EEF comments on the Apprenticeship Levy Funding Guidance

Published:  30 August, 2016

Commenting on the publication of the Apprenticeship Levy funding guidance, Terry Scuoler, chief executive of EEF, the manufacturers’ organisation, said: “High quality apprenticeships cost more and it’s good to see the Government has recognised this, particularly through the uplift of funding for STEM apprenticeships. The manufacturing industry already punches above its weight in both the quantity and quality of apprenticeships it provides and will see this as a green light to train even more.

“On the whole, the provisional funding bands for manufacturing and engineering apprenticeships are a true and fair reflection of the cost of training, but there remain a few apprenticeship standards that we would like to see knocked into a higher band.

“However, question marks still remain over the design of the new levy system. Employers will want to see a commitment from Government that the system will evolve and respond to employer needs not just in the lead up to the implementation date but, importantly, also afterwards. Delaying the introduction of the levy would buy the Government some much-needed additional time to work closely with industry to iron out some of the major wrinkles. This will be vital if the levy is to support the creation of more high quality apprenticeships.”

On co-investment:

“Manufacturers are used to putting their hands in their pockets - over two-thirds currently fund apprenticeships through a combination of public and private funding and almost a third pay for apprenticeship training entirely themselves.

“The level announced today is both balanced and fair. Requiring employers not in scope of the levy to co-invest could help to improve the quality of apprenticeships as the employer will have a vested interest.”

On incentive payments for recruiting young people:

“Almost three-quarters of manufacturers tend to recruit apprentices aged between 16 and 18. With an ageing workforce, industry is keen to attract young fresh talent and apprenticeships are a perfect way of doing this. Recruiting young people can sometimes be seen as a little riskier so today’s announcement is a nice sweetener and will act as an added incentive.”

On how the levy will operate across the UK:

“Many manufacturers operate across the Scottish, Welsh or Northern Irish borders and those that do will immediately see a slice of their levy payments taken away making it impossible for them to get back what they put in.

“But, the good news in today’s announcement is that employers will be able to fund apprentices based on their main place of work, as opposed to where they live. This will prevent them from being even further subjected to a cross-border penalty. Manufacturers need to be able to spend their levy funds on apprentices and providers across the UK if they wish to do so.”

On using vouchers on equivalent level qualifications and transferring vouchers to other organisations:

“Employers, and indeed learners, will both benefit from the decision to allow employers to spend their vouchers on higher, equivalent and even lower level qualifications where appropriate. This will be particularly beneficial for learners who want to make a career move or move across industries and sectors.

“We are disappointed that the Government couldn’t make voucher transferability work in the first year. There is of course a trade-off to be had between the ability to spend vouchers more freely and being burdened with red tape. However, the announcement that up to 10% of vouchers will be transferable from 2018 will be particularly welcomed by larger organisations, who may want to use their vouchers in their supply chains, and companies of all sizes that choose to use Apprenticeship Training Agencies.

“Going forward, the Government needs to work with industry to ensure transferability is not consumed by complex regulation.”

Key statistics:

• Manufacturers champion apprenticeships in the UK – 79% plan to recruit an engineering apprentice in the next 12 months

• Apprenticeships in the sector are high quality, typically lasting up to four years, from intermediate to degree level and in almost all cases leading to permanent employment

• The biggest barrier to recruiting more apprentices is cost (39% of manufacturers), followed by a lack of quality candidates (36%)

• 72% of manufacturers say the Apprenticeship Levy should be delayed until business and Government are satisfied that it’s fit for purpose

• Seven in ten firms (70%) agree with the Government’s drive to deliver a greater number of apprentices, but only 18% think that the Apprenticeship Levy as it currently stands will deliver

• Firms find the levy confusing (53%), overly complicated (49%) and think it will simply become another cost burden on business (54%).