Employers with higher apprenticeship bills ‘should get more leeway on how money is spent’

The head of the CBI has written to the Secretary of State for Business urging the minister to reconsider rules around the new apprenticeship levy to lessen the costs for employers.

Carolyn Fairbairn, CBI director-general, asked minister Sajid Javid to ensure firms could claim back "allowable expenses" on what they spend on administering apprenticeships, such as capital investment and staff time.

The letter said businesses with higher apprenticeship bills should be given additional freedom on how the money is spent.

Fairbairn said the levy - due to be introduced for businesses with a wage bill of more than £3m from April 2017 - had not been welcomed by the CBI, but added: "If it is to be successful in providing the higher rates of training we all want to see, the levy system must ensure training is relevant and valuable to businesses."

She said that businesses had been promised more influence over qualifications offered in the in-work education system for more than a decade but "programmes have changed too regularly, and government-inspired red tape has made the system difficult to deal with".

Her letter also said that the CBI welcomed the introduction of the Institute of Apprenticeships, due to operate in shadow form this year and be fully operational by April 2017, but warned steps must be taken to establish its "credibility and longevity".

The institute must be independent, the letter said, and have full control over the levy, which the CBI said must remain solely for funding apprenticeships.

The letter outlined hopes that the institute would correct issues with the trailblazer programme, - where employers have helped shape apprenticeship standards and assessment - which it criticised for being "chaotic" and "overly government-dominated".

It said the institute should ensure growth of level 3 and 4 apprenticeships, rather than just those at level 2, which are equivalent to GCSEs. Doing this, Fairbairn said, would address the UK's shortage of technician level skills.

In response, Sajid Javid MP, said: "Employers need to be in charge of driving up the quality of apprenticeships so that our young people get the skills they need. We will continue to work with the CBI, and others, to turn round the 20-year decline in training investment."

The Institute of Directors said it shared some of the CBI's concerns outlined in the letter. Seamus Nevin, head of employment and skills policy, added: “Businesses are keen to work with government but the focus needs to be on quality training, not just the race to reach the targeted three million apprenticeships.

“Moreover, businesses still need clarity about how they will get more out of the levy than they put in. It is a worry that the government are working on the assumption that up to one-quarter of the money collected will be spent on administration and bureaucracy, rather than the apprentices themselves.”

For more information see our recent article 'Apprenticeship levy: how will it work in practice?'