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Apprenticeship Levy uptake remains low

9 April 2019

An apprentice being overseen by business owner while working in a workshopUK businesses are set to lose over one billion pounds in funding because they've failed to set up new apprenticeships, according to a new report.

Research published by Arch Apprentices has revealed that, to date, only 14% of eligible businesses have used the Apprenticeship Levy. It means the remaining 86% of businesses who have not used the levy are set to lose £1.28 billion.

The Apprenticeship Levy was introduced two years ago; the tax was designed to encourage UK employers to invest in new talent and their existing workforce by funding apprenticeships.

The levy is paid by employers with annual wage bills of more than £3 million. Levy-paying employers contribute 0.5% of their pay bill into a fund each month, which can then be spent on apprenticeship training; for every £1 spent, the government adds 10p.

Despite the fact that 90% of businesses say they have concerns about finding employees with the right skills, worries about the levy have prevented many firms from making the most of it. The findings of the research show that:

  • 17% of businesses that have not taken advantage of the levy say it is too time-consuming;
  • 15% say it is a complicated process;
  • 13% are unaware of how to access it.

"The opportunity presented by the levy is really positive for employers and employees alike but due to the challenges of how the system works and the changing perceptions around apprenticeships, it's no surprise the uptake has been so low," said Ben Rowland, co-founder of Arch Apprentices.

"With UK businesses set to lose over a billion as of next month, we urge employers to invest the time and resources to reap the benefits. Our latest research shows that there is a growing concern amongst UK businesses about the shrinking talent pool and mass exit of existing talent following Brexit, yet we must question why so few taken advantage of the levy?"

Arch Apprenticeships has calculated that the £1.28 billion being lost is equivalent to: 116,363 digital marketers, 85,333 data analysts, 71,111 software developers, 160,000 assistant accountants or 142,222 HR consultants.

Written by Rachel Miller.

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