Apprenticeship numbers are down 34% since 2015-16, before the apprenticeship levy and other reforms were introduced, and down 40% for under 19s. Only one in two apprentices completes their apprenticeship, although total training hours per apprenticeship are up. Falls in apprenticeships in deprived areas mean apprentices are now just as likely to be from the least deprived areas, having been half as likely before.

Too often large employers paying the apprenticeship levy are choosing apprenticeships to draw down their levy to fund higher-level training for older, existing employees, rather than because it is the best option for them. Meanwhile overall employer investment in training down 26% since 2005.

The apprenticeship system isn’t working as it should. We need a system that raises overall employer investment in training, improves opportunities for young people and training particularly up to level 3, and better meets the need of employers and our economy.

This report makes the case for the next government to broaden the current levy into a “flex and match” Skills Levy that would give employers greater flexibility to spend their levy on training in priority areas, but only if they also invest in apprenticeships for young people. Growth in the levy over time would allow the apprenticeship budget to be protected. The Government should also increase support for functional skills, explore expanding the levy to more employers, and introduce a Skills Tax Credit.