Third of manufacturers see no benefits from apprenticeship levy

Over a third of British manufacturers see no benefits to the government's proposed apprenticeship levy, a survey of the industry has found.

Many manufacturers see the apprenticeship levy -- where about companies with a payroll of £3m or more, which represents roughly the largest 2% of UK businesses, will from 6 April will be required to invest 0.5% of this payroll into the government's apprenticeship scheme -- as a “tax on business”, according to industry body the EEF.

The organisation said that although manufacturers were warming to the levy, with a quarter of those surveyed by the EEF believing it will increase the quality of apprenticeship and a further quarter expecting it to attract more young people, they have reservations about its viability and long-term prospects.

The levy will come into effect on the first day of the new tax year and the government hopes it will increase the number of apprenticeships in England to three million by 2020. Businesses that pay the levy will still have access to government funding to go towards costs for apprenticeships.

The report by EEF and Lloyds Bank Commercial Banking surveyed 114 senior company executive in the manufacturing and engineering sector and found that 75% are worried they will not get back what they put in.

While 61% were concerned about cost, half of those surveyed were concerned about the timescale to implement the levey and 44% had apprehensions over the uncertainty about the future rule and rate changes to levy.

However, EEF said that manufacturers that operate across the UK with employees in Scotland, Wales or Northern Ireland would lose out on funding because of an incompatibility between the levy and devolved skills policy across the country.

EEF chief executive Terry Scuoler said: “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.

“This report confirms that the apprenticeship levy remains a work-in-progress and must be treated as such - it requires further refining and we would urge the government to continue to engage with business in order to make some much-needed improvements.

But some were positive about the levy as 26% believed that it will increase the responsiveness of providers to deliver relevant training and 29% said they would be better able to buy the training their business really needs.

Amid doubts about the viability of the levy, EEF has called for an independent employer-led review of the roll-out of the levy by the end of 2018.

Dave Atkinson, UK head of manufacturing at Lloyds Bank Commercial Banking, said manufacturers are firmly behind apprenticeships in securing business skills to drive productivity growth and “have a long track record of providing high quality apprenticeship opportunities that lead to long-term careers, very often with the same employer”.

But he stressed that it was 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”.