Apprenticeship numbers fall by 59% after levy imposed

There has been a big fall in the number of workers starting apprenticeships in England since the introduction of the government's levy scheme earlier this year.

The levy was supposed to increase the number of people training at work.

But according to Department for Education figures, at the end of this academic year, between May and July, 48,000 people began an apprenticeship.

That was less than half the 117,000 for the same period last year.

The levy was introduced to raise £2.5bn a year for training and is payable by any organisation with a wage bill over £3m. The government estimated that it would affect 2% of businesses.

The levy applies to all UK employers; however Scotland, Wales and Northern Ireland manage their own apprenticeship schemes.

The aim is to fund up to three million new apprenticeships and the government has said it will "support productivity growth through the increase in training".

Most firms are not large enough to be liable for the levy.

However medium-sized firms with wage bills under £3m, that employ between 50 and 200 staff, are also faced with new responsibilities.

They include releasing apprentices for one day a week for off-site training and contributing some of the training costs, which has made apprenticeships less popular.

The DfE says it had expected there would be an initial drop-off in the number of people starting apprenticeships following the introduction of the levy.

Employers paying the levy have 24 months to spend funds earmarked for apprenticeships, the DfE said, so they are taking time to formulate new schemes.

Robert Halfon, who was apprenticeships and skills minister at the Department for Education until the reshuffle in June, said: "Initially the number of starts has gone down, but I suspect over the coming year they will go back up again."

However, many industry experts say the scheme has been badly organised.

"The policy intent was great, the implementation has been diabolical," says Mark Dawe, chief executive of the Association of Employment and Learning Providers (AELP), whose members include independent trainers, employers and further education colleges.

The Chartered Institute of Personnel and Development's (CIPD) skills adviser Lizzie Crowley, said 98% of firms were not large enough to be liable for the levy.

But she said these companies were being put off offering more apprenticeships by the cost of releasing the trainees for one day a week and having to shoulder 10% of their off-site training fees "whereas previously the vast majority would have received this free of charge".

The AELP said it had already made clear to the government what needed to be done to increase the number of apprenticeships.

"There needs to be appropriate flexibility of off-the-job training. In addition, employers without levy funding should not be charged for training 16-24 year old apprentices," said Mr Dawe.

"Without these actions, we do not believe the government will reach their manifesto commitment."

Verity Davidge, head of education and skills policy at the manufacturers' organisation the EEF, said some members had been "left frustrated that the introduction of the levy has in, some cases, resulted in them being unable to offer and deliver apprenticeships".

Ms Davidge described the 59% drop in apprenticeships as "shocking" but added that it was "frankly unsurprising as we continue to hear stories from companies who have hit a brick wall in trying to get levy-supported apprenticeships off the ground".

"Accessing the funding has proven complex and difficult to unlock in time, and employers have struggled to get their heads around the complex rules and restrictions in accessing funds," she said.

"As a result some apprentices have been told that their apprenticeship has been put on hold for now, which is clearly a huge disappointment for young people who had effectively been offered a job - only to have their hopes dashed."