It argues that any money raised by the levy should go into a single fund (for England) which would be combined with any investment funds allocated by the government, currently £1.5bn.
The fund would then support all Apprenticeships in England for both large and small employers. As with the current system, this would mean all employers would be able to access the funding support and the level of that support would be set out by the government for each standard (by bands) and for each age group of apprentices. This would be a simple system where the government’s contribution would not be dependent on each employer’s contribution or the price agreed for the training.
Risks with a mandatory system
AELP is concerned that there are risks in making payment for Apprenticeships a mandatory levy as many employers may look for ways of defraying cost and it may also slow down the growth in the programme until the details of the new levy are known. CBI has said, for example, that a proposed levy rate of 0.5% would be far too high.
AELP says that it is unfortunate that the BIS consultation does not cover a number of important issues of principle such as:
- Should the levy cover all employers
- Should the money raised replace or enhance the current £1.5bn investment by government
- Should the government continue to fully fund those young people up to the age of 19 as they do in the school system
- Should the government continue to support English and maths support up to level 2 and
- Should the government continue to provide additional funds for those learners with special needs?
Without the answers to these and other policy issues, it is difficult to give a definitive response to the consultation questions.
Preserving quality within the Apprenticeship programme
Another AELP concern is that many employers will be driven by simply getting their money back. This may result in organisations re-badging internal training or even taking on apprentices when they have no real intention of giving them a job.
The levy system should not encourage employers to become training providers themselves just to minimise cost or to access funds. The decision for employers on how they deliver the programmes should be based on what works for them and the quality of the programme delivery, but AELP points out that the best provision is normally found where there is a committed employer and an experienced, skilled provider.
AELP recognises that the Treasury may want to introduce a cap on growth but the use of caps should be minimised. Apprenticeships have a high payback for employers, learners and the economy so any attempt to cap activity would be counterproductive. A capping system could also be very complex with government having to track levy charges collected for every employer and managing across long periods of activity.
AELP calls for the government to ensure that the programme is fully funded for 16-19 year olds and any apprentice recruited directly from unemployment whatever their age. This would mean that government should continue to invest funds into the Apprenticeship funding system. There should be no cap on any employer to take 16-19 year olds and the government should allow more money to be drawn down for the funding of these apprentices.
AELP CEO Stewart Segal comments:
“Our main recommendations for the levy are based on a principle that we should maximise the choice for learners and employers. We accept that the levy will be a source of additional investment and will engage more larger employers. However we have to be cautious about the impact on the smaller employers in the Apprenticeship programme and how the levy will focus the attention of employers on the programme’s financial cost rather than the quality of delivery.”
The AELP submission in response to the Apprenticeship levy consultation can be downloaded here.