People Management: - Only 1 in 5 businesses aware of apprenticeship reforms

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Only one in five businesses aware of latest apprenticeship levy reforms

The overwhelming majority of UK businesses are unaware of recent changes intended to improve the apprenticeship levy, research has found.

In April, reforms came into force designed to reduce the cost of apprenticeships to businesses and increase their uptake. However, a new poll of more than 1,000 employers found just 18 per cent knew about the legislation.

The changes, estimated to be worth £695 million in savings to businesses, increased the portion of levy funds employers could share with suppliers from 10 to 25 per cent, and cut the co-investment rates non-levy paying firms needed to contribute to just 5 per cent, down from 10 per cent.

But the YouGov survey, commissioned by Pearson Business School, found 82 per cent were unaware of changes to supply chain funding, and a similar number (81 per cent) were unaware of the cut to co-investment rates.

The two measures were first announced in last year’s autumn budget and were brought forward in the spring statement, coming into force on 1 April this year.

Roxanne Stockwell, principal of Pearson College London, said the reforms were a “welcome first step” but added they needed to be much more clearly communicated.

“The apprenticeship levy has its issues, but it is not beyond redemption,” she said. “There are practical measures that the government could take to make it more of a success, such as listening to employers about the barriers they face.”

Ever since its inception in 2016, the levy has come under fire for being difficult to comply with, and some levy payers have described it as “fiendishly complex”. While the cash injection and subsequent organisational focus on apprenticeships have been broadly welcomed, critics fear the levy’s wider structural problems will continue to hamper apprenticeship numbers.

Responding to the spring statement, Jane Gratton, head of skills at the British Chambers of Commerce (BCC), told People Management the reduction in apprenticeship levy co-funding was an “important step in the right direction”.

But Gratton added: “The inflexibility of the apprenticeship levy means there’s still not enough training taking place in businesses, and this will hamper efforts to boost productivity. We’re unlikely to see training volumes increase until there is significant reform of the system.”

A recent National Audit Office report found the overall number of apprenticeships had fallen by 26 per cent in the two years to 2018, while the number of higher-level apprenticeship starts increased substantially by 56 per cent over the same period.

However, the survey by Pearson Business School also found more than half of businesses (53 per cent) said they could be encouraged to take on more apprentices, rising to 78 per cent for large businesses.

Of those businesses that might take on more apprentices, the top factor that would encourage them was greater flexibility on apprenticeship funding (38 per cent) closely followed by more information on accessing funding (36 per cent), while 28 per cent highlighted the ability to work more closely with higher education institutions to identify suitable candidates for the business.

Stockwell said the government should consider allowing businesses to pay their apprentices in proportion to the hours they worked, encourage different lengths of apprenticeships, and allow flexibility to spend the money where it was needed, including on HR and administrative costs.