Importance of skills growing, but will Levy deliver?

The importance of a well-designed and functioning skills regime in the UK is even more important, according to a major new report published today, but there are growing fears that the Apprentice Levy won’t achieve that goal. The ninth version of the CBI/Pearson skills survey says that “acute skills shortages are holding back businesses across all regions and many sectors”, and reveals that “there are real concerns about some policies… [while] the Apprenticeship Levy is a particular worry”.

The headlines from the survey, which was conducted during April and May 2016, with responses received from nearly 500 organisations, collectively employing more than 3.2 million people show a commitment to skills, but concerns over government action and future direction of education policy.

The survey reveals:

  • There is a welcome, growing demand for higher skills: over three quarters of businesses (77%) expecting to have more jobs for people with higher-level skills over the coming years and needing more people with intermediate-level and leadership and management skills (balances of +42% and +67% respectively)
  • Firms are committed to developing talent in-house: with only 42% of training done externally, the majority use an in-house dedicated training and development budget (76%), mentoring and coaching opportunities (68%) or support employees to study part-time (73%)
  • But there is a concern about future shortages: over two-thirds of businesses (69%) are not confident about filling their high-skilled jobs in future (up from 55% in 2015).
  • More than three-quarters of respondents (78%) make at least some use of external training and development providers, most commonly private providers followed by further education colleges (88% and 46% respectively of those using an outside provider)


Apprentice Levy a growing concern for many

The picture regarding apprenticeships is encouraging. According to the research, businesses see apprenticeships as a valuable route to developing and upskilling their workforces. Involvement in apprenticeship programmes is already widespread (71%), with further respondents (16%) indicating plans to create a programme in the next three years.

However, the Apprentice Levy is a serious concern for a significant number of businesses. The priority for most is that the levy helps to ensure firms can offer more, and better quality training places – not simply re-badged current training.

“The first year of the levy will be one of learning. Employers and providers will be coming to terms with how to spend their levy in order to maximise it,” said Arch Apprentices CEO Jason Moss. “There are many new standards in development – all of which have been created by employers to address the skills they need for the future.”

In terms what would reassure these concerns, the research shows that confidence in the new system will depend on the levy being responsive to business need (71%) and businesses having increased flexibility in how they spend levy funds (65%).

The survey also showed that companies are concerned about the Levy’s impact on both existing training and business operations, most commonly in the form of causing increased prices or reduced margins (45%), cuts to investment in non-apprenticeship training (39%), and downward pressure on wages (22%).


‘Levy will work in Whitehall but not Walsall’

Josh Hardie, CBI Deputy director-general, said that “As it stands the levy system will work in Whitehall but it won’t work in Walsall, or any other part of the UK where business is training and developing people.

“While the ambition is positive, the current design does not recognise the breadth of great training currently being delivered and runs the risk of unintended consequences, including fewer apprenticeship opportunities, downward pressure on wages or cut-backs on non-apprenticeship training

“Our survey shows how businesses develop and nurture talent and that’s why their priority for the levy is flexibility: so companies can invest in what works.”

Jason Moss concluded: “Employers will utilise their levy spend to re/up skill their existing workforce, whilst also recruiting bright new talent in to their organisations.”