While there’s still a lot of question marks surrounding how the Apprenticeship Levy and Brexit will interact, we do know that the timetable for the forthcoming Apprenticeship reforms won’t be perturbed by Britain’s departure from the European Union (EU).
In this guide, we’ll explore the potential effects of Brexit on the Apprenticeship Levy and collate research and opinions on how the UK leaving the EU could impact changes to apprenticeships and the country’s workforce in general.
When the shock vote to leave the EU was first announced, Skills Minister Nick Boles
issued an initial warning that Brexit could put plans for the Apprenticeship Levy and associated reforms in jeopardy.
However, around a month later, Boles issued assurances that the Levy would launch in April 2017 as planned.
“The need for investment in skills development will be even more urgent and more important for a United Kingdom that is outside the European Union,” he said.
Boles did warn that the vote would delay further details on funding, but was adamant that the changes would still be pushed through.
The referendum’s results and its effects on businesses in the UK have proved highly divisive and the Apprenticeship Levy has not been immune from this contention.
In the aftermath of the vote and the uncertainty the country’s future in Europe poses for British companies, some parties have called for the reforms to be delayed or cancelled, while others have claimed it no longer goes far enough in addressing future skills gaps.
Following the referendum, recruitment website Reed reported a drastic drop in apprenticeship vacancies, with chairman James Reed placing the blame squarely at the feet of worries around Brexit.
Manufacturing trade organisation the EEF joined forces with several other business and charity organisations to compose an open letter to the Secretary of State for Education, calling for the Levy to be put on hold, warning that mounting costs, delays to funding guidance and economic uncertainty were creating a perfect storm of peril for businesses in the UK.
“Our industry is passionate about high quality apprenticeships and we want to see
more of them. However, if the government pushes ahead with its current timetable for the Apprenticeship Levy we could see a decline in both the quality and quantity of apprenticeships,” it warned.
“We therefore urge government to take a considered pause and work with charities, industry and other stakeholders to ensure that the Levy is fit for purpose, until which time the Levy should not go ahead.”
Others asked for greater flexibility in terms of how the Levy would be applied,
with the London Chamber of Commerce and Industry (LCCI) warning against a one-size-fits-all approach.
“LCCI supports efforts to promote and create apprenticeships but has found that smaller companies have found it bureaucratic whereas larger firms have more resources to offer apprenticeships in larger volumes,” said chief executive of London Chamber of Commerce and Industry,” said chief executive Colin Stanbridge.
“What has become clear here is that businesses would like to see more flexibility in how they can apply funds as a result of the levy. Sometimes it is more effective for firms to give existing staff extra training, or indeed transfer the levy to a smaller firm within their supply chain which is more likely to benefit.”
The need for the Levy post-Brexit
Others were keen to stress that the Levy and associated apprenticeship reforms would be needed more than ever should Britain move forward with departing the EU.
Speaking to FE Week, Professor Alison Wolf, an early proponent of an employer levy for apprenticeship funding, claimed that the referendum result had made skills policy more important than ever.
“One argument for the Apprenticeship Levy was that firms had cut back their training expenditures over the years, in part because they found it cheaper and easier to use skilled migrant/immigrant labour,” she said.
“[If the UK were to opt out of free movement of labour within Europe,] the need to increase our skilled, level three apprenticeship numbers will be more pressing than ever.”
A report from the Institute for Public Policy Research (IPPR) also urged the government
to significantly bolster its investment in skills if it wanted to compete on an even footing with its European counterparts.
“Britain’s economy can’t survive outside the European Union without bringing investment in skills into line with our competitors and making sure employers are making better use of workers’ skills,” said Clare McNeil, IPPR associate director for work and families.
“The government’s Apprenticeship Levy may go part of the way to upping skills investment but it won’t be enough to bring us in line with our competitors.”
The IPPR was joined by mayoral candidates from across the political spectrum in calling for more devolved funding to enable regional and local leaders to tackle emerging skills issues close to home.
A growing shortage of skilled labour was also highlighted in the CIPD Labour Market Outlook, released earlier this year. It showed that despite a strong short-term outlook for employment, sectors employing a high proportion of EU nationals were already starting to show signs of growing skills and labour shortages.
The report found that nearly one in three employers reported EU nationals on their staff were considering leaving their organisation and/or Britain in 2017 due to the outcome of the Brexit vote.
“In addition, it has been suggested that greater investment in skills and physical capital may increase as a result of a reduction in the supply of EU nationals. However, the survey data suggest that we have seen a modest fall in investment, despite the prospect of changes to the government’s immigration policy,” said the report.
A survey conducted by the Capital City College Group (CCCG) found that nearly half of 1,1000 British Business thought Brexit would bring about staffing problems and 52 per cent would consider taking on one or more apprentices to offset its impact.
“It’s crucial that businesses meet this challenge head-on and invest in the UK workforce by recruiting motivated apprentices to make up the skills shortfall that is widely expected to arise after Britain leaves the European Union,” CCCG chief executive Andy Wilson said.
Although many unresolved questions remain around Brexit, the roll-out of the Levy and accompanying apprenticeship reforms won’t be derailed by our departure from the EU.
The looming spectre of Brexit only increases the importance of employers using the opportunities presented by these changes to address emerging skills gaps and ensure their talent pipelines are robust, no matter what the future may hold.
And if you’ve got any questions about how the Levy or apprenticeship reforms might affect your business in the coming years, be sure to get in touch with our team of Levy experts today: