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18 April 2018updated 24 Jun 2021 12:23pm

Government could end up spending £600m a year on “mislabelled” apprenticeships

Thousands of UK employers stand accused of presenting existing low-skilled roles as apprenticeships in order to make use of the apprenticeship levy.

By Rohan Banerjee

The government could spend as much as £600m each year by 2019-20 if companies misuse the apprenticeship levy, a new report from Reform has claimed.

The apprenticeship levy – a tax on all employers with an annual pay bill of £3m or more – was launched in 2017 as an effort to shift much of the cost of funding apprenticeships from the state to the private sector.

According to Reform, nearly 40 per cent of the apprenticeship standards approved by the government in the last six years, fail to reach the international definition of an apprenticeship, with many roles formally counted as apprenticeships including “low-skill and often very short training courses.”

The think tank published The great training robbery: assessing the first year of the apprenticeship levy last week, evaluating the successes and failings of the Conservatives’ flagship skills policy. The report highlighted concerns over “rebadging” existing training courses and sourcing misdirected funding for executive training opportunities.

Should this trend continue, Reform warned, the government will be spending almost £600m per annum by 2019-20 on training courses that have been “incorrectly labelled as apprenticeships”.

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Elizabeth Crowley, skills adviser at the Chartered Institute of Professional Development (CIPD), told Spotlight in March: “Employers are looking for ways to rebadge existing training activities to be able to reclaim their levy money.”

And Reform’s report has confirmed: “Given the 90 per cent subsidy available for any course or programme that is designated as an apprenticeship, even at managerial levels, employers are now actively incentivised to relabel training courses as ‘apprenticeships’ that they previously paid for themselves.”

Of course, rebadging is not just limited to high-skilled development, as the report suggested that new apprenticeship standards drawn up by the government were allowing organisations to redefine low-wage roles as apprenticeships, and to benefit from levy money.

The list of roles eligible to be classed as apprenticeships includes serving customers over the counter in a shop, working on a hotel reception desk, performing basic office work and serving food or drink in a restaurant.

Reform has made a series of recommendations off the back of its report, such as scrapping the government target of three million apprenticeship starts by 2020 to ensure that more focus is placed on the quality of apprenticeships over anything else. Reform also says that the levy’s 10 per cent employer co-investment towards the training should be removed to avoid businesses disengaging.  

Reform also argued that the exam regulator Ofqual should be made the only option for quality-assuring the end-point assessments for apprenticeships, as a way of maintaining set standards.

 

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