The apprenticeship levy that comes into effect in April, represents “poor value for money”, the Institute of Fiscal Studies (IFS) has found.
The institute’s report, published today, will fuel fears that the 0.5% levy, which comes into effect on 6 April, is being used as a revenue-raising tax rather than to boost skills and increase the number of apprentices.
The levy will apply to all businesses with a payroll of more than £3m a year, and the IFS predicted it will raise £2.8bn a year when fully implemented by 2019/20. However, government spending on apprenticeships is only expected to increase by an extra £640m annually.
However, Jenny Holloway, director of north London-based manufacturer Fashion Enter, which runs apprenticeships, defended the levy: “It’s not a question of the levy being poor value for money but rather a case of poor communication on how it works and what value it can have for retailers.
“It is up to retailers to find the right one for them [and] get the best out of it. It’s here to stay, so we have to work within the system.”
Holloway, who supplies Asos, Marks & Spencer and John Lewis, added that demand for apprenticeships shows no sign of slowing.
The Department for Education said the levy would help the government to meet its commitment of creating 3 million new apprenticeship places in England between 2015 and 2020. A spokesman added that it would “boost economic productivity and increase the country’s skills base.”