Employers’ behavioural responses to the introduction of an apprenticeship levy in England: an ex ante assessment

ABSTRACT

An apprenticeship levy was introduced in England in 2017 to help the government meet its target of 3 million apprenticeships between 2015 and 2020. Training levies have been, until recently, something of an anathema in public policy circles in England with most having been abolished by the mid-1980s as the government moved towards creating a flexible, de-regulated labour market. So why would an apprenticeship levy now produce better results? In this paper, we analyse in-depth employer interviews carried out in 2016 to identify possible impacts of the levy on businesses’ approaches to apprenticeships. We consider whether, ex ante, the levy was expected to result in: more apprentices being trained; reconfiguration of existing training structures into apprenticeships; employers ‘gaming’ the system, with levy funds being used but not producing real gains in training; or, employers writing off the levy. These findings are presented alongside data on apprenticeship starts since the levy’s introduction. We discuss the dramatic fall in apprenticeship starts relative to pre-levy numbers. Given the latest figures and our ex ante study of employers, it appears as though even such wide-sweeping change to the programme may do little to overcome longstanding, low levels of employer demand for apprenticeships.

KEYWORDS:

• Apprenticeship
• training levy
• employer investment
• policy
• government
• funding policy
• vocational education

Acknowledgments

The authors wish to acknowledge the employers who gave their time and insights during the study; the Department for Business, Innovation and Skills who originally commissioned the study; and, members of the research team who worked on the original study.

Disclosure Statement

The authors declare that they have no competing interests.

Notes

1. This paper is based on evidence collected from a UK Government commissioned research study undertaken by the authors. While the overarching objectives of the research were set out in the invitation to tender for the study (i.e. to understand how employers might respond to the introduction of an apprenticeship levy), the theoretical framework for the study, the specific research questions addressed and the analysis, were wholly, and independently, determined by the authors. All case study subjects (employers) were assured of anonymity and confidentiality in reporting and in the information provided to the commissioning government department. Due to the commercially sensitive nature of some responses provided by employers, data collected in the original study are not publicly available. Readers are encouraged to see the full research report (Gambin et al. 2016) for more detailed findings of the original study.

2. According to the Department for Education (DFE) ‘A start refers to the number of apprenticeship programmes that begin in a given time period. This measure is helpful in determining the take-up of programmes. An apprentice is counted for each individual apprenticeship they start; for example, if one individual started one intermediate level apprenticeship and one advanced level apprenticeship, they would be counted as two starts.’ (DFE 2019, 15).