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Only 4% of employers spend full apprenticeship levy funding

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£3.5b funding nationally allocated to levy-paying employers expired

Ahead of National Apprenticeship Week, new research from  City & Guilds, the skills development organisation together withworkplace learning advocates The 5% Club, has revealed that the government’s apprenticeship levy is not working as it should.

Levy-paying employers are using around 55.5% of available funds and only 4% have used their full levy funding in the last five years – meaning nearly half of the generated funding has not been used by levy-paying employers and risks going to waste.

The City & Guilds and The 5% Club are calling on the Government to reform the apprenticeship levy system to a 50:50 model – with half of funding ring-fenced for apprenticeships, and half freed up for businesses to use to meet their skills needs in a more flexible way.

According to the findings, a staggering 96% of UK businesses want to see changes made to the levy while the Freedom of Industry (FOI) found that £3.5b funding nationally allocated to levy-paying employers has expired! (FY 2017-18 and FY 2012-22).

Despite the research revealing that only 15% of businesses can recruit the skilled people they need, employers are facing barriers to accessing levy funds which could help to fill skills shortages. According to City & Guilds’ research, carried out amongst 1,000 HR leaders at UK levy-paying business, of those who haven’t used all of their levy funds, 94% report facing at least one barrier to accessing it.

18% say access involves too much bureaucracy or administration

17% state a lack of time to invest

19% cannot commit to the length of time an apprenticeship takes to complete.

Kirstie Donnelly, CEO of City & Guilds, said: “Apprenticeships are a valuable recruitment and retention tool but, the current system is just not working for them, leading to large sums of funding intended for the levy instead going back to the Treasury because they cannot be used, all this at a time of such acute skills gaps and shortages.”

Mark Cameron, CEO of the 5% Club, also commented: “This report provides further evidence on where the system works, where it is challenged and those areas that should be protected and improved.”

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