Breathing new life into Britain’s apprenticeship levy

To maintain its competitiveness in the global economy, the UK needs to make sure that its top companies and startups are able to draw in, and retain, top talent. For this reason, apprenticeships have always played an incredibly important role in developing our talented labour market.?

However, the state of apprenticeship schemes today is a sorry one: apprenticeships in England fell from 500,000 in 2015 to 337,000 in the latest recorded year, while the number started by under-19s decreased from around 131,000 to 77,000 between 2015 and 2023.?

Considering how critical upskilling is to the expansion of our businesses, this presents a dismal picture of the UK's future. So, what went wrong with our implemented initiatives?

Reforming the Levy

The Apprenticeship Levy –?the initiative introduced by the government in 2017 to invest in skills development – has fallen short of its intended goal.?

Fundamentally the Levy works through a redistribution system – UK employers with a pay bill over ￡3 million are required to pay an additional 0.5% on any further wages into the Digital Apprenticeship Service (DAS), thereby becoming eligible to access those funds to pay for UK-based apprenticeship training.?

However, bureaucratic hurdles and complexity have hindered the programme’s effectiveness, especially for SMEs, stifling participation, and funding rigidity has impeded innovation. According to research from City & Guilds, only 4% of employers are spending their full apprenticeship levy funding.

Barriers to accessing funds that could be used to help fill skill shortages is an incredible waste of potential.?

Therefore, overcoming this issue will require a change in tack that prioritises a more flexible and simplified system. Streamlining administrative procedures with a more nuanced approach to funding allocation, based on industry-specific requirements and regional disparities, is essential to optimise resource utilisation and maximise impact.

If UK businesses are to recover from current economic hardships, it will be done with the people that have been instilled with the skills and confidence to make the difference. Breathing life into apprenticeship initiatives and vocational training programs becomes of the utmost importance in this regard.