The government is to carry out a review of the apprenticeship levy after apprenticeship starts fell in the construction industry by more than 10% since its introduction.
Chancellor Philip Hammond yesterday announced a series of measures at the Conservative Party conference to try and make the levy more flexible.
The new proposals will allow large businesses to transfer up to 25% of their apprenticeship levy funds to businesses in their supply chain from April 2019. Currently only 10% of the levy can be passed on in this way. Hammond pledged an extra £90m of funding to support the move.
Meanwhile the government pledged another £5m for the Institute for Apprenticeships to introduce new standards and update existing ones so that more courses can be offered.
The range of courses will be expanded to increase the number of people who can access STEM subjects, transport and healthcare.
The government will discontinue the old apprenticeship frameworks so that all new apprenticeships will be on the same standards by the start of the 2020/21 academic year.
It will also seek views on the operation of the levy after 2020.
Hammond said: “We have heard the concerns about how the apprenticeship levy is working so today we’ve set out a series of measures to allow firms more flexibility in how the levy is spent.
“But we know that we may need to do more to ensure that the levy supports the development of the skilled workforce our economy needs.
“So in addition to these new flexibilities, we will engage with business on our plans for the long term operation of the levy.”
The apprenticeship levy, introduced in April last year, requires businesses with an annual payroll of £3m or more to invest 0.5% in apprenticeship training.
There were 341,700 apprenticeship starts in the period between August 2017 and June 2018, down from 472,500 over the same period the previous year.