Apprenticeship levy is not working, employers say

The government's new apprenticeship levy is yet to increase the number of people being trained, according to official figures released on Thursday.

There were 114,000 apprenticeship starts reported so far for the first quarter of the 2017-18 academic year.

That compared with 155,600 for the same period in the previous academic year.

Employers' groups said the government had failed to act on mounting concerns about changes to the apprenticeship system.

They are concerned about the cost to business of the apprenticeship levy, which was introduced in April 2017.

The Department for Education said the levy and other changes was likely to have affected the number of apprenticeship starts and participation last year.

The Institute of Directors said many employers were still struggling to comprehend how the system was meant to work.

"Today's figures are a warning for the government, as it becomes increasingly unlikely that they will meet their three million new starters target," said Seamus Nevin, the IoD's head of policy research. "The levy is the right idea, but the system is ripe for reform."

Verity Davidge of the EEF, the manufacturers' organisation, said: "It is clear the apprenticeship levy and wider reforms aren't working and need a radical rethink. Government must listen to business concerns."

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The 26% quarter-on-quarter fall was not as big as the 59% slide between the fourth quarter of 2015-16 and the same period in the 2016-17 academic year.

The figures are subject to change until final data is published in November.

Minister for Apprenticeships and Skills Anne Milton said: "The last year has been a period of significant change. It will take time for employers to adjust.

"But we must not lose sight of why we introduced our reforms in the first place - to put quality at the heart of this programme, and putting control in the hands of employers.

"It is right that they are taking their time to plan ahead, with two years to spend their levy funds, and maximise the opportunities an apprenticeship can bring for both the learner and employer. Feedback we've had shows employers are doing exactly that."

Analysis: Jonty Bloom, business correspondent

The apprenticeship levy looked fine in principle. Its implementation has been met with howls of protest from industry and declining numbers of people starting courses.

The levy is a tax on large companies intended to pay for training at smaller companies. Large firms hate it, claiming it is no more than an added tax and are finding ways of claiming the money back to spend on other training courses.

Small firms find the system complicated and say the government has failed to provide anything like enough approved courses for them to use.

Ministers say these are teething problems. But at a time when the government is desperately trying to improve skills and productivity by increasing the number of apprentices, the opposite is happening.

It seems increasingly unlikely that the government can hit its target of three million new apprenticeships by 2020.