The government’s apprenticeship levy lacks focus and has been likened to “a blunt tool” by MPs.
A report from the cross-party sub-committee on Education, Skills and the Economy last week warned that the cross-industry apprenticeship levy will not close the skills gap.
The government levy will apply to businesses with a payroll of more than £3m and will be charged at 0.5% of companies’ wage bills.
This is aside from the payments of 0.5% of PAYE bills made by qualifying construction firms to the CITB.
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The report said the target for three million apprenticeship starts by the end of this Parliament could hamper attempts to raise quality and MPs were not convinced the apprenticeship levy was the best way to achieve the government’s aims.
The report said: “Our country needs to invest more in training and it is right that employers should contribute, but this training must take place in the sectors of the economy and the regions of our country where it will do most good.”
It added: “We recommend that the government, as part of its continuing review of the operation of the levy, consider whether a single rate is the best approach and explore ways of restructuring the levy on a sectoral and regional basis.”
MPs said there was an urgent need for technicians in construction, engineering and manufacturing, where training has been shown to raise skills and boost wages. However, more than two thirds of apprenticeship starts were in other sectors.
The government expects the two highest-paying sectors under the levy to be education and human health and social work, where there is “no significant wage effect” from training.
“These are not the sectors of the most persistent skills shortages or where apprenticeships produce the highest wage returns. As a result, the contribution that apprenticeships can make towards solving skills shortages and improving productivity is undermined,” MPs said.
“The government has not set out how its increase in apprenticeship numbers will help fill the country’s skills gaps. The current balance of provision is skewed towards sectors with low wage returns and few skills shortages and we are not convinced that tinkering will bring about the major changes necessary.”
