Reforming Apprenticeships for the Recovery

Employers call for reform of the Apprenticeship Levy

  • By Tim Gallagher

A coalition of local government and major employers in the capital has joined forces to propose urgent reforms to the Apprenticeship Levy that will ensure apprenticeships can play a bigger role in the capital’s recovery.

A new paper published by London Councils, the Greater London Authority, London Chamber of Commerce and Industry, London First, West London Alliance, Central London Forward, South London Partnership and Local London, calls on the government to reform the Apprenticeship Levy and sets out how a number of new flexibilities could incentivise employers to take on more apprentices.

The cross-party coalition has also written a joint letter to Skills Minister Gillian Keegan MP listing its proposed solutions.

The government introduced the Apprenticeship Levy to give employers a greater role in addressing skills shortages and to create more apprenticeships. However, many employers – including London’s boroughs – cannot make the most of the funds available to them because of flaws in the design of the scheme. Data from government shows £504m of levy funds were lost to levy-paying employers in the first four months of this year alone.

The paper calls on central government to introduce greater flexibilities to the Apprenticeship Levy. These include:

  • Temporarily extending the amount of time employers have to spend their levy from two years to three years.
  • Extending the availability of the current employer incentives and increasing them to reflect the higher cost of living, working and training in London.
  • Providing additional government support to small businesses looking to take on apprentices.
  • Allowing some levy funding to be used for pre-employment training to get people ready for an apprenticeship.
  • Allowing levy-paying employers to use some of their levy to contribute towards the wage costs of new apprentices from priority groups.

These changes would lead to a substantial increase in apprenticeship opportunities, minimising the risks of long-term unemployment and supporting the economic and social recovery from the pandemic.

Tim Gallagher, Principal Policy and Projects Officer