How we can make the most of apprenticeship levy funds

Plans to make apprenticeship levy transfers easier are welcome – but more must be done, says Anna Ambrose
10th December 2020, 5:08pm
Anna Ambrose


How we can make the most of apprenticeship levy funds
Spending Review: How We Can Improve The Apprenticeship Levy Transfer Process

We need to support apprenticeships now more than ever. Whether to get young people into work, to help people progress in work or move to new jobs, they are a vital part of the skills ecosystem. There's a degree to which the government's announcements on skills fall consistently short, considering the challenges we face. And yet perhaps some small recent changes to the apprenticeship system could hold more promise than we might think.

At the chancellor's recent spending review, it was good to see the flesh finally beginning to appear on the bones of the oft-made promises about "making the apprenticeship system work better". Alongside improving some flexibility in the system, the government has also taken steps to make the apprenticeship levy transfer process easier, by developing an online levy matching system, including a "pledge" function.

Spending review: Chancellor announces new funding for skills

More: Sunak promises more employer support

Background: 9 ways to future-proof the apprenticeship system

Levy transfer - the ability for apprenticeship levy payers to transfer up to 25 per cent of their levy pot to smaller businesses - allows funds which would otherwise sit unspent for two years to be put to good use right away. It provides vital access to funding for small businesses, removing the need to find the 5 per cent co-investment funds, and has wider relationship-building benefits. The addition of an online levy matching facility within the apprenticeship service should make it easier for levy donors and recipients to find each other, and overcome some of the hurdles to leveraging the potential of transfer. That is why it is vital the system itself is robust and intuitive.

Improvements in transferring apprenticeship levy funds

This new government support for levy transfer is a clear indication that it recognises that supporting small businesses to access apprenticeships is fundamental to increasing the number of development opportunities available to young people and people with lower skills levels.

This development is also great validation of the work of the London Progression Collaboration - a pilot initiative I head, delivered in partnership by the Institute for Public Policy Research and the Greater London Authority. In response to the impact of Covid-19, which hit in earnest just weeks after our launch in February, we rapidly developed and deployed a levy transfer brokerage service for small businesses in the capital.

Through our Reskilling the Recovery campaign, we asked London's levy payers to pledge their unspent levy funds to us. With over £3.5 million secured to date, we are facilitating the transfer of these funds to London's small businesses - creating over 200 new apprenticeship opportunities for low-paid Londoners by the end of this year, even in the midst of the pandemic.

The power of levy transfer is not just to create new apprenticeships, but also to direct funds in a way that ensures they can make maximum impact, meeting the needs of the individuals and businesses hardest hit by the pandemic.

The provision of a new online levy matching service is, if it's done well, a great step forward. But it's only part of what's needed to drive greater uptake in levy transfer. To achieve real impact from these changes, there needs to be parallel investment in working with potential levy donors and recipients to maximise the supply of and demand for funds. Without investment in this, the levy matching portal risks being under-used.

It takes significant work to generate a commitment to levy transfer from big businesses. Large firms need to be reassured about the risks and liabilities and supported to find compelling ways to align levy transfer with their strategic vision, values and wider business objectives.

Likewise, considerable ongoing effort is required to inspire small businesses to realise the potential of apprenticeships, and to enable them to offer programmes that are a success for them and their apprentices.

It's hard to imagine that a new online system, however easy it is to use, will substantially increase the number of apprenticeships funded in this way on its own. But if we put in the work to generate interest and commitment, levy transfer gives large businesses the agency to ensure that their unspent levy makes a positive difference - giving small businesses a route to accessing fully-funded apprenticeship training at a time when skills are absolutely business-critical.

Let's hope that these changes, however small, mark a significant step forward in creating a more straightforward levy transfer process. But rather than relying on a blanket encouragement to transfer funds, let's also ask the question "what is the job we need apprenticeships to do right now?" and galvanise levy payers to transfer funds in support of a clear set of social, regional or sectoral priorities.

 Anna Ambrose is director of the London Progression Collaboration.

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