Two-fifths of training providers are having to turn away smaller businesses wanting to recruit apprentices because of the growing shortfall in funding from the £2.8bn #apprenticeship #levy
The levy is designed to fund the entire apprenticeship programme for large and small employers but providers are now on average turning down approaches from 40 SMEs each due to their non-levy employer funding allocation running out. Up to 40,000 small businesses could be adversely affected by the shortfall.
Employers also say that they fail to understand why the government is still running its big ‘Fire it Up’ advertising campaign for apprenticeships when they find that their chosen training provider can’t access any funding.
The findings in the latest survey of apprenticeship training providers by the Association of Employment and Learning Providers (AELP) reveal that since July, the proportion of training providers with a non-levy government contract, which have actually stopped recruitment of apprentices for smaller employers, has jumped by 14% to 31%.
29% of providers with a government contract to train apprentices for SMEs have also significantly reduced recruitment. In all, 39% of these providers have either stopped or significantly reduced recruitment.
The new AELP survey results follow the latest official government statistics showing that apprenticeship starts for young people have slumped by a quarter in the last five years bearing in mind that prior to the levy’s introduction, it was SMEs who accounted for most of the recruitment of younger apprentices.
‘Levelling up’ for SMEs in Midlands and North
The Conservative election manifesto committed the government to review how apprenticeships will be funded under the levy and in announcing that the Budget will take place on 11 March, the Chancellor confirmed that investment in skills was one of his priorities. This will certainly be necessary in the Midlands and North as part of the government’s efforts to ‘level up the whole country’.
Commenting on the latest set of survey results, AELP chief executive Mark Dawe said:
“The fact that the levy is running short of funding shows how popular apprenticeships are and the levy should be kept. But it’s totally unacceptable for both small businesses and young people that so many of them can’t start apprenticeships because of failures in how the levy funding system works and this is why it needs reform.
“Brexit requires us to meet employers’ skills needs by training more home-grown talent but many training providers have given up ‘selling’ apprenticeships to SMEs when the lack of funding means that there’s no point in doing so. In the meantime, there’s a big government advertising campaign telling employers that support is still available.
“The Prime Minister promised in July that he would ‘properly fund’ apprenticeships and the Education Secretary has said that the programme’s funding would be a matter for the spending review. As the clock ticks, thousands of young people are hearing about the success stories of their peers who have been on an apprenticeship and they can’t understand why the same opportunities aren’t available for them.”
AELP has called for the restoration of £1.5bn apprenticeship budget that was available to SMEs before the levy was introduced in April 2017. One option to cover the shortfall in funding is to increase the levy.
AELP represents around 900 apprenticeship training providers and employers who train over two-thirds of the apprentices in England.
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