A new report from the Insitute for Public Policy and Research has cast doubt on the ability of the Apprenticeship Levy to truly deliver real benefits in all parts of the UK. According to the IPPR survey, under its current guide, the levy will stimulate training most in London and the South East and not in fact distribute funds and support to the areas of the UK that need it most.
“[London and the South East] have 38 per cent of the UK’s large businesses which will be affected by the levy, but only 27 per cent of the population,” the report says. “London and the South East also have among the highest qualified populations in the country, with 50 and 40 per cent respectively of their populations educated to level 4 and beyond, compared with 30 per cent for example in the North East and Yorkshire and the Humber.
As a result, the survey says, current skills imbalances will not be fixed and in some cases made worse by the Levy.
Skills levy may address concerns
So what’s the answer? The IPPR says a new ‘Skills Levy’ should be introduced to “boost employer investment and to turbo-charge skills devolution”. The Skills Levy would raise over £5 billion – twice the amount raised by the apprenticeship levy. Under the IPPR plan, the skills levy would be
- Broader, applying to all employers with 50 or more staff;
- Larger, set at one per cent of payroll for the largest employers (250 or more employees) – twice the current level;
- Fairer, with a £1.1bn ‘Regional Skills Fund’ to boost investment in left behind areas, as a result of top slicing investment from the largest employers
Clare McNeil, IPPR Associate Director for Work and Families, said the Brexit vote showed that large areas of the country felt left behind by economic change. “But the government’s apprenticeship levy risks exacerbating the regional inequalities it has pledged to reduce. With Brexit on the horizon, and the increasing impact of technological change on jobs, now is the time to be investing in high quality vocational education to improve opportunities for workers.
“Ahead of the budget IPPR has been joined by a cross-party line-up of mayoral candidates calling for a new skills levy to increase investment, including through a regional skills fund to ensure more investment goes to those areas where it is needed the most. This devolved funding would also give more control to local leaders to ensure investment can reflect local priorities”
‘People feel left behind and forgotten’
The proposals for greater skills devolution and investment has been backed a cross-party line up of mayoral candidates. Andy Burnham, the Labour party’s candidate for Manchester Mayor said, “Throughout the Mayoral campaign I’ve been going around the ten boroughs asking people about their priorities for Greater Manchester. One issue that is raised almost everywhere is the shortage of skills and how we equip people with the training they need to access secure and well-paid employment.
“We want Greater Manchester to play a leading part of the new industrial revolution but not based on a low-paid, low-skilled call centre economy where young people are expected to carry out work experience for little or no pay.
“I want to see a thriving Greater Manchester where everyone benefits from our economic success. The Skills Levy can help to achieve that by making sure the money goes to the areas where it’s needed most – those areas where people feel left behind and forgotten.”
Hang Ho, Head of Philanthropy for Europe, Middle-East and Africa at J.P. Morgan, said he believed it was critical that the UK Workforce has access to a wide range of skills which are relevant to the labour market and that bolster the long term health of the UK’s economy.
“The right training is key to this and it’s the joint responsibility of employers and policymakers to work together to ensure the UK’s current skills gap doesn’t widen any further and proactive steps are taken to reduce the gap.
“We are in a period of rapid global change and a skilled workforce is fundamental to creating a stable economic future for the country.”