Rethink the apprenticeship levy, don’t replace it

The government’s apprenticeship levy has come in for heavy criticism in recent weeks. Billed as the answer to the nation’s skills shortage, more than half of employers currently paying the levy are already calling for it to replaced: less than year after it was introduced.

According to research from the Chartered Institute of Personnel and Development, 53% of levy-paying employers would prefer a training levy. This is compared with 17% who supported the apprenticeship levy.

But a training levy is not the solution. In theory a levy for apprenticeships is still a solid initiative, but the government needs to work more closely with training firms and employers to ensure it is fit for purpose.

The levy was introduced in April 2017 and compels businesses with an annual wage bill of £3 million or more to pay 0.5% of their payroll costs into an apprenticeship fund. Employers can draw on the fund to help cover the cost of their own training, as long as they do so within two years of making a contribution.

Many small businesses, including those in the financial planning sector, had hoped to access funding in order to support the development of new talent.

Use it or lose it

But employers are struggling to find apprenticeship programmes that meet their requirements. This is often because firms that have training programmes are struggling to meet the requirements of the Department for Education, such as not using the levy for wages, induction, exam resits and more.

As a result, levy-paying firms are using these funds to upskill current employees. After all, if the money is not used, it becomes part of the government’s pot and is essentially just another tax.

This, of course, was not the point of the apprenticeship levy. Apprenticeships are supposed to be about helping people embark on a new career by giving them the skills and knowledge they need. That is not to say they should be limited to people leaving school. They can, and should, be for anyone who wants to enter a new career that requires training to obtain the skills and knowledge for that role.

In 2016 the Treasury and the Financial Conduct Authority acknowledged the growing advice gap. It pledged to make financial advice more widely available. The apprenticeship levy provided the perfect opportunity to channel funding towards the investment in skills required to bring new blood into the sector. Additionally, this could replenish the number of professionally qualified financial advisers able to support the consumer with their finances.

Bridging the knowledge gap

This is desperately needed in a profession where there are fewer than 30,000 financial advisers operating in the UK, and the majority are over 50 years old.

So the government needs to take a closer look at the levy. Currently, there is insufficient funding available for small businesses to take on apprentices.

The negative impact of this is wide-reaching. Small advice firms had hoped to access funding in order to support the development of new talent. However, last year they saw their plans scuppered and aspiring financial advisers were left with a funding shortfall at the 11th hour.

Without apprenticeships, it is not only those firms and the next generation of financial planners who miss out, but UK savers as well.

Source

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source https://fecompare.co.uk/rethink-apprenticeship-levy-dont-replace/