Think tank report highlights possible problems ahead for Growth and Skills Levy

The current Apprenticeship Levy has had many critics, with business groups pointing out that apprenticeships have been failing to help firms address skills shortages and to support individuals trying to boost their qualifications.

So, the recent news that the Government planned to introduce a new Growth and Skills Levy (see Prime Minister promises ambitious apprenticeship reforms in England) has seen a cautious welcome by bodies such as the British Chambers of Commerce (BCC).

It is the subject of the latest Labour Market Outlook, produced by independent think tank the Resolution Foundation, which highlights that Britain’s chronic skills shortages are underlined by the fact that the share of job vacancies, caused by firms finding it hard to recruit people with the right skills or qualifications, has more than doubled over the past decade, from 16% in 2011 to 36% in 2022.

The Labour Market Outlook Q3 2024: the Growth and Skills Levy notes that access to apprenticeships has fallen sharply among young people with low-level qualifications.

In addition, the apprenticeship achievement rate remains unequal between different groups, with apprentices from the least deprived areas of the country having a much higher achievement rate than those from the most deprived.

“There are reasons to be optimistic that the new Growth and Skills Levy, alongside a youth guarantee for 18-21-year-olds, could benefit both firms and young people,” the report states. “The promised flexibility of the new Levy will undoubtedly be welcomed by firms, particularly if it enables them to more easily invest in training that suits their needs.”

However, the Foundation warns, the design and implementation of this new Levy must be handled carefully to avoid exacerbating, rather than improving, the current situation.

The Government must ensure that there are sufficient apprenticeship opportunities for young people aged 18–21 to make this guarantee meaningful. It must be aware that, by making the Levy too flexible, firms will be more likely to subsidise training they would have done anyway rather than genuinely increasing provision and it must put safeguards in place to ensure that Levy funds are used to deliver training that genuinely benefits both firms and learners.

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