Bridging the Gap: next steps for the apprenticeship levy

Apprenticeships are a great way to combine learning with earning, helping people build their careers and enabling employers to meet their skills needs. In 2017, the government introduced the apprenticeship levy in an effort to boost employer investment in training, as well as new apprenticeships standards which aimed to ensure apprenticeships were high quality.

New research from Learning and Work Institute warns that the assumptions on which the apprenticeship levy were based are flawed, and that the levy is set to be over-spent next year as a result.

While the number of apprenticeships starts has fallen by around 20% since these reforms, there has been a rapid increase in the use of more costly higher and degree level apprenticeships by levy-paying employers, which often go to older workers and existing employees, rather than to young people starting out in their career. The new apprenticeship standards have also been more expensive than anticipated.

The shift to more expensive apprenticeships could mean the apprenticeship budget is overspent by more than £1 billion next year. This could lead to a creeping rationing of funding for SMEs, with the potential loss of up to 75,000 apprenticeships.

This new report from Learning and Work Institute sets out the choices for tackling the growing funding gap. We set out a balanced and costed proposal to close the gap, and to ensure that there is sufficient funding for SMEs and enough opportunities for young people.

As featured in:

The Times

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Explore some of our other work on apprenticeships here.

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