This report by Policy Exchange claims the Apprenticeship Levy system is not currently delivering the number of high quality apprenticeships that the UK needs – with young people, those from disadvantaged backgrounds and SMEs being hit the hardest.
According to the report, the number of apprentices has decreased sharply, with particularly severe falls amongst young people, those from economically disadvantaged backgrounds, in SMEs and in the Midlands and North.
The problem is undersupply, with over 40% of young people who registered for UCAS indicated they would be interested in doing an apprenticeship.
The Levy was designed in a way that allowed underspend by levy payers to be recycled to support SME apprenticeships, with Government – in practice, levy-payers – paying 95% of the cost of each apprenticeship initiated by a non-levy-payer.
Accordingly, the Apprenticeship Budget, the money raised by the Apprenticeship Levy, the amount of money in levy-payers’ accounts and the money actually spent on apprenticeships are all different things, both in principle and in fact. Nevertheless, the frequent complaint from business that too much of the Levy is clawed back and not spent on apprenticeships is fundamentally correct, says the report.