Lord Jo Johnson said a reformed apprenticeships and skills levy was “the only game in town” to increase spending on training. The next government should at least double what businesses pay in to the apprenticeship levy to repair the country’s poor record on training, according to a former Department for Education minister.
He told an event in parliament on 02 March 2023 that increasing employer contributions would enable the levy to fund “a wider range of courses”, without reducing the resources available for apprenticeships. Lord Johnson of Marylebone was speaking on a panel organised by the Future Skills Coalition, a new campaigning group set up by the Association of Colleges (AoC), the Association of Education Learning Providers (AELP) and City and Guilds. The panel event was part of a day of action with colleges and training providers lobbying MPs for greater investment in FE and skills ahead of next month’s budget.
Johnson said “taking more money from employers to fund adult training, as well as apprenticeships, was the most realistic way of solving the country’s skills gaps. There is a need to ramp up training spending. As a country we spend less than half the Europeans on training employees and virtually all economists are in agreement that the UK needs to invest substantially more into training and development of its workforce.”
Johnson, who is chair of independent training provider Access Creative College, would increase the amount employers pay in to a rebranded “apprenticeships and skills levy” from 0.5 per cent of their annual pay bill to 1 per cent. He suggested half of the increased funding raised should be ringfenced for apprenticeships, and the rest could be spent by employers on “non-apprenticeship training, including modular courses to tackle key skills gaps.”
The Labour Party announced last year that it would also reform the levy to a “growth and skills levy” so businesses could use half of their contributions on non-apprenticeship training. Unlike Lord Johnson’s suggestion however, Labour didn’t announce any plans to raise extra funding from employers, leading to concerns that its plans could shut out smaller businesses.
At the s “mind the skills gap” event, which also saw speeches by Kirstie Donnelly, chief executive of City and Guilds, Jane Hickie, CEO of AELP, David Hughes, CEO of AoC and Lord David Blunkett who led Labour’s Council of Skills Advisers, Johnson took aim at the government’s record on investment in skills and training. “I think there is a really shocking mismatch between government rhetoric on skills and the actual resources that have been made available to colleges and independent training providers. Government funding itself is not going to be the whole answer. So I don’t think anybody should be under the illusion that the Treasury is just going to write a cheque. That’s why reform of the apprenticeship levy is so important, because it will potentially bring more employer funding to the table in a way that absolves the taxpayer and the treasury of the sole responsibility of addressing this mismatch.”
Smaller businesses should also pay the levy, Johnson suggested, so “more SMEs have skin in the training game”. Currently businesses with an annual pay bill of over £3 million are liable to pay the apprenticeship levy. Johnson said that £3 million threshold could “potentially” be brought down, though he didn’t specify by how much.
“As a country, we really need to double, or more, mandatory spending on training. An apprenticeship and skills levy in the next parliament, I think, is the only game in town in that respect,” he concluded.
His comments come on the day 360 headteachers and principals wrote to education secretary Gillian Keegan to ask the government to postpone plans to defund most BTECs and applied general qualifications.