The Confederation of British Industry (CBI) has called for a ‘radical rethink’ of the apprenticeship levy ahead of its April 2017 introduction.

Carolyn Fairbairn, CBI director general has warned of fundamental flaws to the levy’s guidelines which could encourage employers to abandon their existing training programmes in order to cover the levy’s costs.

From 6 April 2017, businesses with annual earnings of more than £3 million will need to pay a 0.5% levy to fund apprenticeships.

Employers will also receive a £15,000 allowance, available through the Digital Apprenticeship Service to offset the levy costs.

The CBI has called for the following:

• Stronger role for the institute for apprenticeships, including measuring and managing the system around the levy
• More flexibility on the levy and the way it is spent, including training and high quality support
• The digital system for managing levy spend needs to support the delivery of apprenticeship training for businesses.

Fairbairn, added:

“Currently, the levy misunderstands training only as apprenticeships and the current design encourages firms to rebadge their existing programmes.

“Companies are having to change the ‘spec’ of graduate or management training schemes – programmes that are working perfectly well – just to fit apprenticeship standards.

“The government needs to work with business to resolve these issues before the levy launches. This means taking the time to get this right to design a flexible, business-led system – through the Institute – that encourages employers to spend on quality training opportunities.”