CIPD warning | 'Worrying unintended consequences' of Apprenticeship Levy highlighted in new report

New evidence and analysis by the CIPD, working with Youth Futures Foundation, reveals worrying unintended consequences of the Apprenticeship Levy on apprenticeship provision and skills development since its introduction.

The new report ‘Balancing act: Youth apprenticeships and the case for a flexible skills levy’ includes a survey of more than 2,000 organisations. It finds most employers believe that apprenticeships should be primarily used to support young people entering the workforce. However, the survey evidence reveals that the current levy system is undermining this ambition and is instead incentivising employers to rebadge training for existing staff as apprenticeships so they can claim back funding.

In response, the report calls for an Apprenticeship Guarantee for young people and for the levy to be transformed into a flexible skills levy, with at least 50% of funds going towards apprenticeships, primarily for young people, and the remainder going towards other forms of accredited training. These reforms would help provide the right balance in structurally restoring and ringfencing opportunities for young talent, whilst also enabling businesses to meaningfully invest in and upskill their existing workforce.

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The report’s analysis highlights a significant fall in overall apprenticeship starts since the Apprenticeship Levy came into force in 2017 and finds that the policy has failed to reverse the long-term decline in employer investment in skills, a key intended outcome for its introduction. It shows that: