Over £1bn in apprenticeship levy funds wasted in 2020, UK manufacturers say

The levy, which first came into force in 2017, charges the UK’s larger employers 0.5 per cent against their pay bill to fund new apprentices.

But Make UK, which represents manufacturers, said the latest figures show that over £1bn-worth of levy funds expired unused in the nine months from May 2020.

It said that apprenticeship schemes were particularly needed in high-growth industries like manufacturing and engineering.

But it has found that an average four-year engineering apprenticeship costs a business £40,000 to deliver with just £27,000 of that cost claimable from levy funds, leaving many businesses struggling to pay to train an apprentice.

The body called on the government to immediately release up to 20 per cent of levy funds to help support wage costs alongside the ability to use £500 from the levy pot to fund catch-up learning or pre-apprenticeship training.

To increase recruitment in the next 12-18 months, manufacturers have also asked for a temporary extension to the lifetime of levy funds from 24 to 36 months, and 20 per cent of levy funds to be spent on capital costs to allow companies time to take on more apprentices as economic conditions and demand pick up.

“For many manufacturers, apprenticeships are key to unlocking our recovery, and building a strong industrial base in the UK,” said Bhavina Bharkhada, skills policy manager at Make UK.

“But they need more flexibility to do this effectively as they themselves are struggling to recover from the Covid crisis.

“With so many manufacturers looking to recruit an engineering or manufacturing apprentice in the next 12 months, apprenticeships in the UK manufacturing sector can address the yawning skills gap we face, and aid the Government in its ambition to level up.

“Backed by the National Manufacturing Skills Taskforce, this new strategy proposes a series of targeted recommendations which can support our high-growth sector by retaining and recruiting apprentices in the next 18 months to help kick-start the country’s recovery.”

Make UK also called for the government to conduct a full-scale review of the levy that should be undertaken by the end of next year.

Last month, Labour criticised the government for “letting down” young people by failing to sufficiently fund the apprenticeship system.