A new “productivity and skills levy” should replace the apprenticeship levy in order to improve the UK’s productivity, according to a new report by the Institute for Public Policy Research (IPPR) thinktank.
The new levy should be set at 1 per cent of the payroll of large employers, and would raise £1 billion to support skills devolution and support networks for local businesses, the thinktank claims. At the present, the apprenticeship levy is set at 0.5 per cent of the payroll for firms with an annual bill of £3 million or more.
According to the IPPR, 5.1 million Britons - including graduates, apprentices and those on NVQs or specialist training - are too educated for their jobs, while 30 per cent of employers do not fully utilise their employees’ skillsets.
The thinktank also calls for a minister of productivity and skills to work across the Department for Education (DfE) and the Department for Business, Energy and Industrial Strategy. Until 2016, the post of skills minister stretched across the DfE and the former Department for Business, Innovation and Skills, but it was brought entirely into the DfE in July 2016.
‘Radical plans’
Joe Dromey, senior research fellow at the IPPR, said: “Employers aren’t using their employees’ skills or investing in them enough, and we’ve seen productivity and pay stall.
“This report sets out a radical plan to transform our skills system. It would boost employer investment, helping to drive a collective commitment to skills and productivity. It would give workers a voice in the system, helping them to take control of their careers. This won’t be easy to do, but tinkering with the current failing system just won’t cut it any more.”
David Hughes, chief executive of the Association of Colleges, said: “The UK needs to become more self-sufficient in skills, and colleges are ready and willing to meet that need but we need to see more investment - from government, from employers and from people themselves.
“This report has a range of innovative approaches which could help to achieve that and has helpfully built its thinking on policy successes and failures from the past. More than anything, though, the UK needs to see a culture and behaviour change in which investing in skills is more common and delivers good returns for all of the investors.”
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