The current apprenticeship levy policies could result in a reduction in the number of apprenticeships offered by SMEs, according to new research.
Research from The Learning and Work Institute points out that, since the introduction of the apprenticeship levy in 2017, the number of apprenticeship starts have fallen by a substantial 20 percent.
The institute said there has been a growing trend for enrolling older and pre-established staff on higher level courses, which are more costly. This could mean that the apprenticeship budget is in deficit very soon, which, could, in turn, have a detrimental effect on the funding provided to smaller organisations, who are not eligible to pay the apprenticeship levy. There are fears that the funds available for those who do not pay the levy will be restricted as a result of a growing deficit within the budget.
The Learning and Work Institute states that the potential effect could be the loss of 75,000 apprenticeships at SMEs.
The initial assumption on which the apprenticeship levy was founded was that the larger organisations would not utilise their whole levy fund, so the remainder would be available for SMEs who did not pay the levy. This presumption was unfortunately incorrect, with larger organisations opting to use higher proportions of the funds available to them, and investing in the higher level, more expensive courses for their staff.
In order to address this issue and attempt to stop a reduction in the number of apprenticeships offered by SMEs, the institute has offered the following recommendations: