Hammond threatens to tinker with the Apprenticeship Levy

October 1, 2018 / Isla MacFarlane
Hammond threatens to tinker with the Apprenticeship Levy

At the Conservative Party Conference, Phillip Hammond acknowledged the well-publicised problems with the Apprenticeship Levy. “We have heard the concerns about how the apprenticeship levy is working, so today we’ve set out a series of measures to allow firms more flexibility in how the levy is spent,” he said.

“But we know that we may need to do more to ensure that the levy supports the development of the skilled workforce our economy needs,” Hammond added. “So, in addition to these new flexibilities, we will engage with business on our plans for the long term operation of the levy.”

However, Mark Farmer, CEO of Cast, argues that the changes do not go far enough. He said, “The Apprentice Levy alterations outlined in Hammond’s conference speech are the latest in a series of piecemeal and reactive modifications to the Levy in gradual recognition that only 2% of UK employers pay the levy, but that training must happen in a much more diverse and SME-led supply chain, most of whom are not levy payers.

“In the specific case of construction, with a hugely fragmented structure of over 315,000 firms, the vast majority of whom do not pay Apprenticeship Levy, the 25% cap is still too low to reflect how big businesses could better support the smaller businesses they rely on. The larger contractors and housebuilders only employ 10-15% of the industry so there is the very real potential for a continued massive underspend of the collected levy at a time when the need for an appropriately skilled workforce that drives productivity has never been greater.

“In addition to this, there has been slow progress in agreeing new standards, assessment methods and the funding allocations of the Apprenticeship Levy preventing it being spent in the first place. There is also a growing risk that many of the standards already signed off and others being sought relate to ‘here and now’ roles and not the more future-proofed skills and competences that the construction workforce will increasingly need as it enters an unprecedented period of technology led change.

“As the standards have to be employer-led, this relies on a limited number of more progressive employers recognising that as design and production techniques change, current apprentices will increasingly be taught outdated skills that although respond to today’s needs, do not reflect an impending digital revolution that is already changing the workplace. This future-proofing is the single biggest thing that the Institute for Apprenticeships should be forcing through its standards sign off process.

“If it does not, the government’s Industrial Strategy ambitions will be unachievable.”

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