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Are UK Companies Failing to Spend the Apprenticeship Levy?

According to the findings of a survey of 510 businesses with a turnover of up to £1 billion by the accounting firm Grant Thornton. Over half of the companies which had money payed into the apprenticeship levy fund have not spent the money which is available to them.

The apprenticeship levy was introduced in April 2017, and involves companies with a wage bill in excess of £3 million paying 0.5% of this amount into a fund to be utilised for workplace training programmes. When the scheme was first introduced, critics of it were not only unsure of how apprentices could benefit all types of businesses, but also viewed it as a way for the government to put a further tax on large companies.

The findings of this survey don’t help to dissuade those who have this opinion. In fact 45% of the businesses surveyed don’t even fully understand exactly what they are able to use the levy funds for. And this is probably one of the main reasons why The City & Guilds found that only £268 million from a budget of around £2 billion was spent on apprenticeships. This works out at just 13% of the levy budget.

What Should Companies be Doing?

One of the main failings companies seem to be having around the levy, is the lack of a clear plan or strategy of how the money can be utilised. The fact that the levy has a reputation as a tax, or as another barrier to the running of the business. Means no time ever seems to be taken to work out how best to use the funds which are available to the organisation.

However, with some time taken to look at the future direction of where your organisation is going, or at least where it expects to be, the apprenticeship levy can provide value. Most businesses either have a gap in the skills of their workforce, or will run into a problem of a skill deficit in the near future. It is at this point when normally businesses turn to recruitment to fill the gap. But, this is where organisations can utilise the levy to their advantage. The levy gives you the chance to up-skill your workforce. This allows you to keep recruitment costs down. While giving the talented employees you have at your disposal the knowledge the you will invest in their development. Increasing the retention rates of staff as a result.

Do Changes Need To Be Made To The Apprenticeship Levy?

With the election upcoming all major parties have promised to make changes to the levy system. The Conservatives have promised to create a £3 billion national skills fund. The Liberal Democrats have made their promise to widen the scope of what the fund can be used for. Labour have also promised to widen the scope of what you can use the fund for. But, on top of this they have said some of the fund will be used for climate apprenticeships. Apprenticeships will teach skills which should help to reduce a businesses carbon footprint.

When the results of the Grant Thornton survey and The City and Guilds Group investigation into the levy are taken into account. Then it becomes apparent that changes need to be made to the apprenticeship levy.

The levy was created in order to ensure that there are proper opportunities for both those who need an opportunity to get the first step on a career ladder, and gain some experience and skills in the workplace. And to enhance the skills of those who are in a role but need additional knowledge to progress.

But the funding is not being used. And a large percentage of what is being spent is being used for high level qualifications. If utilising the funding in this way becomes common practice, and as the cost of these qualifications are expensive, there could be a reduction in the amount of apprenticeship opportunities which are created.

For more information on offering apprenticeships, give us a call on 0151 357 6100 or fill in the form on our contact page.

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