A coalition of leading business bodies representing tens of thousands of employers and millions of workers has written to the Chancellor of the Exchequer Sajid Javid today, urging him to use the spending review to broaden the apprenticeship levy.
A reformed training and skills levy would allow employers to spend their levy funds more flexibly, which would allow millions more workers to benefit from quality training and career progression opportunities. This would boost the UK economy just as it needs it most.
Mr Javid wrote in the Financial Times during his campaign for leadership of the Conservative Party:
“I will broaden the apprenticeship levy into a wider skills levy, giving employers the flexibility they need to train their workforce, while ensuring they continue to back apprenticeships.”
In response, the joint letter says:
“We believe this would be the right step. A levy that allows businesses greater flexibility to fund accredited, quality training that is effective for workers and employers – rather than meeting a Government target – would be ideal. It would help to fill skills shortages and enable higher pay for workers.”
The coalition includes the Recruitment & Employment Confederation (REC), Chartered Institute of Personnel and Development (CIPD), Freight Transport Association (FTA), The Chartered Institute of Management Accountants (CIMA), Association of Accounting Technicians (AAT), the Association of Independent Professionals and the Self-Employed (IPSE) and ScreenSkills. They collectively represent employers, business owners and professionals across all sectors and regions of the UK.
Neil Carberry, Chief Executive of the REC, said:
“The apprenticeship levy was designed with the best intentions, but the current approach has not worked. The number of young workers doing apprenticeships has slowed and non-apprenticeship training has taken a huge hit. It’s time to think again. Moving away from a complex system that locks many workers out, to a flexible skills levy that lets firms buy the most appropriate high quality training for any worker is the right choice.
“Our Report on Jobs survey tells us that there are skills shortages all across the economy, from logistics to hospitality to health and social care, and the recruitment industry is doing its part to help. However, they employ almost 1 million temporary agency workers who are currently shut out of levy-funded training. A flexible skills levy would allow recruiters to provide quality training for temps which would help them progress at work, earn more and fill some of these vital roles.
“At this critical time for the UK, skills matter more than ever. It is time for this policy to be redesigned in order to boost productivity and help workers to learn and progress.”
Peter Cheese, the CIPD’s Chief Executive, said:
“The apprenticeship levy is too inflexible and fails to encourage or create the best opportunities for employers to invest in the skills they need to boost the UK’s productivity and competitiveness. Our research shows employers want a more flexible training levy that supports investment in apprenticeships, as well as other equally important forms of workplace training and development.”
CIMA’s Andrew Harding FCMA CGMA, Chief Executive – Management Accounting commented:
“One of the reasons the apprenticeship levy was initially introduced was to raise the level of employer investment in skills and tackle the UK’s productivity gap. We should remember the valuable difference it has made to a number of employers and apprentices to date.
“However, recent figures released by the Office for National Statistics clearly show that we continue to struggle with productivity despite record employment and strong wage growth. To remain competitive on the global stage and raise our efficiency, we need to embrace and invest in digital transformation. Our success will highly rely on having a well-trained, tech-savvy workforce, yet evidence suggests that we are still far from our target. In fact, CIMA’s 2019 Mind the Skills Gap research shows that nearly a fifth of UK workers haven’t participated in any in-work learning in the last twelve months.
“We must better support current workers to reskill and upskill throughout their careers. This is why it is essential that we review our national education and skills policies, especially the apprenticeship levy as it currently stands, expanding it to provide for reskilling and lifelong learning.”
Sally Gilson, Head of Skills Campaigning at the Freight Transport Association (FTA) said:
“Quality apprenticeships are important for businesses but they can be restrictive. Training is not a one size fits all and funding must be made available for all quality vocational training for those that are employed full and part time, on a temporary basis or self-employed. With the skills shortages being experienced across the whole of the UK, businesses should have the freedom to use levy funds on all quality vocational training. A Training Levy as opposed to an Apprenticeship Levy would help businesses gain the skills they need.”
Mark Farrar, Association of Accounting Technicians (AAT) Chief Executive, added:
“AAT has campaigned for the apprenticeship levy to be renamed the “Skills Levy” and broadened to include traineeships and other forms of high quality training since 2016. Widening the remit of the levy will help address the fall in apprenticeship starts, the frustrations of many employers and the future skills needs of UK plc.”
The diverse coalition highlights the essential role that training and skills development play in increasing the UK’s productivity. Changes to the levy will help ensure that the country’s workforce has the skills needed both to thrive in today’s fast-changing labour market and be able to adapt to the workplace of the future.
An apprenticeship lasts a minimum of 12 months but 960,000 out of 1,020,000 temporary and contract workers in 2017/18 took placements which lasted less than 12 months. This means 98% of workers on temporary/contract assignments were automatically excluded from accessing the opportunities that apprenticeships offer.
The KPMG and REC Report on Jobs is a survey of 400 recruitment and employment consultancies about the labour market, compiled every month by IHS Markit.