This open letter on the apprenticeship levy was sent to the Secretary of State for Education on 30 April 2019 and published on 13 May 2019.
The Rt Hon Damian Hinds MP
Secretary of State for Education Department for Education
Great Smith Street, London, SW1P 3BT
cc: The Rt Hon Anne Milton MP
Minister of State for Skills and Apprenticeships
Dear Secretary of State
Re: An open letter on the Apprenticeship Levy
Good apprenticeships provide people with the skills and experience to help them get into work or progress in their careers. This is why employers across the country support the Government’s commitment to create more apprenticeships as skills development is so vital for individuals, employers and the national and local economy.
April 2019 marks the two year anniversary of apprenticeship reforms. The Levy has helped thousands of people enter the labour market and improve the skills base of those already in work, but the reforms have not been as seamless as many of us would like.
Over the last few months the Local Government Association (LGA) has brought together a range of stakeholders and sector representatives to explore how the skills system, and particularly apprenticeships, can be even more effective and responsive in delivering for employers and for our current and future workforce.
Unfortunately, a recent National Audit Office report found that that employers continue to face considerable barriers to spend their Levy funds, despite their best efforts and recent welcome changes.
We are suggesting, and seeking your commitment on, two further changes which will lead to a more effective apprenticeship system.
1. An extension of the expiry date of funds
All employers need a flexible and effective Levy to boost apprenticeships. In May 2019, monthly withdrawals of unspent Levy allocations from employers’ accounts will begin. These monies will be centralised and re-directed nationally via the Education and Skills Funding Agency’s (ESFA) non-Levy apprenticeship pot. We have significant concerns about this approach.
Many employers want to use their Levy funds to boost vital skills and professions, but have been unable to do so where standards, such as social work and planning, have only just been approved, or are still in development, such as adult care, early years, and building control.
We welcome the ESFA’s assurance that the Institute for Apprenticeships (IfA) has started to speed up its delivery of standards. Given the current delay, the Government should extend the date by which funds should be spent. There are a number of ways to do this, including an extension to employers that have taken on apprenticeships, and an appeals system that will give employers recourse to extend the expiry date of Levy funds in such circumstances.
2. Boosting apprenticeships to achieve local inclusive growth
Boosting the numbers of apprenticeships will help drive local economic growth and help us reach and support disadvantaged communities and those furthest from the labour market. We would like to offer up a discussion to commission and test new ways of working which we believe could open new opportunities for employers and help boost local economies. Our proposals would include:
Aligning apprenticeship activity across an area to local skills strategies and emerging local industrial strategies and sector deals in line with how the Industrial Strategy is devised. This would enable all partners to have a shared vision and understanding of apprenticeships across a local area, and from that, coordinate how Levy and non-Levy funds are raised, commissioned and delivered. There are approximately 17,000 Levy paying employers, each with their own digital accounts. Our suggested approach could incentivise collaboration and ensure much better intelligence about what is being raised and spent locally.
Flexibility for employers to work with local partners to decide how they spend their Levy and any unspent Levy funds to meet local economic priorities and boost apprenticeships for key cohorts. This should include being able to use the Levy to meet the full costs of apprenticeship programmes and administration including on any necessary pre-apprenticeship training. Currently unspent Levy and non- Levy funds are managed centrally by the ESFA nationally. We would like to explore how this could be commissioned and tested locally.
Empowering employers to collaborate around the transfer of funds, for instance through the pooling of money. This could pave the way for more local partnerships to co-commission provision to address skills gaps.
Sharing central government information on how much is being raised and spent locally, so local public and business leaders can play their part in promoting apprenticeships with employers and residents locally.
We have a collective commitment to make sure that the new apprenticeship programme works well for England. We are committed to bringing government new solutions to make sure we have an internationally renowned system in place which meets the needs of employers and apprentices.
We would welcome the opportunity to discuss our ideas with you.