£55 million a year wasted in creative apprenticeship levy payments
26th October 2018
Even once the new apprenticeship system is fully embedded, it is unlikely creative industry companies will spend more than 27% of the £75 million levy contribution*, leaving around £55 million.
That money could be used to subsidise training costs for small and medium-sized enterprises (SMEs) which do not pay the levy, allowing them to take on apprentices.
But the system is so complex that the reality is a large chunk of that money, perhaps around £35 million, is likely to go out of the creative industries skills system altogether because of lack of take-up by those companies, too.
The net effect is we estimate there are about a quarter as many creative industries apprentices as there could be. (There were 4,480 starters in 2017/2018)
Levy spending stats
The research shows that 42% of levy payers are using less than 11% of their levy funds. That rises to 65% who expect to use less than 21%.
Why aren’t they spending their levy?
Sample responses from research
- Complexity and lack of suitable standards / courses / quality training
- Training costs which exceed the funding bands
- Cost of meeting salaries
- Cannot afford to have apprentices off-the-job for 20% of the time
- Cannot commit to 12 month apprentice contract
- Hard to get existing staff to do apprenticeships to help them upskill and progress.
Example of how it is unrealistic
The six biggest VFX companies would have to take 122 apprentices a year between them to use up their levy. That is not practical. From April 2019, available levy will be expiring at a rate of £114,000 per month from these six companies which is an incredible waste. Source: UK Screen Alliance’s 2018 annual workforce survey.
Ideally, the apprenticeship levy would be turned into a training levy and employers given much more freedom to decide how best to spend their levy funds.
There are more modest reforms which could make a difference, including:
Sharing of vouchers: new flexibilities that would facilitate employers pooling vouchers and share apprenticeships, for example via a specialist Apprenticeship Training Agency.
Modular apprenticeships: Enable apprentices to build up occupational competence ‘credits’ towards their apprenticeship (a technical/vocational version of the CATS scheme used by organisations like the Open University), could help solve issues associated with the minimum 12-months of continuous employment.
The Chancellor’s previous announcement increasing the amount of levy money that can be transferred to other businesses from 10 % to 25% is a welcome step in the right direction, But without simultaneous simplifications which would allow companies to make bulk transfers to a third party organisation (called an Apprentice Training Agency) that would employ the apprentices, it will not have the desired effect.
What are we doing
ScreenSkills has shared its findings with government and is continuing to advocate for changes to make the system work.
Seetha Kumar, ScreenSkills’ Chief Executive, said: “The screen industries have acknowledged skills shortages as a result of the production boom so it is particularly important that we find ways to unlock the levy contributions paid by UK screen to invest in training. Enabling young people to earn while they learn is also an obvious way of opening up the industry and build a more inclusive workforce.”
How was the research conducted
ScreenSkills conducted the online survey this summer with Creative & Cultural Skills, the UK’s Sector Skills Council for the arts, cultural heritage and design sectors.
We interrogated Department for Education’s official apprenticeship statistical releases and also conducted two round-tables with industry:
- UK Theatre's Workforce Group
- The skills working group of UK Screen Alliance who represent companies in eg post-production, visual and special effects, animation
*Figure from the Creative Industries Council
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