Designing an Apprenticeships Levy that Works

One surprise announcement of the Summer Budget is the new apprenticeships levy. This is intended to help meet the government’s target of 3 million more apprenticeships by 2020.

In first proposing the levy, Alison Wolf argued that the state of the government’s finances made the levy a policy imperative if the government is to meet its ambitious targets on apprenticeships. But the levy doesn’t just raise money – it creates an incentive for employers to offer apprenticeships by recouping the money. As such, the levy is designed to increase employer contributions to apprenticeships, while at the same time increasing demand for apprentices amongst employers.

At this stage little is known about the details. The levy will be targeted at large employers, who will be able to claim back the money they are charged if they invest it in apprentices. This will all be administered through the forthcoming apprenticeship voucher system. The policy replicates the levies of the old Industrial Training Boards, and the one which still operates in the construction industry; but it applies across sectors and to apprenticeships specifically. It will be interesting to see how this plays out between the different sectors.

Equally important is what sits alongside the levy. The government’s task is to ensure that the apprenticeships system is attractive in its simplicity for employers; and that apprenticeships are of high quality and well targeted.

On quality, the Government has established the correct direction of travel, giving greater responsibility to employers in designing apprenticeship standards and assessments that meet their needs. But there are fears among many small employers, training providers, and others invested in apprenticeships that the new employer-led standards will become too narrow in scope. Apprenticeships should lead to mastery of an occupation, not just training for a job.

The government will also need to prevent firms rebadging training for existing employees as apprentices. A levy has advantages but there is a risk of more rebadging if the correct safeguards are not in place. Involving professional and occupational groups in designing standards is one possible answer to this.

Our Commission on Apprenticeships, co-chaired by Robert Halfon MP and Lord Glasman, makes a number of suggestions for driving up the quality of apprenticeships, building on the now well-established political consensus around their importance.