Levying up: How to make the growth and skills levy work

An effective skills system is more important now than ever. In the coming decades, we are likely to see a transformation in the labour market, driven by advances in technology including artificial intelligence. Estimates suggest that between 10 per cent and 30 per cent of UK jobs have the potential to be automated in the coming years, with many more being transformed by technology. As the labour market evolves, and as the skills employers need change, it is vital that the training system helps workers to adapt.

A decade ago, the Conservative government announced the introduction of the apprenticeship levy. This sought to increase the number of apprenticeships, meet the skills needs of employers, and support progression and social mobility. It has failed on all counts. The levy is also failing to deliver on two of the government’s central missions: driving growth and unlocking opportunity.

The Labour government has committed to reforming the levy into a ‘growth and skills levy’, giving employers more flexibility. However, with the apprenticeship budget overspent last year, ministers face difficult policy choices. In this report, general secretary Joe Dromey and senior researcher Sasjkia Otto set out a series of recommendations for the reform of the levy designed to both unleash growth and to unlock opportunity.