Balancing act: Youth apprenticeships and the case for a flexible skills levy

Summary

Analysis of the current UK Apprenticeship Levy and policy recommendations for how it can be adapted to provide a better apprenticeships system and workforce training support. The report includes a survey of more than 2,000 organisations.

Key insights

• More than half of employers (60%) think that the primary purpose of apprenticeships should be supporting young people to enter the workplace, with just 15% saying it should be used to develop existing staff.
• Nine in ten (89%) employers back the recommendation of an Apprenticeship Guarantee for young people up to the age of 24, ensuring that a Level 2 or Level 3 apprenticeship place is available for every young person who wants one and meets the minimum entry requirements.
• 54% of organisations paying the levy admitted they had converted existing training activity into apprenticeships programmes to claim back their allowance.
• Appreticeship starts have fallen 41% for the under 19s and 36% for those aged 19-24 years old between 2015/16 and 2022/23, further to the levy’s introduction in 2017.
• Very low apprenticeship achievements rates of 54.6%, with £620m spent on training for apprenticeships that weren’t completed for year 21/22 alone. The report suggests this is, in part, due to so much training being rebadged and therefore not being appropriate for people’s needs.
• Introduction of the Levy coincides with the number of people undertaking apprenticeships from the most deprived areas of England falling from 250,000 to 150,000 between 2015/16 and 2022/23.

Policy recommendations

• Introduce an Apprenticeship Guarantee for young people aged up to 24 to ensure a Level 2 or Level 3 apprenticeship is available for every qualified candidate. This is backed by nine in ten employers surveyed by the CIPD.
• Reform the Apprenticeship Levy into a more flexible skills levy, with at least 50% of funding ringfenced for apprenticeships for young people and the remainder for other forms of accredited training.
• Reintroduce a pre-apprenticeship programme, to support people in getting the right skills to be able to access and succeed within apprenticeships (the traineeship programme was withdrawn in 2023).
• Strengthen sector bodies and local partnerships to catalyse collective employer action in identifying and addressing skills challenges at an industry level as part of a new industrial strategy.