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UK employers call for more flexibility on how they spend apprenticeship funds

Over a third of employers said in a survey they would rather invest in technical skills training than apprenticeships. Photo: Monkey Business Images/Rex/Shutterstock

An overwhelming 92% of UK employers want to see more flexibility in how they can spend their apprenticeship allowance, according to research published by City & Guilds Group on Thursday.

Working with research agency Censuswide, the skills development company surveyed 765 levy-paying employers to find out what changes to the system would help them get the most value out of their investment. It revealed that while most employers are keen to put their levy to good use, the “rigidity” of the system is holding many back.

When asked how they would choose to spend their levy funds with more freedom, 55% said they would continue to spend on apprenticeships, while the other 45% said they would like to allocate the money to non-apprenticeship training. Technical skills training was the biggest priority for 36% of employers, while 33% said they would like to put the money towards work placements and internships, and another 31% said they would invest in leadership and management training.

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Kristie Donnelly, managing director for City & Guilds Group, said: “The turmoil we are facing as a result of uncertainty around Brexit, as well as the rapidly changing world we live in, means it’s never been more urgent to improve the skills of our workforce and invest in home-growing skills that we may no longer be able to import from abroad.

“Apprenticeships have a huge potential to deliver on this, but the system is still not responsive enough to the needs of employers. Businesses needs more flexibility to use the apprenticeship levy in a way that will help them fill skills gaps, upskill their workforce and shore up their talent pipeline for the future.”

The government has announced some freedoms to flex spend in the last year, including increasing the level of levy funds which can be transferred to other businesses in a supply chain from 10% to 25%. But City & Guilds Group’s research found levy-paying employers would invest an average of 35% in their supply chain if they could.

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The survey also revealed the incredible scale of disengagement with the levy, which came into effect at the start of the 2017 to 2018 tax year. Just 5% of employers said they managed to spend the entirety of their apprenticeship budget in the first 12 months of the new system. They also said they only expect to spend an average of 56% of their allotted funds in the future.

However, City & Guilds Group acknowledged there is no way for industry bodies and trading providers to be certain of the true extent to which employers have taken up apprenticeships and where leftover money has gone while there is no transparent reporting of apprenticeship spend.

Employers are currently waiting for the government to set a date for the employer consultation on apprenticeships announced in October.