CIPD calls for a reform in the Apprenticeship Levy to boost employer investment in training and skills development

A new CIPD report highlights that the Apprenticeship Levy has failed to reverse the decline in employer training more widely, which was one of the policy objectives for introducing the Levy.  

The report, Devolution and evolution in UK skills policy: Finding common ground across the four nations explores skills policy across the UK’s four nations and compares and summarises current labour market and skills challenges. A particular focus of the report is on apprenticeship systems, as these have seen the biggest evolution and divergence over the last six years.  

As a result of the findings, the CIPD is calling on the UK Government to reform the Apprenticeship Levy into a Flexible Skills Levy, to boost employer investment in training and skills development, and to improve business support services for SMEs, particularly on HR (Human Resources) and people management.  

The report also looks at employer approaches to training and provides an overview of key UK public policy developments.

Key findings include:  

• Economic inactivity is a real issue for all four nations, but Northern Ireland in particular, where over a quarter of its working age population is inactive.  
• England and Wales have nearly double the participation rates of apprentices per 1,000 employees compared with Scotland and Northern Ireland.  
• Since being introduced in 2017, the number of apprenticeships starts in England SMEs have plummeted, with 123,800 apprenticeship starts in SMEs in 2020/21, compared to 241,000 in 2016/17, a fall of 49%.  
• A 14% fall in apprenticeship starts in large firms, with 250 or more staff, and overall, apprenticeship starts have fallen 31% in England since the Levy was introduced in 2017.  
• Investment in training per employee has declined by 19% since 2011*, with UK investment per employee now standing at around half that of the EU average.   
• 60% of employers provided some sort of training in the last 12 months – a drop from 66% in 2017. *  
• UK employers are training and investing less in their workforces than they were 20 years ago. The fall in employer investment in training and apprenticeships has occurred despite the number of skills shortage vacancies more than doubling in England, from 193,800 in 2017 to 460,100 in 2022.  

The report concludes with a summary of key themes, points to areas of good guidance and highlights individual programmes in the four nations.

The CIPD has set out a range of recommendations for UK policy makers, including:   

• Reform the failing Apprenticeship Levy into a Flexible Skills Levy, to boost employer investment in training and skills development.  
• Develop interventions to boost management capability and increase understanding of skills needs and development opportunities in small firms. For example, the CIPD’s People Skills model.   
• Refocus the scope of apprenticeship policy to include a discussion on direct financial incentives, alongside a focus on funding off-the-job training costs. For small businesses in particular, apprentice hiring incentives can make a difference.  
• Introduce fast-track routes to apprenticeship qualifications for adults with existing workplace skills.  
• Close the gap in UK-wide employer advice on how to navigate skills development, in organisations that operate cross-nationally.  

*Based on CIPD analysis of the Government’s latest Employer Skills Survey (ESS).