Organisations plan to ‘game’ apprenticeship levy system, CIPD finds

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Nearly one-third (29 per cent) of employers plan to offset the increased costs of the apprenticeship levy by adapting existing training programmes so they can be accredited as apprenticeships, CIPD research has found.

Of those that have calculated the cost of the levy, nearly two-fifths (36 per cent) admitted the 0.5 per cent charge on payrolls, which is due to be implemented in 2017, would force them to reduce investment in other areas of workforce development.

The research, based on two large employer surveys and in-depth interviews with HR leaders and senior managers, found that more than a quarter (27 per cent) of respondents opposed the levy completely. This figure increases among organisations that expect to pay the levy: 47 per cent of eligible employers, with a wage bill of more than £3 million, said they were not in favour of it.

Peter Cheese, chief executive of the CIPD, said the levy “could have damaging and unintended consequences”, including taking investment away from other “equally valuable forms of training and development”.

“Many large employers, particularly in low-margin sectors and the public sector, will have to make significant cuts to their training budgets as a result of the levy, or will simply write it off as a tax,” he said.

The CIPD has previously warned of the risk of businesses ‘gaming’ the system, as they look to use funding to accredit existing low-level training as apprenticeship programmes. And organisations such as the British Chambers of Commerce and the CBI have questioned the impact the levy will have on current skills training.

The CIPD’s latest research suggests that employers are seriously considering offsetting the extra costs of the apprenticeship levy in this way.

The levy aims to provide employer-led funding to help reach the target of three million apprenticeship starts by 2020. But just 9 per cent of respondents to the CIPD’s research expected to use levy funding to develop a new apprenticeship programme. Almost one in five (18 per cent) said they would use levy funding to enhance their existing apprenticeship programme.

More than one-fifth (21 per cent) of employers that have calculated the cost of the levy said they would increase the provision of Level 2 apprenticeships (equivalent to five passes at GCSE), but decrease Level 3 and above apprenticeships (equivalent to two passes at A-level). This would “further devalue the apprenticeship brand”, said Cheese.

These issues could have been foreseen if there had been proper consultation with businesses and training providers before the introduction, he added.

In light of the findings, the CIPD is calling on the government to delay the introduction of the levy and completely overhaul the current proposed system.

“We believe a much broader, more flexible training levy should be developed to ensure that the system is genuinely employer-owned and meets the skills requirements of organisations,” Cheese said.

“This would enable employers to draw down levy funding, with appropriate criteria, for a wider range of training activities, as well as for apprenticeships.”

 

Story via – http://www.cipd.co.uk/pm/peoplemanagement/b/weblog/archive/2016/06/17/organisations-plan-to-game-apprenticeship-levy-system-cipd-finds.aspx

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