1 in 5 manufacturers says levy should be scrapped

Funds from the apprenticeship levy should be freed up to spend on all workforce training, says manufacturing industry

Kate Parker

apprenticeship starts levy anne milton training FE colleges

The UK's manufacturers believe the apprenticeship levy needs significant change if it is to succeed, and one in five even think it should be scrapped altogether.

According to a report by Make UK, published today, 95 per cent of manufacturers say that the apprenticeship levy must be changed – with half of levy payers saying that the money should be freed up to be spent on all forms of training for employees, not just apprenticeships.  

Currently, the levy requires all businesses with a payroll of more than £3 million to pay 0.5 per cent of the company's total monthly salary costs into a digital account. This money can only be used on the training of apprentices. 

However, Education and Skills Funding Agency (ESFA) figures for the period of April 2017 to December 2018 found that employers drew £480 million from digital apprenticeship service accounts, leaving more than £3 billion unspent.

According to Make UK's research, just 19 per cent of levy-paying companies spent their entire levy last year – and the survey also found that one in five manufacturers believe the levy should be scrapped altogether.

Background: 80% of levy-paying employers have hired no apprentices

Opinion: The apprenticeship levy a year on: lessons learned

More news: Make apprenticeship levy more flexible, say firms

Make UK's report, An Unlevy Playing Field for Manufacturers, says that “a lack of appropriate apprenticeship training standards (training course criteria) available to employers to deliver the skills their businesses need is preventing employers from training the new generation of workers, fill vital skills gaps and growing their businesses.”

In the past 12 months, 65 per cent of manufacturers recruited an engineering apprentice, and 73 per cent plan to recruit one in the next 12 months, according to the research. 

The need for real change

Tim Thomas, the director of labour market and skills policy at Make UK, said the levy, introduced in 2017, was rushed in development and implementation and has been caught in systemic chop and change. 

“It’s little wonder then that manufacturers overwhelmingly want to see real change, not tinkering at the edges of a skills system that is just too slow, too complex and increasingly too late to deliver the skills needed by tomorrow’s technologies. 

“Now is the time for government to be both quick and bold – opening the levy pot up to other forms of technical, work-based training and refocusing it on getting all workers the skills they need to get on and get up the skills ladder,” he said. 

A Department for Education spokesperson said: “The apprenticeship programme gives employers the opportunity to provide new and existing staff with a range of opportunities to gain skills and makes sure we have the workforce we need for a productive economy.

“The levy means more money is available than ever before for apprenticeship training - this year the funding available in England has risen to over £2.5bn, double what was spent in 2010-11.

“We have listened to employers and provided them with more flexibility about how they can use their levy funds. Employers now have up to 24 months to spend their funds and can transfer up to 25 per cent of their funds to other employers. We will continue to work closely with employers to help them take advantage of the levy and wider funding changes, to invest in the long-term skills needs of their business.”

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Kate Parker

Kate Parker is a FE reporter.

Find me on Twitter @KateeParker

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