The new Government has committed to reform the Apprenticeship Levy (introduced under the Conservatives in 2017) to allow businesses to use a to-be-determined portion of the levy pot on other skills training, through a new ‘Growth and Skills Levy’. This is a central part of the Government’s cross-departmental skills strategy and its Growth and Opportunity Missions. Within weeks of the election, officials have started laying the foundations of the policy, with work ongoing to develop the detail.
In this timely, new policy report from Holly Papworth and Sorah Gluck we set out our concerns that, unless the policy is carefully designed, this move could squeeze funding for apprenticeship opportunities. The worrying decline of young people participating in apprenticeships, especially at entry levels, will then continue.
The report also notes that the Growth and Skills Levy could risk compromising achievement of other Government policies and missions: the Youth Guarantee (key to the Opportunity Mission) and the Growth Mission (as it’s SMEs and industries integral to growth that are most likely to lose out). Instead, we set out the levers left to pull in the apprenticeship system that would make a substantial difference to employers’ ability to use their levy and create more, lower-level opportunities for young people, before jumping to – or at least, in tandem with – flex of the levy. We must not forget that the apprenticeship system is there to serve young people as well as employers.
Moving forward with the Growth and Skills Levy, there are valuable lessons to learn from the design and implementation of the Apprenticeship Levy – including the need for clearly articulated purpose and clarity around the ‘Treasury margin’. We also present a series of options available to the Government and Skills England in thinking about the proportions of the levy that can be spent on non-apprenticeship skills training and the scope of the training that should qualify for funding under the levy, that could help mitigate potential, unintended consequences of reform that would hinder, not promote, greater, high-quality vocational opportunities for young people.
Designed well, and with the necessary accompanying reforms, the Growth and Skills Levy has the potential to support a wider apprenticeships system that works far better for businesses large and small and their employees, and unlocks opportunities for young people. We know apprenticeships can be the backbone of the Government’s five missions, so we hope they are front of mind in these critical next steps with the Levy.