The UK’s largest business lobby groups have sent a letter to the chancellor, urging her to release £600m of unspent funds raised from the Apprenticeship Levy to reinvest into skills and training.
Receipts from the levy – which requires employers with a payroll of more than £3m to pay 0.5% of their wage bill to fund apprenticeships – have been growing, but the number of people starting apprenticeships is significantly lower than a decade ago.
Figures released last week show the number of young people not in employment, education or training (Neets) is stuck at about 946,000.
“The Apprenticeship Levy in its current form hasn’t delivered any step change in the overall amount of training being provided across the economy… it’s too rigid,” said Rain Newton-Smith, chief executive of the CBI and a signatory of the letter along with leaders at the BCC, IoD, Association of Employment and Learning Providers (AELP) and Make UK. “Let’s make sure all the money that’s raised off the levy goes back into funding future starts for people.”
According to AELP’s analysis, the Treasury holds an estimated £600m in unallocated levy funding, rising to around £800m next year as wages increase.
The letter claims that £600m would pay for 40,000 construction apprenticeships, or for more than 200,000 people to be upskilled in new short courses. But the system is complex owing to restrictions that mean the levy can only be spent on full apprenticeships, rather than on shorter, flexible training or reimbursement for overtime. A 24-month “use it or lose it rule” means levy funds expire and end up in the pot for general taxation.
For the chancellor facing a make-or-break budget on Wednesday, keeping hold of an extra half a billion might be tempting. The Treasury did not respond to a request for comment.
“They’re digging their feet in. Maybe it’s because it would mean admitting they’ve been doing this for the last four years, basically skimming off the top,” said Ben Rowland, chief executive of the AELP.
Ahead of the CBI’s annual conference, Newton-Smith added that the government’s employment right bills, in its current form, made it tough for employers “to take a risk on young people” and “meaningful” probation periods for new employees should be considered instead of day one rights to unfair dismissal and certain types of leave.
Photograph by Henry Nicholls/AFP via Getty Images