Nearly half of businesses are yet to utilise their apprenticeship levy pot

11 December 2019

A new survey has found that almost half of organisations who must contribute to the apprenticeship levy pot, because they pay over £3 million in wages each year to their staff, have not yet accessed those funds to spend on the training and development of their employees.

510 businesses were approached by Grant Thornton, an accountancy firm, and 45% of them revealed that they had not yet utilised the apprenticeship levy pot that they are entitled to. The responses to other questions that were asked provide an insight into why, as 27% of respondents questioned how beneficial an apprentice would be to their organisation, viewing the levy as a tax rather than as an incentive to train their staff.

Where an employer’s wage bill exceeds £3 million per year, they are required to pay the equivalent of 0.5% of their annual pay bill into the apprenticeship levy pot. These funds can then be invested in the training and development of staff.  If the money isn’t spent after two years or 24 months, then the organisation will forfeit the funds and the money will be offered to smaller businesses to help with the training and development of their staff.

People Management spoke to the Managing director of City & Guilds Group, Kirstie Donnelly, who was not surprised by the findings of the research, and she commented:

“Post-election, the new government should apply more ‘carrot’ and less ‘stick’ and give greater flexibility to employers in the apprenticeship system, allowing them to exercise choice – within a clear set of parameters – in how they spend the levy.”

 She also addressed the fact that City & Guilds research highlighted the fact that 95% of levy-paying employers did not use their whole allowance in the first year, which shows that the latest research demonstrates a continuing trend.

There have been worries that the levy funding is being used to train employees who are already well established, with extensive knowledge in their fields, and not on assisting with those who need more junior level training. This was not the intention when the apprenticeship levy was originally introduced.

It is also of note that the funds within the apprenticeship levy pot are currently running low because smaller businesses now have the option to access the funds forfeited from larger organisations who did not utilise their allowance.

Ahead of the general election on 12 December 2019, the Conservatives, Labour and the Liberal Democrats have pledged to review and amend the apprenticeship levy considering the concerns around how it is being used.



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