Manufacturing industry calls for targeted sectoral approach on Apprenticeship funding

Britain’s manufacturers are calling on Government to adopt a sectoral rethink on how Apprenticeship 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.

Despite 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 within 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 that 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 for this money to be unlocked to train apprentices of 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, has unveiled a new strategy with a series of targeted interventions that will help retain and 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 so money 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. A further £500 from the levy pot should also be unlocked 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.