Labour’s levy won’t devalue apprenticeships, Malhotra claims

Shadow skills minister says reform plans present 'opportunities' for training providers

Shadow skills minister says reform plans present 'opportunities' for training providers

26 Feb 2024, 19:27

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Labour’s proposed reform of the apprenticeship levy to fund other types of training will not “devalue” apprenticeships, the shadow skills minister has claimed.

Seema Malhotra attempted to reassure today’s Annual Apprenticeship Conference that plans for a “growth and skills levy” present “pretty broad opportunities” to training providers while insisting that the money is there to expand the scheme.

Labour leader Sir Keir Starmer has announced his intention to reform the apprenticeship levy so that it can be spent on other types of training if the party comes into power.

The “growth and skills levy” would allow businesses to use 50 per cent of their funds to pay for non-apprenticeship training. 

Sector leaders have warned that such a plan threatens to devalue apprenticeships and there is a danger that employers might be driven to the easiest training option.

The current government’s attack line also claims that Labour’s plan would limit the country to 140,000 apprenticeship starts per year – around half the current rate.

But Malhotra, who was appointed as Labour’s shadow skills minister in September, rejected the concerns.

She told today’s conference: “I don’t think that’s likely at all, and I’ll give you my reasons why. 

“Firstly, we’ve said 50 per cent of the levy would still, as a minimum need to be spent on apprenticeships. And in actual fact, that is probably about what is currently spent by many employers. 

“The proposal is actually greater flexibility for different types of courses because we are hearing that a broad range of adult skills and retraining, where it’s not always possible to deliver an apprenticeship, that having more modular and more stackable courses [is desired]. Those are pretty broad opportunities for training providers. 

“I don’t think it will be a replacement, I think it [the growth and skills levy] will be a really important valuable addition that will also keep our skills system competitive, and create the best possible choices that we need for our learner.”

Labour would continue 95% SME co-investment

Experts have also warned Labour’s growth and skills levy would swallow up funding for small and medium-sized enterprises (SMEs) which are funded by the levy as well as large firms.

In June 2023, then shadow skills minister Toby Perkins committed to additional spending for a ringfenced budget for apprenticeships in SMEs.

Asked today if that commitment from the shadow Treasury team was still in place, Malhotra wouldn’t give a direct answer but pointed out there are billions of pounds of funding generated by the apprenticeship levy that has either not been allocated for spending on apprenticeships or clawed back by Treasury.

She also made clear in her speech that for SMEs who do not currently pay the apprenticeship levy, under Labour they will continue to receive 95 per cent co-payments.

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