There has been plenty of talk about a skills shortage in the UK, particularly in areas like construction and engineering, and the government’s proposed apprenticeship levy has been designed to address the issue.
Chancellor George Osborne announced the levy in his July budget as a way to boost funding for vocational training and create a skilled British workforce to build up local business, as well as to attract foreign companies to locate operations in the UK.
The levy will come from all large employers in both the public and the private sector to help fund apprenticeship training.
With the government hoping to have three million apprenticeships in operation by 2020, as compared to current take-up of 871,800 (as per 2014-15), it is evident that the Chancellor has to take action.
While the latest apprenticeship figures are the highest since records began, the need to increase the number of apprentices will require extra funding.
As a result, Osborne called for a “radical and frankly overdue” approach to training the UK workforce – but the levy is perhaps not as “radical” as he may say – it has already been introduced in over 50 other countries, including the Netherlands and Denmark.
With proof of success elsewhere, and a definite need for more vocational training to close the skills gap the apprenticeship levy seems like a great idea. However, this is only the case if the apprenticeships are directed in the areas where they are needed.
Recent figures showed that 29% of the new apprenticeships started in 2014-15 were in business or administration, while health and public services made up 26%, as compared to 17% in engineering and just 3% in technology and data.
The key lies in apprenticeships offered in the areas where there are shortages rather than simply looking at the creation of apprenticeships in general as a good thing.
Without directing the funding we could end up with a system that wastes money training young people in skills that are over-subscribed – which is neither good for them nor the economy.
As it stands, the proposed levy is 0.5% from employer payrolls, which would raise over £2 billion a year, but many business leaders feel that a 0.3% level would be more palatable.
With some suggesting the levy should be voluntary (as if anyone would pay it if it was!), it will be interesting to see if any concession will be made in today’s Autumn Statement.
While business leaders will be interested to see how high the levy is, there are many industries who will hope to see the funds used to create a skilled workforce that can close the skills shortages that they still face.