HR · 9 April 2018

The apprenticeship levy: over a billion pound left unused

Three in ten business owners said the funding process was more time-consuming than expected.

Employers are being urged to “embrace” the apprenticeship levy or miss out on over £1.28bn of unused funds.

Data from the Education and Skills Funding Agency reveal that one year on from the introduction of the apprenticeship levy, organisations have paid in more than £1.39bn but only withdrawn £108m.

The Open University which commissioned the analysis and sourced the data through a freedom of information request, said the money is simply “languishing” in national apprenticeship service accounts.

It warned that this “could cost organisations in England dearly” as any funding which remain in the accounts will expire after 24 months.

The Open University, as part of its new report, the apprenticeship levy: one year on, said employers must pick up the pace.

“If organisations in England continue to use the funding at the same rate, they risk losing as much as £139m a month from April 2019, which could otherwise be used to build skills, attract and retain staff, and increase efficiency,” it stated. “A year is not a long time considering it can take up to nine months to get an apprenticeship programme up and running.”

According to market research commissioned for the report, three in ten business leaders who have accessed the funding said that the process was more time consuming than they expected.

Even though the majority, 92 per cent, of levy-paying organisations said they agreed with the apprenticeship levy in principle, 43 per cent said they would like to see some changes, as there are a number of other barriers that are deterring employers from taking up apprenticeships.

Employers are concerned about the resource required to develop an apprenticeship strategy and to research providers and programmes. One in ten even said that management of the apprenticeship process requires resource equivalent to a full-time job; a cost they simply cannot afford.

However, the most significant barrier preventing organisations from taking up apprenticeships is the availability and flexibility of programmes. One in four business leaders agreed that apprenticeship standards need to be approved more quickly by the Institute for Apprenticeships, as the current delays limit the training options available to them.

One in three of employers called for more flexibility in apprenticeship content. They said the centrally agreed standards do not allow employers to adapt apprenticeships to fit their specific skills needs.

The Open University said a more agile approach was needed with the introduction of ‘modular apprenticeships’. These would allow employers to tailor training by adding additional learning modules to ‘core’ apprenticeships. 

“With such a huge amount being paid into the apprenticeship levy, it’s essential that employers in England get return on investment by embracing apprenticeships,” said David Willett, corporate director at The Open University.

“While it’s encouraging that the majority of business leaders agree with the levy in principle, it’s clear that adjustments are needed to make the levy work harder for employers. The lack of flexibility needs to be urgently addressed to ensure that organisations get value for money, and we think that modular apprenticeships, which allow organisations to develop tailor-made programmes that fit their specific needs, could be an attractive solution for both employers and the UK government.”

Insurance firms lead apprenticeships revival at UK businesses

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ABOUT THE EXPERT

Carly Hacon is a reporter for Business Advice. She has a BA in journalism from Kingston University, and has previously worked as a features editor for a local newspaper.

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