Apprenticeships are falling despite introduction of new levy, Public Accounts Committee finds

Apprenticeships are falling despite the Government’s introduction of a new levy, the Public Accounts Committee has found. The number of apprenticeship starts dropped by 26 per cent after the apprenticeship levy was introduced, the report said.

In the 2017/18 academic year, there were 375,800 apprenticeship starts, compared to 509,400 in 2015/16, the last full year before the apprenticeship levy was introduced.

The apprenticeship levy forces companies with a wage bill of more than £3 billion to pay 0.5 per cent of it to the Education and Skills Funding Agency (ESFA), which is part of the Department for Education (DfE).

The companies have until April 2019 to draw down the funding, which they must use to take on new apprentices, or train existing staff.

The DfE has failed to make the progress it predicted when it reformed the apprenticeships programme two years ago, according to the PAC report.

Meg Hillier MP, chair of the committee, said that the apprenticeship programme had “laudable ambitions” but the Department for Education’s (DfE) “poor execution” has created “serious longer-term problems”.

The PAC report noted that some employers are using apprenticeship funds to pay for professional training or management courses that they would otherwise have paid for themselves.

It warns that people with lower skills, and those from disadvantaged communities risk losing out due to employers’ preference to spend their levy on higher level apprenticeships.

Ms Hillier added:  "Ultimately, the lack of progress has disrupted the direction of the programme. The way the programme is evolving is out of kilter with the department's objectives. Opportunities for people with lower skills are diminishing and apprenticeship starts in disadvantaged communities have fallen.”

Anne Milton, the skills minister, said that Government reforms are improving the quality of apprenticeships. She added that the number of people starting high-quality apprenticeships has risen by 79 per cent in the first half of 2018/19 compared to the same period last year.

“There is still work to be done, but we won’t sacrifice quality for quantity,” she said. “We are considering the PAC’s recommendations carefully and will respond in due course.”