Labour plans to widen apprenticeship levy

Impact of levy policy on schools has been criticised amid a shortage of routes

Impact of levy policy on schools has been criticised amid a shortage of routes

27 Sep 2022, 18:02

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Labour would reform the apprenticeship levy so that it can be spent on other types of training if the party comes into power.

The party plans to turn the policy into a “growth and skills levy” if it wins the next election. It would allow organisations could use up to half of their contributions to fund non-apprenticeship training, such as modular courses.

Full details of the policy are set to be published in a report produced by Labour’s Council for Skills Advisers – led by former education secretary Lord Blunkett – in the coming weeks.

The apprenticeship levy is paid by academies and trusts with a payroll bill of £3 million or more, and by councils on behalf of local authority-maintained schools. Schools can then draw down funds from the levy to pay for apprentice training.

However, a lack of apprenticeship routes for education staff has prompted criticism of the policy, with warnings schools and trusts are not making the most of the money they put in.

It is unclear at this stage how smaller organisations would continue to access apprenticeships under the proposed system, but shadow skills minister Toby Perkins promised non-levy payers will not see a reduction in the amount of funding available to them.

Party leader Sir Keir Starmer pledged today to “give employers new flexibility to invest in world class training they need”.

Labour has pledged reform before

The current government’s levy policy was designed so that large employers would not use all their funds.

Levy-payers lose access to their contributions after 24 months and unspent money is made available to smaller employers which do not pay the levy.

Expanding the apprenticeship levy was a policy idea favoured by the former Labour leader Jeremy Corbyn, who pledged to reform the policy in his 2019 general election manifesto.

A Labour spokesperson said that under its newly proposed “growth and skills levy”, organisations will be able to “spend up to 50 per cent of their levy contributions, including currently unspent money, on non-apprenticeship training, with at least 50 per cent being reserved for apprenticeships to preserve existing provision”.

“This flexibility will enable businesses to use more of the money in their levy pot for training, rather than it sitting unspent, investing in essential skills that we need to prepare Britain for the challenges of the next decade,” the spokesperson claimed.

New Skills England body will oversee reforms

Labour said it will establish a new expert body, Skills England, to oversee its skills reforms. This includes approving a list of qualifications that organisations could spend their “flexible levy money”. It would replace the Unit for Skills in the Department for Education.

The list of qualifications will include modular courses in “priority areas, which lie at the core of our industrial strategy, including digital and green skills, social care and childcare that would boost training opportunities with a view to supporting national ambitions such as the transition to net zero”.

The growth and skills levy would also fund “functional skills and pre-apprenticeships training helping tackle key skills gaps especially around basic digital skills that hold back individuals and organisations”.

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