Grave concerns remain over Apprenticeship Levy say manufacturers

Manufacturers have warmed to some of the benefits of the new Apprenticeship Levy, but still have grave reservations about its viability and longer-term sustainability, according to a new report.

The report, compiled by EEF and Lloyds Bank Commercial Banking, concludes that with the levy about to be rolled out in April, over a third of manufacturers (34%) still claim to see no benefits to the scheme at all.

The report warns that it is being viewed by many as simply a tax on business and, worryingly, predicts that even more manufacturers will potentially fall into scope than previously expected.
 
Since the levy was announced at the 2015 Summer Budget, Government has consulted and worked intensively with industry to iron out major crinkles in the scheme. The report says that these efforts have paid off to an extent with manufacturers now far more aware of the benefits.

A quarter of firms (26%) think the levy will increase the quality of apprenticeships, while 26% think it could serve to attract more young people into apprenticeships.
 
With companies keen to get skills and training that will help them to meet their productivity and growth targets, firms welcome the fact that the levy will help to put them in the driving seat. A quarter of companies (26%) say it will increase the responsiveness of providers to deliver relevant training, while almost 30% say they will be better able to buy the training their business really needs.
 
Despite these positives, the report says the levy is still shrouded by concerns. Firms are worried about the cost (61%), the timescale for implementation (50%) and uncertainty about future rule and rate changes (44%) – the current funding rules and rates only apply for the year ahead.
 
The biggest concern though is about the value firms will be able to extract from the scheme. Three quarters of manufacturers (75%) worry that they won’t get back what they put in.

The report says the complexity of the connected companies rule will see many more firms, including SMEs, forced to pay the levy, but not all will be eligible for its allowance.

With doubts about the levy’s overall viability and longer-term sustainability, the report urges the Government to commit to an independent employer-led review of the implementation and roll-out of the levy by the end of 2018 in order to tackle these and any other outstanding concerns.  
 
Terry Scuoler, CEO of EEF, said: “Despite much hard work and dialogue with Government, we are on the cusp of a policy rollout that continues to cause manufacturers great concern. Clearly the Apprenticeship Levy has the potential to bring benefits, but not enough to outweigh our sector’s reservations. With skills such a high priority these fears are entirely understandable and must be swiftly addressed.”
 
Dave Atkinson, UK Head of Manufacturing at Lloyds Bank Commercial Banking, said: “Manufacturers are firmly behind this and have a long track record of providing high quality apprenticeship opportunities that lead to long-term careers, very often with the same employer.

“It’s important that the Apprenticeship Levy builds on this by supporting manufacturers’ training ambitions and acting as an enabler so that many more feel able to offer these valuable and aspirational roles.”