared to 123,800 in 2020/21.

Despite the number of skills shortage vacancies more than doubling in England, from 193,800 in 2017 to 460,100 in 2022, investment in training per employee in the UK has also decreased, by 19 per cent since 2011. This means that UK investment per employee is at around half that of the EU average.

What is the Apprenticeship Levy?

Initiated in 2017, the Apprenticeship Levy applies to employers with an annual wage bill of more than £3 million. 0.5 per cent of the company’s payroll each month is then charged as a levy tax, which can be reinvested into apprenticeship training. 

The Chartered Institute of Personnel and Development (CIPD) feels that the levy has “failed to reverse the decline in employer training more widely”, which was one of the policy objectives for its introduction. 

The CIPD is calling on the Apprenticeship Levy to be reformed into a “flexible skills levy”. Lizzie Crowley, Senior Policy Adviser at the CIPD, explained: “Skills and labour shortages continue to be a real problem across the UK and all sectors of the economy, and we need to get apprenticeships and vocational education right if we’re to tackle these challenges. Investment in training and development is critical in addressing skill gaps and improving workplace productivity, but the Apprenticeship Levy has failed to reverse the decline in training we’ve seen over the past two decades.

“Despite the importance of SMEs to the UK economy, there are still major barriers in their engagement with the current skills system, including its complexity, lack of resources, and poor people management capability. Good quality advisory and business support services, aimed at boosting management capability and increasing understanding of skills development, are key to engaging small businesses.

“Reforming the levy into a flexible skills levy will also help boost employer investment in the technical skills they need and free up more funding to invest in apprenticeships.”

Picture: a photograph of two people sitting at a meeting table together, with one using a laptop. Image Credit: Unsplash

Article written by Ella Tansley | Published 31 October 2023

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