A paper from the NFB Major Contractors Group describes the apprenticeship levy as “not fit for purpose”.

As of July 2022, more than £3.3bn of unspent apprenticeship levy funds have been returned to the exchequer for general expenditure. NFB major contractors have reported numerous issues with the system, ranging from frustration at the lack of training options available, poor quality and sparse apprenticeship provision, funding rules that are too rigid and a mismatch between the number of apprentices needed to recover funding when compared to the business’ supervisory capacity to oversee them.

Herman Kok of the Lindum Group, who chaired the working group that produced the paper, write in the foreword to the report: “On the face of it, the apprenticeship levy is aimed at increasing the number of apprentice employees and as such a number of apprenticeships are detailed and ‘priced up’ for companies to use. However, frequently the apprenticeships listed are not supported by local delivery agents and the cost of travel when using training organisations in other regions is prohibitive.

“The use of apprenticeship levy can be ‘fudged’ by re-classifying an existing employee as an apprentice when gaining a new skill – resulting in a number of middle-aged middle-management ‘apprentices’ enrolling as under-graduates in order to gain a (further) degree at one of our universities. Not what the apprenticeship levy system was meant for! “Furthermore, the benefit for the employer is dubious, often limited to ‘having used up’ their apprenticeship levy fund.

“Finally, there is the absurdity of the system as operated by training providers; an example is a local FE college providing an AAT course with choice of day-release or evening classes for £860. A similar course booked via the apprenticeship levy system, offered with day-release only, delivered by the same college is charged out at £6,000. When challenged, it was pointed out that this was the only way to access one’s apprenticeship levy fund for the course.”

The paper therefore proposes 10 reforms, covering five priority areas, that aim to allow greater use of apprenticeship levy funds by the company themselves and others in the sector, a reduction in ‘lost’ funding, an increase in investment in learning, skills, and training overall and an increase in apprenticeships:

• widening the levy’s scope – to become an apprenticeship, skills and learning levy
• reforming funding rules – to allow greater expenditure to support apprentices
• relevelling the levy – to match employer’s capability to spend and the system’s capability to provide apprenticeships
• improving levy transfer – to retain funds for much wider use by other companies in the sector and preventing the return of over £3.3bn of unspent funds to the exchequer
• addressing double pay – to tackle the issue of CITB and apprenticeship levy overlap.

Herman Kok said: “A not-fit-for-purpose apprentice levy hurts in an industry which operates on the narrowest of margins as it is. I urge the government to take note of and implement the comprehensive recommendations contained in our report, in order to make the apprentice levy a training tool we can all be proud to use. The construction industry, and other industries, are more than willing to invest in new employees, new technologies and new skills – please give us access to our own money to do so.”

NFB director of policy James Butcher added: “We accept that the covid-era of big funding is over. But with low growth prospects, a major skills shortage, the need for greater productivity and greater investment in technical and vocational skills, we must seek to make the existing policy levers work better. By anyone’s calculation, the loss of over £3.3bn of apprenticeship levy funds indicates a major issue with the system – we have to use that money smarter. With a few minor reforms, we can really get the apprenticeship levy system firing on all cylinders, and rise to the PM’s challenge of increasing business investment in skills.”

The NFB report, Leveraging the Levy, can be downloaded here.

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