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New report examines the impact of apprenticeship reforms on employer behaviour

A new report from the Warwick Institute for Employment Research provides an explanation for the decline in the number of apprenticeships starts following the introduction of the Apprenticeship Levy in 2017.

The 2017 reforms included: the introduction of an apprenticeship levy; the introduction of End Point Assessment; the stipulation of 20% off-the-job training for all apprenticeships; and the creation of a Register of Apprenticeship Training Providers.

The research, funded by the Edge Foundation and the Gatsby Foundation, was based on reviewing statistical evidence and conducting interviews with a range of employers to find out how their apprenticeship recruitment had changed following the Levy’s introduction.

In The Benefits of Hindsight: Assessing the impact of apprenticeship reforms on employer behaviour, Peter Dickinson and Professor Terence Hogarth find that following the introduction of the Apprenticeship Levy in 2017, employers showed an increasing preference to place people on relatively high level and more costly apprenticeships, and a fall in the number of apprentices being taken on in smaller, non-Levy paying enterprises.

Following the introduction of the reforms there was a significant fall in the number of apprenticeship starts. There was also an acceleration of pre-existing trends towards older and higher level apprentices. Whilst numbers began to recover from the low 2017 base, apprenticeship recruitment was hit further by the pandemic. A rough and ready estimate suggests that apprenticeship starts fell by around 14% as a result of COVID 19.

The authors conclude that while the reforms have increased levy-paying employers’ financial investment in apprenticeships they also stimulated their preference to use it to train existing staff at higher levels, sometimes through converting existing training provision to apprenticeships. This may generate higher level skills, but the cost might be a lower number of apprentices, with fewer trained by smaller employers, as well as fewer younger and lower-level apprenticeships.

The key findings of this research suggest that:

Apprenticeships remain an important means through which employers meet their skills needs. However, this research finds that the Levy has had an impact on employer behaviour in terms of apprenticeship recruitment by type, age, and level, including:

• a reduction in apprenticeship recruitment by non-levy payers;

• an increased preference for people working towards higher level apprenticeships;

• specific barriers in particular sectors, such as, backfilling costs;

• a continuation, and potentially an acceleration, of trends in the profile of apprentices which pre-dated the reforms, including older apprentices and those who are already employed.

In addition, the researchers find evidence that for non-levy payers, the requirement to contribute to the costs of apprenticeship training does pose a problem and is a disincentive to train apprentices.

7 September 2021

  • Click here to read the report



Sheila Kiggins

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