Sunak must learn from failure of the apprenticeship levy

rishi sunak

Ahead of the chancellor’s July statement, when extra funding for training and skills is expected to be announced, Nigel Morris, tax director at MHA MacIntyre Hudson, says the apprenticeship levy has failed to help the government reach its target of 3 million new apprenticeships, and any new training fund must be less bureaucratic.

“Funding for retraining is much needed as the end of the furlough scheme draws closer, particularly to help young people. There’s a lot that can be learned from the existing apprenticeship levy, which sets the standard for how not to run a skills fund. The government is aware of its failings and a review was outlined in the Budget statement. With unemployment likely to start rising soon they must avoid the same pitfalls.

“The root cause of the apprenticeship levy’s failure is bureaucracy, and it hurts SMEs in particular. The courses provided have to meet rigid criteria and this increases their cost. It could actually be more expensive for SMEs to use these courses than it to use private training providers, even with government subsidy. The result is clear for all to see, apprenticeship starts for businesses with less than 50 staff have fallen from 37% to 27% since the levy was introduced in 2017. This is especially unfortunate right now. It should be the flexible and innovative SME market providing most of the new jobs and apprenticeships; large employers are cutting workforces considerably and can find it harder to react and change to new ways of working.

“The lesson is surely to design training schemes with less bureaucracy that make training more cost efficient and attractive for SMEs. The best approach would be to trust the employer and allow greater leeway for them to select courses. The chancellor must learn from past failures to lessen the detrimental impact of Covid-19 on UK employment.”