Impact of Apprenticeship Levy funding on employers and training providers

Greater Birmingham Chambers of Commerce

The Department of Education has launched a short survey on the impact of recent reforms to apprenticeship funding.

The survey focusses on the impact of Apprenticeship levy funding on employers and training providers. It  can be found here, and closes on 3rd October. We would encourage all businesses to complete it, so that the Chamber can improve our understanding of the impact the levy is having in the Greater Birmingham region.

There has, for a long time, been serious concern regarding skills gaps - particularly in the Greater Birmingham region. It is the hope of the Greater Birmingham Chambers of Commerce – and many others - that the Apprenticeship levy will help fill these by reinvigorating support for apprenticeships. The Chamber fully support vocational routes into work, and value apprenticeships as an excellent means to providing the skills needed in future workforces.

However, there has been some apprehension about the levy, as discussed in the Chamber’s briefing paper on Apprenticeship Reforms published earlier in the year (click here to read this).

The ONS reports that in 2016 there were approximately 1,969,000 non-graduates with an apprenticeship employed in the UK.

In that year, non-graduates with a level 4 or 5/higher apprenticeship (approximately 21,000 individuals) had a reported 100% employment rate.

Meanwhile, those with a level 3/advanced modern apprenticeship (around 212,000 people) had a 97.4% employment rate.

Between August 2016 and April 2017, there were 54,060 apprenticeship starts recorded by the Department for Education. 9,910 of these were in Birmingham. Interestingly, this reflects national statistics in being slightly fewer than previous years.

Nationally, ONS statistics indicate that apprentices are most commonly employed in the manufacturing and construction industry, followed by the distribution, hotel and restaurant industry.

However, information from the Department of Education shows that nationally and in the West Midlands, the highest numbers of apprenticeship starts by far are in health, public services and care (126,000 nationally, 15,500 in the West Midlands); and business, administration and law (120,600 nationally, 15,340 in the West Midlands).

Third most popular is engineering and manufacturing technologies (66,500 nationally, 9,630 in the West Midlands).

The statistics raise questions as to what impact the Apprenticeship levy will have had on employers and training providers – whether numbers of apprenticeship starts will rise again - and whether the market for apprentices is changing.

Apprenticeship reforms brought in from May this year included the Apprenticeship levy, payable by businesses with an annual wage bill over £3million.

Levy-paying employers now have the ability to spend the levy (plus a 10% Government top-up on monthly contributions) on apprenticeship training.

The Government intends that from next year employers will be able to transfer 10% of their funds paid under the levy down their supply chains. This may be particularly valuable in instances of larger employers finding it difficult to fully utilise their levy allowance.

There are already other significant benefits to non-levy-payers (including 90% Government funding for apprenticeship training and additional funding aid for young apprentices and those from disadvantaged backgrounds) that have been introduced as part of these reforms.

Training providers - in addition to increased demand from businesses for apprentices- are anticipated to benefit from additional funding support for training apprentices from deprived areas.

It will be extremely interesting to see the impact the apprenticeship reforms have on the statistics for apprenticeship starts in this academic year (2017-2018).

Chamber members with questions about opportunities that may be available to them as a result of the levy, or procedural questions on how the levy works in practice, are encouraged to contact:

Emily Stubbs
Policy and Patron Advisor
Greater Birmingham Chambers of Commerce