Supply chain · 26 October 2016

Unspent apprenticeships funding in construction to be handed down supply chain

Two-thirds of apprentices in the construction sector are trained by SMEs

Small UK construction companies will be able to access the unspent apprenticeships funding of larger contractors, following changes by the government to the Apprenticeship Levy.

From April 2018, larger UK contractors will be able to digitally transfer funds they don’t spend down the supply chain, providing smaller sub-contractors with the means to train more apprentices.

The changes were made after it was discovered that, in the construction industry, two-thirds of all apprentices received their training from SMEs.

By contrast, Britain’s larger construction firms were found to be harbouring excess Apprenticeship Levy funding, handed to firms of all sizes, in the form of digital vouchers, to spend on training.

The new approach was developed and put to government by a coalition of small business bodies, including the Federation of Small Businesses (FSB), The Manufacturer’s Organisation EEF, the Confederation of British Industry (CBI) and the British Chambers of Commerce (BCC).

The Federation of Master Builders (FMB), the UK construction industry’s largest member’s association, has also welcomed the move.

FMB chief executive Brian Berry said in a statement: “Ensuring that there is plenty of flexibility within the digital voucher model is critical to the Apprenticeship Levy’s success.

“The severity of our industry’s skills shortage means that we need to ensure that every single penny of Apprenticeship Levy that is extracted from the construction sector is reinvested in high quality construction apprenticeships.

“As long as larger contractors are unable, or unwilling, to play a greater role in industry training, then it’s vital that funds can be rerouted to smaller firms.”

Berry stressed that ensuring the updated digital voucher model remained simple and “easy for small firms to navigate” would be of growing importance as 2018 approached.

Apprenticeship Levy rule changes also include an additional 20 per cent in funding allocated to construction sector training provider firms, offering training to apprentices aged 16 to 18, in response to the industry’s concerns surrounding the future affordability of apprenticeship training.

In August, the Construction Industry Training Board (CITB) warned that government plans to introduce new industry-wide training standards under the Apprenticeship Levy could reduce apprenticeships funding by as much as 30 per cent.

The government revealed that construction training providers will be obliged to use the existing apprenticeship framework, which from April 2017 is subject to a 30 per cent funding cut.

Why are Britain’s small construction firms waiting almost two-months for payment? 

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Fred Heritage was previously deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London.