Making Sensible Recommendations on Apprenticeship FundingThe recent Institute of Fiscal Studies (IFS) report that grabs most attention concerns apprenticeship funding. However, ‘creative’ the recommendations may feel, any future government would be better to ensure stability in apprenticeship funding; not ‘radical, untested change’ such as those proposed by the IFS. This article looks at the pros and cons of the report’s proposals and explores why unspent Levy should not be used to support other forms of skills training.PROPOSED CHANGES TO APPRENTICESHIP SUBSIDIES IN IFS REPORTThe recommendation in the Institute of Fiscal Studies’ (IFS) recent report ‘ Investment in Training and Skills’ (published 12 October 2023)that will attract the most attention, concerns an apprenticeship “uniform subsidy rate for all employers, set at a lower rate than the existing rates” [1] . Levy paying employers and non-levy payers would, under the IFS proposals, receive a government ‘ subsidy ’ of the same level but at a rate lower than that currently provided.The report offers no clues as to what such a rate would be. Non-levy paying employers would, however, receive less than the 95% government contribution that they currently receive and levy paying employers would be able to use less than the 110% of their levy payments that they can currently spend on Apprenticeships. IFS states: “Perhaps the obvious way to free up funds for expanded subsidies is to lower the 95% and 110% subsidy rates.” [2]SAVING ON APPRENTICESHIP SPENDSavings on apprenticeship spend, the IFS recommendation suggests, could then potentially be used to support other forms of training. UVAC would note that less is spent on apprenticeship training in England than is collected through the Apprenticeship Levy even after deductions for the devolved nations. An obvious question is why should such excess funds not be used to support other forms of training instead of reducing apprenticeship ‘subsidy’ rates?UNDER A SECTION TITLED “WHAT ARE THE SUBSIDY RATES” [3] THE IFS STATES:“Levy-paying employers can access funding equal to 110% of the amount of the levy paid (i.e., the full costs and a 10% top-up).” This statement is a little confusing as employers can only ever secure the actual cost of an apprenticeship up to the maximum funding band.“Non-levy-paying employers – and those who have exhausted their fund – receive a subsidy for 95% of the cost of apprenticeship training and must cover the remaining 5% of costs.”CHALLENGES AND IMPLICATIONS OF LEVY PAYMENTS FOR EMPLOYERSWhile it is theoretically possible, levy paying employers are highly unlikely to recover 110% of their levy payments. Most levy paying employers write off a substantial proportion of their Apprenticeship Levy payments. Such unused payments are perceived as being used, in part, to fund provision for smaller non-levy paying employers.Given that the vast majority of levy paying employers spend significantly less than 100% of their levy payments on apprenticeship provision, unless the percentage was reduced substantially only negligible savings would be secured. For employers committed to maximising the use and value of apprenticeships the IFS proposal is, however, potentially bad news.Take the NHS. The NHS aims to maximise the ‘recovery’ of the levy payments they make. According to the NHS Long Term Workforce Plan [4] , by 2030 one in six NHS staff will be recruited by the apprenticeship route in both clinical and non-clinical roles. The IFS needs to explain how their proposal fits in with such strategies where, encouraged by government, employers are planning to optimise use of their levy payments to deliver organisational objectives.IMPLICATIONS OF PROPOSED CHANGES TO APPRENTICESHIP FUNDINGIn other parts of the report the IFS highlights constant “chopping and changing” [5] and the “policy instability and inconsistency which have plagued the sector” . [6] Proposals from the IFS for changes to appren...

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