Employers are finally getting to grips with the Apprenticeship Levy, a new survey from the IoD has revealed, with over half of employers who use the system now saying they understand it ‘perfectly’, a 42% increase since March (from 36% in March to 51% in November).

However, the poll of business leaders revealed that awareness of recent Government reform is low, with only one in three knowing about the increased scope to transfer Levy funds to smaller employers. With three times as many large companies employing apprentices, compared with the rate for small companies, the IoD said work was needed to get businesses ready to make use of the new flexibility when it comes into effect next April.

While most business leaders favoured using apprenticeships as part of the training mix, almost four in ten felt they were not the most appropriate for them. A majority of these respondents said that their organisation would benefit more if they were allowed to use Levy funds on other forms of training, including traineeships or Massive Open Online Courses (MOOCs).

Stephen Martin, Director General of the Institute of Directors, said “The apprenticeship levy has had some serious teething problems, but these figures suggest that the creases are being ironed out. While there’s certainly distance left to travel, the Government deserves credit for listening to the concerns of business.”

“Greater opportunity to transfer levy funds is a step in the right direction, and ensuring smaller enterprises are in a position to take advantage of this come April must now be the focus. We would call on larger employers who aren’t currently using all of their levy funds to talk to smaller suppliers to see if they could use an apprentice. It’s much better than letting the money go to waste.

“Looking ahead, we shouldn’t shy away from broadening the scope of the levy. Apprenticeships are an immensely valuable tool, but they aren’t a one-size-fits-all solution. Opening out the system to encompass other forms of training would be to the benefit of employer and employee alike.”

Full survey results:

1141 total respondents, conducted between 15-30 November 2018

Do you employ an apprentice? 

Total Small Medium Large
Yes 28% 18% 47% 54%
No 71% 81% 53% 43%
Don’t know 1% 1% 1% 3%

Why do you not employ an apprentice?  

 Cost constraints 8%
Administrative burden 14%
Time constraints 13%
Lack of available apprenticeship standards (approved courses) to fit my business needs 16%
Increased regulatory burden for my business 10%
Not applicable – apprenticeships are not suitable for my business 59%
Other (please specify) 12%
Don’t know 2%

(of those that pay the Levy – 215 respondents)

Do you feel you understand sufficiently how the Government’s Apprenticeship Levy system works? 

Nov 18 Mar 18
Yes, I understand the Apprenticeship Levy system perfectly 51% 36%
No, I do not understand how to pay the Levy 4% 11%
No, I do not understand how to reclaim our Levy funds to train apprentices 10% 18%
No, I understand how the Levy payments work and how to reclaim our funds, but do not yet understand how the Apprenticeships standards (courses) work 20% 25%
N/A 3%
Other (please specify) 8% 9%
Don’t know 3% 11%

Do you feel the Government’s Apprenticeships are the most appropriate form of training to meet your (primary) organisation’s technical skills needs? 

 Yes 3%
No 38%
Part of a mix 55%
N/A 2%
Don’t know 1%

You identified that you do not feel the Government’s Apprenticeships are the most appropriate form of training for your organisation. What are the reasons for this?  

I cannot find relevant Government Apprenticeships standards (courses) for my firm’s training needs 40%
Apprenticeship Levy funds cannot be used to train the self-employed individuals my firm has contracted 7%
My firm already meets its skills and training needs in house without the need to train apprentices 34%
My firm would benefit more if allowed to use our Levy funds for other forms of training (e.g. short courses, traineeships, MOOCs etc.) 60%
Other (please specify) 13%
Don’t know 2%

Last month the Government announced an increase to the amount large employers will be able to transfer of their Apprenticeship Levy funds to businesses in the supply chain from 10% to 25%. The reform will come into place in April 2019.  Were you aware of this change?   

Yes 33%
No 60%
Not applicable 8%