Following his recent visit to a successful engineering company, Lord Fox — a Liberal Democrat member of the House of Lords — recounted speaking to the latest apprentice intake.
“They were an impressive group of people, who were all highly motivated; so was the apprentice school’s manager; and he had one thing he wanted to talk to me about — the workings of the Apprenticeship Levy.
“When the Government set a target of 3 million apprentices, this was a challenging aspiration; but when they introduced the Apprenticeship Levy, they made sure that the target could never be achieved.
Since the levy started in 2017, large employers have been required to set aside the equivalent of 0.5% of their wage bill to train apprentices.
“However, the Financial Times reports that during the first year of the levy’s operation in 2017-18, less than 10% of the more than £2 billion raised by the levy was actually spent on training.
“Reacting to business pleas, the Government has increased the time available to businesses to spend the levy from 18 months to two years, but it is clear that much of this money will go unspent.”
Lord Fox said he has spoken with many businesses that have excellent apprentice programmes but say they are struggling to use their levy.
“They tell me that they can’t get their apprentices accredited, because the standards aren’t being approved in good time.
“There is too much bureaucracy and too little flexibility — and flexibility is a key issue.
“Most of the employees who will deliver the digital revolution in the UK are already of working age and are in work.
“Some of those can and will become apprentices, but many more need on-the-job training so they have the skills to work in new environments. The levy does not provide this flexibility.
“The nature of modern supply chains means that there are many medium-size and small businesses that could benefit from their larger customers ‘passing down’ some of their levy.
“However, while 25% of a company’s levy funds can be transferred, the red tape in-volved means that only a tiny fraction of companies are doing so . . . we cannot let our apprentices suffer because of a poorly implemented tax that is stopping businesses from taking them on.
“We owe it to our young people to make the Apprenticeship Levy work.”