The number of apprenticeship starts dropped 40 per cent year on year in February, according to the most recent available statistics from the government.
Figures show the number of apprenticeship starts in February fell to 21,800 from 36,400 in the same month in 2017. The number of starts in February was also down on the 27,600 reported in January, which is the biggest month-by-month drop recorded in half a year.
There were 232,700 apprenticeship starts in the six months to February, compared to 309,000 during the same period a year earlier – a 25 per cent decline year on year.
Business groups said the figures show the apprenticeship system is not working the way it is supposed to.
Jane Gratton, head of skills at the British Chambers of Commerce, said that with businesses “crying out for skilled workers”, apprenticeships should be a part of the solution “but the system just isn’t working”.
“For SMEs in particular, the new rules have added to the barriers, complexity and cost of recruiting and training staff. For larger firms, the inflexibility of the system has made it difficult to spend their levy funds as they see best, making it feel more like a tax, and leaving less money available to pay for the training people need,” she said.
“Businesses want to invest more in upskilling their workforce, and to offer great career opportunities for young people, but this system is holding everyone back.”
Ms Gratton said there is “consensus across the UK business community” that the apprenticeship levy needs reform. At the moment, UK employers with an annual pay bill of more than £3m apportion 0.5 per cent to fund apprentices.
“We are not asking for a complete overhaul – everyone wants this system to work better. Each month the number of apprenticeships is falling, so now has to be the time for government to work with business and training providers to sort things out,” she said.
Meanwhile, Seamus Nevin, head of policy research at the Institute of Directors, agreed that it was time for the government to step in.
“How much more evidence does the government need before it takes action? While the motivation behind the policy is laudable, the execution is flawed,” he said.
“If we want to boost skills, productivity and wages in our economy then the system must be reformed. Businesses should be afforded the flexibility to invest in more tailored courses.
“Firms need longer to spend the money so they can use it on the apprenticeships of greatest value. Larger companies could also be allowed to transmit more of the funds down their supply chain to where it is most needed.”