Nine in 10 firms want more flexibility in the apprenticeship levy

10 Jan 2019 By Claire Toureille

Figure revealed as IFA chief predicts government will miss its 2020 apprenticeship target

A large majority of companies that pay the government’s apprenticeship levy wish they had more flexibility in spending it, a City and Guilds survey has found.

Of the 745 levy-paying companies polled, 92 per cent reported they would like to greater flexibility in spending the funds, with 45 per cent saying they wanted to allocate the funds to non-apprenticeship training courses.

The survey also found companies saw the levy as too strict, while 95 per cent of respondents said they had failed to spend their apprenticeship budget in the first 12 months of the new system.

The figures echo a recent study by Manchester Alliance Business School which found a significant number of UK companies were not expecting to use all their funds before they expired

The City and Guilds research comes the day after Gerry Berragan, chief executive of the Institute for Apprenticeships (IFA), the body that oversees apprenticeship standards, publicly predicted the government would not hit its target of creating 3 million new UK apprenticeships by 2020.

The Financial Times reported that Berragan said the government’s target was unrealistic and was set before there was an understanding of what could realistically be achieved.

Weighing in on the debate over where the apprenticeship levy should be spent, Berragan also said he didn’t mind levy funds being used for higher level management courses, to help employees who had inadvertently fallen into management positions. “I don’t have a problem with using levy money in this way, so long as these apprenticeships are focused on upskilling people from one level to another,” he said.

Mark Dawe, chief executive of the Association of Employment and Learning Providers (AELP), insisted it should only be used for apprenticeships, though this could include management-level apprenticeships.

“The government should resist calls that the levy be used for other types of training in addition to apprenticeships,” he told People Management, but added: “The current funding mechanisms under the levy have led to an imbalance of provision at higher levels, which is damaging to the government’s own social mobility agenda.”

In December last year, Ofsted raised concerns employers were not using the levy as intended and warned they were frequently “rebadging” existing training schemes in order to utilise the funds.

Lizzie Crowley, skills advisor at the CIPD, told People Management she felt there was a clear gap at the intermediary skill levels, but stressed that apprenticeships were only one of the ways to tackle skills challenges in the UK.

“There is a need for a more flexible fund that can address more gaps in current training provision,” she said. 

Crowley added apprenticeships were not the right tool for leadership and management training, pointing out that no other country uses them that way. “Usually, apprenticeships are for very specific categories, and leadership and management skills are relatively generic,” she said.

Employees at management level were also already more likely to be the most qualified, Crowley said. “If levy money is being used to fund further training for groups who would have received it anyway, it is a concern that this might be crowding out support for younger and less skilled individuals.”

A Department for Education spokesperson said the apprenticeship levy gave “employers flexibility to provide their staff with a huge range of apprenticeship training opportunities”.

“Businesses can now transfer up to 10 per cent of their levy funds to other employers – this will be increasing to 25 per cent from April 2019,” they said. “We continue to work with business to make sure they make best use of the levy transfer and their own levy funds.”

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