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NFB Calls for Apprenticeship Levy Reform

The National Federation of Builders (NFB) has today launched a new policy paper, outlining the need to reform the Apprenticeship Levy to improve the performance of apprenticeship, skills and training delivery.

The paper, authored by the Major Contractors Group of the NFB, is a response to the Prime Minister’s challenge at the Spring Statement in 2022 where he urged the need to review the current business tax system, including the Apprenticeship Levy, to “incentive businesses to invest in the right kinds of training”. The PM reasserted his commitment in his New Year’s speech of January 2023, stating he wanted to see “more technical education, lifelong learning, and apprenticeships.”.

As of July 2022, over £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.

The paper therefore proposes ten reforms, covering 5 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

Commenting, Herman Kok of the Lindum Group Ltd., who chaired the working group that produced the paper, 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.”

James M. Butcher, NFB Director of Policy 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 report has been submitted to the Treasury for consideration ahead of the Spring Budget and will be sent to the Minister for Apprenticeships at the Department for Education.

Read more about the Levy on our Leveraging the Levy page.

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