20 September 2016

A new survey by the British Chambers of Commerce (BCC) shows 89% of business people will not take on more apprentices following the introduction of funding reforms that the government says will lead to the creation of more apprenticeships.

The new Apprenticeship Levy comes into effect in April 2017 and will apply to businesses with a pay bill of over £3 million.

Eligible companies will be forced to pay into the levy as an incentive for them to invest in apprenticeships.

However, the BCC found that only 11% actually plan to hire more apprentices after the introduction of the scheme and just 5% say it will have a positive impact on their wider training budget.

What's more, it seems the scheme has been poorly promoted, with 39% of firms saying they have no understanding of, or haven't heard of, the Levy, and 51% saying they don't understand how the funding reforms work above or below the pay bill threshold.

Marcus Mason, Head of Education and Skills at the BCC, said: "The government needs to ensure that businesses understand how they could benefit from the reforms, because if it just feels like yet another tax then the policy will have failed … [and it] should allow businesses to use the Levy funding to support other high-quality workplace training or there is a risk of displacing other valid forms of training."

Although both employers and trade unions broadly agree that apprenticeships are valuable and schemes to incentivise businesses to recruit apprentices are generally backed by both sides, the Levy has been widely criticised.

The Association of Employment and Learning Providers (AELP) said the reform will lead to cuts in apprenticeship funding of up to 50% in the most deprived areas, the Institute of the Motor Industry described the scheme as a "car crash", and UNITE Assistant General Secretary Tony Burke said the policy has been "written on the back of a fag packet".