Apprenticeships experts warn that the Treasury must be more transparent on how it spends the billions returned to its coffers. The rigid apprenticeship system is blamed for billions of skills funding going unspent by businesses and being returned to the Treasury. More than £3.3 billion has returned to the Treasury in the last three years under the Government’s use-it-or-lose-it apprenticeship levy rules, according to new data collected by apprenticeships experts the London Progression Collaboration (LPC).
The LPC, which to date has helped transfer £10 million of unspent apprenticeship levy from large employers to support small businesses and create over 1,000 apprenticeships, says that it is not clear how the Treasury is making use of the £3.3 billion that it has received from businesses. The apprenticeship experts warn that this lack of transparency means it is unclear whether the Treasury is using the unspent levy in a way that best supports the places most in need of levelling up, and whether it is helping create more entry-level apprenticeships, after numbers have plummeted in recent years.
The LPC argues that if the apprenticeship levy is to meet its objective of increasing employer investment in training, the Treasury needs to give employers greater control over how their funds are directed, including by increasing the 25 per cent apprenticeship levy transfer cap. The LPC has seen at first hand the challenges the current system poses to businesses in their work helping firms navigate the complex apprenticeship system and transferring their unspent levy to small businesses.
These findings follow previous research by the LPC which shows that since 2014-15, ‘entry-level’ apprenticeships have fallen by 72 per cent in England, while apprenticeship starts amongst under-19s have fallen by 59 per cent, depriving those most at risk of in-work poverty and at the beginning of their careers the best start in life.
Commenting on this information, FIS CEO, Iain McIlwee stated:
“We need clarity here, Government increasingly expects employers to act as finishing schools, but is simply not providing adequate support for the investment that this entails. We need a serious rethink about how education is built around careers and preparing people for the world of work, not purely academic outcomes. The chasm between education and industry seems to be widening and the answer is not more stealth tax!”