As businesses lose over £3bn in Government training cash, Ian Green MBE asks, “Is it time to change the levy system?”

July 27, 2022

A report in the FT this week revealed that Employers in England lost out on more than £3.3bn in unspent apprenticeship levy funds since 2019.

Employers surrendered the staggering sum to the Treasury, in unspent apprenticeship levy; worrying for a system we were told would encourage workplace training investment.

Many businesses consider the levy too complex, which is reflected in a 72% drop in entry-level apprenticeships and 59% fall in apprenticeship starts by U18s.

This is a major concern for all employers and in my previous role, working with Nissan new recruits, it’s something I lobbied the Government about for many moons.

A significant amount of work on levy transfer – where employees can share the love rather than money going back to Whitehall – has been carried out, but it only works if employers are doing apprenticeships and understand that that they can get levy for free.

Businesses and organisations don’t always know where to look for levy, which is something the Apprenticeships Ambassador Network can and should help with. Some businesses are excellent at giving away the levy, most major banks for example. In 2019, Lloyds gifted 25% of underspend, amounting to a whopping £3m over three years.

The final figure of unspent levy will be more during the pandemic too. The North East doesn’t have access to as many providers – we did during lockdown as everyone went virtual – but as the return to face to face reduces those points of contact for employers.

Another key area where little progress is being made is allowing employers leeway to spend the levy. Most employers go above and beyond apprenticeship training standards, which is often called enrichment/additionality. It might be a team build, additional qualifications or technical training that must be funded by the employer. I believe that if it’s training for an apprentice, then the firm should be able to use levy for it!

The Government also argues against companies utilising apprenticeship funds to train existing staff, but if that expenditure is providing enrichment and a better experience for apprentices then that must be a good thing, right?

It is time to review and simplify this “use-it-or-lose-it” scheme introduced in 2017, particularly as an increasing amount of questions are being raised about whether the aim of the levy was to increase workplace training levels or increase business tax.

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