A paper from the NFB Major Contractors Group describes the apprenticeship levy as 鈥渘ot fit for purpose鈥�.
As of July 2022, more than 拢3.3bn of unspent apprenticeship levy funds have been returned to the exchequer for general expenditure. NFB major contractors have reported numerous issues with the system, ranging from frustration at the lack of training options available, poor quality and sparse apprenticeship provision, funding rules that are too rigid and a mismatch between the number of apprentices needed to recover funding when compared to the business鈥� supervisory capacity to oversee them.
Herman Kok of the Lindum Group, who chaired the working group that produced the paper, write in the foreword to the report: 鈥淥n the face of it, the apprenticeship levy is aimed at increasing the number of apprentice employees and as such a number of apprenticeships are detailed and 鈥榩riced up鈥� for companies to use. However, frequently the apprenticeships listed are not supported by local delivery agents and the cost of travel when using training organisations in other regions is prohibitive.
鈥淭he use of apprenticeship levy can be 鈥榝udged鈥� by re-classifying an existing employee as an apprentice when gaining a new skill 鈥� resulting in a number of middle-aged middle-management 鈥榓pprentices鈥� enrolling as under-graduates in order to gain a (further) degree at one of our universities. Not what the apprenticeship levy system was meant for! 鈥淔urthermore, the benefit for the employer is dubious, often limited to 鈥榟aving used up鈥� their apprenticeship levy fund.
鈥淔inally, there is the absurdity of the system as operated by training providers; an example is a local FE college providing an AAT course with choice of day-release or evening classes for 拢860. A similar course booked via the apprenticeship levy system, offered with day-release only, delivered by the same college is charged out at 拢6,000. When challenged, it was pointed out that this was the only way to access one鈥檚 apprenticeship levy fund for the course.鈥�
The paper therefore proposes 10 reforms, covering five priority areas, that aim to allow greater use of apprenticeship levy funds by the company themselves and others in the sector, a reduction in 鈥榣ost鈥� funding, an increase in investment in learning, skills, and training overall and an increase in apprenticeships:
- widening the levy鈥檚 scope 鈥� to become an apprenticeship, skills and learning levy
- reforming funding rules 鈥� to allow greater expenditure to support apprentices
- relevelling the levy 鈥� to match employer鈥檚 capability to spend and the system鈥檚 capability to provide apprenticeships
- improving levy transfer 鈥� to retain funds for much wider use by other companies in the sector and preventing the return of over 拢3.3bn of unspent funds to the exchequer
- addressing double pay 鈥� to tackle the issue of CITB and apprenticeship levy overlap.
Herman Kok said: 鈥淎 not-fit-for-purpose apprentice levy hurts in an industry which operates on the narrowest of margins as it is. I urge the government to take note of and implement the comprehensive recommendations contained in our report, in order to make the apprentice levy a training tool we can all be proud to use. The construction industry, and other industries, are more than willing to invest in new employees, new technologies and new skills 鈥� please give us access to our own money to do so.鈥�
NFB director of policy James Butcher added: 鈥淲e accept that the covid-era of big funding is over. But with low growth prospects, a major skills shortage, the need for greater productivity and greater investment in technical and vocational skills, we must seek to make the existing policy levers work better. By anyone鈥檚 calculation, the loss of over 拢3.3bn of apprenticeship levy funds indicates a major issue with the system 鈥� we have to use that money smarter. With a few minor reforms, we can really get the apprenticeship levy system firing on all cylinders, and rise to the PM鈥檚 challenge of increasing business investment in skills.鈥�
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