The number of new apprenticeships has fallen by more than 40 per cent since the training levy was introduced in 2017, according to research by a professional body.
Since the apprenticeship levy came into force in 2017, the number of young people starting on the programmes has dropped by 41 per cent for under 19s and 36 per cent for those aged 19 to 24, the Chartered Institute of Personnel and Development (CIPD) found.
Their study, with Youth Futures Foundation, surveyed more than 2,000 businesses and also found from 2015-16 and 2022-23 the number of people undertaking apprenticeships from the most deprived areas of England fell from 250,000 to 150,000.
54 per cent of organisations paying the levy admitted they had converted existing training activity into apprenticeships programmes to claim back their allowance.
There was also £620m spent on incomplete apprenticeships in 2021-22 alone, suggesting the training was not suitable for people’s needs, the CIPD observed.
Titled ‘Balancing act: Youth apprenticeships and the case for a flexible skills levy’, the report argues for an apprenticeship guarantee for young people.
The CIPD also wants to see it transformed into a flexible skills levy, with at least 50 per cent of funds going towards apprenticeships, primarily for young people, and the remainder going towards other forms of accredited training.
Peter Cheese, CIPD chief executive, said: “The evidence in this report shows clearly that young people most need and benefit from apprenticeships, and that the erosion of this pathway has had a negative impact on social mobility for the most disadvantaged.
“The introduction of an apprenticeship guarantee would help reclaim apprenticeships primarily for young people and reverse the decline in opportunities for them.”
He also argued a “more flexible skills levy” would allow firms to better invest in workforces; adapt to artificial intelligence (AI) and the green transition, whilst addressing the skills shortage.
While Barry Fletcher, Youth Futures Foundation chief executive, added: “International evidence shows apprenticeships are an important and impactful way to support young people prepare for and access jobs, yet apprenticeship participation has fallen significantly for young people, especially those most marginalised in recent years.
“If we want to reverse this trend, we need to ensure that increasing the participation of young people in Apprenticeships is at the centre of future policy development.”
Fiona Graham, chief advocacy officer at Family Business UK, who also called for the levy to be reformed into ‘future skills fund’, said the CIPD research “reinforces our long-standing argument that the apprenticeship system is simply not working”.
She said: “We hear from family businesses daily how the system is too complicated, inflexible and burdensome.
“Family businesses want to train young people and upskill their workforces, but administrative complexities discourage businesses from taking on apprentices.
“A staggering £4.4bn that could be used for training is instead returned to the Exchequer without being touched.
“Quite simply, the current system is holding back the immense potential of family businesses by failing to equip future workforces with the skills, training and support they need.”
The Departments for Business and Education have been contacted for comment.