Operation market failure: a bridge too far for the apprenticeship levy?

The Chancellor of the Exchequer, George Osborne, announced in 2015 that the United Kingdom would introduce an apprenticeship levy. This came into effect in 2017 and covers all UK employers with a payroll in excess of £3 million. Apprenticeships are a devolved policy and this research focuses exclusively upon the impact of the levy on employers in England. The levy was introduced as a consequence of a marked decline in employer training. Its aim is to overcome a perceived market failure in training and to stimulate employer demand for training (i.e. additional training that would not have happened in the absence of the levy), for both new and existing employees. The levy has also sought to improve the quality and perception of apprenticeships. The ‘apprenticeship’ term became protected by law in the Enterprise Act 2016. This was in response to the previous widespread use of the term in association with poor quality training, which threatened to damage the apprenticeship brand. New stipulations mean levy-funded training must be for a minimum of 12 months and include (at least) 20% off-the-job training whilst also being approved by the Institute for Apprenticeships and Technical Education (IfATE). In order to clarify the distinction between apprenticeships pre and post levy, the research refers to apprenticeships (post-levy) as levy-funded training. The research, based upon interviews with over one hundred private sector employers, seeks to understand employers’ views regarding the levy, in particular whether it has overcome perceived market failure in training provision, or has stimulated fresh employer demand for training. It also assesses the government’s stated intention to place employers ‘in the driving seat’. In addition, it seeks to ascertain the impact of the levy on the quality of training provision. The research finds positive indications that the levy is indeed able to stimulate employer demand for high quality training and may (over time) be capable of re-engaging larger numbers of employers with training activity.