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Last updated: 04.10.17

Are Apprenticeship Levy rules causing issues for younger workers?

It has now been several months since the government introduced its new Apprenticeship Levy, a measure designed to generate funds for businesses to invest in training new apprentices.

As with any new tax, the rollout of the levy has not gone without a certain degree of scepticism and criticism, with some companies finding the new system easier to work with than others. However, worries have been raised in some quarters that there may be issues with the levy that mean that younger workers - the group that an apprenticeship-focused scheme would seemingly be intended to benefit - are losing out.

A number of business organisations have already raised this problem with the government, increasing the pressure on lawmakers to ensure this key element of the Apprenticeship Levy is working as it should.

The potential issue

The levy requires that all companies paying more than £3 million in wages to contribute 0.5 per cent of their overall salary bill into an independent fund, which is then provided back to companies in the form of vouchers to spend on apprenticeship training with approved providers.

However, the fact that this new system has essentially removed differences in the funding of apprenticeships across all ages is actually putting businesses off handing opportunities to younger and less experienced workers, according to the Association of Employment and Learning Providers (AELP).

The organisation has expressed concerns that the levelling of the playing field is leading more companies to offer training to experienced candidates and management-level workers who require less supervision, meaning training providers are seeing some employers reducing their recruitment of apprentices aged 19 and under.

This claim has since been underlined by official government data, which showed that only 15 per cent of apprentices taken on since May this year have been aged 16 to 18.

The industry response

These trends have been taken as a cause for alarm by AELP chief executive Mark Dawe, who said the government is "in serious danger of undermining its own social mobility agenda" unless it addresses the bias inherent in the system as it stands.

He said: "Education ministers need to get a firm grip on the apprenticeship reforms to stop a potential haemorrhaging of young talent missing out on opportunities that employers were previously willing to offer."

Meanwhile, Penny Tamkin, director of employer research and consultancy at the Institute for Employment Studies, told People Management that she concurs with the AELP's assessment, saying it makes sense for companies to adopt the approach that delivers the greatest return on investment for them - even if it means adopting a bias against taking on younger apprentices.

"You can't expect employers to somehow resolve this out of some kind of sense of greater good; it's just never going to happen. Employers don't behave like that. They've got to think about their business," she said.

What could be done?

Tackling this problem will potentially require the government to change tack on how the levy is organised, with the AELP having submitted a series of recommendations on how this could be achieved.

Its key suggestion is to ensure that all apprentices aged 16 to 18 be fully funded by the government, regardless of the size of company that is employing them; additionally, the organisation stated that providing extra funding for the system as a whole would allow its benefits to be spread more widely, particularly among candidates who are starting from a lower base of skills.

It also pointed out that the stringent application of the 20 per cent requirement for off-the-job training is putting some employers off recruiting apprentices, due to an unwillingness to take on trainees who will be out of the office for the equivalent of one day a week.

Moreover, a report from the Evolve Learning Group found that only 37 per cent of employers with more than 150 staff feel they fully understood the levy and its benefits, suggesting that many companies are still yet to come to terms with how the system should be working almost half a year after its introduction.

It is likely that the government will need to address some or all of these issues in the coming months if the intended benefits of the Apprenticeship Levy are to be realised in practice.

Summary: The new Apprenticeship Levy is designed to encourage companies to invest in apprenticeship training - but many in the industry are concerned that younger workers may not be benefiting in the desired way.

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