New Chancellor Should Deliver on Commitment to Apprenticeship Levy Reform
Press releases
Sajid Javid, the new Chancellor, should deliver on his commitment to broaden the Apprenticeship Levy, the REC has said.
Writing in the Financial Times in June, Javid said “I will broaden the apprenticeship levy into a wider skills levy, giving employers the flexibility they need to train their workforce, while ensuring they continue to back apprenticeships.” The REC agrees that a broader, more flexible levy is needed to open up training opportunities for temporary workers while also continuing to support apprenticeships.
Earlier this month the REC launched a petition calling on the government to introduce reforms to create a flexible training levy. This would enable as many as 960,000 temporary workers to benefit from better skills training using the levy funds their agencies pay to the Treasury.
670 REC members already have at least £104 million of Apprenticeship Levy funds between them going unspent, because it can’t be used to support the temporary workers on their payrolls. The REC Report on Jobs shows that there are skills shortages in areas that training temps using levy funds could help to address, like hospitality, and health and social care. Courses which could lead to significant pay rises and higher productivity would be unlocked if money paid for the Apprenticeship Levy could also be used on other high quality qualifications as part of a skills levy.
Sophie Wingfield, Head of Policy and Public Affairs at the Recruitment and Employment Confederation said:
"I would like to offer a warm welcome to Sajid Javid in his new role as Chancellor of the Exchequer. Javid takes over at a critical time for business and we look forward to working constructively to make the case for brilliant recruitment as a driver of prosperity.
"Javid’s recognition of the need to reform the Apprenticeship Levy is especially welcome. The Levy was implemented with the best of intentions but could help benefit the progression opportunities for many more workers if it could be used for broader training. We would welcome working together to end the scandal of locking-out temporary workers so that critical industries facing skills shortages, like hospitality and social care, can access the talent they need.”
"At a time when our JobsOutlook data shows employers remain cautious amid political uncertainty, Javid could share some of that optimism and ‘can do’ spirit by ensuring businesses can access the talent they need.”
See below a table of skills shortage areas and the training that could be funded by a reformed levy to ease the demand.
|
SECTOR |
QUALIFICATIONS REQUIRED TO MEET STAFF DEMAND |
|
Education |
Teaching assistant Supply teacher |
|
Health and Social Care |
Healthcare assistant (HCA) training course Level 2 Certificate in Healthcare Support Services Mental health and wellbeing |
|
Logistics |
Forklift truck drivers LGV drivers Counterbalance forklift drivers |
|
Engineering |
Management Training Course Technology Software Training – AutoCAD Essentials Course |
ENDS
Notes to Editors:
- Sajid Javid’s full FT article can be found here.
- An apprenticeship lasts a minimum of 12 months but 960,000 out of 1,020,000 temp and contract workers in 2017/18 were on assignment for less than 12 months.This means 98% of workers on temp/contract assignments were automatically excluded from taking up apprenticeships.
- The apprenticeships programme in England is intended to allow people to develop the knowledge and skills required for their occupation, and help boost productivity. But the way the current Apprenticeship Levy scheme operates means that a disproportionately high number of recruitment businesses pay the levy without being able to use funds in their account on training for agency workers.
- According to REC estimates, over 670 levy-paying members – the vast majority of which are SMEs that supply agency workers – pay approximately £110m into the levy each year. Most of this money goes unused by their own businesses and could be used to train temporary workers. The figure is significantly higher when you take into account contributions to the levy pot made by non-REC member employment agencies.
- In a survey of REC members in March-April 2019, almost half (47 per cent) of survey respondents had been unable to use any of the funds paid into their account so far. Three in five (61 per cent) respondents identified a lack of flexibility on training opportunities as barrier to using the Apprenticeship Levy funds.Meanwhile, more than half (53 per cent) stressed that the reason why they have been unable to use funds in their levy account is because their workforce is on agency contracts.
- Levy funds can only be used to pay for training for 24 months from when they enter employers’accounts before they begin to expire on a rolling month-by-month basis. As a consequence, the first tranche of unused funds in the employers’ levy pot expired in April 2019.
- In the 2018 Autumn Budget the Chancellor announced that a review of the Apprenticeship Levy post-2020 would be a welcome opportunity to reshape and reset the levy so that it works better for workers, businesses and the wider economy.
- The petition can be found here.
- An agency worker is any worker who has a contract with a recruitment agency or employment business but is supplied to work temporarily for another business/a hiring client. The worker is paid by the recruitment agency or employment business.
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For more information, contact the REC Press Office on 0207 009 2157/2129 or pressoffice@rec.uk.com. An ISDN line is available for interviews on 0207 021 0584.
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About us:
The REC is all about brilliant recruitment, which drives our economy and delivers opportunity to millions. As the voice of the recruitment industry, we champion high standards,speak up for great recruiters,and help them grow. Recruitment is a powerful tool for companies and candidates to build better futures for themselves and a strong economy for the UK. Find out more about the Recruitment & Employment Confederation at www.rec.uk.com.
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