Last reviewed 1 March 2021

The Apprenticeship Levy has failed on every measure and will undermine investment in skills and economic recovery without significant reform, the Chartered Institute of Personnel and Development (CIPD) has warned.

Analysis by the professional HR body has shown that, since the levy’s inception four years ago, employer investment in training has declined, overall apprenticeship starts have fallen and far fewer apprenticeships have gone to young people.

The CIPD is therefore urging the Government to announce the reform of the Apprenticeship Levy into a more flexible training levy to boost employer investment in workforce skills and to help the economy recover.

It has revealed that total apprenticeship starts have fallen from 494,900 in 2016/17 to just 322,500 in 2019/20, while the number of apprenticeships going to under-19s has dropped from 122,800 in 2016/17 to just 76,300 in 2019/20.

The current funding arrangements are also failing smaller organisations, the CIPD points out. Whereas, in 2016, 11% of small businesses (fewer than 50 employees) had apprentices in their organisations, by 2019 this was down to just 9%.

CIPD Chief Executive, Peter Cheese, said: “On all key measures the Apprenticeship Levy has failed and is even acting to constrain firms’ investment in apprenticeships and skills more broadly. It appears to have achieved the opposite of its policy objectives. Without reform it will act as handbrake on employer investment in skills, damaging firms’ ability to recover from the pandemic”.

A CIPD survey of 2000 organisations by YouGov finds nearly half of large employers saying that reforming to a more flexible training levy would help them improve workplace productivity and business performance to either a great (23%) or a moderate extent (23%).

Just 13% of large firms, employing 250 or more staff, said reforming the levy in this way would have no impact on productivity or performance.