London Councils has submitted a paper to government calling for reforms to the apprenticeship levy. The paper was produced jointly by the Greater London Authority, the sub-regional partnerships, London First and London Chamber of Commerce and Industry.
The paper calls for the following reforms:
- Temporarily extend the amount of time employers have to spend their levy from two years to three years. The low rate of apprenticeship starts means that many employers are now losing funds they had planned to spend before the outbreak of Covid-19. This measure could be introduced on a temporary basis as part of the recovery from the pandemic.
- Extend the availability of the current employer incentives and increase them to reflect the higher cost of living, working and training in London.
- Allow levy-paying employers to use some of their levy to contribute towards the wage costs of new apprentices from priority groups; and ensure that the equivalent funding is made available to non-levy payers. Priority groups should include care leavers and young people under the age of 25, but also other groups that have been disproportionately affected by the pandemic, including older people (aged 50+) who are out of work and need to retrain. Allow some funding (for both levy-paying employers and non-levy-paying employers) to be spent on the wages of Level 2 apprentices, in order to reverse the worrying decline in the number of apprenticeships created at this level. This funding could also be targeted at certain sectors that are key to the recovery and could be piloted in one of the key growth sectors identified in the Helping Londoners into Good Work mission.
- Provide additional government support to SMEs looking to take on apprentices, including through the funding of administration costs. This could cover initial start-up costs, in a similar way to the Kickstart scheme. One of the most significant barriers SMEs face is the challenge of navigating the complexity of the landscape related to providers, standards and funding. The government should consider funding a brokerage service to support SMEs to navigate the system.
- Allow some levy funding to be used for pre-employment training to get people ready for an apprenticeship. This could also be used to support continued wrap-around support to sustain people in apprenticeships, especially those from vulnerable groups, in a similar manner to the Kickstart scheme.
- Explore the possibility of introducing an incentive for employers who convert Kickstart placements into apprenticeships.
- Increase the proportion of apprenticeship levy that levy payers can transfer to SMEs from 25 percent to 50 percent. This will help unlock more apprenticeships for SMEs.