Understanding training levies
Training levies are a potential way through which employers can collectively invest in the provision of workforce training to raise skills. This Evidence Report deepens our understanding of this particular policy lever and focuses on three particular levies in the construction, engineering construction and film industries. Through desk research and interviews with employers, levy operators and other industry stakeholders, this research provides a qualitative understanding of the benefits and impacts of training levies and how they affect employer behaviour in regard to training and skills.
Understanding training levies
(PDF, 754 Kb) Published July 2012
This Evidence Report develops a deeper understanding of training levies and focuses on two mandatory training levies and one voluntary training levy:
• the construction levy in England, Scotland and Wales, operated by the Construction Industry Training Board-ConstructionSkills;
• the engineering construction levy in England, Scotland and Wales, operated by the Engineering Construction Industry Training Board; and
• the UK film industry levy, or Skills Investment Fund, which is operated by Creative Skillset.
Training levies are one of a range of policy levers, or best market solutions, which the UK Commission has identified as having the potential to encourage employers to invest in skills, on a collective basis, where there is sub-optimal provision of training due to market failure of various kinds. A training levy is a mechanism whereby firms, within an industry or locality, come together with the express aim of increasing workforce skills, via a mandatory or voluntary agreement. The use of training levies to increase the demand for, and supply of, skills was previously considered in the UK Commission’s Review of Employer Collective Measures.
This report, by Professor Howard Gospel, King’s College London and the University of Oxford, builds on that evidence base by providing further understanding of training levies, such as their benefits and their impacts on employer behaviour. Through qualitative research, including interviews conducted with employers, levy operators and other stakeholders, the research explores the following questions:
• What does an effective training levy system look like?
• What is the impact of current levy systems?
• What lessons can be learned in order to encourage employers to participate in levy-systems more widely?
• What features are most attractive/persuasive top employers?
These are addressed by examining the three training levies mentioned above. Their industry background, history, governance and management, and their relationship to training are explored. Before that the report begins by laying down theoretical considerations for introducing a levy. It then identifies different types of training levies and considers the design factors policy architects would have to take into account in order to establish one. Context is then added via an historical and comparative perspective of training levies in the UK.