Are you ready for the Levy? by Clive Memmott, Chief Executive, Greater Manchester Chamber of Commerce

Back in 1971 Don McLean drove his “Chevy to the levee, but the levee was dry”. I hope the Government’s Apprenticeship Levy will not run dry, particularly for smaller companies. Let me explain my concerns.

The Government aims to raise £3 billion to fund 3 million new Apprenticeship starts by 2020, a bold and audacious target. Targets such as this exist to change the way we think about what we do, but they must be grounded in a degree of realism. The 3 million target must not trigger a race to the bottom, and we must collectively ensure that quality is not sacrificed for volume because the target becomes sacrosanct. Promised legislation that will protect the term “Apprenticeship” from misuse is a start, but not sufficient.

Meanwhile, experience of levy systems in the UK and international is mixed, with many failing to deliver the intended benefits. A construction training levy has long existed in this country, and yet two thirds of the sector’s employers are currently suffering skill shortages.

Furthermore, the disproportionate growth of Apprenticeships in the 25+ age category needs to be addressed, and more take-up of higher levels (level 3 and above) is critical. Policy to date has largely failed to deliver a “higher vocational pathway” from high-quality Apprenticeships to advanced technical training.

Let me make it clear that the Government’s ambition for Apprenticeships is laudable, and figures show that progress is being made. However, wholehearted support for the Levy must be tempered until critical detail emerges – and soon.

The new Apprenticeship Delivery Board comprises large employers and will be jointly chaired by the PM’s new Apprenticeship Adviser Nadhim Zahawi and David Meller, who already chairs the Apprenticeship Ambassador Network. I do have real concerns about the voice of small and medium-sized enterprises (SMEs) being absent from this board. The Chamber proved through our Employer Ownership of Skills Programme that large numbers of SMEs will take on apprentices if they are given “hands-on” support that simplifies the system and takes away uncertainty and risk.

What we still don’t know is, if you don’t pay the Levy (that’s about 98% of all UK employers), how exactly to you benefit from the news system? And SMEs matter: future economic growth comes primarily from our smaller businesses – they must not be an afterthought!

Some of the other issues to be clarified or settled

  • what percentage of the Levy will be spent on management and administration?
  • Exemptions must be made from the Levy where mandatory sector Levy schemes (eg in Construction) remain in place
  • The general education elements of Apprenticeship training (such as teaching Level 2 maths and English)  should remain outside the scope of the Levy – this is Government’s responsibility
  • Will the system be simple to administer –crucial for all businesses, not just small ones
  • The new system does not recognise training delivered by employers themselves. The exceptions to this are the few very large employers directly funded by the Skills Funding Agency
  • What precisely can companies spend Levy funds on?
  • Can the Apprenticeship Deliver Board and the yet to be formed Institute for Apprenticeships really safeguard quality and ensure that there is real growth in the higher levels of Apprenticeships? And what precisely are the respective quality remits of these two bodies?

These are things we need to work on together before implementation.

Some of these early concerns are fundamental and will require a genuine spirit of co-operation and collaboration between Government and business to ensure that the proposed system really does achieve what it is setting out to do.

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