Over 20% of the funds earmarked for apprentice training are being returned to the Treasury each year. Why not allow employers to invest these funds in upskilling and reskilling?

Since 2017, large employers have been required to contribute 0.5% of their total annual pay bill to the apprenticeship levy – a fund for apprentice training which remains available to the paying employer for up to two years. However, research shows that up to two thirds of entitled employers are not using these funds. (1) In fact, recently released figures reveal that over £2bn raised by the levy has been returned to the Treasury since it was introduced. (2) In other words, these funds are not being used as intended to upskill the UK labour market.

This presents a great opportunity. These otherwise unspent funds could instead be redirected to upskilling the current UK workforce. As the majority of 2030’s engineers are already in work, upskilling and reskilling today’s workforce will be vital in addressing tomorrow’s challenges, from reaching Net Zero to reaping the benefits of artificial intelligence.

Currently, most levy contributions are serving an important purpose by funding apprentice training, and that should continue to be fully supported. However, the opportunity to use unspent funds for upskilling and reskilling should not be missed. The UK needs an agile and flexible workforce to compete in a rapidly evolving world. Broadening the apprenticeship levy to include skills training for already-experienced employees would help achieve this. More specifically, this could take the form of allowing employers to use unspent levy contributions on 'microcredentials’ for their employees – short-term courses on specific skills that are more responsive to industry changes than traditional education.

Research suggests that employers would take full advantage of this, with 40% preferring to upskill or reskill their current employees rather than hiring externally (3). Therefore, with £500m+ funding for job-training being returned to the Treasury each year, why not allow employers to invest these funds in upskilling and reskilling their employees?

1) ‘The apprenticeship levy – an untapped opportunity?’ – report by Evolve Learning Group Ltd / West London College

2) https://feweek.co.uk/dfe-forced-to-finally-reveal-true-amount-of-apprenticeship-funding-returned-to-treasury/

3) IET Skills and Demand in Industry 2021 Survey