Budget 2015 – what does an apprenticeship levy mean – experts comment
The government are to create three million apprenticeships. To help finance this, there is to be a levy on large companies. The announcement was made during the Budget by the Chancellor George Osbourne.
Expert reaction from Professor Alison Wolf (Baroness Wolf of Dulwich), King’s College London:
“English apprenticeships are overwhelmingly low-level and in service sectors even though the labour market is clearly short of higher-level skills in sectors such as engineering and construction. English employers are increasingly unwilling to pay for training, with the volume of training falling sharply, as shown by a variety of national surveys.
Because the old institutions of apprenticeship were destroyed during the 1980s and 1990s we now have a situation where government action is needed to reverse decline and involve the bulk of employers in apprenticeship again, as they used to be.
A levy or fund is a good way to support apprenticeships and is found in many successful European economies.”
Comment from Professor Ewart Keep, Director, Centre on Skills, Knowledge & Organisational Performance, Oxford University gave his reaction:
“The decision by a Conservative government to introduce an apprenticeship levy is unexpected, and a radical departure. Many large employers, especially those in sectors like retailing will be very unhappy, but the government faces three problems, all of which it thinks might be solved by a levy.
First, as Alison Wolf’s proposals suggested, there isn’t enough public money to fund an expanded and upgraded apprenticeship system. Second, employers were being expected to pay a third of the costs of new apprenticeships up front on a voluntary basis, and it was clear that many were not willing to do this. Finally, a levy provides a financial incentive (using employers’ own money) for firms to get the cash back by offering apprenticeship places and thereby allowing government to meet its target of 3 million new apprenticeship starts by 2020.
The devil will be in the detail of designing the levy system, in a potential backlash by employers, and in the ‘gaming’ of any new funding system by consultants and training providers, who might try to help employers re-badge existing initial training as new apprenticeship places.”
NOTE TO JOURNALISTS: Alison Wolf (Baroness Wolf of Dulwich) is the Sir Roy Griffiths Professor of Public Sector Management at King’s College London, and Director of the International Centre for University Policy Research within the Policy Institute at King’s.
For Professor Wolf’s research see “Fixing a Broken Training System: The case for an apprenticeship levy.” By Professor Alison Wolf for the Social Market Foundation. July 2015.