Levying Up – How to make the Growth and Skills Levy work

Overview

We partnered with the Fabian Society and The Chartered Institute of Personnel and Development (CIPD) to support this research report on how to make the growth and skills levy work. It explores the failings of the apprenticeship levy and how to design a reformed growth and skills levy to work for young people, employers and the economy.

The report draws on a literature review, statistical analysis, an employer survey and interviews and consultations with stakeholders. It makes recommendations for the reform of the levy including boosting and rebalancing investment and making the levy more flexible and strategic.

Contents

1. Summary
2. Introduction
3. Why has the apprenticeship levy failed?
4. Reforming the levy – what do employers want?
5. The growth and skills levy
6. Growth and opportunity – making the levy work

Key insights

The apprenticeship levy was intended to create more apprenticeships, to meet employer skills needs, and to drive social mobility. It has failed on all counts.

• The levy has failed to address chronic low investment in skills. Prior to the introduction of the levy, employer investment in training in the UK was half the EU average. Investment has continued to decline, falling by £9.5bn in real in England since the levy was introduced in 2017.
• It has exacerbated inequalities in access to training, shifting opportunities away from people and communities who could most benefit from investment. Since it was introduced, the number of apprenticeship starts for young people under 25 has declined by a third (34 per cent) despite better labour market returns for this group.
• The number of apprenticeship starts has declined three times faster in the north-east than in London.

Recommendations for policy

The report sets out a series of recommendations for the reform of the levy. They are designed unleash growth and unlock opportunity.