CIPD calls for wider training levy and regional skills fund

A report from the CIPD shows employer training has failed to increase since the introduction of the apprenticeship levy. It also shows a long-term fall in the level of investment in work-based training in the UK.

The report, Addressing employer under-investment in training – the case for a broader training levy, recommends urgent reform of the apprenticeship levy to help address the issues.

The CIPD said the reasons behind the decline in training are not entirely well understood. Commentators have pointed to factors such as the expansion of the higher education system, which has reduced the need for employers to train, or increased efficiency in training investment. Another contributing factor is the shift towards business models and competitive strategies requiring lower skill levels.

The chartered institute added: “While the reasons aren’t fully known, what is clear is that greater investment in workforce skills is needed, and that relying on employers to voluntarily provide adequate training opportunities has failed.

“It was against this background that the government justified the introduction of the apprenticeship levy, an initiative designed to stop the decline in training, while also increasing the number and quality of apprenticeships.”

The CIPD said levies do not always have the desired effect of increasing employer investment in training, and there is evidence that the current arrangements are not working as intended. The report found that:

• The levy has failed to increase the number of apprenticeships since it’s introduction, with current starts down 14 percent on pre-levy figures.

• The levy is failing to boost overall investment in training: 31 percent of levy-paying organisations believe the levy will increase the amount of training they offer.

• Over a fifth (22 percent) of levy-paying organisations stated they had used the funding on training that would have happened anyway.

The CIPD is calling on government to broaden the apprenticeship levy to a wider training levy, including other forms of accredited training that are aligned to industrial strategy priorities.

It said: “Without sustained intervention on the demand side to address issues related to management failings and low-skill business models – it is unlikely that the decline in the volume and investment in training can be slowed, let alone reversed.”

The organisation is also calling for the creation of a regional skills fund, created by top-slicing levy contributions from the largest employers to address local skills and demand-side challenges. It said this would help boost workforce productivity and increase the overall demand for, and use of, skills in England’s regions.