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Record level of levy funds expired last year against backdrop of skills shortages and missed levelling up opportunities for a struggling generation

  • £1,039 million in levy funds have expired in the 9 months from May 2020 without being spent by businesses

  • These expired funds - which cannot now be used - are up 22% on last year from £847 million

  • Targeted approach with flexibility of spending needed to create and support high value apprenticeships in high growth sectors like manufacturing

  • Immediately allow 20% of levy funds to be spent on wages to help employers retain apprentices in the sector as they recover post pandemic

  • Allow £500 to be used now to support catch up learning and pre-apprenticeship support for young people

  • In the next 12-18 months, extend the lifetime of the funds from 24-36 months for a period of one year to help in post Covid recovery

  • To boost apprentice recruitment, allow 20% of levy funds to be spent on capital costs

  • By end of 2022 launch full review of apprenticeship programme and its future

Britain’s manufacturers are calling today on Government to adopt a sectoral rethink on how levy money can be spent to boost essential skills in high growth industries like manufacturing and engineering. The manufacturing sector is ideally placed to help deliver the Prime Minister’s promise of more good jobs in those left-behind areas of the country, with average wages 13% higher than the rest of the economy and 2.7 million jobs already countrywide with a £191 billion contribution to national output.

In spite of the pandemic, 47% of manufacturers still managed to recruit an engineering or manufacturing apprentice in the last 12 months, with 57% saying they plan to do so in the next year. And some 32% say they will recruit an apprentice over other parts of their business, up from 20% last year.

However, the latest figures show that £1,039 million of levy funds expired unused in the nine months from May 2020, wasting cash which could have been spent providing vital training as the country comes out of the Covid crisis and looks to replace millions of job casualties. Going forward, to get the most out of recognised high growth sectors, it is vital this this money can be unlocked to train apprentices across all ages in the essential skills needed by industry to create well paid jobs across the whole of the UK.

Make UK, backed by the National Manufacturing Skills Taskforce, today unveils a new strategy with a series of targeted interventions which will help retain as well as recruit apprentices in the next 18 months. The introduction of the Apprenticeship levy four years ago was meant to create a central cash pot so more people could be trained from scratch or upskilled. But with an average four year engineering apprenticeship costing a business £40,000 to deliver and just £27,000 of that cost claimable from levy funds, the system leaves businesses struggling to pay to train an apprentice and money so is being left unspent.

Releasing up to 20% of levy funds immediately to help support wage costs is the first critical ask to boost apprenticeship numbers alongside the ability to use £500 from the levy pot to fund catch-up learning or pre-apprenticeship training.

To increase recruitment in the next 12-18 months, manufacturers have also asked for a temporary extension to the lifetime of levy funds from 24-36 months, and 20% of Levy funds to be spent on capital costs to allow companies time to take on more apprentices as economic conditions and demand picks up. And finally, a full-scale review of the levy down to core principles and application should be undertaken by the end of 2022.

For many manufacturers, apprenticeships are key to unlocking our recovery, and building a strong industrial base in the UK. But they need more flexibility to do this effectively as they themselves are struggling to recover from the Covid crisis. 

With so many manufacturers looking to recruit an engineering or manufacturing apprentice in the next 12 months, apprenticeships in the UK manufacturing sector can address the yawning skills gap we face, and aid the Government in its ambition to level up. 

Backed by the National Manufacturing Skills Taskforce, this new strategy proposes a series of targeted recommendations which can support our high growth sector by retaining and recruiting apprentices in the next 18 months to help kick-start the country’s recovery.
Bhavina Bharkhada Senior Campaigns and Skills Policy Manager, Make UK

Make UK members can access the report here

News / Make UK / Apprenticeships / Media release